US OPEN: Wall Street opens slightly lower after higher PPI; Disney gains on earnings, while SMCI in trouble

• Wall Street lower after PPI
• Disney shares jump 10% as streaming business turns profitable and beats earnings expectations
• Sonos shares rise despite revenue decline as Q4 results top lowered estimates
• AMD announces 1,000 job cuts as it aims to compete with Nvidia in AI chip market
• Tapestry and Capri terminate $8.5B merger after regulatory pushback, Tapestry announces $2B buyback

US equities opened lower with US30 and S&P 500 down 0.2%. Nasdaq 100 and  Russell 2000 lose 0.3% after hot PPI and strong USD

In Europe the indices are green today. German DAX40 and Austrian AUT20 are leading gains +1.48% and +2% respectively. Italian ITA40 and  French CAC40 are 1.4% and 1.09% higher.  British UK100 gains 0.4%, while Polish W20 remains flat.

Disney shares surged nearly 10% after beating earnings expectations and achieving streaming profitability, while Sonos rose 3% despite revenue declines as Q4 results topped lowered estimates. AMD shares were under pressure after announcing 1,000 job cuts as part of its AI strategy realignment. Tapestry jumped 9% while Capri fell 3.6% after the companies mutually agreed to terminate their $8.5 billion merger due to regulatory challenges. Meanwhile, Coach owner Tapestry announced a new $2 billion share repurchase program as it shifts focus to organic growth.

Current volatility observed on Wall Street. Source: xStation 

The Nasdaq-100 index, represented by the US100 contract, is currently trading above its previous high of 20,895.2, which now serves as initial support for the bulls. For bears, key support levels include this recently surpassed high and the mid-October peak. If these levels are breached, bears may set their sights on the 50-day SMA at 20,253.

The RSI is gradually diverging lower, remaining near oversold levels, while the MACD is slowly approaching a potential sell signal that could be confirmed in the coming days. Additionally, the 50-day SMA is widening above the 100-day SMA following a recent bullish crossover. Source: xStation

News:

• Disney (DIS.US) shares surged nearly 10% after reporting strong fiscal Q4 results and its first profitable quarter in streaming. The entertainment giant posted revenue of $22.57 billion, beating expectations of $22.47 billion, while adjusted EPS of $1.14 topped estimates of $1.10. The company's direct-to-consumer division achieved a significant turnaround, posting operating income of $321 million compared to a $387 million loss last year. Despite challenges in international parks operations due to the Paris Olympics and weather events, Disney maintained an optimistic outlook, forecasting high single-digit EPS growth in 2025 and double-digit growth through 2026-2027. The company also announced plans for $3 billion in stock repurchases and dividend growth aligned with earnings. 

Q4 Results:

• Revenue: $22.57B vs $22.47B expected
• Adjusted EPS: $1.14 vs $1.10 expected
• DTC Operating Income: $321M vs $203M expected
• Parks Revenue: $8.24B, +1% YoY

• Sonos (SONO.US) shares rose 4.33% despite reporting a revenue decline, as Q4 results beat lowered expectations. The audio products maker posted revenue of $255.38 million, surpassing estimates of $249.64 million, though sales fell 16.3% year-over-year. The quarterly loss of $0.18 per share was better than the expected $0.39 loss. The company successfully launched new products including Arc Ultra and Sub 4 ahead of the holiday season, though the overall audio category continues to face headwinds. Sonos speaker revenue declined 20.2% year-over-year while system products saw a 5.8% decrease. 

Q4 Results:

• Revenue: $255.38M vs $249.64M expected
• EPS: -$0.18 vs -$0.39 expected
• Speaker Revenue: $178.23M, -20.2% YoY
• System Products: $58.73M, -5.8% YoY

• AMD (AMD.US) announced a workforce reduction of approximately 4%, affecting about 1,000 employees worldwide, as part of a strategic realignment focused on capturing more of the AI chip market. The company, which currently trails Nvidia's dominant 80% market share in AI chips, projects $5 billion in AI chip sales for 2024. The restructuring comes after AMD's fourth-quarter forecast fell short of Wall Street expectations, though the company reported progress in optimizing chips for AI workloads and meeting data center reliability targets. Management emphasized the layoffs are targeted steps to align resources with growth opportunities in the AI sector. 
• Super Micro (SMCI.US) shares fall as much as 13% on Thursday, putting the stock on course to drop for its fifth consecutive session, as the troubled server maker delayed yet another filing as it continues to search for a new accounting firm

• Tapestry/Capri (TPR.US/CPRI.US) terminated their $8.5 billion merger agreement after facing regulatory hurdles from the FTC. Tapestry shares rose 9% while Capri fell 3.6% following the announcement. The companies cited uncertainty in securing regulatory approval before the February 2025 deadline as the primary reason for the mutual decision. In response, Tapestry announced a new $2 billion share repurchase program and plans to focus on organic growth, highlighting strong first-quarter European sales growth of 27%. Capri, which has seen seven consecutive quarters of sales decline, will continue to operate independently focusing on its luxury brands. 

Other news coming from individual S&P 500 index companies. Source: Bloomberg Financial LP