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Market Moves Yesterday
S&P 500 @ 5,421.03 ( ⬆️ 0.85%)
Nasdaq Composite @ 17,608.44 ( ⬆️ 1.53%)
Bitcoin @ $67,560.22 ( ⬆️ 0.11%)
Hey Scoopers,
Happy Thursday! Here’s what we’re covering today:
👉 Broadcom’s blockbuster earnings
👉 Inflation data drives gains
👉 Energy oversupply might impact oil producers
So, let’s go 🚀
Market Wrap 📉
The S&P 500 jumped to a record and closed above 5,400 for the first time yesterday after the Federal Reserve’s latest policy announcement and May inflation data pointed to easing pricing pressures.
As expected, the Fed kept interest rates unchanged. The central bank indicated the deceleration in inflation might translate toward rate cuts, especially if it moves below the 2% threshold.
Today, analysts expect the Fed to cut interest rates just once in 2024, lower than three rate cuts forecast in early 2024.
Despite elevated interest rates, the S&P 500 index has surged over 24% in the last year due to strong employment numbers and the AI megatrend.
Trending Stocks 🔥
Apple- The iPhone maker climbed close to 3%, briefly surpassing Microsoft in market value. Apple stock surged more than 7% on Tuesday after the tech giant unveiled its AI plans during the WWDC event.
Dave & Buster’s Entertainment - Shares of the restaurant and entertainment company are down over 12% in pre-market after it posted fiscal Q1 revenue of $588 million, lower than estimates of $621 million.
Oxford Industries - The stock is down over 2% after the apparel company reported Q1 revenue of $398.2 million and earnings per share of $2.66, lower than estimates of $404.8 million and $2.68 per share, respectively.
Broadcom Stuns Wall Street
Broadcom posted fiscal Q2 2024 (ended in April) earnings that beat consensus estimates. It also announced a 10-for-1 stock split, driving shares higher by 14% in pre-market trading today.
In fiscal Q2, Broadcom reported:
👉 Revenue of $12.49 billion vs. $12.03 billion
👉 Earnings per share of $10.96 vs. estimates of $10.84
The chipmaker expects to end fiscal 2024 with sales of $51 billion, higher than estimates of $50.42 billion.
Broadcom is a chip manufacturer that has gained a lot of ground amid the AI boom. In fact, roughly 25% of its sales in Q2 were attributed to revenue from AI products. For example, Broadcom works with Google, which partially designs its own AI chip called a TPU.
Broadcom’s acquisition of VMware for $69 billion in late 2023 also contributed to sales growth and its robust forecast for the rest of 2024. The tech heavyweight’s sales were up 43% year over year, primarily due to the VMware acquisition.
Is Inflation Cooling Down?
The consumer price index (CPI) did not show any increase in May as inflation loosened its stubborn grip on the U.S. economy.
The CPI is a broad inflation gauge and measures a basket of goods and services costs across the U.S. economy. In May, the CPI held flat compared to April and rose 3.3% year over year.
Economists forecast the CPI to show a monthly gain of 0.1% and grow by 3.4% annually in May 2024.
While top-line inflation numbers were lower, shelter inflation rose 5.4% year over year. Housing-related numbers have been a sticking point in the Fed’s inflation battle and account for a significant share of the CPI weighting.
Durable inflation has kept the central bank on the sidelines since interest rates were last hiked in July 2023. In March 2024, FOMC members indicated the possibility of three rate cuts in 2024, boosting investor confidence in the process.
Big Oil May Face Turbulence
The IEA (International Energy Agency) stated that a U.S.-led surge in global oil production may outstrip demand through 2030, pushing space capacity to unprecedented levels.
The energy watchdog expects oil demand growth to slow after peaking at 106 million barrels per day by 2030, up from 102 million barrels per day in 2023.
Comparatively, oil production capacity may surge to 114 million barrels per day by 2030, 8 million barrels per day above global demand projections.
Countries are moving away from fossil fuels while investing heavily in clean energy to fight climate change. The share of fossil fuels in the global energy supply is around 80% and might fall to 73% by 2030.
IEA expects emerging economies and sectors such as aviation and petrochemicals to drive demand for fossil fuels in the upcoming decade.
Headlines You Can't Miss!
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Revolut shifts global HQ to London as it awaits UK banking license
Chinese EV stocks surge despite 38% hike in EU tariffs
Digital wallet payments overtake cash and cards in India and China
Crypto mining stocks gain big after Donald Trump backs U.S. miners
Chart of The Day
Bubbles are a recurring feature of markets as investors overestimate the future prospects of “hot” assets and bid up prices to unsustainable levels.
Some notable bubbles since 1977 include Japan’s stock market crash in the late 1980s, the dot-com bubble in the last 1990s, and the US housing bubble in the mid-2000s.
Meme of the Day
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.