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whyframestudio
The benchmark S&P 500 (SP500) posted its worst weekly performance of the year on Friday and only its fourth overall negative week of 2024. The decline was primarily driven by strong economic data on the labor market, which increased bets that the Federal Reserve would be in no hurry to cut interest rates. Additionally, a rally in commodities led to a resurgence in inflation fears, while a jump in Treasury yields also put pressure on equities. Friday's nonfarm payrolls report blew past expectations, with the economy adding 303K jobs, the unemployment rate ticking down, and the labor force participation rate inching up. The data underscored bets that the Fed will be in no rush to cut interest rates, and markets have dialed back their odds of a 25-basis point rate cut at the central bank's June policy meeting. For the week, the S&P 500 (SP500) retreated -1.0%, the tech-heavy Nasdaq Composite (COMP:IND) lost ground by -0.8%, and the blue-chip Dow (DJI) slipped -2.3%. Read a preview of next week's major events in Seeking Alpha's Catalyst Watch.
Magic Kingdom
In what became the most expensive proxy contest ever, Walt Disney's (DIS) proposed slate of directors was re-elected to the board, beating the nominees proposed by activist investors led by Nelson Peltz. "Now that this distracting proxy contest is behind us, we're eager to focus 100% of our attention on our most important priorities, growth and value creation for our shareholders and creative excellence for our consumers," Disney CEO Bob Iger declared. Shortly after the win, Iger laid out a plan to turn the company into a growth business, including a formal crackdown on password sharing for Disney+ starting in June. (100 comments)
Three-way split
General Electric finally completed its breakup, as its aerospace and energy businesses began trading separately on the NYSE. Shares of GE Aerospace (GE), the conglomerate's cash cow that kept the "GE" ticker, dropped 22% on Tuesday to reflect the changes. Meanwhile, power and renewable energy unit GE Vernova (GEV) briefly rose over 5%, before reversing course to end 1.4% lower. The third unit, GE HealthCare (GEHC), was spun off last year and its shares have performed well so far, bucking the trend of many spinoffs that have resulted in muted stock performances. (6 comments)
More evidence
Fed Chair Jerome Powell repeated on Wednesday that he doesn't expect "it will be appropriate to lower our policy rate until we have greater confidence that inflation is moving sustainably down toward 2%." However, some of the bigger points that were highlighted stressed the "recent data does not materially change the overall picture," and it would be appropriate to start cutting rates "at some point this year." Market participants viewed those statements positively, with gold extending its run-up into record territory. It wasn't only shiny metals. Other commodities like crude also pushed higher. (46 comments)
The Google graveyard
There have been many services killed by Google in recent years (think Google+, Project Loon, Hangouts, Stadia, etc.) and the latest one joined the tech cemetery this week as users of Google Podcasts were told to switch their subscriptions to the newly integrated YouTube Music. Google (GOOG, GOOGL) hopes to capitalize on YouTube's traffic and brand awareness to boost its podcast base, and the move will help it invest all of its podcasting money into one platform. Episodes of Wall Street Breakfast had been available on Google Podcasts. You can also find them on Apple Podcasts, Spotify and Seeking Alpha's website. (16 comments)
Flood the market
Treasury Secretary Janet Yellen landed in China for the second time in the past year, following a phone conversation between President Biden and Xi Jinping about "unfair trade policies." The trip will deal with the flood of exports that are coming out of China, especially in the clean energy industry, like solar panels, batteries and electric vehicles. "We went for too long with too little communication, and misunderstandings developed," said Yellen. "I will convey my belief that excess capacity poses risks not only to American workers, firms and the global economy, but also to productivity and growth in the Chinese economy." (57 comments)
Notable Ratings From SA Analysts
Tesla: The Pain Might Not Be Over by JR Research.
Occidental Petroleum's Diverse Strategy Just Might Work Out by Michael Del Monte.
Home Depot Acquires SRS For 6 Times What It Fetched In 2018 - Cause For Concern? by Deep Value Ideas.
Weekly Movement
U.S. Indices
Dow -2.3% to 38,904. S&P 500 -1.0% to 5,204. Nasdaq -0.8% to 16,249. Russell 2000 -3.1% to 2,060. CBOE Volatility Index +23.2% to 16.03.
S&P 500 Sectors
Consumer Staples -2.7%. Utilities -0.7%. Financials -1.4%. Telecom +2.5%. Healthcare -3.1%. Industrials -0.2%. Information Technology -1.0%. Materials -0.1%. Energy +3.9%. Consumer Discretionary -1.9%. Real Estate -3.0%.
World Indices
London -0.5% to 7,911. France -1.8% to 8,061. Germany -1.8% to 18,164. Japan -3.4% to 39,010. China +0.9% to 3,069. Hong Kong +1.1% to 16,724. India +0.8% to 74,248.
Commodities and Bonds
Crude Oil WTI +4.3% to $86.73/bbl. Gold +4.2% to $2,349.1/oz. Natural Gas +1.3% to 1.785. Ten-Year Bond Yield -0.2 bps to 4.4.
Forex and Cryptos
EUR/USD +0.42%. USD/JPY +0.2%. GBP/USD +0.13%. Bitcoin -2.8%. Litecoin -4.5%. Ethereum -5.3%. XRP -5.0%.
Top S&P 500 Gainers
General Electric (GE) +12%. First Solar (FSLR) +11%. McCormick & Company (MKC) +9%. FedEx (FDX) +9%. Domino's Pizza (DPZ) +8%.
Top S&P 500 Losers
Lamb Weston Holdings (LW) -25%. Ulta Beauty (ULTA) -15%. Intel (INTC) -12%. Walgreens Boots Alliance (WBA) -12%. American Airlines Group (AAL) -10%.
Where will the markets be headed next week? Current trends and ideas? Add your thoughts to the comments section.
