S&P 500 Performance: PC Makers Decline as AI Growth Slows

S&P 500 Performance: PC Makers Decline as AI Growth Slows

Key Highlights

* The S&P 500 fell 0.4% on Wednesday, Nov. 27, as inflation data revealed a modest increase for October.

* Shares of HP and Dell dropped sharply after mixed earnings reports raised concerns about PC demand and slower-than-expected AI adoption.

* Ulta Beauty gained on optimism about easing competitive pressures in the cosmetics retail space.

Market Overview

U.S. equities dipped during the final trading session before Thanksgiving, weighed down by inflation concerns and weak performances from major technology stocks.

The S&P 500 slipped 0.4%, while the Dow Jones Industrial Average declined 0.3%. The tech-focused Nasdaq closed 0.6% lower.

The downturn followed the release of the latest Personal Consumption Expenditures (PCE) data, which showed annual inflation rising to 2.3% in October, up from 2.1% in September. As the Federal Reserve closely monitors the PCE for inflation trends, the uptick may complicate the central bank's plans for additional interest rate cuts.

Dell and HP Decline on Mixed Earnings and AI Concerns

Dell Technologies (DELL) saw its stock plunge 12.3%, the sharpest decline among S&P 500 constituents, after posting mixed quarterly results. While the company exceeded profit estimates, its revenue fell short of forecasts.

* Networking and Server Revenue: Up 58%, driven by demand for AI-related infrastructure.

* AI Growth Outlook: Dell's COO cautioned that AI adoption "will not be linear," signaling a gradual growth trajectory as businesses adapt to emerging technologies.

Similarly, HP Inc. (HPQ) shares dropped 11.3% following its fiscal Q4 results. Although profits met expectations, sales slightly missed estimates, and the company's guidance for the current quarter disappointed.

* AI PC Sales: Represented just 17% of total annual sales, indicating slow consumer adoption.

* Market Concerns: HP's outlook raised alarms about broader PC demand trends, with sluggish AI adoption exacerbating challenges.

Other Notable Movers

* Autodesk (ADSK): Shares of the design and engineering software firm fell 8.6% despite beating quarterly sales and profit expectations. The decline followed the announcement of a CFO transition, with interim CFO Betsy Rafael set to be replaced by Janesh Moorjani at the fiscal year’s end.

* Texas Pacific Land Corp. (TPL): TPL led the S&P 500's gainers, rising 4.1%. The company, which manages land in the oil-rich Permian Basin, continues to diversify with ventures in bitcoin mining, renewable energy, and carbon sequestration projects.

* Ulta Beauty (ULTA): Shares of the cosmetics retailer climbed 4.1% after analysts at DA Davidson noted easing competitive pressures. Slower growth in Kohl's Sephora shop-in-shops and stabilizing Amazon market share in beauty contributed to the positive outlook.

* VeriSign (VRSN): The internet infrastructure provider renewed its agreement with ICANN, maintaining its pricing structure for domain names. However, the company’s pending deal with the Department of Commerce is expected to have a more significant impact on pricing.

Final Thoughts

The market’s cautious tone ahead of Thanksgiving reflects investor concerns over inflation and uneven corporate performance. While sectors like cosmetics and energy found some bright spots, technology and PC-related stocks faced significant headwinds, particularly as the adoption of AI continues to progress more slowly than anticipated.