🎉 Celebrating Wins: Netflix, TSMC, Record Highs, and Our 6-Month Journey Together!
From record highs to the end of bank earnings season, it’s been a big week. And with 6 months of growing together, here’s a cheers to all of us 🍻
🗓️Saturday, October 19
🍵Weekly RoundUp
📈Market and Economic Highlights
📈 Dow and S&P Close at Record Highs, Boosted by Netflix and Tech Stocks
The Dow Jones and S&P 500 hit fresh record highs, marking their sixth consecutive weekly gain, supported by strong Netflix earnings and gains across tech stocks. Netflix surged after exceeding subscriber growth forecasts, lifting the communication services sector, while Apple and Nvidia also saw gains. Despite small losses in American Express and the energy sector, positive economic data and earnings have continued to drive the market upward, with analysts focusing on corporate earnings to maintain the rally's momentum.
📉 Oil Prices Drop Amid China Demand Woes and Mixed Middle East Outlook
Oil prices dropped over 7% this week, marking their steepest decline since early September, driven by concerns over China's slowing economic growth and uncertainty in the Middle East. While China's economic performance improved slightly in September, its third-quarter growth was the slowest since early 2023. Additionally, rising electric vehicle sales in China are contributing to decreased oil demand. The ongoing Middle East tensions also played a role, with investors reacting to mixed signals regarding potential conflict resolution.
🏆 Gold Prices Hit Record Highs Amid Uncertainty and Rate Cut Expectations
Gold prices have surged over 30% this year, reaching an all-time high driven by geopolitical tensions in the Middle East and uncertainty surrounding the U.S. presidential election. Investors are flocking to gold as a safe haven, bolstered by expectations of lower interest rates from the Federal Reserve. Central banks, particularly in China, have also been purchasing gold to reduce reliance on the U.S. dollar.
💰 China Rolls Out $112 Billion Funding Schemes to Boost Stock Market
China's central bank, the PBOC, launched two funding schemes aimed at injecting up to 800 billion yuan ($112.38 billion) into its stock market. The initiatives, including a 500 billion yuan swap scheme for brokerages, asset managers, and insurers to buy stocks, and a 300 billion yuan relending program offering low-interest loans for share buybacks, aim to stabilize and support capital markets. This move comes as China's stock rally slows, and the schemes are expected to fuel further market growth by providing easier access to liquidity and boosting shareholder returns
📉 ECB Cuts Rates Again as Growth Concerns Rise
The European Central Bank (ECB) cut interest rates for the third time this year, highlighting the slowdown in eurozone growth and easing inflation. The move, seen as part of a broader shift towards economic support, comes as investors anticipate further rate cuts into 2025, with expectations of a terminal rate around 2%. Analysts emphasized that the ECB’s focus has shifted from inflation to addressing sluggish growth, potentially leading to additional cuts in December. The decision impacted both European stocks and the euro, which saw mixed reactions.
👔Corporate News
🌐 Worldcoin Rebrands to "World" with New Orb for Human Verification
Worldcoin, the crypto and identity project co-founded by OpenAI's Sam Altman, has rebranded itself as "World" and introduced an upgraded version of its Orb—a device that scans users' eyeballs to verify their humanity in the age of AI. This revamped Orb is cheaper to produce and uses Nvidia’s Jetson platform. World aims to increase production to verify more users globally, offering services like "Orb on Demand" to deliver the device like a pizza. Despite having verified nearly 7 million users, privacy concerns persist, with some countries halting or investigating its operation
🚗 Hyundai Motor India to Price IPO at Top Range, Raising $3.3 Billion
Hyundai Motor India is set to price its shares at the upper limit of 1,960 rupees in its IPO, aiming to raise $3.3 billion, according to insider sources. This will mark the largest IPO in India's history by funds raised, with the company selling 142.2 million shares. South Korean parent company Hyundai Motor Corp is selling 17.5% of its wholly-owned Indian subsidiary, valuing Hyundai India at about $19 billion. Anchor investors have already committed $989 million to the offering at the top price.
⚛️ Amazon's $500M Investment in Small Modular Nuclear Reactors
Amazon Web Services (AWS) is investing over $500 million to develop small modular nuclear reactors (SMRs), aligning with its clean energy goals and the growing energy demands of its data centers. AWS has partnered with Dominion Energy in Virginia to explore an SMR near its North Anna nuclear power station, and with Energy Northwest in Washington for further reactor development. As tech companies like Amazon, Google, and Microsoft expand AI services, nuclear energy is becoming a vital solution to ensure a sustainable, low-carbon power supply. This initiative supports Amazon's path to net-zero emissions while addressing the high electricity needs of its data centers.
💼 BlackRock and Jio Financial Eye Private Credit Venture in India
BlackRock, the world’s largest asset manager, is reportedly in talks with Jio Financial Services, part of Mukesh Ambani's Reliance Group, to form a private credit joint venture in India. The proposed 50-50 partnership would focus on lending to businesses, including large companies and startups, tapping into the growing demand for private credit in India. If the deal goes through, this would mark their third collaboration, following joint ventures in asset management and broking. Both companies recently gained approval to establish a mutual fund business in India, signaling a deepening partnership.
📉 European Companies Slash Jobs Amid Economic Slowdown
European companies, from banks to industrials, are cutting jobs as the region grapples with high inflation and the economic fallout of the Ukraine war. Major firms like Airbus, Unilever, and Telia have announced significant layoffs, with sectors like finance, manufacturing, and consumer goods particularly affected. For example, Airbus plans to cut up to 2,500 jobs in its Defense and Space division, while Unilever will reduce one-third of office roles in Europe by 2025. The job cuts highlight a broader trend of cost-cutting across industries as economic pressures mount.
🔄 McKinsey Cuts Hundreds of Jobs in China Amid Business Revamp
McKinsey & Company is cutting about 500 jobs, roughly a third of its workforce in China, as part of efforts to restructure its China operations. The move follows the firm's decision to reduce its work with government-linked clients due to security concerns and broader business risks in the region. McKinsey has been gradually separating its China unit from global operations, and over the past two years, it has significantly reduced its workforce across Greater China, including Hong Kong and Taiwan. The company is yet to comment on these developments.
🚀Space and Innovation
🚀 SpaceX Achieves First Catch of Starship Booster in Fifth Test Flight
In its fifth test flight, SpaceX successfully returned the Super Heavy booster of its Starship rocket to the launch pad using giant mechanical arms, marking a new milestone in reusable rocket technology. The booster launched from Boca Chica, Texas, reached an altitude of about 70 km, and then re-lit its engines to guide its descent. The rocket's 233-foot-tall first stage booster was caught by the tower’s arms, a novel feat in space engineering. The second stage, Starship, completed a controlled descent into the Indian Ocean before toppling and exploding. This mission brings SpaceX closer to achieving fully reusable rockets designed for missions to the moon, Mars, and beyond.
SpaceX's Super Heavy booster lands during SpaceX Starship's fifth flight test, in Boca Chica, Texas, U.S., October 13, 2024.
📊 Earnings Season
📈 Citigroup Beats Q3 Profit Estimates on Investment Banking Surge
Citigroup's third-quarter profit exceeded expectations, driven by a 31% surge in investment banking revenue, benefiting from increased debt and equity issuance. The bank posted earnings of $1.51 per share, surpassing the forecasted $1.31, despite a slight drop in net income due to higher provisions for credit losses. CEO Jane Fraser highlighted the bank's progress during a pivotal year, while consumer and retail banking sectors showed mixed performance. Citigroup shares are up 24% year-to-date.
📊 Morgan Stanley's Profit Surges on Dealmaking Revival; Shares Hit Record High
Morgan Stanley exceeded profit forecasts for Q3, driven by a 56% surge in investment banking revenue, fueled by a revival in mergers, IPOs, and corporate debt issuance. CEO Ted Pick expressed optimism for continued growth in M&A and IPO activity. The bank's profit reached $3.19 billion, significantly beating expectations. Wealth management assets surpassed $6 trillion, contributing to stable growth alongside investment banking. The results reflect Morgan Stanley's successful strategy across all divisions, including strong trading performance.
📊 Charles Schwab’s Q3 Profit Surges on Strong Asset Management Growth
Charles Schwab's third-quarter profit jumped by 25%, driven by a 20.6% increase in asset management fees and record-high client assets of nearly $10 trillion. Despite a slight dip in net interest revenue, overall net revenue rose by 5% to $4.85 billion. This performance reflects strong client activity, supported by optimism about the U.S. economy, and comes as Schwab prepares for leadership changes with CEO Walt Bettinger set to retire at the end of 2024.
📊 Interactive Brokers Q3 Earnings Rise Despite Higher Expenses
Interactive Brokers reported a 12.9% year-over-year increase in adjusted earnings per share to $1.75 for Q3 2024, slightly missing analysts’ expectations of $1.78. Revenue climbed 19.2% to $1.37 billion, driven by increased customer accounts, a 41.7% rise in daily average revenue trades (DARTs), and growth in emerging markets. However, non-interest expenses surged 23.9%, impacting profitability, with a slightly lower pre-tax profit margin of 72%. Despite rising costs, the company remains strong, with cash reserves of $69.9 billion and robust customer growth.
📉 Procter & Gamble Beats Earnings but Struggles with Weak China Demand
Procter & Gamble reported Q1 earnings that surpassed estimates, with adjusted EPS at $1.93, but missed on revenue expectations at $21.74 billion. Sales in Greater China, its second-largest market, fell 15% due to economic pressures, hurting demand for staples like shampoo and diapers. Despite flat overall product volume and weak performance in its beauty and baby care segments, U.S. demand remained strong. P&G reiterated its 2025 outlook, but expects China’s recovery to take several quarters, affecting sales in the short term.
👓 EssilorLuxottica Misses Sales Forecasts Amid China Slowdown
EssilorLuxottica, the maker of Ray-Ban and other eyewear brands, missed Q3 revenue expectations, reporting €6.44 billion, falling short of the forecasted €6.58 billion. The eyewear giant cited a slowdown in consumer spending in China, especially in Hong Kong due to weak tourist traffic. While growth in the Asia-Pacific region slowed to 5% from 9.8% in the previous quarter, the company remains optimistic about Q4, driven by strong sales of smart Ray-Ban eyewear in partnership with Meta. Despite current challenges, EssilorLuxottica confirmed its long-term revenue and profit growth targets.
🔍 ASML Reports Accidental Earnings Disclosure, Prompting Market Reaction
ASML, a leading semiconductor equipment maker, unintentionally released its third-quarter earnings early due to a technical error, leading to a sharp selloff of its shares—the largest in 20 years. The early disclosure included a downgrade in sales and bookings forecasts for 2025. ASML informed Dutch market regulators of the incident, with CEO Christophe Fouquet issuing an apology for the premature release. While the Dutch Financial Markets Authority has not confirmed an investigation, the premature release, rather than the bad news itself, was noted as a significant breach of protocol for such a prominent company.
💊 J&J Beats Expectations on Strong Cancer Drug Sales
Johnson & Johnson surpassed Wall Street's Q3 expectations, thanks to a nearly 19% rise in sales of its oncology drugs, led by Darzalex with $3 billion in revenue. Despite a 6.6% decline in sales for its psoriasis drug Stelara, J&J's pharmaceutical unit showed confidence in meeting its 2025 target, even as biosimilars loom. While its MedTech division faced challenges in Asia, especially China, J&J raised its full-year sales forecast and reported adjusted earnings of $2.42 per share, beating the $2.21 analyst estimate.
👛 LVMH (Moët Hennessy Louis Vuitton) Shares Slide on Weak Q3 Sales, Impacting Luxury Sector
LVMH (Moët Hennessy Louis Vuitton) shares fell on Wednesday after reporting a decline in third-quarter sales, its first drop since the pandemic. Weaker demand from China and Japan, particularly in the fashion and leather goods division, weighed heavily on results, dragging down shares of other luxury companies like Kering, Hermes, and L’Oreal. Despite recent economic stimulus hopes in China, the luxury sector has struggled with lower consumer confidence, and analysts are lowering forecasts for the industry's performance amid growing uncertainty.
💉 Abbott Raises Profit Forecast on Strong Medical Device Sales
Abbott Laboratories raised its annual profit forecast after a strong third-quarter performance, driven by high demand for its continuous glucose monitors (CGMs) like FreeStyle Libre, which saw a 21% organic sales growth. The company’s medical devices unit generated $4.75 billion in sales, surpassing analysts' estimates. While its diagnostics and pharmaceuticals segments also performed well, the nutrition business underperformed, partly due to lawsuits surrounding its baby formula. Despite this, Abbott remains optimistic about future growth, projecting high single-digit growth through 2025.
📈 TSMC Stock Reaches Record High on Strong AI-Driven Growth
TSMC shares soared 4.8% to a record high following better-than-expected third-quarter earnings, driven by surging demand for AI chips. The world’s largest contract chipmaker, which supplies major players like Apple and Nvidia, also raised its revenue outlook for the year and forecast a healthy next five years. Despite political uncertainty due to a U.S. investigation into its ties with Huawei, TSMC reaffirmed its commitment to complying with export controls, with analysts optimistic that its share price has further growth potential amid AI momentum.
📈 Netflix Stock Hits Record High on Strong Subscriber Growth
Netflix shares surged nearly 10% to a record high, adding over $28 billion to its market value, after surpassing expectations for both subscriber growth and profits in the third quarter. The streaming giant added 5.1 million new users, benefiting from popular content like "Squid Game" and is set for continued gains with new releases like "Knives Out" and "Stranger Things." With price hikes expected in the U.S. next year and the ad-supported tier gaining traction, Netflix is solidifying its lead in the streaming wars.
💡 A Quick Update & Celebrating Our 6-Month Anniversary!
Hey there!
This week, we’re taking a breather from deep dives. Why? Well, it’s been an amazing 6 months with you, and today, we’re celebrating our half-year anniversary! 🎉 Whether you’ve been with us from the start or recently joined, we’re so grateful for your feedback and engagement.
As we celebrate this 6-month milestone, we’re excited to keep you company throughout earnings season and beyond. But we’re not stopping there — our upcoming newsletter revamp and expansion will reflect your valuable feedback, making our insights even more accessible and engaging. We want to thank you for reading, and for helping us shape this journey. We’ll continue delivering relevant, easy-to-digest financial insights to help you make smarter investment decisions.
As we move through earnings season, we’ll still be keeping you company with quick insights. But this week, we’re focusing on resting and recharging — because even informed investors need a break! 😊
Stay tuned for exciting changes, and as always, thank you for being part of this journey!
🔎Infographic Highlight: Curious about which Companies are reporting Earnings Next Week?
Source: earningshub.com
