Technology stocks and artificial-intelligence hype seemed to take a break from driving the stock market at least for one day on Friday. One impetus may have been quarterly results from Dell, which highlighted how AI hopes, even when they seem logical, can sometimes be misplaced. The company's stock had run up sharply in recent weeks on perceptions that it was selling a lot of servers for AI use. That turned out to be true, but the problem, as Heard columnist Dan Gallagher pointed out, was that it doesn't seem to be making any real profits on them yet. Operating margins for the segment that includes servers fell to 8% from 9.7% in the year-ago period. Dell's stock plummeted 17.9% in response. Of course, Dell is still up 82% so far this year. The Nasdaq Composite spent most of Friday in the red but benefited from a late market rally in the final minutes of trading, closing down just 0.01%. AI bellwether Nvidia ended down 0.8%. At the same time, there appeared to be a rotation into more mundane sectors. The S&P 500 Consumer Staples sub-index rose 1.5%, outperforming the broad index's 0.8% gain. And there was a sharp relief rally in many health insurers. They had sold off earlier this week on fears that disruptions to Medicaid coverage in many states could cause profitability issues. It was unclear what triggered the rebound, but it may have been comments by the chief executive of insurer Elevance who, according to Stephens analyst Scott Fidel, said at an investor conference that the company is paying close attention to the issue but is still confident in meeting its financial targets this year. Elevance rallied 6.1% and UnitedHealth, the nation's largest health insurer and one of 30 components of the Dow Jones Industrial Average, gained 2.9%. That helped the Dow close higher by 575 points, or 1.5%.
With many countries setting regulatory frameworks to permit the use of digital assets within their financial system, and consumers already having the option to use them for a variety of retail purchases outside of tapping a traditional bank account, credit card or cash, the velocity of blockchain, cryptocurrency and digital assets is speeding up.
A decade ago it was common to ask if younger Americans were falling out of love with plastic. The reasons offered were many: They had seen their parents deal with card debt; they didn’t care about frequent-flier miles; and they had new alternatives like buy-now-pay-later loans. One company saddled with that baggage was American Express. Fast forward to 2024. Amex shares are now zooming, up over 25% this year. The stock has returned an annualized 17% since the start of 2020, beating the S&P 500’s annualized return by almost 4 percentage points.
New creative leadership looks good on Gap. The company on Thursday reported that companywide comparable-store sales rose 3% in the quarter ended May 4 from a year earlier, higher than the 1.2% growth Wall Street expected. Remarkably, all of Gap’s brands—its namesake, Old Navy, Athleta and Banana Republic—saw comparable-store sales growth. This was particularly surprising for Athleta and Banana Republic, for which analysts were penciling in declines. There hasn’t been a single quarter over the past decade in which all four brands reported comparable-store sales growth at the same time
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