On a largely stable trading day, financial markets experienced a strong week, with the S&P 500 achieving new highs. This performance was fueled by economic data indicating that the Federal Reserve may need to adopt a more aggressive stance on interest rate cuts in the coming months.
Morgan Stanley economists have revised their forecasts, now predicting that the Fed will implement 25 basis point rate cuts at its upcoming meetings scheduled for September, October, December, and January 2026. This is a change from their previous expectations, which only included rate cuts in September and December.
In corporate updates, Adobe stock saw a positive uptick following the company’s favorable earnings report, which surpassed analysts’ estimates. Adobe’s revenue reached $5.99 billion, exceeding expectations of $5.91 billion, while adjusted earnings per share came in at $5.31, above the anticipated $5.18.
Looking ahead, Nvidia and OpenAI are poised to announce substantial investments in data centers in the United Kingdom next week. Meanwhile, Super Micro Computer has begun volume shipments of Nvidia Blackwell Ultra, signaling ongoing momentum in the tech sector.
In a significant development, Microsoft and OpenAI have reached a deal that seemingly advances OpenAI towards a for-profit restructuring. Following the news, Microsoft’s stock experienced a slight increase.
Elsewhere in the tech landscape, Applied Materials faced a downgrade from Mizuho, moving from an “outperform” to a “neutral” rating over concerns regarding competitive pressures in China. Analysts expressed a preference for Lam Research, raising their price target for Lam from $120 to $130.
In the beverage sector, Barclays downgraded both Constellation Brands, the brewer of Corona and Modelo, to an equal weight “hold” rating from an “overweight” buy, and Molson Coors to an underweight “sell” from equal weight due to concerns over market trends in beer consumption.
The entertainment industry saw Warner Bros. Discovery’s stock surge nearly 29% yesterday, with an additional increase of over 8% this morning. This rise is linked to reports suggesting that Paramount Skydance is preparing an acquisition offer that could materialize as early as next week.
However, not all companies experienced positive fortune. Boeing shares declined after CEO Kelly Ortberg indicated that the company is lagging in the certification process for the much-anticipated 777x aircraft. While this was deemed unfavorable news, analysts at JPMorgan suggested that the delays are not unexpected and reiterated their “overweight” buy rating along with a price target of $251, viewing the market’s reaction as an opportunity for investors.
Additionally, shares of luxury home furnishings company RH fell over 9.5% after the firm lowered its revenue outlook. RH now anticipates revenue growth of 9% to 11% for the year, down from earlier forecasts of 10% to 13%. The company also adjusted its expectations for adjusted operating margins following a quarterly performance that fell short of analysts’ estimates.
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