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Stocks Surge as Inflation Data Boosts Hopes for Rate Cuts

The stock market finally closed in the green after inflation unexpectedly slowed in December. Consumer price index showed that core inflation (excludes food and energy) rose 3.2% – lower than November’s and estimates of 3.3%. Headline inflation was in line with forecasts at 2.9%.

This resulted in a drop in Treasury yields to 4.65%.

Overall, S&P 500 was up 1.8% to 5,950, while NASDAQ increased 2.5% to 19,511.

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Here is the ten-year chart of Oracle (ORCL) as of December 16, 2024, when the stock was at $171.

In last quarter’s earnings call, Oracle reported an Earnings Per Share (EPS) miss, causing its stock price to drop from $190 to $165. The company posted a profit (in EPS) of $1.47, falling just short of the $1.48 estimate.

Profits grew 10% on 9% revenue growth. However, the stock surged higher after the prior quarter’s earnings report, and was likely simmering down to a more realistic valuation.

In terms of performance, Oracle’s growth and demand looks good as Cloud Services and License Support revenue grew 12%, which is 77% of total revenue. Under this segment, Oracle Cloud Infrastructure’s (OCI) revenue jumped 52% year-over-year due to record level AI demand. Also, OCI consumption revenue was up 58%. On the other hand, GPU consumption was up 336% in the quarter, and Oracle delivered the world’s largest and fastest AI supercomputer, scaling up to 65,000 NVIDIA H200 GPUs.

Overall, even with the EPS miss and light revenue, management stated that growth in the AI segment of its infrastructure business was extraordinary.

ORCL is on the radar of our Conservative Growth Portfolio.

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