Weekly Stock Market Performance
The stock market logged solid gains since last Friday. The Dow Jones Industrial Average and Russell 2000 each closed 2.9% higher, the S&P 500 jumped 3.9%, and the Nasdaq Composite climbed 5.3%. The volatile action in August was triggered by a July jobs report that raised concerns about a weakening economic environment and labor market. This week's release of economic data, which had the market feeling positive about the economic environment and labor market, invited strong buying activity.
Positive Economic Releases
- Producer Price Index for July showed disinflation in total and core PPI.
- Consumer Price Index for July was in line with expectations.
- Retail Sales report for July was much better than expected.
- Weekly jobless claim report reflected ongoing strength in the labor market.
A disappointing housing starts and building permits report for July on Friday didn't deter the strong rally this week. Solid earnings results and commentary about the consumer from Walmart (WMT), along with Cisco's (CSCO) solid fiscal Q4 operating performance, contributed to the upside bias this week.
Corporate News
- Home Depot (HD) closed 3.9% higher this week despite reporting below-consensus guidance.
- Starbucks (SBUX) was in the headlines after news that CEO Laxman Narasimhan has stepped down and will be replaced by Chipotle (CMG) CEO Brian Niccol.
- Kellanova (K) made news after Mars confirmed it will acquire Kellanova for $83.50/share in cash, or total consideration of $35.9 billion, including debt.
- Alphabet (GOOG) settled slightly lower in the week despite other mega caps outperforming after a Bloomberg report that the Department of Justice may be looking at breaking up the company following last week's court ruling that Alphabet violated search-related antitrust laws.
All 11 S&P 500 sectors closed higher, led by consumer discretionary (+5.2%), information technology (+7.5%), and financials (+3.2%).
Today's News
FuboTV (FUBO, Financial) experienced a significant stock surge of 21% after a judge granted a preliminary injunction blocking a major joint sports streaming service planned by Disney (DIS, Financial), Fox (FOX) (FOXA), and Warner Bros. Discovery (WBD). The ruling is a major victory for FuboTV, which argued that its future was at risk due to the anticompetitive nature of the proposed Venu Sports service.
Boeing (BA, Financial) and Lockheed Martin (LMT, Financial) are in discussions to sell their United Launch Alliance (ULA) rocket-launching joint venture to Sierra Space. The deal could value ULA at $2 billion to $3 billion. Boeing sees this move as a strategic shift to focus on its core aerospace and defense businesses, while Lockheed seeks to capitalize on the sale amid ULA's struggles with profit goals and workforce retention.
Jefferies predicts another strong earnings beat for Nvidia (NVDA, Financial) in its upcoming report. The brokerage expects the semiconductor giant to exceed consensus estimates for both revenue and EPS, driven by early volumes of its Blackwell product in Q4 and larger ramps in the first half of next year.
Mastercard (MA, Financial) plans to cut 3% of its global workforce, equating to about 1,000 employees. The company aims to realign its regions and businesses to accelerate growth and unlock capacity for long-term investments. The layoffs are expected to be completed by the end of September 2024.
Rocket Lab USA (RKLB, Financial) announced the successful packing and shipment of two Mars-bound spacecraft to Cape Canaveral, Florida, in preparation for launch. These spacecraft are part of NASA's heliophysics mission and were designed and built by Rocket Lab for the University of California Berkeley's Space Science Laboratory.
Seelos Therapeutics (SEEL, Financial) filed a prospectus for the resale of up to 1,945,260 shares of common stock by selling stockholders. This move follows recent financial difficulties and workforce layoffs after the FDA rejected one of its psychedelic drugs for PTSD treatment.
B. Riley Financial (RILY, Financial) saw a 25% premarket surge after its chairman and co-CEO, Bryant Riley, offered to acquire the company at $7 per share. This comes after a significant stock plunge earlier in the week due to large charges related to investments and a delay in filing Q2 statements.
Ginkgo Bioworks (DNA) announced a one-for-forty reverse stock split for its common stock, which will begin trading on a split-adjusted basis on August 20, 2024. The decision was approved by shareholders to better position the company for future growth.
Fed Chairman Jerome Powell met with CEOs of major U.S. banks, including JPMorgan Chase (JPM), Citigroup (C, Financial), Bank of America (BAC), and Morgan Stanley (MS), to discuss proposals for increasing bank capital requirements. The meeting aimed to get the banks' cooperation on the Basel III endgame proposal, which could see a 16% rise in capital requirements.
GuruFocus Stock Analysis
- TJX Companies' Upside Is Limited Due to High Valuation by Blue Chip Portfolios
- Realty Income: Back the Truck Up for This High-Yield Dividend Aristocrat by Jakub Rochlitz
- The AI Revolution by Vitaliy Katsenelson
- Reshoring Trend May Benefit Eaton by Stavros Tousios
- Microsoft: Navigating AI Investments Amid Market Volatility by Sheraden Frances
