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Market Moves Yesterday

S&P 500 @ 5,648.40 ( ⬆️ 1.01%)

Nasdaq Composite @ 17,713.62 ( ⬆️ 1.13%)

Bitcoin @ $58,986.20 ( ⬇️ 0.29%)

Hey Scoopers,

Happy Tuesday! We hope you had a great weekend.

👉 Will Broadcom surpass earnings estimates?

👉 Volkswagen warns of slowing demand

👉 Bitcoin and Ethereum move lower in August

So, let’s go 🚀

Market Wrap

Equities rose on Friday as the Dow Jones Industrial Average posted a fresh record high, while traders mulled over crucial inflation data.

The personal consumption price index, the Fed’s preferred inflation gauge, rose 2.5% year over year, which was in line with estimates. The Fed monitors the metric closely and could still influence rate decisions this month.

In August 2024:

👉 The S&P 500 rose 2.3%

👉 The Dow Jones rose 1.8% and

👉 The Nasdaq Composite advanced 0.7%

Trending Stocks 🔥

Intel - The chipmaker jumped 9.5% after it stated it is working with bankers to explore options to address weaknesses in the core business.

Elastic NV - The AI stock plunged over 26% after it forecast revenue between$353 million and $355 million in fiscal Q2, lower than consensus estimates of $361 million.

MongoDB - Shares of the developer data platform rallied 18% after posting revenue of $478 million and earnings of $0.70 per share in fiscal Q2, above estimates of $464 million and $0.49 per share, respectively. It forecast Q3 sales at $495 million, compared to consensus estimates of $479 million.

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Broadcom’s Upcoming Earnings

Semiconductor giant Broadcom is scheduled to announce its fiscal Q3 of 2024 (ended in July) results this week and is forecast to report:

👉 Revenue of $12.96 billion, up 39.5% year over year

👉 Adjusted earnings per share of $1.2, up 14.5% year over year

Broadcom is among the largest companies globally, valued at $758 billion by market cap. It is an integral part of the AI boom as it makes networking chips that route workloads across the computing power available in a data center.

It also manufactures AI accelerator chips used to train large language models and works closely with other tech giants, including Alphabet and Meta Platforms.

Finally, Broadcom makes chips for other applications, including smartphones, which has proven to be a stable and growing business.

In addition to semiconductor chips, Broadcom operates an enterprise software business, providing solutions for mainframe software and virtualization.

AI will play a central role in Broadcom’s growth as the company expects to end fiscal 2024 with AI chip sales of more than $11 billion.

Now, JPMorgan expects Broadcom’s AI revenue opportunity to grow to $150 billion in the next five years, allowing the tech behemoth to increase semiconductor sales by at least 30% annually in the medium term.

The semiconductor business accounts for 58% of total sales, raking in $7.2 billion in fiscal Q2, indicating an annual run rate of $29 billion. Broadcom stated that AI chip sales in Q2 came in at $3.1 billion, or 43% of semiconductor sales.

Volkswagen Focuses on Cost-Cutting

Yesterday, German carmaker Volkswagen warned that a tough economic environment might force the closure of manufacturing plants as it focuses on cost-cutting measures amid a challenging macro backdrop.

“The European automotive industry is in a very demanding and serious situation,” Volkswagen Group CEO Oliver Blume said in a written statement.

Blume added, “The economic environment became even tougher, and new competitors are entering the European market. In addition, Germany in particular as a manufacturing location is falling further behind in terms of competitiveness.”

Volkswagen explained that multiple brands within the company would need to undergo a comprehensive restructuring and force Volkswagen to end its employment protection agreement.

Earnings, Super Micro, and Bitcoin

The earnings season for Q2 has wrapped up (almost), and the S&P 500 index grew its earnings by 13% in the last quarter, the strongest growth since Q4 of 2021. Comparatively, Wall Street forecast earnings to grow by “just” 10.6%.

Sectors such as tech, financials, and healthcare grew earnings by 20%, while real estate and materials ended the season with earnings contractions.

Around 80% of companies beat earnings estimates, while 60% outpaced top-line forecasts. Moreover, the average revenue growth for S&P 500 companies stood at 5.5%, higher than the estimated 4.2%.

Super Micro Computer Slides in August

Shares of AI server maker Super Micro Computer fell 38% last month, posting its worst month on record.

The stock tanked after Hindenburg Research revealed a short position in SMCI and alleged the company of accounting manipulation. Moreover, Super Micro postponed the release of its annual filing, accelerating the sell-off.

Super Micro Computer was also the worst performer in the S&P 500 index last month.

Alternatively, the consumer staples sector was the best-performing S&P 500 sector, rising 5.2%, the biggest one-month gain in almost two years.

The top five best-performing stocks within the group were:

• Costco, up 8.3%

• Coca-Cola, up 7.8%

• General Mills, up 7%

• Kimberly-Clark, up 6.8%

• Philip Morris, up 6.6%

Bitcoin Falls Over 11%

Bitcoin prices have wavered over $60,000 for most of August but are on pace for a monthly decline of 11.5%. It was the second down month in three and the worst month since April for the world’s largest cryptocurrency.

Ethereum prices fell 25% in August, posting its worst month since June 2022.

August and September are historically weak months for Bitcoin. So, expect the digital asset to trade between $50,000 and $70,000 this month.

Headlines You Can't Miss!

China’s consumer brands target international expansion

South Korea’s inflation hits 42-month low

Americans are driving global travel demand

China’s housing market may crash further, says JPMorgan

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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.