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Market Moves Yesterday

S&P 500 @ 5,633.09 ( ⬆️ 0.13%)

Nasdaq Composite @ 17,592.13 ( ⬇️ 0.52%)

Bitcoin @ $58,756.20 ( ⬇️ 2.01%)

Hey Scoopers,

Happy Tuesday! Here’s what we’re covering today:

👉 Apple stock pulls back

👉 Intel’s turnaround plans

👉 Broadcom is bullish on AI

So, let’s go 🚀

Market Wrap

The S&P 500 index ticked higher on Monday as investors await the Fed’s highly anticipated policy meeting, where central bankers are expected to cut rates for the first time since 2020.

However, chip stocks, such as Nvidia, which led last week's rally, fell 2%. Other semiconductor stocks such as Broadcom, KLA Corp, and Marvell also fell over 1.5%.

Notably, the financial and energy sectors added more than 1%, outpacing the broader market, while the information technology sector was down 1%. The S&P 500 index now trades just 1% below all-time highs.

The Fed’s two-day meeting will begin today, and the central bank is expected to lower interest rates by at least 25 basis points. However, there is a 63% chance of the Fed cutting rates by 50 basis points.

An interest rate cut would be a pivotal move, as investors hope that lower borrowing costs for companies will drive earnings growth higher.

Additionally, August data for industrial and manufacturing production and the Home Builders Housing Market Index will be published today.

Trending Stocks 🔥

Nuvalent - The stock soared over 28% after the biopharma company highlighted positive data on two experimental cancer treatments.

Bausch + Lomb - The contact lens provider rallied 14.5% after it partnered with Goldman Sachs to explore a sale.

Alcoa - The aluminum stock jumped over 6% after it agreed to sell its 25.1% stake in the Ma’aden joint venture for $1.1 billion.

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Apple Loses Over $100 Billion

Apple shares slid close to 3% on Monday after reports that demand for the new iPhone 16 is lower than expected. In fact, first-weekend sales are down 12% compared to the iPhone 15, according to analyst Ming-Chi Kuo from TF Securities.

The analyst compiled data from Apple’s websites on each iPhone 16 model’s pre-order sales, average delivery times, and shipments before pre-order.

According to Kuo, the key factor for lower demand is the unavailability of Apple Intelligence alongside the iPhone 16, in addition to intense competition in the Chinese market. Apple unveiled the latest versions of the iPhone, AirPods, and Apple Watch last week.

Analysts at Barclays, JPMorgan, and Bank of America also stated that shipping times could translate to lighter demand for newer iPhone Pro models compared with last year.

According to Barclays, Apple Intelligence will not be available in the Chinese language until 2025, which may further dampen enthusiasm for the iPhone 16. Moreover, Apple had to rely on significant discounts to drive sales of the iPhone 15 in China.

The iPhone is Apple’s largest business segment, accounting for over 50% of total sales.

Intel Stock Gains Close to 8%

Intel stock is up almost 8% in pre-market trading after it disclosed plans to turn its foundry business into an independent unit. As part of Intel’s effort to stage a turnaround, the company also announced selling off part of its stake in Altera.

Intel expects the restructuring to allow its foundry business to evaluate independent funding sources. The foundry business will manufacture semiconductor chips for other customers and should be a key driver of future sales.

Intel has already spent $25 billion in the last two years to establish its foundry business. As a standalone entity, the foundry business would benefit from a cleaner corporate structure, fueling investor optimism.

Before its pre-market pop, Intel's market value lost 60% this year, giving up shares in its core PC and data center business as Nvidia continued to dominate the AI chip segment.

Last month, Intel disappointed investors with its Q2 results. It announced plans to reduce the workforce by 15% in addition to a $10 billion cost-reduction plan.

Intel was awarded up to $3 billion from the Biden Administration and the CHIPS and Science Act to bring chipmaking to the U.S. The U.S. government aims to bolster semiconductor capabilities due to the geopolitical risks surrounding Taiwan, home to the largest contract chipmaker- Taiwan Semiconductor.

Broadcom Increases AI Sales Forecasts

Broadcom CEO Hock Tan explained why the semiconductor company hiked its guidance for artificial intelligence revenue during its earnings report.

In a CNBC interview, Han stated, “We are in a segment of the market in AI where we are addressing several hyperscalers. And these hyperscalers have very strong incentive, ambition to towards building continually, investing in large language models to basically create models that are smarter and smarter.”

Broadcom beat Wall Street estimates for revenue and earnings and forecast AI sales at $12 billion in fiscal 2024, above its prior estimate of $11 billion. The company designs and develops semiconductor and infrastructure software products that have been in demand as Big Tech ramps up the production of data centers and new AI technology.

Tan believes the AI boom is far from over, as mega-cap companies continue to invest heavily to gain traction in a rapidly expanding addressable market.

However, Tan said slower sales of legacy semiconductor products would offset AI growth in fiscal 2024.

Headlines You Can't Miss!

China seeks a homegrown alternative to Nvidia

Amazon instructs employees to return to the office

Nikkei  falls over 2% as the yen appreciates

E.l.f. Beauty lowers prices to boost demand

MicroStrategy raises $700 million to buy Bitcoin

Chart of The Day

The 1st week of September was the worst week of the year for investors.

The 2nd week of September was the best week of the year for investors.

Timing the market in futile. Stay invested to benefit from the power of compounding.

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DISCLAIMER: None of this is financial advice. The newsletter is strictly educational and is not investment advice or a solicitation to buy or sell assets or make financial decisions. Please be careful and do your own research.