NEARING ITS ALL-TIME HIGH
Bitcoin experienced a resurgence in value, driven by increased adoption of digital assets in the U.S. spearheaded by Donald Trump. The potential acquisition of Bakkt Holdings Inc. by Trump Media & Technology Group Corp. and Nasdaq’s plan to offer options for the iShares Bitcoin Trust both signal a growing interest in the cryptocurrency market. Additionally, Goldman Sachs’s move to separate its digital-asset platform underscores the expanding influence of blockchain technology in the financial sector. In response to these developments, the price of Bitcoin rose to $92,555, although as of 8:00 AM CST, it has decreased slightly and it is trading just above the $91,000 mark. Moreover, it is worth noting that despite uncertainties surrounding the implementation of such policies, market analysts have stated that they still remain bullish on Bitcoin, with expectations of reaching $100,000.
NEW COMPLIANCE PLAN
Super Micro Computer (SMCI) stock experienced a significant boost in premarket trading following the submission of a compliance plan to the U.S. Securities and Exchange Commission (SEC) aimed at avoiding delisting from the Nasdaq exchange. The company’s plan outlines its intentions to become current with its filings, with investors eagerly anticipating the outcome after a report from Barron’s. SMCI’s decision to hire a new auditor, BDO, following the resignation of EY, has also been a point of interest. Following these announcements, SMCI’s stock rose by 29%, providing some relief to investors, although the stock is still down over 20% for the year. Moreover, despite the recent challenges experienced in the last three months, which include the investigation by the Department of Justice and missed earnings expectations, SMCI is still showing commitment to innovation as it has announced that it will be introducing next-generation AI servers at the Supercomputing Conference in Atlanta.
WORRIES DUE TO TENSIONS
Global markets experienced a significant downturn as escalating tensions between Russia and the U.S. heightened fears of a potential nuclear conflict. The pan-European Stoxx 600 stock index dropped nearly 1%, reaching its lowest level since August, following news of Russia’s revised nuclear doctrine that broadens the circumstances under which Moscow would consider deploying its nuclear arsenal. This includes the possibility of using nuclear weapons in response to conventional aggression against Russia or Belarus. The situation became more fraught after the U.S. decision to allow Ukraine to use American-made missiles on Russian territory, sparking concerns among NATO allies and increasing the risk of further escalation in the ongoing conflict. Investors reacted by flocking to safe-haven assets, leading to a rise in gold prices and strengthening of currencies like the U.S. dollar, the Euro, the Japanese yen and the Swiss franc.
OPTIMISTIC FORECASTS
Despite the recent tensions due to the Russia-Ukraine conflict, Goldman Sachs and Morgan Stanley have both made optimistic predictions regarding the S&P 500 index, forecasting that it will reach the level of 6,500 by the end of 2025. These forecasts are based on anticipated growth in the U.S. economy and corporate earnings. Goldman Sachs’ forecast implies a 10.3% increase from the index’s most recent closing value. The brokerage also identified a group of seven major stocks, including Amazon and Microsoft, that are expected to outperform other companies in the index. However, they cautioned that risks remain high for the broader U.S. equity market due to factors such as tariffs and higher bond yields. Additionally, they mentioned that political changes, such as Trump’s victory in the U.S. Presidential election, could impact economic policies such as taxes and tariffs, potentially affecting market trends and the Federal Reserve’s interest rate decisions.
POSSIBLE DECLINE AHEAD
In other news, Lowe’s has outperformed Wall Street’s expectations in its quarterly earnings report, fueled by robust sales in outdoor DIY projects, professional home services, and online shopping. Nevertheless, despite this positive outcome, the net income and revenue have declined compared to the previous year, with a 1.1% decrease in comparable sales attributed to weaker demand for larger DIY projects. Consequently, the company is now predicting a year-over-year sales decline and has revised its full-year sales projection to be between $83 billion and $83.5 billion. Additionally, Lowe’s anticipates a smaller drop in comparable sales, now expected to be in the range of 3% to 3.5%. Similarly, competitor Home Depot also reported a decline in comparable sales but both companies saw improvements in specific areas. Moreover, it is worth noting that although Lowe has experienced a 22% increase this year, this growth is slightly less than the gains seen by the S&P 500.
