Wednesday’s Market Movers: Disney, H&M, Indices & AI Stocks

Wednesday, March 27th, was an eventful day for the markets as Wall Street Indices reversed their previous losses, and companies like H&M, Disney, and Intel made the headlines. 

Let’s take a look at Wednesday’s main market movers:

H&M: Fashion Retail Giant’s Earnings Beat

The Swedish fashion retailer, Hennes & Mauritz, famously known as H&M (HM-B.ST), posted an earnings beat on Wednesday, March 27th despite economic headwinds and rising competition from companies like Shein and Zara. 

The company reported an operating profit of about $196 million, while its operating margin gained 3.9% from the previous 1.3%. On the flip side, inventory and net sales experienced a downtrend.

Commenting on the results, the company’s CEO Daniel Erver stated that “development continued in the right direction in the first quarter with an improved gross margin and operating profit, lower inventory and strong cash flow.”

Accordingly, and perhaps unsurprisingly, following the positive earnings report, the fashion retailer gained 14%. These gains come in addition to the positive momentum H&M experienced throughout 2023 whereby it gained 57%. (Source: CNBC)

DIS Price Target Hike: Are Disney’s Dreams Coming True?

Entertainment behemoth Disney (DIS) gained about 1.5% on early Wednesday and 30% so far in 2024. The “happiest place on earth” rose yesterday following a UBS price target hike. 

In a UBS research note by analyst John Hodulik, Disney’s price target was upped from $120 to $140. The bullish note also revealed that Disney’s cash flow is expected to hit $9 billion this year and $14 billion by 2024. In addition, the company’s three-year compound annual growth is expected to hit 25%.

In addition to the above developments on the same day, it was announced that Disney settled with the State of Florida, to put a halt to the lawsuit over Disney’s long-standing special tax district. 

To provide more context, Disney initially operated in a district called “Reedy Creek Improvement District,” whereby the company could be a self-governing entity. This was changed when the Governor of Florida, Ron Desantis, took control of the area when Disney opposed one of Florida’s anti-gay laws. Nonetheless, the dispute was settled on Wednesday.

Only time will tell what the future holds for this entertainment leader.

AI Stocks’ Wednesday Drops

While Artificial Intelligence (AI) has been making waves across the markets, Wednesday was far from positive for the majority of AI stocks. Stocks of AI companies like NVIDIA (NVDA), Super Micro Computer (SMCI), and Broadcom (AVGO) experienced losses. 

It seems that one of the main drivers for this weak performance is the rising Tech tensions between China and Western countries. In light of the fact that the US and the Netherlands attempted to restrain China’s access to chip fabrication equipment, during a visit to the Netherlands on Wednesday, China’s President Xi Jinping informed the Dutch Prime Minister that these attempts would not succeed. 

Despite the less-than-rosy news and its effect on AI stocks, it is worth noting that Intel (INTC) was able to gain 4.2% that day. This is because it was revealed that Intel’s production of 3 nanometer (nm) processor designs is potentially on the horizon. This news drove bullish market sentiment which edged the stock’s price higher. 

Nevertheless, geopolitical tensions and uncertainties could always change this positive trajectory. Therefore, it would be prudent to keep tabs on any significant developments to see how these might affect the tech giant’s path. 

Wall Street Indices Rebound 

Regardless of yesterday’s tech losses and a three-day losing streak, Wall Street Indices hit much-needed highs on Wednesday. The S&P 500, the Dow Jones Industrial Average (USA 30), and the Nasdaq (US-TECH 100) soared 0.8%, 1.2%, and 0.5% respectively.

Besides these gains, traders may also want to track the upcoming US Personal Consumption Expenditures (PCE) data on Friday, March 29th to see how it might affect the markets. 

Conclusion

The market moved in different directions on Wednesday, March 27th ahead of the upcoming US PCE release on Friday. How might the markets perform today before ending this short trading week?