1. Chip-makers Ahoy!
Wall Street took a significant boost yesterday as tech stocks skyrocketed in response to a more dovish Fed. However, it was the chip-makers who soared high above the rest. Why you ask?
Well it’s all thanks to Micron Technology, whose second quarter results blew skeptical investors out of the water with some explosive figures. With the prices of its DRAM and NAND chips plummeting, and revenues falling by over 21% year on year, analysts were expecting a dismal earnings report from Micron. But, this was not the case.
Micron managed to sell 5 times as many chips as the same time last year, and highlighted the bottoming out of the memory chip pricing downturn as part of its release to the press. This left nothing but considerable upside for its stock and other similarly undervalued chip stocks, such as AMD, Qorvo, Western Digital and Skyworks Solutions which all raked in some impressive returns yesterday.
The shift in landscape from a more accommodating Fed also paved the way for more gains for the chip-makers most affected by the October 2018 downturn and turbulent market created by trade war tensions. Asian tech stocks also woke up in the green this morning, lapping the bullish sentiment of yesterday’s buying spree. Long may it last.
2. UPS Delivers The Goods
UPS is looking to change up the delivery game by offering in-home health services in a new push to fend off cost pressures and competition from its ever-present rival, Amazon. Interesting stuff!
This latest development would see UPS provide a service that dispatches nurses to vaccinate patients in their homes in an innovative new joint-venture with the US vaccine project and drugmaker, Merck & Co. The aim is to tap into the growing $85bn outsourced healthcare and logistics market, and leave rivals like FedEx in the dust.
The space is currently dominated by DHL, but with the right infrastructure and implementation strategy, we could easily see UPS biting off chunks of its market share in no time. The project looks extremely promising, but the headwinds of a cooling economy may throw a few obstacles into the mix for UPS.
UPS (+7.9%) has outperformed its competitors, DHL (-17.8%) and FedEx (-21.99%) by quite some distance on a yearly basis, and may just be set for more gains in 2019 with its bold new strategy. Let’s hope they really can deliver the goods.
Today we are watching…
1. Nike (#nike)
Nike managed to shock everyone late in yesterday’s session after it plummeted over 4% from its intraday high, despite beating analysts expectations. It did, however, announce weaker than expected sales in North America (+7% growth) which took investors by surprise when compared with Europe’s +12% growth and sent the stock tumbling. Analysts were expecting a blowout report for the monster retailer, so even the slightest slip had sizable ramifications. Despite the speedbump, investors remain bullish on Nike for the remainder of 2019…provided it can get its North American sales back on track!
2. Tiffany & Co. (#tifny)
US jeweler, Tiffany’s, is looking uncertain ahead of its earnings call today. The company has been performing well, but has experienced considerable headwinds from the Chinese downturn which forced it to report lower than expected foreign revenues over the holiday period. A weaker global outlook may dent the company’s prospects going forward, but analysts have pointed to an improvement in the company’s gross margins, which usually bodes well ahead of earnings announcements. Let’s see what comes out in the wash!