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Market Moves Yesterday

S&P 500 @ 5,346.56 ( ⬇️ 1.84%)

Nasdaq Composite @ 16,776.16 ( ⬇️ 2.43%)

Bitcoin @ $52,722.33 ( ⬇️ 12.32%)

Hey Scoopers,

Happy Monday! Are you ready for today’s newsletter?

👉 Berkshire Hathaway reduces exposure to Apple

👉 Mortgage rates move lower

👉 Japan’s Nikkei is freefall

So, let’s go 🚀

Market Wrap 📉

Equities fell sharply on Friday as a weaker-than-anticipated July jobs report ignited worries that the U.S. economy could enter a recession.

Stocks pulled back as nonfarm payrolls grew by 114,000 last month, much lower than estimates of 185,000. Moreover, the unemployment rate increased to 4.3%, the highest since October 2021.

The 10-year Treasury yield fell to its lowest since December as capital flowed into lower-risk bond products on the fear that the Fed has made a mistake by keeping interest rates at current levels.

Megacap names saw steep losses for the day, with Amazon sliding 8.8% after missing revenue estimates in Q2. Chip maker Intel cratered 26% after issuing weak guidance and layoffs.

The tech-heavy Nasdaq was the first of the three major benchmarks to enter correction territory, trading over 10% below all-time highs. The sell-off is expected to continue today.

Trending Stocks 🔥

Chevron - Shares of the energy giant slipped 2.7% after it reported adjusted earnings of $2.55 per share and revenue of $51.18 billion vs. estimates of $2.93 per share and $50.8 billion, respectively.

Exxon Mobil - The oil and gas behemoth moved marginally lower despite reporting adjusted earnings of $2.14 per share in Q2 vs. estimates of $2.01 per share.

Snap - The social media company sank 17% after it forecast adjusted earnings to range between $70 million and $100 million, below consensus estimates of $100 million.

Berkshire Hathaway Trims Apple Stake

Warren Buffett’s Berkshire Hathaway dumped almost half of its massive stake in a move that surprised Wall Street.

The conglomerate disclosed its holding in the iPhone maker was valued at $84.2 billion at the end of Q2, which suggests the Oracle of Omaha offloaded 49% of Apple stock.

The share sale follows a broader pattern of selling. In Q2, Berkshire sold over $75 billion in equities, increasing its cash pile to a record $277 billion.

After a slow start to 2024, Apple shares took off in Q2, gaining 23% in this period, as it provided detailed plans about its future in AI.

Buffett initially purchased AAPL stock more than eight years back, and it once accounted for over 50% of Berkshire’s equity portfolio.

It's quite possible that Berkshire reduced its stake in the tech giant due to concerns related to portfolio management rather than fundamental reasons.

Mortgage Rates Move Lower

The average 30-year fixed mortgage rate dropped 22 basis points to 6.4%, the lowest rate since April 2023. The 15-year fixed rate fell to 5.89%, the lowest since early May 2023.

The drop followed a weaker-than-expected employment report, sending bond yields lower.

Two more inflation reports and another employment report will be published before the next Fed meeting, at which regulators are likely to embark on a rate-cut cycle.

The 30-year fixed rate touched 7.52% in April and started the week at 6.81%, which means the drawdown is quite dramatic. Buyers are currently wrestling with high interest rates, rising home prices, and a lack of supply in the last two years.

In April, a 30-year fixed mortgage on a $400,000 home with a 20% down payment resulted in a monthly payment of $2,240. Today, the monthly payment will be much lower at $2,000.

Mortgage applicants to buy a home have been 15% lower year over year, but the latest rate drop could kick-start demand.

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Japan’s Nikkei Enters Bear Market

Japan stocks confirmed a bear market today with the Nikkei 225 and Topix dropping over 12%. The benchmark indices have now fallen over 20% from all-time highs, entering bear market territory.

The 12.4% loss on the Nikkei was the worst day for the index since the “Black Monday” of 1987. Nikkei has erased all its gains year-to-date, moving into a loss position in 2024.

Monday’s decline follows Friday’s rout when the two major indices fell over 5%. Moreover, the yen strengthened to its highest level against the USD since January and was trading at 142.09 at the time of writing.

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Bitcoin prices slump as equities pullback

Chart of The Day

The Sahm Rule states that when the unemployment rate averages half a percentage point above the 12-month low over a three-month period, the economy is in a recession.

The unemployment rate in July rose to 4.3%, bringing the three-month average to 4.1%, while the 12-month low was 3.5%.

The rule triggered every U.S. recession since 1970, with only two false positives, which were premature by a few months.

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.