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- The Weekly Wrap-Up - January 6th, 2023
The Weekly Wrap-Up - January 6th, 2023
Apple downgrades lead to sell-off in the market
CMG Venture & Mark Roussin
January 06, 2024
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Market Talk
Apple’s rating downgrades led to a market wide sell-off to start 2024.
5 Stories Moving the Market
These are some of the biggest stories from the past week that had an influence on market action.
Apple slides to eight-week low after two rating downgrades
Apple made an eight week low on Thursday after Piper Sandler handed the tech giant its second downgrade last week. The first downgrade came earlier in the week from Barclays on worries about iPhone demand. The rating downgrades caused Apple’s stock to fall 6% to $181 per share, causing its market value to decline nearly $170 billion in the first week of 2024.
Piper Sandler cut their rating on Apple to “neutral” and lowered their 12-month Price Target to $205. Barclays cut their rating to “Sell” with a 12-month Price Target of $160.
Despite the downgrades, Apple still remains the most valuable company in terms of market cap in the US with a market cap of over $2.8 trillion and there are still 27 analysts who have a "buy" or higher rating on the company.
Fed officials in December saw rate cuts likely, but path highly uncertain, minutes show
Federal Reserve officials in December concluded that interest rate cuts are likely in 2024, though they appeared to provide little in the way of when that might occur, according to minutes from the meeting released Wednesday. At the meeting, members indicated they expect three quarter-percentage point cuts by the end of 2024.
However, the minutes noted an “unusually elevated degree of uncertainty” about the policy path. “In discussing the policy outlook, participants viewed the policy rate as likely at or near its peak for this tightening cycle, though they noted that the actual policy path will depend on how the economy evolves,” the minutes said.
Officials also noted the progress that has been made in the battle to bring down inflation. In addition, they cited progress in bringing the labor market better into balance, though that also is a work in progress.
Walgreens slashes quarterly dividend nearly in half, the first cut in 47 years
Walgreens announced it was cutting its dividend payout nearly in half last week as it attempts to conserve cash amid low consumer spending and intense competition. The retail pharmacy giant slashed its dividend to 25 cents per share from 48 cents per share to “strengthen [its] long-term balance sheet and cash position,” CEO Tim Wentworth, who officially took the helm during the quarter, said in a statement.
Walgreens’ dividend yield is now 4.1% — that’s down significantly from its prior yield of more than 7%, which made the company the highest-paying dividend stock in the Dow Jones. It also marks the company’s first dividend cut in nearly five decades. The company was previously a member of the elite of Dividend Aristocrat club, increasing its dividend for 47 consecutive years.
Jobs reports all indicate the labor market remains tight
The U.S. labor market closed out 2023 in strong shape as the pace of hiring was even more powerful than expected. December’s nonfarm payroll report showed employers added 216,000 positions for the month, a sizable gain from November’s downwardly revised 173,000. Meanwhile the unemployment rate held at 3.7%.
There was one key takeaway though — the labor force participation rate, or the share of the civilian working-age population either employed or looking for a job, slid to 62.5%, down 0.3 percentage point to its lowest since February, as 676,000 people left the labor force.
On top of the NFP numbers, two other reports also indicated the labor marker remained strong. ADP reported that 164,000 jobs were added in December, well above the 121,000 jobs expected, while initial and continuing jobless claims were much lower than estimates.
Peloton launched a partnership with TikTok on Thursday as part of its strategy to change its public perception and attract a broader array of customers as sales and profits fall. The partnership will create a new fitness hub on the social media platform dubbed ”#TikTokFitness Powered by Peloton.” It will feature short-form fitness videos, longer live classes, content from Peloton’s instructors and collaborations with TikTok creators.
The moves comes about six months after Peloton rebranded itself as a fitness company “for all” and launched a tiered pricing strategy for its app. The changes were designed to position Peloton as more than just a bike company and bring in new customers who may not have been able to afford its pricey connected fitness equipment but could be interested in a monthly subscription for its content.
Shares of Peloton surged more than 26% after the news was announced.
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Post of the Week
Alphabet (Google) brought in nearly $77 billion in revenue last quarter. Here is a breakdown of their revenue streams.
In case you missed it, we performed a Deep Dive of Alphabet (Google) this week. You can see the full analysis here:
The Week Ahead
It’s a big week ahead for the market as Q4 earnings season warms up and two key inflation reports are set to be released.
Earnings Reports
Earnings season kicks off as several major banks are set to report on Friday, as are a few other companies. We will be covering JPMorgan, Bank of America, BlackRock, Delta and UnitedHealth.
IE members will get an earnings preview for these companies, as well as our predictions, in The Edge Report Monday morning. Members will also get a full summary of each company’s quarterly results in our Earnings Recap next weekend.
Economic Reports
Inflation seems to be in the rearview for now, but this week’s CPI and PPI reports will give us more clarity on inflationary pressures.
Poll of the Week 📊
How long until Apple's stock makes all time highs again? |
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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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