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Market Moves Yesterday
S&P 500 @ 5,434.43 ( ⬆️ 1.68%)
Nasdaq Composite @ 17,187.61 ( ⬆️ 2.43%)
Bitcoin @ $60,956.10 ( ⬆️ 0.78%)
Hey Scoopers,
Happy Wednesday! Are you ready to tackle the midweek hustle?
👉 Starbucks gets a new CEO
👉 DoJ takes on Google
👉 Home Depot warns of slowing sales
So, let’s go 🚀
Market Wrap 📉
Equity indices rallied on Tuesday, moving closer to last month’s record levels following the first of two key U.S. inflation reports this week.
The producer price index, which measures wholesale prices, rose 0.1% last month, below estimates of a 0.2% gain. Today, the consumer price index data for July is likely to show a rise of 0.2% compared to June, where the CPI fell 0.1%.
The S&P 500 and Dow Jones are down 4.3% and 3.9%, respectively, below all-time highs, while the tech-heavy Nasdaq Composite trades 8.2% below record levels.
While the markets have staged a comeback, there are signs of a slowdown in Europe and China while the labor market in the U.S. is softening.
Trending Stocks 🔥
Flutter Entertainment - Shares of the gaming company are up 8% in pre-market after it reported revenue of $3.61 billion in Q1, topping estimates of $3.40 billion.
Nu Holdings - Shares of the Brazil-based fintech firm are up 3.5% after it reported revenue of $2.85 billion and earnings of $563 million, compared to revenue and earnings estimates of $2.57 billion and $460.3 million, respectively.
Dell Technologies - The tech stock popped almost 5% after Barclays upgraded the firm to “equal weight” from “underweight”.
Brian Niccol Joins Starbucks
Coffee chain Starbucks announced a surprise CEO change, bringing in Brian Niccol from Chipotle Mexican Grill. The surprising C-suite change at Starbucks sent the stock higher by 24.5%, while Chipotle tanked by 7.5%.
Niccol has a proven track record. He was a success story at Taco Bell before he joined Chipotle and led the fast-food chain out of the E. coli crisis.
In fact, Niccol joined the burrito chain in March 2018. In this period, just nine S&P 500 stocks performed better than Chipotle which rose 773%. Comparatively, peers such as McDonald’s and Yum Brands rose by 82% and 69%, respectively, since March 2018.
Meanwhile, Starbucks has struggled and trailed the broader markets in the past five years. Its outgoing CEO, Laxman Narasimhan, began his tenure last March, and the stock has since been the 40th worst-performing company in the S&P 500 index.
Will Alphabet Be Forced to Split?
The U.S. Department of Justice might seek to break up Alphabet, Google's parent company, after a court found that the tech giant has monopolized the online search market.
It would be Washington’s first push to dismantle a company for illegal monopolization since unsuccessfully trying to break up Microsoft 20 years back.
Other options may include forcing Google to share data with competitors and measures to prevent it from gaining an unfair advantage in AI products.
The DoJ discussions have intensified after Judge Amit Mehta ruled that Google illegally monopolized the markets of online search and search text ads. Further, the regulator has raised concerns that Google’s search dominance gives it an advantage in developing AI technologies.
Following these developments, Google stock is down 1% in pre-market. A forced breakup of Google could be the biggest of a US company since AT&T was dismantled in the 1980s.
Home Depot Tops Estimates
Home Depot topped quarterly estimates but cautioned that sales will be weaker than expected in the second half of the year due to elevated interest rates and sluggish consumer spending.
The home improvement giant forecasts full-year comparable sales to decline between 3% and 4%, compared to its previous forecast of a 1% decline.
However, Home Depot’s recently completed acquisition of SRS Distribution, a company that sells supplies to landscaping and roofing professionals, will boost its total sales.
In the quarter that ended in July, Home Depot reported:
Revenue of $43.18 billion vs. estimates of $43.06 billion
Earnings per share of $4.60 vs. estimates of $4.49
Home Depot kicked off a wave of retail earnings as investors and economists pay close attention to the health of the American consumer as they try to navigate the possibility of an economic recession.
While inflation has cooled, higher prices for groceries, energy, and housing continue to weigh on consumer spending. The next few days will see a slew of retail earnings from Walmart, Target, Macy’s and Best Buy.
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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.