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Bulls, Bitcoin, & Beyond
Market Moves Yesterday
S&P 500 @ 5,035.69 (⬇️ 1.57%)
Nasdaq Composite @ 15,657.82 ( ⬇️ 2.04%)
Bitcoin @ $56,989.16 ( ⬇️ 7.1%)
Hey Scoopers,
Happy Wednesday! Here’s what we’re covering today:
👉 Amazon tops Q1 estimates
👉 Inflation refuses to cool down
👉 Bitcoin slumps below $57k
So, let’s go 🚀
Market Wrap 📉
Equities tumbled on Tuesday to close out a losing month after higher-than-expected wage data raised fresh inflation concerns ahead of the Federal Reserve’s rate decision later today.
April was an ugly month for the major averages as the:
Dow Jones ⬇️ 5%
S&P 500 ⬇️ 4.2% and
Nasdaq ⬇️ 4.4%
All three major averages snapped five-month winning streaks in April. Despite the pullback, the S&P 500 index is up over 20% from its low last October as investors expect the economy to remain resilient and withstand higher rates.
Trending Stocks 🔥
McDonald’s - Shares of the fast food behemoth moved marginally lower after it reported sales of $6.17 billion and earnings of $2.70 per share, compared to estimates of $6.16 billion and $2.72 per share.McDonald’s explained that low-income customers are spending less, allowing it to increase same-store sales by just 1.9% in the March quarter.
3M - Shares of the industrial products manufacturer popped 4.7% after it posted revenue of $7.72 billion and earnings of $2.39 per share, higher than estimates of $7.63 billion and $2.10 per share. It also announced a dividend cut after raising the payouts for 64 consecutive years due to the spinoff of its healthcare unit.
Eli Lilly - Shares of the healthcare giant advanced close to 6% after it reported earnings of $2.58 per share in Q1, above estimates of $2.46. Further, it hiked full-year guidance for adjusted earnings and revenue, topping consensus estimates.
Amazon Expands the Bottom Line
Amazon reported Q1 results that beat Wall Street estimates due to growth in cloud computing and digital advertising, pushing the stock higher by 1% in pre-market trading.
Here are the numbers for the tech giant in Q1:
Revenue of $143.3 billion vs. estimates of $142.5 billion
Earnings per share of $0.98 vs. estimates of $0.83
Amazon Web Services sales of $25 billion vs. estimates of $24.5 billion
Ad sales of $11.8 billion vs. estimates of $11.7 billion
Amazon’s latest cost-cutting measures and focus on efficiency helped it bolster the bottom line as:
👉 Operating income soared over 200% to $15.3 billion
👉 Net income more than tripled to $10.4 billion or $0.98 per share
👉 AWS accounted for 62% of the company’s operating profit
In the year-ago period, Amazon reported revenue of $27.4 billion and earnings of $0.31 per share.
The e-commerce heavyweight expects sales between $144 billion and $149 billion in Q2, indicating a year over year growth of between 7% and 11%. Analysts expect Q2 sales to surge 12% to $150.1 billion.
AWS sales rose 17% in Q1, while ad revenue was up 24%. Amazon’s ad business was the fastest-growing business and is a crucial driver of profit margins moving forward.
Total Compensation Costs are Growing
Total compensation costs for workers in the U.S. rose above expectations in Q1, proving yet again that inflationary pressures are not going away.
The employment cost index rose 1.2% in Q1, higher than the 0.9% gain in Q4 of 2023 and higher than estimates of 1%.
This index is closely watched by the Fed and is a sign of underlying inflation. Compared to the prior-year period, the index rose by 4.8% in 2023 and 4.2% in Q1 of 2024.
Bitcoin Enters Bear Market
Bitcoin prices have pulled back over 20% from all-time highs, entering bear-market territory. At the time of writing, BTC prices have slumped below $57,000.
The flagship cryptocurrency is now down 18.3% in the past month, posting its first negative month in eight months. It is also the worst month for Bitcoin since November 2022, when FTX collapsed.
Lower BTC prices have dragged cryptocurrency stocks such as Coinbase lower. Coinbase stock has lost over 20% in the past month as investors worry about higher interest rates and inflation.
Despite the pullback, BTC prices are up 29% in 2024.
Headlines You Can't Miss!
What to expect from the Fed today?
Aston Martin stock slumps as Q1 losses double
Starbucks stock sinks on lower-than-expected guidance
Tesla fell 6% as Elon Musk announced another round of layoffs
Binance co-founder Changpeng Zhao is going to prison
Chart of The Day
Rising inflation has hurt U.S. households in the last two years as cumulative credit card debt crossed the $1 trillion mark for the first time in 2023. So, who is saving money in the current environment?
As expected, people over the age of 60 have the highest savings percentage. According to Visual Capitalist, “This age group spent the most time making peak earnings in their careers, are more likely to have investments, and are more likely to have paid off major expenses like a mortgage or raising a family.”
Another report from the Bureau of Labor Statistics stated savings tend to improve with every level of education completed.
A Fed study also found out that people with higher education qualifications tended to make financial decisions that contributed towards wealth building.
Meme of the Day
Source: suncryption/Instagram
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.