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Market Moves Yesterday

S&P 500 @ 5,872.16 ( ⬇️ 2.95%)

Nasdaq Composite @ 19,392.69 ( ⬇️ 3.56%)

Bitcoin @ $102,356.11 ( ⬇️ 1.88%)

Hey Scoopers,

Happy Thursday! Here’s what we’re covering today 👇

👉 Micron’s Q1 earnings

👉 A big-ticket auto merger

👉 Fed spooks the market

So, let’s go 🚀

Market Wrap

The Dow Jones Industrial Average extended its decline on Wednesday, marking the tenth consecutive day of losses following the Federal Reserve's conservative rate cut projections.

The Fed reduced its benchmark interest rate by 25 basis points to 4.25%-4.5%, meeting market expectations. However, the central bank surprised investors by forecasting only two rate cuts for 2025, down from its previous projection of four cuts.

Fed Chair Jerome Powell emphasized a more measured approach, stating that recent rate adjustments give the central bank latitude to "be more cautious" in making future policy changes.

This cautious stance disappointed market participants anticipating a more aggressive rate-cutting cycle to sustain the bull market momentum in 2025.

The Fed's conservative outlook triggered a sharp rise in Treasury yields, with the 10-year note climbing above 4.50%.

This development added pressure to equity markets, particularly affecting the Dow, which has struggled since reaching its historic peak above 45,000 on December 4.

During this ten-day decline, the blue-chip index has shed approximately 6% of its value.

Trending Stocks 🔥

Lamb Weston - Shares dipped 5% as the food processing company continues to be under pressure from an activist investor to sell itself to Post Holdings.

Lennar - Shares of the homebuilder sank 9% in premarket after it reported earnings of $4.06 per share, below estimates of $4.15 per share. Higher mortgage rates, from higher interest rates, in the most recent quarter impacted the company’s performance.

General Mills - The maker of consumer food products such as Cheerios and Cocoa Puffs sank 4% after trimming its outlook for 2025.

Tech Stocks Tank as Fed Spooks Investors

Technology stocks led a broad market decline, with most Magnificent Seven tech giants posting significant losses. Broadcom tumbled 7%, Tesla plunged 8%, and Microsoft, Meta Platforms, and Alphabet each fell approximately 2%.

Amazon dropped 3%, and Apple declined about 1%. Notable tech firms Netflix and Palo Alto Networks also contributed to the Nasdaq Composite's 2.4% retreat.

Following the Federal Reserve's quarter-point rate cut, selling pressure was widespread across all market sectors. Consumer discretionary stocks were hit hardest, falling 4%, followed by real estate, which declined 2.9%.

The information technology and communication services sectors lost 2.4%, while financials, materials, and industrials dropped about 2%.

The market weakness was particularly evident in the breadth of the decline, with approximately 90% of S&P 500 companies trading lower.

Small-cap stocks were also heavily impacted. The Russell 2000 index fell 3% to its session low after the Fed's cautious stance on future rate cuts.

This marked the small-cap benchmark's steepest daily decline since September 3, contrasting sharply with its robust 10.8% gain in November.

At that time, investors had positioned themselves for potential benefits to smaller, domestically focused companies under a possible Trump presidency.

Micron Disappoints With Guidance

Memory chip manufacturer Micron Technology saw its shares tumble 13% in after-hours trading Wednesday, as disappointing forward guidance overshadowed its quarterly earnings beat.

The company matched or exceeded Wall Street expectations for fiscal Q1 of 2025 reporting:

• Adjusted earnings per share of $1.79, above estimates of $1.75

• Revenue stood at $8.71 billion, in line with estimates

However, Micron's second-quarter forecast fell significantly short of consensus estimates. For the current quarter, Micron forecast:

• Revenue of $7.9 billion (±$200 million), vs. estimates of $8.98 billion

• Adjusted earnings per share of $1.43 (±$0.10), well below the anticipated $1.91

Despite highlighting growth opportunities in data centers and partnerships with Nvidia for AI applications, Micron has underperformed the broader tech market this year. The company's stock has risen 22% year-to-date, lagging behind the Nasdaq's 29% gain.

CEO Sanjay Mehrotra remained optimistic about the company's trajectory, noting in the earnings release: "While consumer-oriented markets are weaker in the near term, we anticipate a return to growth in the second half of our fiscal year."

He emphasized Micron's growing market share in high-margin segments and its strategic positioning to capitalize on AI-driven growth opportunities.

Honda Might Merge with Nissan

On Wednesday, Japanese automotive shares reacted dramatically to reports of a potential merger between Nissan Motor and Honda Motor. Nissan's stock surged 23.7%, its largest single-day gain since 1985. Honda shares, meanwhile, declined 3%.

According to a Nikkei report, the automakers are exploring a holding company structure and plan to sign a memorandum of understanding.

The report suggests that the merged entity would eventually incorporate Mitsubishi Motors, with Nissan holding a 24% stake. Mitsubishi's shares closed up 19.7%.

The merger discussions come as Nissan faces significant challenges. Following disappointing Q2 results and reduced full-year forecasts, the company recently announced plans to cut 9,000 jobs and reduce global production capacity by 20%.

Vivek Vaidya of Frost & Sullivan told CNBC that Nissan's financial underperformance drove the merger considerations. At the same time, AutoForecast Solutions' CEO Joe McCabe noted Nissan needs "revitalization" following its strained relationship with Renault.

The proposed merger could create a formidable automotive giant with annual sales exceeding 8 million vehicles, though still trailing Toyota (11.2 million) and Volkswagen (9.2 million).

Industry analysts suggest the combination would help the companies share technology development costs and reduce innovation risks across traditional combustion engines, hybrids, battery electric, and hydrogen vehicles.

This potential merger follows the companies' earlier strategic partnership on automotive components and software and would represent the industry's largest consolidation since Stellantis was formed in 2021.

The timing is particularly significant as global automakers face multiple challenges, including the electric vehicle transition dominated by Tesla and BYD, widespread industry restructuring, and potential trade policy changes under the incoming Trump administration.

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