Breakfast News: Has JPM Called The Bottom?
March 13, 2025
Wednesday's Markets |
|---|
| S&P 500 5,599 (+0.49%) |
| Nasdaq 17,468 (+1.22%) |
| Dow 41,351 (-0.2%) |
| Bitcoin $82,804 (+0.19%) |
1. JPMorgan Says Worst Might be Over
Strategists at JPMorgan Chase (JPM -0.54%) feel there's a good chance the worst of the stock market rout could be behind us, with potential support coming from exchange-traded fund (ETF) inflows and lower implied recession risk.
- Credit markets "are once again more dismissive of U.S. recession risks than equity or rate markets": Analysis shows debt markets are pricing in a 9-12% probability of a recession. This contrasts to small-cap stock prices, which are indicating a 50% probability, similar to the rates and commodity space.
- End of March buying could total $135 billion: Investor inflows from ETFs is another positive sign of dip buying, as we head toward month and quarter end. This period could see purchases from long-term pension funds, sovereign wealth, and mutual funds as rebalancing takes place.
2. Starbucks Gets Personal
Starbucks (SBUX -0.89%) CEO Brian Niccol spoke at his first shareholder meeting on Wednesday, striking an upbeat tone that customers and employees are already responding to the major strategy overhaul underway.
- "There will be ups and downs but we are focused on our back-to-Starbucks plan": Niccol shared early progress of the transformation, with boosted staffing levels and investment in new coffee-making equipment. The meeting was partially overshadowed by a six-city walk-out strike by union baristas relating to unfair labor practices.
- "The recent directive ... that employees must write a special message to customers on each cup, has drawn new scrutiny": Fool analyst Seth Jayson says it's "worth wondering whether or not inauthentic engagement is a competitive advantage, or a weird leadership whim. Customers are not fooled, and would probably choose efficiently quick over fake quirky."
3. UiPath Stumbles on Uncertain Outlook
UiPath (PATH 0.77%) dropped over 17% after the market closed. The latest results showed a profitable quarter, but investors were spooked by the financial outlook and CFO comments.
- "Increasing global macroeconomic uncertainty": CFO Ashim Gupta discussed how the impact of tariffs and shifts in U.S. trade policy meant the financial outlook for both the next quarter and coming year is under pressure.
- What we learned having issued our December 2024 'Sell' recommendation in Stock Advisor: "When we first recommended UiPath, shares traded nearly 40 times enterprise value to sales. That was too expensive by any metric. We hoped UiPath could grow into that valuation by dominating the [Robotic Process Automation] field. We no longer think it can do that ... Next time, we must be more cautious in our growth assumptions for highly valued stocks."
4. Next Up: Ulta Earnings and More Inflation Data
Longtime SA rec Ulta Beauty (ULTA -3.94%) will report Q4 earnings after the market closes, as the business looks to move on following the recent news CEO Dave Kimbell will be retiring after 11 years.
- Experienced COO Kecia Steelman to take the reins: Ulta shareholders will be hoping for a repeat of the revenue and earnings beat from last quarter, although rising costs and higher competition from emerging beauty distribution channels could thwart this. Watch out for any news of how the leadership change could impact strategy going forward.
- On high alert after the Consumer Price Index (CPI) falls: After the surprise drop in CPI yesterday was largely welcomed by markets, the Producers Price Index (PPI) data for February is forecasted to fall from 3.5% last month to 3.3%. When stripping out food and energy, the core figure is expected to decrease from 3.6% to 3.5%. S&P 500 futures were down around 0.6% in early hours trading.
5. Foolish Fun
Dollar General (DG -4.82%) is among the companies reporting today. What retail store have you visited recently that you wish would become a publicly traded company so you could invest in them, and why? Discuss with friends and family, or become a member to hear what your fellow Fools are saying!
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