New York Morning: Oracle may wake up the "bears"

Daily review and forecast of events on the U.S. stock market from Mikhail Denislamov, Deputy Director of Freedom Capital Markets Research.

The focus of the investment community's attention today will be Oracle's (ORCL) report released the day before, which caused its stock to plummet about 11% in the postmarket and triggered a local correction in the artificial intelligence beneficiary segment. The company's adjusted fiscal Q2 earnings came in at $2.26 with a consensus of $1.64, while revenue of $16.06 billion fell short of average guidance of $16.21 billion. A 68% increase in cloud revenue and a record contract liability balance ($523 billion, +438% YoY) took a back seat to investors. They were concerned about the increase in the capital expenditure plan (CAPEX) from $21.2bn in FY 2025 to $50bn in 2026, with negative free cash flow (FCF) of $10bn recorded in the quarter, while the consensus was $5.2bn. The issue of financing large-scale projects in general worries market participants. Oracle's management announced a shift to chip neutrality policy, refusing to develop its own processors and planning to use any microprocessors preferred by its corporate customers, including solutions from Nvidia (NVDA) and other vendors.

Today we will release the initial jobless claims statistics for the week ending December 6 (consensus: 220,000, previous value: 191,000). We do not expect any big surprises from this release.

Ciena Corp (CIEN) will report quarterly results before the open of main trading. Broadcom (AVGO), Costco (COST ), Lululemon Athletica (LULU) and RH (RH) will report at the post-market.

Futures on US indices demonstrate negative dynamics. We assess the balance of risks for the upcoming trades as negative with increased volatility. We believe that the statements made on the eve by the head of the Fed will support the equal-weighted broad market index, which, due to the local correction in the quotes of companies related to the AI sector, is able to outperform the Nasdaq 100. We focus on the S&P 500 fluctuations in the range of 6800-6920 points (from -1.2% to +0.5% to the closing level of the previous session).

- Adobe (ADBE) reported revenue of $6.19 billion and adjusted earnings per share (EPS) of $5.5 with consensus of $5.4 billion and $6.11 billion, respectively, for its most recently reported quarter. For FY 2025, the company generated record revenue of $23.77 billion (+11% YoY), strengthening its position in Digital Media and Digital Experience. Its recurring subscription services revenue (ARR) increased 11.5% YoY to $25.2 bln. Buyback for the year approached $12 bln. Nevertheless, ADBE stock is not showing strong momentum ahead of the main session due to a general weakening of risk appetite.

- Synopsis (SNPS) reported last quarter adjusted EPS of $2.9 with a consensus of $2.78 and revenue of $2.26 billion with average expectations of $2.25 billion. The recently acquired Ansys contributed $668 million to the total. Management forecasts FY 2026 EPS in the range of $14.32-14.40 (consensus: $14.05) and revenue in the range of $9.56-9.66 billion, including ~$2.9 billion from Ansys. The company's guidance for the current quarter also exceeded analysts' expectations. SNPS stock was down more than 1% in Thursday's premarket.

- Shares of Planet Labs (PL) are up 16% as its quarterly EPS came in at zero, beating analysts' estimates by $0.03, and revenue came in at $81 million versus consensus of $72.18 million.

December 10 trading on the U.S. stock exchanges ended on the positive territory. S&P 500 added 0.67%, Nasdaq 100 rose by 0.42%, Dow Jones rose by 1.05%, and Russell 2000 - by 1.32%.

Almost all segments of the broad market closed in the plus. Raw materials (XLB: +1.96%), industrial companies (XLI: +1.83%) and consumer durables (XLY: +1.47%) were the top gainers.

In the Magnificent Seven, Tesla (TSLA: +1.41%) and Amazon (AMZN: +1.69%) were the best performers. Microsoft (MSFT: -2.74%) and Nvidia (NVDA: -0.64%) were the outsiders.

The Fed, as expected, cut the rate by 25 bp, to 3.5-3.75%. At the same time, a program of limited purchase of short-term treasury securities was launched to stabilize bank reserves. The regulator's December macro forecasts turned out to be more optimistic than September's. According to the revised benchmarks of the Fed, GDP in 2025 and 2026 will grow by 1.7% and 2.3%, respectively, while previously expected 1.6% and 1.8%. The regulator forecasts unemployment at the end of 2025 at 4.5%, in 2026 it should fall to 4.4%, in 2027 - to 4.2%. Haydens on the basic PCE (index of personal consumption expenditures) for the current and next year are reduced by 0.1 p.p. - to 3% and 2.5%, respectively.

Fed Chairman Jerome Powell attributed the improvement in forecasts to the sustainability of consumer spending, investment in AI, fiscal support (OBBBA) and the shift of some economic growth from the current year to next year due to the shutdown effect. Also, the head of the regulator emphasized that commodity inflation is concentrated in sectors affected by import tariffs. Its slowdown is expected in the second half of 2026. The only formally negative moment was the preservation of the Fed Funds rate forecast for 2026 at 3.4%, which implies only one reduction. At the same time, the Fed Watch futures market includes two such steps in its forecasts. We regard the regulator's restraint as a signal of a pause in the monetary easing cycle, and Powell actually confirmed it. On the whole, the updated forecasts demonstrate the Fed's confidence in the economy's health and the temporary nature of unemployment growth.

-Photronics (PLAB: +45%) reported last-quarter EPS and revenue above expectations thanks to a notable strengthening in the US market. Its outlook for the next three months was above consensus. Comments on geographic expansion added to the positivity.

- Marvell Technology (MRVL: +4%) shares rebounded amid its CEO's denial of rumors of losing major customers, including Amazon and Microsoft.

- The US Navy is planning a $448m strategic investment in Palantir Technologies (PLTR: +3.3%) to implement the Shipbuilding Operating System. The project aims to accelerate the development of AI and autonomous technologies in the defense industry.

- AeroVironment (AVAV: -12.8%) reported better-than-expected revenue for the latest quarter, but its EPS came in below average forecasts. Management noted one-time cost pressures and the negative impact of the shutdown on results. The company lowered its full-year earnings forecast. At the same time, its order book reached a record volume with strong fundamental demand.

This article was AI-translated and verified by a human editor