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Mid-Week Wrap-Up - October 2nd, 2024

Mid-Week Wrap-Up - October 2nd, 2024

A huge union strike, Nike's earnings, Tesla deliveries, and more

CMG Venture & Mark Roussin
October 02, 2024

Good morning investors!

If this is your first time reading, welcome to The Investor’s Edge — a thriving community of nearly 20,000 subscribers striving to be better investors with an edge in the market.

Every Wednesday we publish “The Mid-Week Wrap-Up” — your ticket to being well informed and staying ahead in the investment game!

This report is designed to help investors of all skill levels break down important stories/topics within the stock market. And best of all, we cut through all of the BS and give you exactly what you need to know in easy to digest, bite sized pieces of content.

This article is designed to truly give you that EDGE in the day ahead!

Grab your afternoon pick me up and let’s dive in.

Market Talk

The major indexes are slightly lower to start the week as markets digest a major strike by dockworkers, the geopolitical turmoil between Israel and Iran, and the most recent labor market data.

3 Stories Moving the Market

These are some of the biggest stories so far this week that are having an influence on market action.

Nike withdraws guidance, postpones investor day as it gears up for CEO change

Nike missed revenue estimates and is withdrawing its full-year guidance due to an upcoming CEO transition.

For the quarter, Nike reported net income of $1.05 billion, or 70 cents per share, down from $1.45 billion, or 94 cents per share, a year earlier. Sales dropped 10% to $11.59 billion, missing expectations, as the company works on its product lineup and innovation strategy. Despite a gross margin increase to 45.4%, profits fell nearly 28%.

Nike Direct and digital sales dropped 13% and 15%, respectively, while wholesale revenue fell 8%. North American footwear sales were down 14%, and apparel sales declined 10%. Converse also saw a 15% drop in sales. In China, Nike’s revenue slightly exceeded expectations at $1.67 billion, though consumer demand remained weak.

With the CEO change set for October 14, Nike has postponed its November investor day and will provide quarterly guidance moving forward. The company expects next quarter's revenue to decline by 8% to 10%, worse than analysts' forecasts.

👉 EDGE ALERT: Nike’s recent quarterly results paint a challenging picture, but there’s reason to believe this…upgrade to Edge+ to read the full Edge Alert.

A historic strike is underway at U.S. ports — and the impact on global supply chains could be massive

A major dockworker strike at U.S. East and Gulf coast seaports is expected to severely disrupt global supply chains and impact the economy, potentially causing shortages of popular products for American consumers if it continues for an extended period.

Workers at ports from Maine to Texas went on strike over disputes regarding wages and automation, marking the first such strike by the International Longshoremen’s Association (ILA) in nearly 50 years.

The strike involves about 45,000 port workers and has halted operations at 14 major ports after talks over wage increases and the use of automation with the United States Maritime Alliance (USMX) broke down.

📚 EDGE-UCATION: What is the International Longshoremen’s Association and how will this strike affect the U.S. consumer?

The International Longshoremen’s Association (ILA) is the largest union of maritime workers in North America, representing about 45,000 dockworkers at ports along the U.S. East Coast, Gulf Coast, and the Great Lakes. The ILA handles cargo and operations at major seaports, playing a critical role in the movement of goods like food, pharmaceuticals, electronics, automobiles, and raw materials. Their work is vital to keeping supply chains running smoothly, making them a key player in global trade.

This strike will have a significant impact on U.S. consumers:

Product Shortages: With the stoppage of port operations, imports will be delayed, leading to potential shortages of everyday goods. Perishable items like imported coffee, bananas, and frozen food could be affected first, while longer-lasting products might see slower disruptions.
Rising Prices: As shortages occur, prices for affected goods are likely to increase. Groceries, pharmaceuticals, apparel, and automobiles could all see price hikes if the strike continues, as businesses pass on the higher costs from delays and alternative shipping routes to consumers.
Disrupted Supply Chains: Companies may face difficulties sourcing materials and products, causing delays in production and availability. If the strike extends, U.S. retailers and manufacturers will struggle to maintain inventory, and consumers may experience delays in receiving goods like electronics and clothing.

Overall, a prolonged strike could severely affect consumer spending power and the availability of key products in the U.S.

Tesla stock slips after EV maker misses estimates on deliveries

Tesla reported its third-quarter vehicle production and delivery figures, which fell slightly below expectations, causing the stock to drop as much as 6%.

The company delivered 462,890 vehicles, just short of analysts' projections of 463,310, while producing 469,796 vehicles, surpassing the estimated 465,828.

This represents growth compared to the year-ago period, when Tesla delivered 435,059 vehicles and produced 430,488.

However, Tesla is facing growing competition, particularly in China, from rivals like BYD, Geely, Li Auto, and Nio, as well as U.S. competitors such as Rivian. Additionally, legacy automakers like Ford and GM are ramping up their electric vehicle production, with GM reporting a 60% year-over-year increase in EV sales for the third quarter.

In Other News

In this section we'll be curating a selection of news headlines we think you'll find interesting. If a topic catches your eye, click the provided links to read more about it.

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The Second Half

The labor market remains the major catalyst this week, especially as everyone awaits Friday’s nonfarm payrolls report.

Earnings Reports

There are no major earnings reports we are watching in the second half of the week.

Here is the calendar of earnings releases scheduled for the rest of the week:

Economic Reports

The nonfarm payrolls report will be the main focus as we close the week, though there will also be the latest unemployment data, initial jobless claims, and services PMI.

Here is the full calendar of events scheduled for the remainder of the week:

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Thank you for reading this edition of the Mid-Week Wrap-Up.

Until next time investors!

Mark & Chris

The Investor’s Edge

Disclosure

This is not investing advice. It is very important that you do your own research and make investments based on your own personal circumstances, preferences, goals and risk tolerance.

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