Top 10 Market Highlights for Friday, March 13th
1. Brent crude oil, which is the global benchmark, is only slightly down this morning—over 1%. Yesterday, it settled just above $100, marking the first time it’s hit that level since August 2022. The White House has given temporary permission for the purchase of Russian crude that’s already at sea, hoping to alleviate some supply issues linked to the conflict in Iran. “We have unparalleled firepower, unlimited ammunition and plenty of time,” President Donald Trump mentioned on Truth Social.
2. Stock futures are showing some gains this morning, while oil prices are experiencing a bit of a dip. West Texas Intermediate crude, the standard for U.S. oil, dropped more than 2%. This week, all major averages have seen declines. The PCE index, an inflation measure favored by the Fed, came in roughly as anticipated for January, with the annual rate of increase (excluding food and energy) at 3.1%.
3. Adobe is witnessing a significant leadership change, as CEO Shantanu Narayan, who has been at the helm since 2007, plans to step down after appointing his successor. He is the second CEO of a major software firm to resign this year, following Workday’s Carl Eschenbach. The company also revealed its first-quarter annual recurring revenue growth, with stock prices dipping over 8% in premarket trading.
4. Salesforce has joined other software as a service (SaaS) companies in ramping up share buybacks after a tough start to the year. They applied to raise $25 billion in debt to fund this initiative and increased their buyback authorization to $50 billion last month. Meanwhile, ServiceNow has approved a $5 billion stock buyback earlier this year. Notably, the software sector has been recovering since its lows in late February.
5. Ulta Beauty’s stock saw a significant drop this morning, going down more than 7%. Despite strong comparable sales in the fourth quarter, their forecasts for full-year sales and profits were disappointing. JP Morgan quickly labeled it a buy, but Wells Fargo has downgraded its price target from $500 to $475 due to the sell-off.
6. Citi has upgraded Knight Swift to a Buy, even as the stock has fallen 18% since March 4th. Truck drivers are feeling the pinch this month, concerned that increasing oil prices might hamper economic growth. Prior to the conflict in Iran, this sector had come together to tackle a prolonged cargo slump.
7. Industrial gas suppliers have fared well in the stock market amid the ongoing conflict. Wells Fargo upgraded shares of Air Products from hold to buy, forecasting further upside in the company’s second-half outlook, driven by higher helium prices due to supply disruptions in Qatar. Similarly, JPMorgan upgraded Linde, emphasizing it is better positioned in the current market than many material stocks.
8. Michael Hurlston, CEO of Lumentum, gave an insightful talk on “Mad Money.” He mentioned that optical technology suppliers for data centers are “completely sold out” until the end of 2027, stating, “There’s no end in sight.” Lumentum, which recently partnered with Nvidia, is emerging as a hot stock, seeing a 90% increase over the past three months. Our focus is on Corning as our optical play.
9. Needham believes Alphabet doesn’t need to cut back on its AI data center expansion plans, predicting that Google will fully fund its capital expenditures through 2028 with its available cash flow. In contrast, Amazon may face negative free cash flow this year. Needham suggests Alphabet is “building a deeper moat” with its expenditures, and we continue to support Alphabet in our portfolio.
10. Stifel has reduced ServiceTitan’s price target from $145 to $125 following mixed quarterly results. Nevertheless, Stifel maintained a Buy rating, alongside Canaccord. ServiceTitan has a distinctive business model by providing software for blue-collar trades, but it isn’t immune to broader software market pressures. Its shares are down around 6% in the premarket.
