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Market Moves Yesterday

S&P 500 @ 5,246.68 ( ⬆️ 0.48%)

Nasdaq Composite @ 16,511.18 ( ⬆️ 0.75%)

Bitcoin @ $62,167.60 ( ⬆️ 0.07%)

Hey Scoopers,

Happy Wednesday! Are you ready to tackle the mid-week hustle?

👉 GameStop and AMC drive meme stocks higher

👉 Key inflation report expected today

👉 Credit card delinquencies are up

So, let’s go 🚀

Market Wrap 📉

Stocks rose on Tuesday following the release of fresh economic data from the U.S. as investors await another key inflation report.

The producer price index reading for April was above estimates, dampening expectations that the Federal Reserve would begin cutting rates in the second half of 2024.

The PPI gained 0.5% from March, higher than estimates of 0.3%. Initially, the market reacted negatively, but the sentiment was soon reversed as wholesale prices for March were revised down to indicate a 0.1% decline.

The PPI index is a proxy for wholesale prices and accelerated by 2.2% annually, the highest reading in a year.

Trending Stocks 🔥

Boot Barn - The western apparel and footwear stock slid 5.5% after issuing light revenue and earnings guidance for 2024.

Nextracker- The solar technology stock popped 9% after it reported revenue of $737 million in fiscal Q4, topping estimates of $682 million.

Boeing - The airline manufacturer is down 1.5% in pre-market after the Justice Department claimed it broke a 2021 agreement which shielded the company from criminal charges related to past 737 Max crashes.

GameStop Gains Over 500% in May

It seems meme stock mania has gripped Wall Street again, decimating short-sellers with exposure to stocks such as GameStop, AMC, and BlackBerry. Shares of GameStop have surged over 500% this month after accounting for today’s pre-market gains of 25%.

GameStop and AMC saw sizeable gains this week after “Roaring Kitty” surfaced on social media after three years. The Roaring Kiity account is known for fueling the epic meme stock squeeze that took Wall Street by storm in 2021.

While GameStop and AMC have seen higher trading volumes this month, this pales compared to the meme stock explosion of 2021.

For instance, net trader volumes for GameStop and AMC totaled $15.8 million and $37.5 million, respectively. Comparatively, peak daily inflows for the two stocks were around $87.5 million and $170 million in January 2021.

Our Take

While it might seem exciting to join the frenzy and benefit from exponential gains, investors should understand that meme stocks such as GameStop and AMC remain fundamentally weak and are bound to move lower once sentiment normalizes.

Steal our best value stock ideas.

PayPal, Disney, and Nike all dropped 50-80% recently from all-time highs.

Are they undervalued? Can they turn around? What’s next? You don’t have time to track every stock, but should you be forced to miss all the best opportunities?

That’s why we scour hundreds of value stock ideas for you. Whenever we find something interesting, we send it straight to your inbox.

Subscribe free to Value Investor Daily with one click so you never miss out on our research again.

All Eyes on CPI

The consumer price index (CPI) is a broad measure of the cost of goods and services in the marketplace. This index is expected to show another increase for April as estimates project a 0.4% gain on the month, translating to a 3.5% increase year over year.

Monthly CPI Index of Urban U.S. Consumers

If we exclude food and energy prices, the core CPI index is forecast to increase by 0.3% on the month and 3.6% year over year.

Fed Chair Jerome Powell expressed hope that inflation would decelerate through 2024 but acknowledged the slow progress and emphasized that rates aren’t likely to move anytime soon.

Credit Card Defaults Are Rising

Credit card default rates hit their highest level since 2011, according to a New York Federal Reserve report.

The quarterly report on Household Debt and Credit showed the share of “seriously delinquent” debt (which are 90 days behind) rose to 6.86% of outstanding balances at the end of Q1. Moreover, auto delinquencies moved to 2.8%, the highest since Q2 of 2010.

Credit card balances fell by $14 billion to $1.12 trillion, while total consumer debt rose to $17.69 trillion, up 1.1%.

Headlines You Can't Miss!

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Copper futures touch all-time high on strong demand

El Salvador volcanic Bitcoin mining yields 473.5 BTC

Chart of The Day

Last week, Jim Simons, the founder of the most successful quantitative hedge fund ever, passed away.

The Medallion Fund generated annual returns of 66% behind 1988 and 2018, bringing in $100 billion in total profits. After adjusting for fees, these returns were closer to 40%.

Simons pioneered mathematical models to make investment decisions instead of evaluating fundamentals such as sales and earnings.

Basically, Simons relied on automated trading to take advantage of inefficiencies and trading patterns.

Meme of the Day

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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.aring