In partnership with

Good morning investors!

If this is your first time reading, welcome to The Investor’s Edge — a thriving community of more than 16,000 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

After a brief bounce in the market earlier in the week, tech and mega caps are weighing on the S&P 500 and Nasdaq after Tesla and Alphabet reported earnings that didn’t impress investors.

3 Stories Moving the Market

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

Tesla shares fall 12% after earnings miss

Tesla shares dropped 12% today after the company reported disappointing second-quarter earnings.

Automotive revenue fell by 7% year-on-year to $19.9 billion, and the adjusted earnings margin also declined. Tesla has had to cut prices and offer incentives due to slowing sales and rising competition, especially in China.

Despite being the leading electric vehicle seller in the U.S., Tesla is losing market share to rivals, partly due to its aging vehicle lineup and Elon Musk's controversial statements.

The market is keenly watching for a new mass-market car from Tesla, which Musk said would be delivered in the first half of next year.

Additionally, Musk highlighted the potential for robotaxis, envisioning an autonomous ride-hailing service. He expressed confidence in launching the first robotaxi ride next year but has a history of missing such timelines. He recently postponed the company's robotaxi event from August to October.

Alphabet shares trading lower on margin and capital expenditure concerns

Alphabet exceeded earnings and revenue expectations on Tuesday, but its stock is still declined today.

Key issues included lower-than-expected YouTube revenue and concerns about future margin expansion. YouTube revenue slowed due to tougher comparisons with the previous year, particularly from ramping advertising revenue in Asia.

During the earnings call, Alphabet executives highlighted potential challenges, such as increased headcount from hiring college graduates and higher depreciation and expenses due to significant investments in technical infrastructure. The company had $13 billion in capital expenditures in the second quarter and expects similar levels for the rest of the year.

Investors are concerned about how these factors will affect Alphabet's ability to widen its margins in the near term.

The impact of increased capital expenditures on earnings and margins should be monitored, not just for Alphabet but also for other major tech companies like Microsoft, Amazon, and Meta.

CrowdStrike says bug in quality control process led to botched update

A software update from CrowdStrike caused a global computer crash affecting services in aviation, banking, and healthcare.

The outage, which occurred on Friday, was due to a bug in CrowdStrike’s Falcon Sensor, causing Windows systems to crash with the "Blue Screen of Death." The issue stemmed from a fault in CrowdStrike's quality control mechanism, allowing problematic data to pass validation.

The company did not specify what the problematic content was. A “Template Instance,” guiding the software on threat detection and response, was implicated. CrowdStrike has implemented a new quality control check to prevent recurrence.

The extent of the damage is still being evaluated, with Microsoft reporting 8.5 million affected Windows devices.

The U.S. House of Representatives Homeland Security Committee has requested testimony from CrowdStrike CEO George Kurtz.

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.

• Visa reports rare quarterly revenue miss, shares drop

• Coca-Cola tops earnings estimates, hikes full-year outlook as global demand rises

• GM beats quarterly expectations and raises forecast, but shares dive

• US new home sales fall to seven-month low in June

• Pfizer’s gene therapy for rare genetic bleeding disorder succeeds in late-stage trial

• Disney reaches tentative agreement with California theme park workers

• UPS domestic revenue slips as customers trade down to economy service

• Delta Air Lines expects outage-related cancellations to end by Thursday, CEO says

• Verizon misses quarterly revenue estimates on slow phone upgrades

• AT&T beats estimates for subscriber additions on demand for higher-priced plans

• Texas Instruments beats quarterly profit estimates as chip demand turns steady

• Bank of Canada cuts rates again, lowers 2024 growth forecast

The Second Half

It’s been a busy earnings week so far and that continues into the end of the week. Even so, all eyes are on that PCE report on Friday and that will be the key to how the market ends the week.

Earnings Reports

There are still some major earnings this week. At the Investor’s Edge we will be watching AbbVie, IBM, Waste Management, Union Pacific, Chipotle, 3M and Tractor Supply.

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

Economic Reports

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

Let’s be honest, the only thing that investors care about right now is that PCE report on Friday. With cracks forming everywhere, the market is begging for a rate cut and if this report shows declining inflation again, it will most likely lock in a cut for September.

We also get a GDP report, initial jobless claims, and consumer sentiment to round out the week.

The Investor’s Edge Discord is here!

Before you go, don’t forget to join our Discord server.

If you are only reading the newsletter, you are only getting a fraction of the benefits of being an Edge subscriber. Here’s what you’re missing in the Discord:

🗨️ Chat rooms: Connect with fellow investors, swap ideas, and engage in lively discussions about stocks and market trends—all while rubbing virtual elbows with both Mark and Chris.

🚨Trade Alerts: Get exclusive, behind-the-scenes access to our trades as they happen. It's like having a front-row seat to our investment decisions!

Join us on Discord and let's level up our investing game together. The future of trading awaits—and you're invited to be a part of it! 🌟

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.