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The main U.S. equity indexes were mixed on Wednesday, but technology and other risk-on sectors rose as market participants looked beyond events in the Middle East. Meanwhile, with a firm date set for an initial confirmation hearing for his nominee to be the next Fed chair, President Donald Trump has renewed his threat to fire Jerome Powell.
The front-month West Texas Intermediate crude oil futures contract was down 0.4% to $90.95, as investors, traders and speculators assess the bottleneck at the Strait of Hormuz and the state of negotiations to end the war.
The president was relatively silent on that front today, though he reengaged with Fed Chair Powell about when he’ll leave the central bank for good. The Senate Banking, Housing, and Urban Affairs Committee will meet next Tuesday, April 21, to take testimony from Kevin Warsh, Trump’s nominee to be the next Fed chair.
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Price action generally suggests markets are more concerned now about numbers flowing from the earnings calendar and the revolutionary potential of artificial intelligence (AI).
Tech stocks “continue to power the market higher,” Louis Navellier of Navellier & Associates writes, citing strong gains for Tesla (TSLA, +7.6%) and Microsoft (MSFT, +4.6%), as well as Nvidia‘s (NVDA, +1.2%) recent strength.
“Mega tech is not concerned about oil prices,” Navellier notes. A nearly 10% year-to-date rally for the Russell 2000 Index of small-cap stocks “is also an encouraging sign of confidence in overall economic growth.”
Top- and bottom-line beats for semiconductor stock ASML Holding (ASML, -2.4%) as well as financial stocks Bank of America (BAC, +1.8%) and Morgan Stanley (MS, +4.5%) show “earnings continue strong.”
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Questions remain about when the Strait will open, Navellier concedes. “But the market has disengaged from bouncing on oil prices,” he concludes.
The broad-based S&P 500 was up 0.8% to 7,022, a new all-time closing high. The tech-heavy Nasdaq Composite added 1.6% to 24,016, finishing above 24,000 for the first time, extending its winning streak to 11 trading sessions and also closing at a new all-time high.
But the blue-chip Dow Jones Industrial Average declined 0.2% to 48,463, the price-weighted index anchored by a 3.0% slide for Caterpillar (CAT), its second-biggest component at more than $770 per share.
BIRD flies like an AI stock
On March 31, Allbirds (BIRD, +582.3%) said it was selling its brand and shoe assets to American Exchange Group, which would build on the consumer discretionary stock‘s legacy and “deliver compelling products” to its customers.
Today, Allbirds said it would borrow $50 million “to pivot its business to AI compute infrastructure.” NewBirdAI intends to be a “fully integrated GPU-as-a-Service (GPUaaS) and AI-native cloud solutions provider.”
Management “will initially seek to acquire high-performance, low-latency AI compute hardware and provide access under long-term lease arrangements, meeting customer demand that spot markets and hyperscalers are unable to reliably service.”
At the time of its first announcement, BIRD was down more than 40%. Its deal with American Exchange valued the company at $39 million. Today, BIRD’s market cap pushed $160 million.
Why WD-40 will outperform
WD-40 (WDFC, -1.7%) is a “well-oiled machine” comparable to “Coca-Cola with no Pepsi… Apple with no Samsung… or Visa with no Mastercard,” and William Blair initiated coverage of the consumer staples stock with an Outperform (Buy) rating on that basis.
“We believe the stock is attractively valued for long-term investors,” analyst Jon Andersen writes, noting that a premium relative to its peers is “warranted given the unique and powerful equity present in the WD-40 brand.”
He also cites WD-40’s long-duration market penetration opportunity, attractive margins and return on invested capital (ROIC), as well as a strong balance sheet and free cash flow generation that support both dividends and share buybacks.
“In fact,” Anderson observes, “relative to 10 other major household and personal care companies, WD-40 Company ranks highest in terms of combined sales growth and ROIC.”