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- Weekly Wrap-Up - August 31st, 2024
Weekly Wrap-Up - August 31st, 2024
Nvidia tops earnings, stock falls?
CMG Venture & Mark Roussin
August 31, 2024
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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 weekend we publish “The Weekly 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.
Grab your coffee and let’s dive in.
Market Talk
Nvidia weighed down tech and semis this week, though the rest of the market performed pretty well with the S&P and Dow moving higher.
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3 Stories Moving the Market
These are some of the biggest stories from the second half of the week that had an influence on market action.
Nvidia shares fall despite earnings beating estimates
Nvidia, now valued at $3 trillion, has surged nearly nine-fold since late 2022, ranking second only to Apple in market cap.
The company reported its fourth consecutive quarter of triple-digit revenue growth, rising 122% year-over-year to $30.04 billion and exceeding Wall Street analysts.
Nvidia issued market-beating revenue guidance for its fiscal third quarter of $32.5 billion. That would imply an 80% year-on-year increase.
Nvidia also announced a $50 billion share buyback program.
Despite these strong results, Nvidia’s stock fell nearly -9% this week.
👉 EDGE TAKEAWAY: So why the sell-off? As Nvidia continues its rapid growth, annual.…upgrade to Edge+ to read the Full Edge Takeaway.
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The Fed’s favorite inflation indicator increased 0.2% in July, as expected
In July, inflation inched higher, according to the personal consumption expenditures (PCE) price index, a key measure favored by the Federal Reserve.
The Commerce Department reported a 0.2% monthly increase and a 2.5% annual rise, matching expectations.
Core PCE, which excludes food and energy prices, also rose 0.2% for the month and 2.6% year-over-year, slightly below the expected 2.7%.
Both core and headline inflation on a 12-month basis remained unchanged from June.
📚 EDGE-UCATION: What is the PCE index and why does the Fed prefer it for inflation?
The Personal Consumption Expenditures (PCE) price index is a key measure of inflation that tracks the prices of goods and services purchased by consumers in the United States. It's produced by the Bureau of Economic Analysis (BEA) and is a component of the broader PCE data, which measures overall consumer spending.
Why the Fed Prefers the PCE for Inflation:
Comprehensive Coverage: The PCE price index captures a broader range of goods and services compared to the Consumer Price Index (CPI), including expenditures made on behalf of households (e.g., employer-provided health insurance), which makes it a more comprehensive measure of consumer spending patterns.
Weighting Differences: The PCE uses a dynamic weighting system that adjusts more frequently to changes in consumer behavior. This means it can better reflect how consumers shift their spending in response to price changes, which gives a more accurate picture of inflation trends.
Less Volatility: The Fed often focuses on the core PCE, which excludes volatile food and energy prices. This makes the core PCE less susceptible to short-term fluctuations and a better gauge of underlying inflation trends over the long run.
Alignment with GDP: The PCE is part of the national income and product accounts (NIPA) and is consistent with other economic indicators like Gross Domestic Product (GDP). This makes it easier for policymakers to integrate inflation data with broader economic assessments.
The Fed prefers the PCE because it provides a more stable and comprehensive picture of inflation, which is crucial for making informed decisions on monetary policy.
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Intel working with bankers to present board with strategic options, sending shares up 8%
Intel executives are exploring strategic options with advisors, including Morgan Stanley, to address the company's struggling business.
The advisors are expected to present a range of possibilities, including splitting off and selling parts of the company, at an upcoming board meeting in September.
CEO Pat Gelsinger acknowledged investor concerns and emphasized the need for operational efficiency and urgency.
Despite announcing plans to lay off 15,000 workers to cut costs, Intel's recent poor earnings report has done little to reassure investors, and the stock is down nearly 60% this year.
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.
Salesforce tops earnings estimates, CFO Amy Weaver to step down
CrowdStrike beats quarterly consensus but lowers full-year guidance
US consumers' near-term inflation expectation lowest since 2020
Alibaba shares jump after it completes three-year regulatory overhaul
Lululemon cuts guidance, misses sales estimates after botched product launch
Intel working with bankers to present board with strategic options, sending shares up 8%
Dell beats estimates as server sales soar 80%, riding AI wave
OPEC+ likely to proceed with planned output hike from October
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IE+ Posts of the Week
We continue to push out more and more content every week to give investors that edge. Here are the posts Investor’s Edge+ subscribers received this week.
Edge Report
Mondays are for the investors. Every Monday morning we share exactly what we’re watching in the week ahead, how we’re positioning, and even share a sneak peek into our systems and models. This week we discussed the upcoming earnings report from Nvidia, pending inflation data and the expected volatility ahead. See the latest full report here:
Earnings Recap
Every week during earnings season we share a recap of the quarterly reports from stocks that we cover. You can see this week’s earnings recaps here:
The Week Ahead
The week ahead is all about the Fed and its Jackson Hole Symposium. And although the bulk of earnings season is behind us, we still have several major companies left to report.
Earnings Reports
Earnings season may be winding down but the work never stops. Here is the list of names we will be covering next week:
Monday 9/2: Labor Day
Tuesday 9/3: --
Wednesday 9/4: Dollar Tree and Dick’s Sporting Goods
Thursday 9/5: Broadcom
Friday 9/6: --
Here is the full calendar of scheduled earnings releases:
Source: Earnings Whispers
Economic Reports
Next week is all about the labor market. There will be key jobs reports, including JOLTs job openings, ADP employment, the unemployment rate and initial jobless claims. But no report will be more important than Friday’s nonfarm payrolls report.
We also get manufacturing and services PMI data.
Want more? Check out our other resources
If you haven’t done so, check out the social media pages of our collaborators and give them a follow:
Mark (Dividend Seeker)
Chris (CMG Venture)
Thank you for reading this edition of the Weekly Wrap-Up. Have a great weekend!
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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