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The Key Takeaways
- The S&P 500 plunged 3% on Wednesday, Dec. 18, 2024, as the Fed cut interest rates but struck a more cautious tone about future policy moves.
- Paycom, which provides cloud-based services for human resources management, saw its shares plummet despite recent increases in price targets.
- Jabil’s shares are surging after it posted better than expected quarterly results, and increased its guidance for the full year.
As the Federal Reserve wrapped up its last policy meeting of 2018, major U.S. stock indexes fell. As expected, the central bank cut benchmark interest rates by one quarter percentage point. However, policymakers warned that rising inflation in 2025 could force them to take a more conservative approach.
After trading higher for much of the day, the S&P 500 changed course following the rate-cut announcement and as Fed Chair Jerome Powell addressed the press, ending with a daily loss of 3%. Dow Jones ended the day down by 2.6%. This is the first time since the 1940s that the Dow has had a streak of double-digit down days. Nasdaq fell 3.6% due to concerns over interest rates.
Shares of human resources services provider Paycom Software (PAYC) dropped 10.1% on Wednesday, the most of any S&P 500 constituent. Paycom’s stock has been affected by concerns about cannibalization over the last year. The efficiency of the Beti automated payroll solution is said to have reduced demand for the company’s other products and service. Paycom analysts from Mizuho & Stifel have raised their target prices for the stock. However, these forecasts are still below what is currently being paid.
Tesla’s (TSLA), shares fell 8.3% from recent highs, despite upgrades issued by several firms. Analysts cited positive developments for the autonomous driving and AI initiatives of the electric car company under a new administration. Stocks fell on Wednesday after reports that Tesla’s Elon Musk, and SpaceX his business were the subjects of federal reviews relating to national security issues.
BXP, a REIT focused on office premium properties, saw its shares fall 7.6%. Although the company saw metrics improving for its East Coast markets and Central Business Districts but underperformance persisted on the West Coast and suburban areas, this indicates that office realty is still experiencing an uneven recover.
Broadcom’s (AVGO), shares fell 6.9% for the second consecutive day after a run of gains lifted it above the $1 Trillion market capitalization mark. Broadcom’s AI driven earnings and positive outlook encouraged research firms, including a number of brokerages, to increase their price target. But the recent rally pushed the share price higher than analysts’ average estimates, suggesting that the stock could be valued fully at its current level.
Wednesday’s top performance in the S&P 500 came from shares of circuit board manufacturer Jabil (JBL), which surged 7.3%. Apple’s (AAPL), a supplier of circuit boards, surpassed sales and profit expectations for the first fiscal quarter 2025. It also raised its guidance for the full year, citing robust demand for cloud, datacenter infrastructure and digital commerce. Jabil had announced earlier in the year a plan of restructuring that involved layoffs, cost-cutting initiatives and realigning manufacturing capacities.
As political forces against PBMs grew, shares of healthcare companies rose. The industry is under bipartisan scrutiny and may need to rethink its business plan, but analysts believe the outlook for growth remains positive. Cigna shares (CI), recovered by 6.3%. UnitedHealth shares (UNH), Centene stocks (CNC) and CVS Health stock (CVS), too, gained ground.
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