What’s News in Markets: AI Rewards, Target Missed, Rivian’s Glovebox
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How did the March market rally and record S&P close set the stage this week?
Hey, listeners, it's Saturday, March 9th. I'm Francesca Fontana for The Wall Street Journal, and this is What's News in Markets, our look at the biggest stock moves of the week and the news that drove them. Let's get to it. It is March, which for college basketball means March madness. And who knows, maybe for markets too. With all three of the major indexes coming off their fourth straight month of gains, we're watching to see if the market can keep up its hot streak. The big story behind last week's rally was NVIDIA, the chipmaker and de facto poster child of this AI boom that's been powering the market higher. But some of these AI-sensitive stocks have been volatile lately too, and we did see tech shares waffle a bit this week.
Still, that didn't stop the S&P 500 from hitting a new record close on Thursday, ending about 1% higher at 5,157. For those of you keeping score at home, that is now the 16th record close of 2024. Speaking of the AI boom and last week's Nvidia high, investors were watching Broadcom this week. Like Nvidia, Broadcom's another chip maker that's reaping all these AI rewards.
Which Broadcom financial results disappointed investors and why?
And you can tell just by looking at its stock, which has more than doubled in the past year. But unlike Nvidia's great performance last week, Broadcom's quarterly report didn't impress investors much. The good news was that its sales got a boost thanks to AI-fueled chip demand and thanks to its acquisition of the software maker VMware. Just last year, Broadcom closed the $69 billion deal, which is one of the biggest tech deals ever. The bad news was that its quarterly net profit missed expectations, which was also thanks to its acquisition of VMware. Specifically, costs related to closing that giant deal. So it was kind of a double-edged sword for the quarter. Broadcom shares fell after hours Thursday and ended 7% lower on Friday.
But an important takeaway here is that Broadcom sees a stronger year ahead for AI demand. And we all know what they say, right?
How is Broadcom’s VMware deal boosting sales but hurting profits?
Rising AI tides lift all chipmaker boats. I mean, that is what they say, right?
Now let's talk about one of my favorite places to spend a Saturday afternoon, Target. See, if I wanted to impress you all, I should say a museum or the library, but you know what? I just, I gotta keep it real. So Target set its sights on a turnaround since its annual revenue fell in 2023, which was its first decline since 2016. Some of the company's plans to juice up sales and store traffic are long-term, like opening up hundreds of new locations and investing in improvements over the next decade. And some are short-term, like unveiling Target Circle 360, aka its new paid membership program. It gets you things like free two-day shipping and free same-day delivery on orders over $35. And some of these perks may sound a little familiar.
Clearly, Target's taking on rivals like Amazon Prime and Walmart Plus. Investors were pretty stoked about it all, though, sending shares up 12% Tuesday. And the stock held on to most of those gains throughout the week. So we'll just have to see if the company can hit its targets.
What is Target’s turnaround plan and how will Target Circle 360 compete with Amazon?
Sorry, low-hanging fruit. I just can't help myself. And last but not least, I want to give you all an update on Rivian. Rivian's the electric vehicle or EV startup I told you about a couple weeks back. It's one of several EV makers that's struggling with a slowdown in demand. And we talked about one of the big issues with EVs, right? The price tag. People just aren't as game to fork over $70,000 for an electric car. And the lack of EV buzz shows in Rivian's stock price. Shares have fallen more than 40% in 2024 so far. So it was big news that Rivian unveiled two new, more affordable SUV models. And the starting price for one is $45,000. It's a lot of money, to be sure, but compared to 70 grand, it's a deal.
Why did investors react positively to Target’s new initiatives and membership launch?
And it was great news for Rivian's stock. On Thursday, shares jumped 13% and ended the week higher. Oh, I almost forgot. Those new cars, not just cheaper, they've got glove boxes. And I'm actually being serious. Owners of the older models that didn't have glove boxes complained, and Rivian listened.
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Chapters
6 chapters
1
How did the March market rally and record S&P close set the stage this week?
0:02–1:13
2
Which Broadcom financial results disappointed investors and why?
1:13–2:05
3
How is Broadcom’s VMware deal boosting sales but hurting profits?
2:05–3:21
4
What is Target’s turnaround plan and how will Target Circle 360 compete with Amazon?
3:21–4:06
5
Why did investors react positively to Target’s new initiatives and membership launch?
4:06–4:27
6
How are Rivian’s cheaper SUVs and added glovebox affecting demand and stock performance?
4:27–4:47
Speakers
1 identifiedMore from WSJ Your Money Briefing
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