Stocks Fall as Federal Reserve Raises Interest Rates

by Warren Seah

Stocks experienced a decline on Wednesday following the Federal Reserve’s expected decision to raise interest rates by a quarter of a percentage point.

GameStop Surges After Reporting Surprise Profit

One notable exception to the market downturn was GameStop (ticker: GME), whose shares soared over 35%. The video game retailer announced a surprise profit in its fiscal fourth quarter, exceeding analysts’ expectations. This marked GameStop’s first profitable quarter since January 2021.

In efforts to improve its financials, GameStop significantly reduced its inventory. By the end of the fourth quarter, its inventory amounted to just under $683 million, down from $915 million the previous year.

Carvana Exceeds Expectations, Stock Rises

Carvana (CVNA), the online used-car dealer, saw its stock rise by 6.3%. This increase came after the company issued revised fiscal first-quarter guidance, which included a narrower-than-expected adjusted loss.

PacWest Bancorp Faces Challenges, Shares Decline

Unfortunately, PacWest Bancorp (PACW) encountered difficulties as its shares declined by 17%. The lender announced that it would not pursue a capital raise due to “depressed market prices” for regional bank stocks. Additionally, the bank revealed a 20% decrease in deposits since the beginning of the year.

First Republic Bank’s Rollercoaster Ride

After experiencing a surge of more than 29% on Tuesday, First Republic Bank (FRC) faced a significant drop of 15% in its stock price. Following a report from The Wall Street Journal, which stated that the regional lender had hired Lazard for a strategic review that could potentially include a sale, the stock fell further during after-hours trading. First Republic Bank has also enlisted the help of consultant McKinsey to assist with post-crisis restructuring.

The overall performance of these stocks reflects the immediate impact of the Federal Reserve’s interest rate increase. Market analysts will be closely observing how these companies navigate the new economic landscape.

Nike Beats Expectations, but Shares Decline

Nike (NKE) reported fiscal third-quarter earnings and sales that exceeded expectations on Wall Street. However, despite this positive news, the company’s shares experienced a 4.9% decline as gross margins contracted. Nike cited ongoing aggressive discounting activity, unfavorable exchange rates, and higher production and freight costs as the key factors contributing to the contraction of gross margins. Additionally, Nike issued a weaker margin forecast for the fiscal year.

Virgin Orbit Holdings Rises on Resumption of Operations

Virgin Orbit Holdings (VORB) witnessed a significant increase of over 33% following the aerospace company’s announcement that it will progressively resume operations. This resumption aims to facilitate preparations for Virgin Orbit Holdings’ next mission. The company made this disclosure in a recent filing.

Petco Health & Wellness Slides on Disappointing Revenue Guidance

Petco Health & Wellness (WOOF) experienced an 18% slide after issuing underwhelming revenue guidance for 2023. The pet food seller’s outlook fell short of market expectations, thus causing a decline in its stock value.

Luminar Technologies Downgraded Following Neutral Rating

Luminar Technologies (LAZR) witnessed a significant 15% decline in its share price ($6.60) after Goldman Sachs downgraded the lidar company from a Neutral rating to a Sell rating. Additionally, Goldman Sachs set a price target of $5 for Luminar Technologies.

Array Technologies Reports Strong Performance, Shares Rise

Array Technologies (ARRY) observed a 4.8% increase in its share price after exceeding analysts’ forecasts for fiscal fourth-quarter profit and revenue. As a manufacturer of solar energy products, Array Technologies’ strong performance contributed to the upward momentum of its stock value.

Ollie’s Bargain Outlet Holdings Surpasses Analysts’ Expectations

Ollie’s Bargain Outlet Holdings (OLLI) saw a 9.8% rise in shares after the discount retailer posted adjusted earnings for the fourth quarter that surpassed analysts’ expectations. This positive outcome reflects the company’s ability to outperform predictions and deliver strong financial results.

Krispy Kreme Upgraded to Buy, Shares Rally

Shares of Krispy Kreme (DNUT) experienced a 6.3% increase following an upgrade from Hold to Buy by analysts at Truist. This positive evaluation from industry experts boosted investor confidence in the doughnut chain, resulting in a rally in its stock price.

Nvidia Receives Praise on New Product Announcements

Nvidia (NVDA) witnessed a 1% jump in its share price after receiving praise from Wall Street. The chip maker announced a range of new products and clients aimed at continuing to drive demand for artificial intelligence. This announcement garnered positive attention from the market, reinforcing optimism surrounding Nvidia’s future prospects.

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