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Market Moves Yesterday

S&P 500 @ 5,463.54 ( ⬆️ 0.081%)

Nasdaq Composite @ 17,370.20 ( ⬆️ 0.071%)

Bitcoin @ $66,836.88 ( ⬇️ 4.33%)

Hey Scoopers,

Happy Tuesday! Are you ready for an exciting newsletter?

👉 Apple’s AI push

👉 McDonald’s misses Q2 estimates

👉 Automakers are under pressure

So, let’s go 🚀

Market Wrap 📉

Equity indices traded marginally higher as the earnings season gained pace. Today, companies such as PayPal, Procter & Gamble, Microsoft, Advanced Micro Devices, and Starbucks will report Q2 results and dictate market sentiment.

Around 40% of the S&P 500 companies have reported Q2 results, with 79% beating consensus earnings estimates, above the five-year average of 77%.

Moreover, the Fed’s two-day policy meeting will begin today, during which central bank chief Jerome Powell could signal the timing and number of rate cuts expected in 2024. The Fed previously projected just one rate cut in 2024.

Additionally, traders will be looking at macro data, such as job openings for June. Economists expect this number to be 8.1 million. Consumer confidence for July is also slated for release today.

Trending Stocks 🔥

CrowdStrike - The cyber security stock is down 5% in pre-market after Delta Air Lines hired attorney David Boies seeking damages from CrowdStrike and Microsoft after an outage led to thousands of flight cancellations.

Chesapeake Energy - The energy stock is down 1% after missing revenue estimates in Q2.

F5 Inc. - The cloud security company is up 14% after beating earnings and revenue estimates in the June quarter.

Apple Releases AI Tools

Yesterday, tech giant Apple released the first version of Apple Intelligence, its suite of artificial intelligence features. These capabilities should improve Siri and automatically generate emails and images.

Apple Intelligence was released in the developer beta and is currently available to registered Apple developers.

Apple Intelligence is an important initiative for the iPhone maker. The integration of AI with its operating system could spur a wave of device upgrades in the next 12 months, given that the system will work only on iPhone 15 Pro and newer devices.

The upcoming upgrade cycle is crucial for Apple, as iPhones account for more than 50% of its total revenue. After a slow start to the year, Apple shares are now up 17% in 2024.

McDonald’s Big Miss in Q2

Shares of fast-food giant McDonald’s rose by close to 4% yesterday despite the company’s underwhelming Q2 results where it reported:

👉 Revenue of $6.49 billion vs. estimates of $6.61 billion

👉 Earnings per share of $2.97 vs. estimates of $3.07

McDonald’s missed Q2 estimates as same-store sales declined across every division. Moreover, industry traffic declined in major markets, including the U.S., Australia, Canada, and Germany.

McDonald’s explained that consumers considered their prices too high, forcing the company to evaluate new offerings and work with franchisees to make necessary adjustments.

Its same-store sales shrank 1%, while analysts estimated a growth of 0.4% year over year. It was the first decline in company-wide same-store sales since Q4 of 2020.

McDonald’s same-store sales in the U.S. fell 0.7%, compared to 10.3% growth in the year-ago period. Customers are cutting back on restaurant spending at fast-food chains as they are no longer considered bargains.

What Next for Ford and GM?

Shares of Ford Motor slumped by over 18% in a single trading session last week. The last time the stock fell by a similar margin was when the automotive industry survived a bankruptcy threat amid the Great Recession of 2008.

Automakers are now feeling the heat after years of record-high prices, lower vehicle inventories, and resilient demand.

Morgan Stanley recently downgraded General Motors from overweight to equal weight last week and warned the auto sector is wrestling with competition, excess capacity, and other secular risks.

General Motors expects demand to decline in the second half of the year. In the next six months, it estimates adjusted earnings to range between $4.7 billion and $6.7 billion, or $3.82 and $4.82 per share. In the first half, it reported an adjusted earnings of $8.3 billion or $5.68 per share.

It forecasts vehicle prices to fall by at least 1% and spend an additional $400 million on marketing to support vehicle launches. The company is looking to raise the production of EVs, a loss-making business, as it aims to make the segment profitable on a contribution-margin basis.

Elsewhere, Ford expects adjusted earnings to narrow to $2.5 billion in the second half of 2024, compared to $5.5 billion in the last two quarters. It missed earnings estimates in Q2, primarily as warranty costs totaling $800 million impacted its financials.

Shares of Ford and General Motors have trailed the broader markets in 2024, falling 11% and 24%, respectively, year-to-date.

Headlines You Can't Miss!

Tencent Cloud plays down AI hype for the gaming sector

Self-driving start-up, WeRide, expands globally

Oil giant BP announces dividends, beats Q2 results

How will the Fed rate cut impact homebuyers?

Bitcoin slumps after the U.S. moves $2 billion worth of BTC

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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.