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Bulls, Bitcoin, & Beyond
Market Moves Yesterday
S&P 500 @5,667.20 ( ⬆️ 0.64%)
Nasdaq Composite @ 18,509.34 ( ⬆️ 0.20%)
Bitcoin @ $65,883.26 ( ⬆️ 3.17%)
Hey Scoopers,
Happy Wednesday! Are you ready to tackle the midweek mania?
👉 Delta strengthens its balance sheet
👉 Has the small-cap rally started?
👉 Bitcoin ETFs attract fund flows
So, let’s go 🚀
Market Wrap 📉
Equity indices touched another all-time high on Tuesday as the bull market broadened beyond technology names in anticipation of interest rate cuts.
The Dow Jones Industrial Average index surged over 1.8%, notching its best session since June 2023.
Industrial giant Caterpillarclimbed over 4%, while UnitedHealth spiked 6.5% after beating estimates in Q2 of 2024.
The rotation from big tech giants into small-cap and cyclical stocks began last week after the June CPI showed the lowest inflation in three years.
The traders now expect the Fed to lower interest rates in September, making it easier for capital-intensive companies and small-caps to access debt at a lower cost.
Trending Stocks 🔥
Morgan Stanely- Shares of the banking giant gained 0.9% after its Q2 profits rose 41% while revenue growth stood at 12%.
Bank of America - Shares added more than 5% after it reported adjusted earnings of $0.83 per share and revenue of $25.54 billion vs. estimates of $0.80 per share and $25.22 billion, respectively.
Match Group - The stock added 7.5% after activist investor Starboard Value put pressure on the online dating platform to improve profit margins or go private.
Fitch Upgrades Delta’s Credit Rating
Yesterday, Fitch RatingsupgradedDelta Air Lines’ credit rating to investment grade, citing balance sheet improvements in the last three years.
Several airline companies were forced to raise debt amid the COVID-19 pandemic to support their cash burn rates. Fitch had then cut Delta’s credit rating to junk, making it more expensive for the airline giant to raise capital.
Delta has focused on reducing balance sheet debt in the last two years and getting back its investment-grade rating.
Fitch emphasized that Delta has reduced its gross debt and operating leases by $11 billion in the last three years.
With solid travel demand in 2024, Delta will end 2024 with a free cash flow of almost $4 billion.
Last week, Delta Air Lines stock ticked lower after its earnings estimates for Q3 were below estimates. Alternatively, Delta Air Lines is among the most profitable airline companies globally and trades at a cheap valuation in July 2024.
Small-cap Stocks Are on the Move
Small-cap stocks are on an absolute tear as they take over the baton from mega-cap tech stocks. The Russell 200 index, the benchmark for small-caps, jumped 3.5% on Tuesday, trading at its highest level since January 2022.
It was just the fifth time in 45 years that the benchmark recorded a five-day streak of gains of over 1%. The Russell 2000 index is up 12% in the last month, triple the gains of the S&P 500.
Cooling inflation data last week fueled bets that the Fed will soon cut interest rates and skirt a recession. Generally, small caps are sensitive to economic fluctuations and could benefit from lower interest rates.
Bitcoin ETFs Attract Investments
The 11 spot Bitcoin exchange-traded funds (ETFs) reported net inflows of $422.67 million on Tuesday, the largest intake since June 5, extending the positive streak to eight days.
Data from SoSoValue shows that BlackRock’s IBIT ETF led the inflows, attracting $260.23 million. Moreover, the ETF’s trading volume was over $1 billion yesterday.
ETFs such as Fidelity’s FBTC and Ark Invest’s ARKB attracted funds worth $29.85 million and $22.04 million, respectively.
These spot ETFs traded around $1.76 billion worth of BTC on Tuesday, accumulating a total net inflow of $16.53 billion since launching in early 2024.
Headlines You Can't Miss!
ASML beat estimates in Q2
Gold surges to record high on rate cut optimism
UK inflationholds steady at BoE’s 2% target
Royal Caribbean leans towards shorter cruises
Crypto meme coinindex spikes 10%
Chart of The Day
It's Nvidia’s world, and we are just living in it.
Despite the cyclicality associated with this sector, semiconductor stocks have outpaced the broader markets by a wide margin in the last decade.
Since July 2014, the VanEck Semiconductor ETF has returned more than 1,100% to shareholders after adjusting for dividends.
This monstrous rally was led by Nvidia, which was worth $3.3 trillion earlier this month, making it the largest company in the world by market cap.
Taiwan Semiconductors, Broadcom, and ASML are other chip makers valued at a market cap of over $400 billion.
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.