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Good morning investors!

If this is your first time reading, welcome to The Investor’s Edge — a thriving community of more than 15,000 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 market was higher to start the week with the S&P 500 and Nasdaq making all time highs after inflation data was in line with estimates.

3 Stories Moving the Market

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

CPI report shows inflation eased in April

In April, inflation slightly eased, offering some relief to consumers but still remaining above levels that might prompt immediate interest rate cuts.

The consumer price index (CPI) rose by 0.3% from March, slightly below expectations, but increased by 3.4% over the past 12 months, in line with forecasts. Core inflation, excluding food and energy, also rose by 0.3% monthly and 3.6% annually. Despite this, it was the lowest core inflation rate since April 2021.

Increases in shelter and energy costs drove the monthly price gains, with shelter costs up 0.4% and energy up 1.1%. Both rent and owners equivalent rent increased by 0.4% monthly and by 5.4% and 5.8% respectively over the past 12 months.

This inflation rise negatively impacted workers, with real earnings falling by 0.2% monthly and rising only 0.5% annually. 

Meme stocks rally after Roaring Kitty returns to X

GameStop and AMC are experiencing significant buying activity from individual investors, but it falls short of the frenzy seen during the meme stock explosion three years ago.

On Monday, GameStop and AMC saw net inflows of $15.8 million and $37.5 million, respectively, from retail traders. However, these figures are much lower than the peak daily inflows of $87.5 million for GameStop and $170 million for AMC observed in late January 2021.

Both stocks surged by over 70% on Monday following cryptic posts on social media from "Roaring Kitty," also known as Keith Gill, who played a role in the previous meme stock phenomenon. The image above was the post that kick started this move, showing a video game player leaning forward in their chair — a sign that things are getting interesting and focus is required.

However, expectations for a broader resurgence were tempered on Tuesday as the stocks fell from their session highs. GameStop and AMC continued to show substantial declines on Wednesday, with decreases of 28% and 20%, respectively. Nevertheless, both stocks have surged nearly 100% for the week so far.

📚 EDGE-UCATION: What is short selling and what leads to a short squeeze?

Short selling is a trading strategy where an investor borrows a stock from a broker and sells it on the market with the intention of buying it back later at a lower price. If the stock's price declines, the investor can repurchase the shares at the lower price, return them to the broker, and pocket the difference as profit.

A short squeeze occurs when a heavily shorted stock suddenly increases in price, forcing short sellers to buy back shares to cover their positions. This surge in buying can further drive up the stock's price, leading to a cycle of increasing prices and additional short sellers rushing to cover their positions, ultimately exacerbating the price increase.

The AI battle heats up as Google and OpenAI roll out new, more powerful models

At Google I/O, Google introduced Gemini 1.5 Flash, its latest lightweight AI model designed for tasks like summarizing conversations, captioning media, and extracting data from documents.

This move reflects a broader trend among tech companies towards generative AI, offering users more advanced ways to access information.

Meanwhile, OpenAI launched GPT-4o, a faster and more cost-effective AI model.

This update makes GPT-4 accessible to all users, including free ones, with enhanced capabilities in text, video, and audio processing. OpenAI also showcased GPT-4o's translation and problem-solving abilities, positioning it as a competitor to Microsoft's GitHub Copilot for coding assistance.

The Second Half

The second half of the week is very quiet with only a handful of key earnings, the initial jobless claims and a few housing reports on deck.

Earnings Reports

There are several earnings left this week that we here at The Investor’s Edge we will be watching:

• Wednesday (after-close): Cisco

• Thursday: Walmart and John Deere

• Friday: --

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:

The quiet week continues as building permits, housing starts, Philadelphia manufacturing and initial jobless claims are the only reports scheduled.

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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.