Daily Update: Extremely Optimistic View on Stocks
| || --- || S&P 5006,051 (-0.39%) || Nasdaq20,109 (-0.32%) || Dow43,450 (-0.61%) || Bitcoin$106,402 (+0.31%) |
1. Funds Keep Pouring Into Stocks
Markets have cooled down ahead of today's Federal Reserve interest rate decision, but investors remain vigorous in their faith in stocks compared to cash. A Bank of America (BAC 1.04%) fund manager survey showed "the biggest underweight position for currency compared to stocks since at least 2001." BoA's Michael Hartnett stated the data signaled "extreme bullish sentiment."
- Three main indexes lower: The Dow Jones is experiencing a 9-day losing streak, the longest since 1978. However, markets are still close to their all-time highs, as investors anxiously wait for information about the Fed's plans for rate cuts in 2025.
- "I'm not facing a chip shortage issue":Microsoft (MSFT 0.79%) CEO Satya Nadella mentioned indications that AI chip shortages are decreasing, which contributed to the cooldown since Microsoft is believed to be Nvidia's (NVDA 4.31%) largest customer. Nvidia has slipped 15% since its peak, but it's still up 160% year-to-date.
2. Is AI-powered Software the Next Breakthrough?
Long-term Rule Breakers recommendation Salesforce (CRM 0.47%) reported it had closed over a thousand contracts for its "Agentforce" platform, which helps businesses create AI-driven virtual assistants. CEO Marc Benioff claims the company's technology has reduced the need for human employees to handle customer queries by half.
S&P 5006,051 (-0.39%)
- Digital assistants and robotic labor collaboration: Benioff revealed plans to integrate digital assistants with robotic labor in the future, citing the hotel business as an example - AI handling phone calls, and robots cleaning rooms.
- "More than just marketing talk from the SaaS giant": Our Website CIO Andy Cross pointed out that Agentforce was mentioned an astounding 82 times during the Q3 conference call!
3. Price Increases for Chocolate and Coffee Might be on the Horizon
Nasdaq20,109 (-0.32%)
The price of cocoa has skyrocketed this year, with cocoa futures hitting a record high of $11,925 per tonne, nearly tripling since the beginning of the year. This can be attributed to weather conditions in West Africa, which produces over 70% of the world's cocoa.
- "Favorable prospects for the 2024/25 marketing year": Warren Patterson at ING still expects high and volatile prices to continue.
- Highest prices since 1977: Coffee has also been impacted by the same weather conditions, and Rabobank's Carlos Mera suggested we may be seeing record prices soon.
Dow43,450 (-0.61%)
4. What to Watch out For on Wednesday
Semiconductor memory and storage provider Micron Technology (MU 3.01%) will release its Q1 results after the market closes today. It has exceeded earnings estimates in the previous four quarters, and investors will be interested to see if it can meet its projected revenue of $8.5-$8.9 billion.
Bitcoin$106,402 (+0.31%)
- Pre-market results: Dividend Investor recommendation Toro (TTC 1.42%) and General Mills (GIS 0.48%) will release earnings reports before the bell. The consumer goods giant has reported revenue decreases this year.
- "Consistent dividend increases for 16 years": Fool analyst Matt Argersinger highlighted "Toro has faced a challenging 18 months. Consumers have cut back on large purchases like lawnmowers, but the company's golf course and construction equipment businesses have held up better."
5. Automaker Competition Heats Up
Nissan surged 24% today on the Tokyo Stock Exchange, following a report in the Nikkei newspaper that it's in merger talks with Honda (HMC 0.77%) to tackle the global electric vehicle (EV) market.
- "Combining strengths": A Honda spokesperson confirmed that the two companies are "considering various possibilities." Bloomberg suggests Mitsubishi could also join the partnership.
- Challenging Tesla: Nissan's first EV was introduced in 2010, when Tesla (TSLA 7.90%) was still several years from its present-day global success.
6. Foolish Fun
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- Despite the market fluctuations ahead of the Fed's decision, investors are still pouring money into stocks, preferring them over cash, as shown by the Bank of America fund manager survey.
- If the trend of AI-driven virtual assistants continues, companies like Salesforce could see significant financial gains, reducing the need for human employees in customer service roles.
