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- 📈 Meta and Musk Bet Big on AI
📈 Meta and Musk Bet Big on AI
Bitcoin tops $100K, Nvidia alternative Marvell stock rises, Powell says US economy strength allows Fed to be cautious, United Healthcare CEO shot and killed, Meta building $10B AI center
Evelio Silvera
December 05, 2024
Good morning.
⚡ The Fast Five → Bitcoin tops $100K, Nvidia alternative Marvell stock rises, Powell says US economy strength allows Fed to be cautious, United Healthcare CEO shot and killed, Meta building $10B AI center
🔎 Market Trends → Tech rally, Powell comments boost indexes to record closing highs; US Futures Hold Steady After Tech-Led Rally
And now…
⏱️ Your 5-minute briefing for Thursday, December 5, 2024:
MARKET BRIEF
Before the Open
As of market close 12/4/2024.
Pre-Market
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Fear & Greed
Markets in Review
Dow Tops 45,000: Bullish Sentiment Sweeps Wall Street
The Dow Jones Industrial Average surged 0.7% to close above the 45,000 milestone, while the S&P 500 climbed 0.6% to 6,086.5, and the Nasdaq jumped 1.3% to 19,735.1. Tech led the rally, while energy struggled.
The Big Picture:
Optimism fueled a record-setting day for U.S. equities as investors digested Federal Reserve Chair Jerome Powell's cautiously upbeat comments. Powell highlighted the resilience of the U.S. economy, signaling the Fed may proceed carefully with future rate cuts—a move that markets interpret as stability for growth sectors.
Technology stocks were the clear winners, driven by robust earnings reports and optimism around AI adoption.
On the flip side, energy stocks slipped as crude oil prices fell amid ongoing concerns about oversupply and weaker demand projections.
Meanwhile, the bond market saw a retreat in yields, with the 10-year Treasury yield easing to 4.18%, reflecting tempered inflation expectations and steady economic momentum.
Market Movers:
Salesforce (CRM): Rocketed +11% after fiscal Q3 revenue crushed estimates, showcasing growth in subscription services.
Marvell Technology (MRVL): Skyrocketed +23%, thanks to an upbeat Q4 earnings outlook fueled by strong AI-related demand.
Foot Locker (FL): Tumbled -8.9% following a disappointing Q3 and a reduced full-year outlook tied to soft consumer spending.
WTI crude oil: Dropped -1.8% to $68.68/barrel, with OPEC+ expected to extend output cuts.
Gold: Nudged up +0.2% to $2,673.90/oz, as investors hedge against volatility.
What They’re Saying:
“The U.S. economy is in very good shape, and there’s no reason for that not to continue,” said Powell, emphasizing the Fed’s flexibility in navigating interest rate adjustments.
WHAT WE’RE WATCHING
Events
Today: Dept. of Labor - Jobless Claims - 8:30am
Why You Should Care: Although it's generally viewed as a lagging indicator, the number of unemployed people is an important signal of overall economic health because consumer spending is highly correlated with labor-market conditions. Unemployment is also a major consideration for those steering the country's monetary policy.
Earnings Reports
Today: Lululemon, Ulta, Dollar General, Docusign, HP
Tomorrow: Genesco, Nebius, BRP, Soho House
MARKET BRIEF
Leading News
Meta and Musk Bet Big on AI in the South
Why it matters:
Tech giants Meta (META) and Elon Musk’s xAI are doubling down on AI infrastructure with game-changing investments in Louisiana and Tennessee. These projects could transform local economies, while spotlighting energy challenges and opportunities for investors.
Zoom Out:
Meta’s $10 billion investment in a 4-million-square-foot AI data center in northeast Louisiana marks its largest facility to date. The project aims to revitalize Richland Parish, an area grappling with poverty and low employment rates, with promises of 500 permanent jobs and 5,000 construction roles.
Meanwhile, Musk’s xAI is expanding its Memphis supercomputing hub, collaborating with tech heavyweights like Nvidia (NVDA) and Dell (DELL). Together, these projects position the South as a rising AI powerhouse, but they also raise concerns over energy dependence and environmental impact.
Deep Dive:
Meta’s Local Play: Meta plans to spend $200 million on infrastructure upgrades, like roads and water systems, in Louisiana. This aligns with its goal of creating a positive local impact while meeting rising demand for AI-powered services.
Energy’s Role: Entergy (ETR) is fast-tracking three new natural gas plants to power Meta’s center, sparking debates over renewable energy vs. fossil fuels. Meta has pledged to add 1,500 MW of renewable energy to the grid.
Economic Boost: Tennessee’s Memphis hub will attract global tech players and inject significant capital into the region, although concerns over transparency and environmental strain linger.
Market Pulse:
“AI-driven data centers are not just an energy play; they’re an investment in future economic hubs. These projects could redefine the tech landscape in the South.” — Foster Campbell, Louisiana Public Service Commissioner.
Bull’s Take:
Meta’s and xAI’s moves signal long-term growth in AI demand. While energy debates persist, the infrastructure investments could unlock outsized returns for investors who spot opportunities in utility, tech, and green energy stocks. AI is the megatrend. Keep an eye on META, NVDA, and ETR as they capitalize on the AI boom. For broader exposure, consider ETFs focused on renewable energy and AI infrastructure.
Headlines
UnitedHealthcare CEO Brian Thompson fatally shot in New York in targeted attack (link)
Powell says a strong US economy is letting the Fed be ‘cautious’ about cutting interest rates (link)
Marvell Stock Rises. Why It’s an Alternative to Nvidia in the AI Chip Trade. (link)
Battle Of The Weight-Loss Behemoths: Eli Lilly Whomps Novo Nordisk (link)
SentinelOne Revenue Beat, Guidance Underwhelms. Shares Fall. (link)
Amazon rolls out Buy with AWS button to let software vendors more easily sell to its cloud customers (link)
CRYPTO
Fear & Greed
Headlines
DAILY SHARE
On the Socials
*Hat-tip to HighYieldHarry