Nvidia Nosedives, Taking Tech Lower

NEWS Nvidia Nosedives, Taking Tech Lower The tech stock turmoil continued as semis led lower, with Nvidia falling 10% in a day for the first time since 2020. Despite that, rotation into more “defensive” sectors of the market, like financials, healthcare, and consumer staples, created several bright spots. Let’s see what else you missed.  Today's issue covers an end to Procter & Gamble’s price increases, bougie customers buoying Amex profits, and a chart that calls into question the EV revolution.  Here's today's heat map: 6 of 11 sectors closed green. Utilities (+1.54%) led, & technology (-2.06%) lagged.  Federal Reserve Bank of Chicago president Austan Goolsbee was the latest central bank member to cast doubt on the path of rates, saying, “Given the strength of the labor market and progress on easing inflation seen over a longer arc, I believe the Fed’s current restrictive monetary policy is appropriate.”  Paramount Global shares popped 13% on news that Sony is considering joining Apollo Global Management to make a joint bid on the company as it performs exclusive talks with Skydance Media.  Meanwhile, scrutiny picked up around Warner Bros. CEO David Zaslav’s $50 million compensation package during a year of cost-cutting and a floundering stock price.  Other active symbols: $NFLX (-9.09%), $SMCI(-23.14%), $DJT (+9.61%), $MNDR (+33.87%), $AGBA (+21.36%), $ACB (-1.15%), & $SBFM(-46.84%).  Here are the closing prices:  S&P 500 4,967 -0.88% Nasdaq 15,282 -2.05% Russell 2000 1,948 +0.24% Dow Jones 37,986 +0.56%

EARNINGS Procter & Gamble’s Price-Raising Days Are Over Packaged consumer goods companies had been pushing up prices to offset rising costs and juice profits but started to see some meaningful pushback from consumers beginning mid/late last year. As a result, they’ve had to find other mechanisms to beat quarterly estimates (with mixed results), so let’s see how one of the biggest names in the space is faring.  Procter & Gamble’s earnings per share of $1.52 topped estimates of $1.41, while revenues of $20.20 billion missed estimates of $20.41 billion. Organic sales were up just 3% YoY, driven entirely by price increases. With that said, CFO Andre Schulten said on a media call that P&G didn’t institute any nationwide price hikes this quarter. The chart below from its press release shows that volumes and foreign exchange remain significant headwinds across all of its categories.  Flat volumes mean the company is having trouble increasing demand for its products. And if it’s also having trouble raising prices further, then its sales outlook is likely going to lag behind Wall Street expectations.  As a result, the company is focused on boosting earnings through further operational efficiencies, buying back shares, etc. One bright spot for the company remains the U.S. market, where volumes grew 3% YoY. The U.S. labor market and consumers remain healthy, so people haven’t started “trading down” to lower-priced alternatives as they have in other markets.  Investors don’t seem to mind the lackluster growth prospects, as shares were up marginally and trading just below all-time highs.  Additionally, Stocks community sentiment remains in “extremely bullish” territory, which suggests they’re anticipating even more gains ahead.

EARNINGS Amex Profits Buoyed By Bougie Customers American Express continues to bet on wealthy Gen Z and Millenial customers to drive its business growth. And so far, that bet has been paying off handsomely. The company reported an 11% YoY jump in revenues, with $15.80 billion beating the $15.77 billion consensus view. Its earnings per share of $3.33 also topped the expected $2.95.  Spending on its cards rose 6% YoY to $367 billion, narrowly beating estimates, with consumers flocking to fee-based products during the quarter. These products accounted for 70% of new account acquisitions in the quarter, driving net card fees up 15% YoY to $1.97 billion.  CEO Steve Squeri said, “We continue to attract high-spending, high credit quality customers to the franchise.” And those consumers love to fly in style, with spending on airline travel rising 9% YoY due to high demand for front-of-cabin tickets like first or business class.  Overall, the company continues to execute its long-term vision, and investors love it. $AXP shares rose to a new all-time high, with Stocks community sentiment firmly sitting in “extremely bullish” territory.

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STOCKS Is The EV Revolution Over? Tesla’s market cap eclipsing that of oil and gas giant Exxon Mobil during the summer of 2020 was supposed to mark the “tipping point” for the green revolution. And for a few years, it seemed to be the case.  But about four years later, Exxon Mobil’s value is once again higher than Tesla’s. So, does that mean the electric vehicle (EV) revolution is over? That’s the question many people are asking, as various forms of the chart below circulate on Fintwit.  It shows Tesla’s market cap falling back below $500 billion as it struggles with lackluster demand, increased competition, and an unclear plan for how Elon Musk and the company will overcome the industry’s recent headwinds. With energy coming into 2024 with some solid gains and breakouts across the board, it’s no surprise to see Stocks sentiment in bullish territory for $XOM while $TSLA sits in bearish territory.  Clearly, the market’s view of EV stocks and the oil and gas sector has flipped over the last year or so. The question now is whether this is a cyclical selloff within the context of a longer-term secular move. Or if something in the longer-term EV/green energy story has shifted significantly.  That and only that will determine whether this weakness is a buying opportunity or an opportunity to exit before the situation gets worse. Time will tell, but for now, it seems many are betting this trend will continue through at least the end of the year.

Bullets From The Day 🤔 The IRS’s new draft broker form raises some digital asset industry eyebrows. The Internal Revenue Service’s “digital asset proceeds from broker transactions” draft form which indicates that a transaction number should be reported, along with which assets were transferred. That suggests every transaction conducted by a broker should be reported to the IRS, generating hundreds of millions of transactions reported to the agency and creating more regulatory and administrative “overhead” for industry operators. Axios has more. 📵 a16z-funded Twitter alternative shuts down. Microblogging site “Post News” is shutting down just a year and a half after launching in beta. Founder Noam Bardin said the service is not growing fast enough to become a real business or a significant platform. A consumer business needs to show rapid consumer adoption and they’ve not found the right product market fit to drive that. Still, the experiment was not without use. It validated many theories around Micropayments and consumers’ willingness to purchase individual articles, insights that’ll be useful for navigating the rapidly-changing media landscape. More from TechCrunch. 😮 U.S. Air Force confirms the first successful AI dogfight. The military confirmed that an autonomously controlled aircraft faced off against a human pilot in a test conducted by the Defense Advanced Research Projects Agency (DARPA) last year. Dogfighting was the primary problem to love before it could begin testing autonomous artificial intelligence systems in the air. With 21 test flights completed so far and more expected through the end of the year, there will be plenty of data to work with. The Verge has more.