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UBS analysts express optimism for stock markets, citing strong US economic fundamentals and favorable macro data. Despite recent declines, they highlight a robust GDP growth of 2.8% and significant job creation, suggesting limited recession risk and potential Federal Reserve rate cuts ahead. With AI driving growth in tech, UBS sets a target of 6,600 for the S&P 500 by the end of 2025.
The S&P 500 is expected to continue its decline as bond yields rise following inflation data. Weekly jobless claims were lower than anticipated, while major tech earnings from Apple and Amazon are on the horizon, with mixed reactions to recent results from Microsoft and Meta. Comcast's shares surged over 6.5% after announcing plans to separate its cable networks business.
UBS has reaffirmed its Buy rating for Meta Platforms, Inc., which focuses on online social networking services. The company generates 98.6% of its net sales from platforms like Facebook, Instagram, and WhatsApp, boasting 3.98 billion monthly active users in 2023. Revenue primarily comes from advertising (97.5%), with geographical distribution showing 39.2% from the U.S. and Canada, 26.8% from Asia-Pacific, 23.1% from Europe, and 10.9% from other regions.
UBS maintains a 'Buy' rating for Meta Platforms with a target price of $690, citing strong sales and profits despite disappointing advertising revenue growth. Other analysts, including Morgan Stanley and JPMorgan, have also raised their price targets, reflecting confidence in the company's performance. Pivotal Research has increased its target to $800, emphasizing Meta's growth potential.
Apple Inc. and Amazon.com Inc. are set to report earnings, which will be pivotal in determining the overall success of this Big Tech earnings season. Their results follow disappointing reports from Microsoft Corp. and Meta Platforms Inc., which negatively impacted their stock prices and the broader market. In contrast, Alphabet Inc. and Tesla Inc. delivered better-than-expected results earlier in the week.
Asian equities fell, with Australia and Japan opening lower, while US futures declined due to disappointing guidance from Microsoft and earnings results from Meta Platforms. The S&P 500 and Nasdaq 100 dropped by 0.3% and 0.8%, respectively. In bond markets, global measures hit a three-month low, and traders adjusted expectations for policy easing following strong US economic growth in Q3, driven by increased household spending and defense expenditures, with underlying inflation aligning with the Federal Reserve's target.
Meta Platforms reported a strong third quarter, exceeding revenue expectations, despite a drop in after-hours stock prices that may mislead investors. At the Meta Connect developer conference, Mark Zuckerberg showcased a prototype of computer glasses capable of displaying digital objects in transparent lenses.
Stocks experienced a decline on Wednesday, with notable movements expected in the upcoming trading session. Apple reported a 5% increase over three months but fell nearly 4% in after-hours trading, while Microsoft and other tech stocks showed mixed performance. Ingersoll Rand and W.W. Grainger are set to report earnings, with Grainger being a standout performer in its sector.
Mark Zuckerberg expressed surprise at Meta's rapid investment in AI infrastructure, raising 2024 capital expenditure guidance to between $38 billion and $40 billion. Despite beating earnings expectations, concerns over user growth and rising costs led to a dip in Meta's stock. The Reality Labs unit reported a $4.4 billion operating loss, with anticipated losses increasing in 2024 due to ongoing development efforts.
Asia-Pacific markets are poised for a mixed opening as investors await the Bank of Japan's rate decision and China's manufacturing PMI figures. The BOJ is expected to maintain rates at 0.25%, while China's PMI is forecasted at 49.9, indicating continued contraction in the manufacturing sector. In the U.S., tech stocks fluctuated, with Alphabet outperforming expectations, while AMD's shares fell sharply due to disappointing guidance.
Meta Platforms, Inc.
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