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Market Moves Yesterday
S&P 500 @ 5,399.22 ( ⬇️ 0.51%)
Nasdaq Composite @ 17,181.72 ( ⬇️ 0.93%)
Bitcoin @ $67,003.11 ( ⬆️ 3.77%)
Hey Scoopers,
Happy Friday! Are you ready for an exciting newsletter?
👉 Google stock continues to decline
👉 Apple wrestles with competition in China
👉 GDP numbers are strong
So, let’s go 🚀
Market Wrap 📉
The S&P 500 and Nasdaq Composite indices dropped on Thursday, building on the previous session’s losses as investors continued to dump some of the year’s leading tech stocks.
Investors ditched tech for a second day as Nvidia lost 1.7% while Advanced Micro Devices fell over 4%. The VanEck Semiconductor ETF pulled back by 2%, and big tech giants, including Meta, Microsoft, and Alphabet, fell by 1.7%, 2.5%, and 3%, respectively.
Ford Motor shares tumbled over 18%, posting its worst day since 2008, after Q2 results came in lower than estimates. Comparatively, SaaS company ServiceNow popped 13% on a stellar earnings beat.
The recent decline may be attributed to an overheated market, as Wall Street is seeing a rotation away from mega-cap tech into small-caps and other cyclical sectors.
Trending Stocks 🔥
Dexcom - The medical device company plunged over 36% in pre-market after its full-year guidance of $4 billion to $4.05 billion was below earlier forecasts. Its Q2 sales of $1 billion were also below forecasts of $1.04 billion.
Boston Beer Company - The alcohol beverage giant is down 4% after it reported revenue of $579 million and earnings of $4.39 per share, below estimates of $597 million and $5.02 per share, respectively.
Coursera - Shares of the online course provider surged 20% after it reported revenue of $170 million and a loss of $0.15 per share. The Street called for revenue of $164 million and earnings of $0.01 per share in Q2.
OpenAI Unveils SearchGPT
OpenAI launched a prototype of its search engine called SearchGPT, providing users with fast and timely answers to clear and relevant sources. The company eventually plans to integrate the tool into its ChatGPT chatbot.
The rollout could directly impact Google, the world’s dominant search engine. ChatGPT was launched in late 2022, and investors have since been concerned that it could take market share from Google in search as it offers a new way to seek online information.
Alphabet stock fell over 3% yesterday and currently trades 12.5% below all-time highs.
OpenAI is backed by Microsoft and is valued at $80 billion. It remains under pressure to stay ahead in the generative AI market while finding ways to make money as it spends massive sums on processors and related training infrastructure.
Apple’s Market Share is Shrinking
A Canalys report states that Apple was edged out of the top five smartphone vendor list in China in Q2 as competition from domestic brands intensified.
Apple ended Q2 with a market share of 14% in China, down from 16% in the year-ago period.
The iPhone maker was the third-largest smartphone vendor in China last year and dropped to the sixth spot as it shipped 9.7 million devices in the June quarter.
It was the first time in history that domestic vendors dominated the top five positions in China.
Apple’s China shipments have been falling, slumping 25% year over year to 10 million units in Q1. Elsewhere, the Chinese smartphone market grew by 10% to more than 70 million units in Q2.
GDP Rises by 2.8% in Q2
Economic activity in Q2 was stronger than expected boosted by robust consumer and government spending as well as a sizeable inventory build.
The real gross domestic product in the U.S. rose by 2.8% annually, higher than estimates of 2.1%, while GDP growth stood at 1.4% in Q1.
Consumer spending propelled the growth number, in addition to contributions from private inventory investment and non-residential fixed investment.
Here are some key macro numbers in Q2:
Personal consumption expenditures rose 2.3%, up from 1.5% in Q1
Inventories added a 0.82 percentage point to the total gain
Government spending rose 3.9%
The personal savings rate continued to decelerate at 3.5%, down from 3.8% in Q1.
Credit card delinquencies and revolving debt balances touched an all-time high
Retail sales numbers have continued to climb, indicating that consumers are weathering headwinds of high interest rates and persistent inflation.
Finally, the housing market is under pressure. Sales are declining amid rising home prices, stressing first-time homebuyers.
Headlines You Can't Miss!
Airlines roll out business class upgrades on strong demand
Visa employs AI to combat $40 billion in fraud activity
American Airlines misses revenue estimates in Q2
Samsung bets on AI as it hints at new products
Spot Ethereum ETFs continue to see outflows
Chart of The Day
Source: Visual Capitalist
The S&P 500 index has returned over 15% in 2024, but the rally has been driven by a handful of mega-cap companies.
Microsoft, Meta, and Alphabet have seen prices increase, while Nvidia shares have more than doubled year-to-date.
A key driver of the stock price is the earnings growth of big tech giants. In 2023, earnings surged by 57%, much higher than the median S&P 500 growth of 4%.
Earnings growth is forecast at 37% in 2024, while the median S&P 500 growth is around 6%.
The 10 largest companies in the S&P 500 account for 37% of the index and are driving 24% of the earnings, the largest gap since 1990.
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.