Market Overview
The stock market experienced a mixed performance today. Early trading showed little conviction as investors awaited the FOMC policy decision at 2:00 ET, followed by Fed Chair Powell's press conference at 2:30 ET. The FOMC unanimously decided to maintain the target range for the fed funds rate at 4.25-4.50%, which was anticipated by the market.
The directive's language was adjusted to omit the statement that "Inflation has made progress toward the Committee's 2 percent objective." Instead, it stated that "Inflation remains somewhat elevated." This change was expected as the market anticipated the Fed's cautious stance amid evolving economic and labor market conditions.
Fed Chair Powell reiterated this cautious approach, noting, "The broad sense of the Committee is that we don't need to be in a hurry to adjust the policy stance." Despite some volatility in stocks and bonds following these announcements, markets ultimately remained stable, indicating no unexpected developments from the decision or Powell's comments.
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Today's News
Tesla (TSLA, Financial) saw its shares decline in after-hours trading following its Q4 earnings report, which missed analyst expectations. The electric vehicle maker reported a 2.1% increase in revenue year-over-year to $25.7 billion, but EPS fell short at $0.73 compared to the $0.77 consensus. The operating margin notably decreased to 6.2% from 10.8% in the previous quarter. Despite an increase in adjusted EBITDA to $4.9 billion, the company experienced less cost-reduction benefits than anticipated.
Microsoft (MSFT, Financial) shares dropped 3% in late trading after its fiscal second-quarter results showed Azure cloud unit growth below forecasts, despite overall earnings surpassing expectations. The tech giant reported a 12% rise in revenue to $69.6 billion, with Azure revenue growing 31% year-over-year. However, the company anticipates increased capital spending in the future, which may have concerned investors.
ServiceNow (NOW, Financial) experienced a 9% decline in shares during post-market trading due to disappointing forecasts for the first quarter and full-year 2025. The company's Q4 revenue of $2.96 billion matched estimates, but its subscription revenue forecast fell short of expectations, indicating potential challenges in meeting growth targets.
Lam Research (LRCX, Financial) saw a 7% increase in its shares after reporting strong second-quarter results that exceeded Wall Street's expectations. The semiconductor equipment firm posted a 14.6% year-over-year revenue increase to $4.38 billion, with both adjusted gross and operating margins surpassing estimates, highlighting the company's robust performance in the semiconductor manufacturing sector.
Globalstar (GSAT, Financial) and AST SpaceMobile (ASTS, Financial) faced significant declines of 17.5% and 10.33%, respectively, following news of a collaboration between Apple (AAPL, Financial), SpaceX's Starlink, and T-Mobile (TMUS). This partnership offers an alternative to Globalstar's existing services, impacting its market position and causing a sharp drop in share value.
ASML Holdings (ASML, Financial) saw its shares rise nearly 5% as its CEO Christophe Fouquet reassured investors that advancements in AI models would not negatively impact chip equipment manufacturers. Despite potential efficiency gains in AI models, the demand for advanced processing and high-power computing remains strong, supporting ASML's market outlook.
Teva Pharmaceutical (TEVA, Financial) experienced a 13% drop in its shares after providing a 2025 earnings outlook that fell below consensus, despite surpassing Q4 expectations. The company's revenue estimates aligned with projections, but its forecasted earnings per share and EBITDA were lower than anticipated, leading to investor concerns.
Meta Platforms (META, Financial) is considering integrating the Chinese AI model DeepSeek into its generative AI tools for advertisers. This move comes as some advertisers expressed dissatisfaction with the accuracy of Meta's AI-generated content, prompting the company to explore external models to enhance performance.
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