Daily Market Report 05-14-2024

Daily Market Report

As of 11:00 A.M. EST


Stocks Edge Up Before CPI as Traders Weigh Powell: Markets Wrap – Bloomberg, 5/14/2024

  • The stock market edged higher in the run-up to key inflation data, with Jerome Powell once again signaling the Federal Reserve will remain on hold before embarking on interest-rate cuts.
  • Speaking in an event in Amsterdam, Powell said that while the first quarter saw a lack of inflation progress, he expects prices will move back down on a monthly basis.
  • Just 24 hours before the release of the consumer price index, a gauge of producer inflation rose more than forecast.
  • Looking beneath the surface, its details offered some relief as key categories that feed into the Fed’s preferred inflation measure were more muted.
  • The S&P 500 hovered near 5,230.
  • Meme-stock traders again piled into shares of GameStop and AMC Entertainment Holdings, a day after both soared in a revival of the retail frenzy.
  • Two-year yields fell three basis points to 4.83%.
  • The producer price index (PPI) for final demand increased 0.5% from a month earlier, driven largely by services and following a downwardly revised 0.1% drop in March.
  • Several categories in the PPI report that are used to calculate the personal consumption expenditures price index — eased.
  • Underlying US inflation probably moderated in April for the first time in six months, offering a ray of hope that price pressures will start to ease again after a string of upside surprises.
  • The core consumer price index, which excludes food and fuel, is seen rising 0.3% from a month earlier after 0.4% advances throughout the first quarter.
  • Investors who have positioned for big stock swings on macro event days have been rewarded this year.
  • Buying a one-day S&P 500 straddle — composed of owning a put and a call option with the same strike price — for days with large data releases or economic catalysts have generated an average 21% since the fourth quarter of last year.
  • Home Depot’s string of negative sales extended into a sixth straight quarter as the big-box retailer struggles to overcome a weak housing market and lower demand for big-ticket items.
  • Tencent Holdings reported a far better-than-projected 62% surge in earnings while rival Alibaba Group Holding’s profit plunged, highlighting the growing divergence between China’s twin internet powerhouses during a rocky post-Covid recovery.
  • Comcast will offer customers a streaming bundle that includes Apple TV+, Netflix and its own Peacock service as it tries to reduce subscriber churn, Chief Executive Officer Brian Roberts said Tuesday at an investor conference.
  • The top US auto-safety regulator opened an investigation into Waymo, the autonomous-vehicle subsidiary of subsidiary of Alphabet, after 22 incidents in which the company’s cars were involved in collisions or may have violated traffic laws.

GameStop, AMC Shares Soar as Traders Pile Back in to Meme Stocks – Bloomberg, 5/14/2024

  • Meme-stock traders again piled into shares of GameStop and AMC Entertainment Holding, a day after both soared in a revival of the retail frenzy.
  • The video-game retailer jumped as much as 113% on Tuesday, while the beleaguered movie theater chain surged 129% — triggering halts in the trading of both soon after the opening bell.
  • Even with the rapid rallies, each remains below the heights they reached during 2021’s meme-stock heyday.
  • The latest rally had been turbocharged on Monday following the return to social media of Keith Gill, who drove the meme-stock mania of 2021 under the moniker “Roaring Kitty.”
  • On Tuesday morning, AMC announced it had completed a previously announced at-the-market offering of shares, raising about $250 million in total as it sold 72.5 million shares for an average price of $3.45.

Home Depot Posts a Sixth Sales Drop Amid Housing Market Woes – Bloomberg, 5/14/2024

  • Home Depot’s string of negative sales extended into a sixth straight quarter as the big-box retailer struggles to overcome a weak housing market and lower demand for big-ticket items.
  • Total sales including new openings fell 2.3% to $36.4 billion.  The company also has stores in Canada and Mexico.
  • Same-store sales, which investors use to track performance at locations open for at least a year, fell 2.8% in the company’s fiscal first quarter, a bigger drop than analysts were expecting.
  • Same-store sales were worse in the US, Home Depot’s main market, where they dropped 3.2%.
  • The Atlanta-based company was hit by “continued softness in certain larger discretionary projects” and a delayed start to spring, Chief Executive Officer Ted Decker said in a statement Tuesday.
  • Transactions over $1,000, such as for kitchen and bathroom remodeling, were down 6.5% in the most recent quarter versus a year ago, executives told analysts on an earnings call.
  • That’s because those large and discretionary projects typically need financing, they said.
  • Diluted earnings per share declined 5% year-on-year in the quarter to $3.63.

Tesla Rehires Some Supercharger Workers Weeks After Musk’s Cuts – Bloomberg, 5/14/2024

  • Tesla has begun hiring back some of the almost 500 members of its Supercharging team that Chief Executive Officer Elon Musk dismissed late last month.
  • Chief among the personnel who have returned is Max de Zegher, the director of charging for North America, according to people with knowledge of the matter, who asked not to be identified because the information is private.
  • De Zegher was one of the top managers after Rebecca Tinucci, the senior director Musk fired late last month along with virtually everyone else in the charging group.
  • The @TeslaCharging account on X — the social media platform Musk owns — followed up Musk on May 10 with a post thanking charging site hosts and suppliers for their patience with the company amid its internal restructuring.
  • De Zegher reposted the message.

Walmart to Lay Off and Relocate Workers – Wall Street Journal, 5/14/2024

  • Walmart is cutting hundreds of corporate jobs and asking most remote workers to move to offices, according to people familiar with the matter.
  • In addition, workers in small offices in Dallas, Atlanta and Toronto are being asked to move to other central hubs like Walmart’s corporate headquarters in Bentonville, Ark., as well as Hoboken, N.J., or Northern California, said one of the people familiar with the matter.
  • Walmart will still allow staff to work remotely part of the time, as long as they are in offices the majority of the time.

Regulators Probe Alphabet’s Waymo After 22 Self-Driving Car Incidents – Wall Street Journal, 5/14/2024

  • Federal auto-safety regulators are looking into Waymo, the self-driving car startup owned by Google’s parent Alphabet, following 22 reported incidents involving the unit’s automated-driving system.
  • The National Highway Traffic Safety Administration said 17 of the incidents were crashes or fires involving vehicles equipped with Waymo’s fifth-generation automated-driving system, or ADS.
  • In other incidents, the vehicles exhibited behavior that potentially broke traffic-safety laws.
  • No injuries or fatalities were reported.
  • Reports included collisions with stationary or semistationary objects, such as gates, chains or parked vehicles, according to the regulator.
  • In some incidents, the collision occurred shortly after the ADS showed unexpected behavior near traffic-safety control devices.
  • Certain collision incidents were reported directly by Waymo while others, including when automated vehicles drove in opposing lanes against oncoming traffic or when entering construction zones, were identified based on publicly available reports, NHTSA said.

Amazon Web Services Chief to Step Down – Wall Street Journal, 5/14/2024

  • The chief executive of Amazon Web Services is stepping down and will be succeeded by the company’s senior vice president of sales and marketing.
  • Amazon.com Chief Executive Andy Jassy said Tuesday that Adam Selipsky intends to step down as head of AWS on June 3.
  • He will be succeeded at that time by Matt Garman, who has led sales and marketing for more than four years.

Comcast to Offer Apple TV, Netflix, Peacock in Bundle – Bloomberg, 5/14/2024

  • Comcast will offer customers a streaming bundle that includes Apple TV+, Netflix and its own Peacock service as it tries to reduce subscriber churn, Chief Executive Officer Brian Roberts said Tuesday at an investor conference.
  • The bundle will be offered at “a vastly reduced price” compared with offerings elsewhere, Roberts said without stating a figure.
  • The new bundle, called StreamSaver, will be introduced this month, Roberts said without confirming a date.
  • The package will be available to video and broadband customers, he said.


US Producer Prices Top Forecasts, But Details Offer Some Relief – Bloomberg, 5/14/2024

  • US producer prices rose in April by more than projected, though key components that feed into the Federal Reserve’s preferred inflation gauge were more muted.
  • The producer price index for final demand increased 0.5% from a month earlier, driven largely by services and following a downwardly revised 0.1% drop in March, Bureau of Labor Statistics data showed Tuesday.

  • Among those, the cost of hospital outpatient care fell 0.1% and airfares dropped 3.8%. Prices for physician care rose modestly.
  • At the same time, prices for portfolio management services increased 3.9%.
  • The PPI report showed overall services costs climbed 0.6%, the most since July and accounting for nearly three-fourths of the overall increase in the PPI.
  • Goods prices rose 0.4% on the back of higher fuel costs.
  • Stripping out food, energy and trade services, which is an even-less-volatile PPI measure, prices increased 0.4% in April after a 0.2% gain.

Powell Reiterates Fed Likely to Keep Rates Higher for Longer – Bloomberg, 5/14/2024

  • Federal Reserve Chair Jerome Powell said the US central bank needs to be patient as it awaits more evidence that high interest rates are curbing inflation, doubling-down on the need to keep borrowing costs elevated.
  • Powell reiterated it will likely take longer than previously thought to attain the confidence needed to lower interest rates, echoing remarks made following the Fed’s latest meeting on May 1.
  • He described current rates as restrictive by “many, many measures” but noted time will tell if policy is sufficiently restrictive to bring inflation back to the Fed’s 2% target.
  • “We think about the effect of the things we’re doing on financial conditions more broadly and on the economy,” Powell said Tuesday during an event hosted by the Foreign Bankers’ Association in Amsterdam.
  • “All of those things lead us to believe at this time that policy is restrictive, and that it looks like it will take longer for us to become confident that inflation is coming down to 2% over time.”
  • “We think that it’s probably a matter of just staying at that stance for longer,” he added.
  • Earlier this month, policymakers kept their benchmark policy rate unchanged at a 23-year high, a level Powell said he was prepared to maintain “for as long as appropriate.”
  • “The first quarter in the United States was notable for its lack of further progress on inflation,” he said.
  • “We did not expect this to be a smooth road, but these were higher than I think anybody expected.”
  • Powell described Tuesday’s report as “mixed.”
  • Powell described the labor market as “very strong” with signs of gradual cooling and re-balancing, in part driven by an increase in labor supply from immigration as well as an easing in demand.


Biden Levies Sweeping Tariffs on China, Intensifying Trade Fight With Trump – Wall Street Journal, 5/14/2024

  • One day after news broke that President Biden was planning to raise tariffs on Chinese electric vehicles to roughly 100%, Donald Trump moved to one-up his rival for the White House.
  • “I will put a 200% tax on every car that comes in from those plants,” the former president said at a rally in New Jersey on Saturday, referring to Chinese vehicles manufactured in Mexico.
  • “Biden finally listened to me,” Trump said. “He’s about four years late.”
  • The leaders of both political parties are racing each other to impose tough barriers on trade with China. What was once a lone effort by Trump to disrupt the bipartisan faith in free trade has become an establishment consensus of its own.
  • Beyond raising tariffs on electric vehicles, the White House said Tuesday that Biden was increasing a key tariff rate on steel and aluminum products to 25% from 7.5%, while the tariff on solar cells would rise to 50% from 25%, and a new duty on shipping cranes would be 25%.
  • Those tariff increases, among others, will kick in this year, while others, including a tariff increase to 25% from 7.5% for larger storage batteries and a new tariff on natural graphite set at 25%, will take effect in 2026.
  • Senior Biden administration officials said they delayed the start of some of the tariff increases to give U.S. industries time to rejigger their supply chains.

Alibaba Quarterly Profit Sinks Despite Rise in Sales – Wall Street Journal, 5/14/2024

  • Alibaba Group’s profit sank in the latest quarter, even as revenue growth picked up due to higher sales in its key e-commerce, cloud and logistics businesses.
  • Quarterly revenue rose 6.6% to CNY221.87 billion, slightly beating analysts’ estimates of CNY220.62 billion.
  • Sales at Alibaba’s core domestic e-commerce business, Taobao and Tmall Group, rose 3.7% from a year earlier to CNY93.22 billion.
  • Its cloud-computing unit, which has trimmed prices domestically and overseas in recent months, posted a 3.4% increase in sales to CNY25.595 billion, while logistics sales rose 30% to CNY24.56 billion.
  • The company’s fast-expanding overseas e-commerce unit reported a 45% rise in revenue to CNY27.45 billion, a tick higher than the 44% growth in the preceding quarter.
  • Adjusted net profit, which excludes the effects of share-based compensation expenses, investment gains and losses, some impairments and other items, fell 11% to CNY24.42 billion, missing analysts’ expectations of CNY25.47 billion.
  • Chief Executive Eddie Wu said in a conference call that the group expects Alibaba Cloud’s revenue, excluding internal customers, to return to double-digit growth in its fiscal second half.
  • The company also expects Taobao and Tmall’s gross merchandise value to return to healthy growth in the new fiscal year, he said.

Apple supplier Foxconn’s first-quarter profit jumps 72% but misses forecasts – CNBC, 5/14/2024

  • Apple supplier Foxconn reported a 72% rise in first-quarter profit, boosted by strong demand for AI servers and coming off a low base from the period a year earlier, but the growth was lower than expected.
  • The Taiwanese company, the world’s largest contract electronics maker, said net profit for the January-March quarter rose to T$22.01 billion ($679 million) from T$12.8 billion in the same period the previous year, when earnings were hit by a T$17.3 billion write-down related to its 34% stake in Japanese electronics maker Sharp.
  • While the profit missed the T$29.31 billion forecast by analysts, it was Foxconn’s third consecutive quarterly profit rise.
  • In the first quarter, consumer electronics including smartphones accounted for 48% of its revenue while cloud and networking products, including servers, contributed 28%.
  • Foxconn said it expects revenue for the second quarter to grow significantly from a year earlier, broadly in line with previous guidance, with revenue for smart computer electronics likely to be flattish. It does not provide numerical guidance.

China’s Tencent posts solid revenue growth as ad sales, business services shine – Reuters, 5/14/2024

  • China’s biggest internet company and operator of the WeChat messaging platform said revenue reached 159.5 billion yuan ($22.04 billion) for the three months ended March 31.
  • That compared with the 158.44 billion yuan average of 19 analyst estimates compiled by LSEG.
  • For the first quarter, domestic gaming revenue declined 2% to 34.5 billion yuan.
  • Honor of Kings and Peacekeeper Elite, Tencent’s two leading titles, have both suffered notable revenue decline.
  • However, international gaming revenue returned to growth this quarter, up 3% year-over-year to 13.6 billion yuan.
  • Revenue from online ads jumped 26% to 26.5 billion yuan as Tencent upgraded its ad infrastructure and further commercialised its short video platform WeChat Video Accounts, a rival to ByteDance’ TikTok-like app Douyin in China.
  • Revenue from fintech and business services grew 7% to 52.3 billion yuan as the firm’s suite of payment, ecommerce and productivity software and services continued to gain traction in China.
  • Net profit rose 62% to 41.8 billion yuan, versus the 43.03 billion yuan average analyst estimate.

Sony reports 7% drop in annual profit as PlayStation 5 sales miss trimmed target – CNBC, 5/14/2024

  • Sony reported a 7% drop in annual profits in the fiscal year 2023, dragged down by a decline in its financial services division.
  • Revenue: 3.5 trillion yen ($22.4 billion) versus 2.89 trillion yen expected.
  • Operating profit: 229.4 billion yen versus 236.81 billion yen expected. That marks a 57% jump year-over-year.
  • In 2023, operating income in the financial services unit came in at 173.6 billion yen, marking a 22.5% year-on-year drop after a firm increase in 2022.
  • Sony’s I&SS business recorded operating income of 193.5 billion yen, down 9% from 2022.
  • Sony narrowly missed its revised down target for PlayStation 5 sales.
  • The firm said that sales of its flagship console totaled 20.8 million in the fiscal year 2023.
  • That’s slightly lower than the revised 21 million unit target that Sony gave investors in February.
  • Prior to that, the company had forecast that its PS5 console would sell 25 million units for the full year.
  • Sony expects even weaker sales of 18 million units of its PS5 in the year ending March 2025, a company executive said, according to Reuters.
  • Sony said it’s forecasting a drop in overall group revenue for the current fiscal year.
  • The company expects sales will reach 12.3 trillion yen for the year ending March 2025, down 5%.
  • Fiscal year 2024 operating income is expected to total 1.28 trillion yen, up 5%, Sony said in its consolidated results.

Singapore E-Commerce Giant Sea Is Up After Topping Estimates – Bloomberg, 5/14/2024

  • Shares of Sea jumped after the Southeast Asia e-commerce giant reported first-quarter earnings that exceeded analysts’ estimates, a sign that it has been successfully navigating fierce competition from the likes of ByteDance Ltd.’s TikTok.
  • Revenue for the group climbed 23% to $3.7 billion.
  • Sales also beat estimates, and the net loss of $23.7 million was narrower than analysts predicted.
  • E-commerce gross merchandise volume, or the value of goods sold, rose 36% to $23.6 billion, topping estimates.
  • The Singapore-based internet firm posted adjusted earnings before interest, taxes, depreciation and amortization of $401 million.
  • While that’s a 21% decline from a year earlier, it topped the $222 million analysts expected on average.
  • The company’s gaming arm Garena, known for its hit Free Fire, increased adjusted EBITDA by 27% to $292 million as it gained paying users and lowered costs.
  • The division, which has struggled to come up with new titles to boost sales, reported a 15% decline in revenue to $458 million.

On Holding Stock Jumps After Earnings – Barron’s, 5/14/2024

  • Shares of On Holding were rising sharply after the Swiss sneaker and athletic apparel company posted earnings and sales up from a year ago.
  • Net sales rose 21% to 508.2 million francs ($559.6 million).
  • For its fiscal first quarter ended March 31, On posted adjusted earnings of 0.33 Swiss francs ($0.36)—higher than the 0.15 francs filed in the year-ago quarter.
  • For the full year, the company reiterated its expectation of at least 30% growth in net sales on a constant currency basis, “while remaining prudent in light of the dynamic macroeconomic and consumer environment,” which implies net sales of at least 2.29 billion francs in 2024.

Factmonster – TODAY in HISTORY

  • Edward Jenner administered the first smallpox vaccine to 8-year-old James Phipps. – 1796
  • The Lewis and Clark expedition set out from St. Louis. – 1804
  • The Olympic Games were held in the United States for the first time, in St. Louis, Missouri. – 1904
  • British rule in Palestine came to an end as The Jewish National Council proclaimed the State of Israel. Within hours, Israel was under attack from Arab forces. – 1948
  • The Warsaw Pact was signed by the Soviet Union and seven other Communist bloc countries. It finally dissolved in 1991. – 1955
  • Skylab, the United States’ first space station, was launched into orbit. – 1973

Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. Historical performance is no guarantee of future results. All indices are unmanaged and may not be invested into directly.

All investing involves risk including loss of principal. No strategy assures success or protects against loss. Any economic forecasts set forth may not develop as predicted. 

All company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services.

Material presented is excerpts derived from third party content and you may need a subscription to access the full the content. The views and opinions expressed are those of the authors and do not necessarily reflect the views of Pence Financial Group or LPL Financial.

Prior to making any investment decision, please consult your financial advisor regarding your specific situation.