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Market Moves Yesterday
S&P 500 @ 5,584.54 ( ⬇️ 0.88%)
Nasdaq Composite @ 18,283.41 ( ⬇️ 1.95%)
Bitcoin @ $57,286.22 ( ⬇️ 0.03%)
Hey Scoopers,
Thank god it’s Friday. Here’s today’s breakdown:
👉 X accused of breaching EU rules
👉 Pepsi and Delta miss revenue estimates
👉 Will the Fed lower interest rates in Q3?
So, let’s go 🚀
Market Wrap 📉
The S&P 500 and Nasdaq indices retreated from a record as investors rotated out of big tech giants such as Nvidia and Meta Platforms after the consumer price index reading touched a three-year low.
Housing-related shares such as Home Depot and D.R. Horton spiked on the hope that cooling inflation would eventually translate to rate cuts and reignite a stalling housing market.
Real estate stocks tracked their best day in several months. The sector added nearly 3% yesterday, marking its best day in over three months.
The real estate sector was the best-performing sector of the 11 that comprise the S&P 500, followed by utilities, which climbed 1.3%.
Finally, the odds of a September rate cut rose to 93%, following the CPI data.
Trending Stocks 🔥
QuantumScape- Shares soared 30.5% after it reached an agreement with PowerCo, a battery company owned by Volkswagen, to mass produce battery cells based on solid-state lithium-metal battery technology.
MicroStrategy - Shares of the largest corporate holder of Bitcoin rose 4% after announcing a 10-for-1 stock split to make the stock more accessible to retail investors.
Tesla - Shares slumped over 8% following a Bloomberg report that said the EV maker is bumping back its robotaxi event by two months, to October.
EU Accuses X of Breaching Content Rules
The European Union accused Elon Musk’s X (formerly known as Twitter) of breaching online content rules and deceiving users by using dark patterns.
Source: CNBC
The EU began an investigation in 2023 to asses whether X may be in breach of the Digital Services Act. Its preliminary findings show that the social media platform has broken the rules regarding dark patterns, ad transparency, and data access for researchers.
The commission emphasized that X’s use of the blue checkmark for verified accounts is not in line with industry practices, as anyone can subscribe and obtain a verified status. Moreover, the EU claimed there was evidence of “motivated malicious actors” abusing the verified status to deceive users.
If these views are confirmed, X could face a fine of up to 6% of its global annual sales.
Pepsi, Delta Post Mixed Q2 Results
Beverage giant Pepsi reported mixed Q2 results due to declining demand in North America for its drinks and snacks. It also narrowed the outlook for the year, estimating organic growth of 4%. Comparatively, it forecasts earnings growth at 8%.
In the June quarter, Pepsi reported:
👉 Revenue of $22.5 billion vs. estimates of $22.57 billion
👉 Earnings per share of $2.28 vs. estimates of $2.16
Pepsi struggled in the U.S. due to product recalls and shrinking demand. Consumers have become value-conscious as they push back on shopping by purchasing fewer bags of chips or switching to cheaper private-label options.
Delta Too Misses Estimates
Delta Airlines reported record revenue in Q2, but its net income fell by 30%. In the June quarter, Delta posted:
👉 Revenue of $15.41 billion vs. estimates of $15.45 billion
👉 Earnings per share of $2.36, in line with estimates
Delta reiterated its full-year earnings guidance of between $6 and $7 per share, compared to EPS of $6.25 in 2023, as the sector faces higher costs and increased industry capacity.
Delta Air Lines forecast record revenue in Q3 due to booming summer travel demand, but its projection was below estimates, driving shares lower by 4%.
Delta is the most profitable carrier in the U.S., which meant its competitors could struggle even more this summer.
CPI Declines in June
The monthly inflation rate, or the consumer price index (CPI), dipped in June for the first time since May 2020, which should prompt the Fed to lower interest rates in Q3 of 2024.
The CPI declined 0.1% from May and rose 3% year over year, its lowest increase in three years. A 3.8% slide in gasoline prices held back inflation in May, offsetting a 0.2% increase in food and shelter prices.
The CPI peaked over 9% in June 2022, prompting the Feb to embark on a rate hike cycle that ended last July. The central bank has held the benchmark rate between 5.25% and 5.5%, aiming to bring inflation down to 2%.
Headlines You Can't Miss!
Japanese yen surges 3% as U.S. inflation cools down
Samsung is developing AI features for China
Global population to peak within this century
Apple expands Vision Pro to more countries
Bitcoin index falls to extreme fear
Chart of The Day
Walmart is the largest retail company in the world. In 2023, it reported sales of $628.5 billion, higher than Amazon and Costco combined.
The big-box retailer is part of a recession-resistant sector and thrives across market cycles.
In the last decade, Walmart's stock has more than tripled investor returns after accounting for dividend reinvestments. Will this impressive run continue in the next ten years?
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.