- Dow Jones Industrial Average is down 0.7%
- S&P 500 is down 0.6%
- Nasdaq 100 is down 0.6%
US retail sales jump
US retail sales were up 0.7% month-on-month in July, rising for a fourth consecutive month and accelerating from the 0.2% reading we saw in June. That was ahead of the 0.4% growth pencilled-in by economists. That meant sales were up 3.2% on an annual basis, well ahead of the 1.5% forecast.
The addition of Amazon Prime Day in July provided a boost compared to June. We already know that the first day of the two-day sale was the biggest event to date.
That delivered the largest jump in retail sales in six months, with nine out of 13 categories posting an increase. This should install confidence that consumers remain in good shape and continue spending as wages continue to climb. Services remained the weak spot in July, apart from a 1.4% rise in sales at restaurants and bars.
However, economists warned before the release that the outlook remains challenging and that the anticipated boost in July may not persist as we move forward. Economists have warned that there is increased use of credit services such as Buy Now, Pay Later to suggest consumers are starting to feel the pinch and the outlook for spending remains bleak in the second half.
Consumers have remained resilient in the face of a shaky economic outlook, but there are fears that their position is starting to weaken as elevated inflation and higher interest rates bite. Jamie Dimon, the boss of the largest US bank JPMorgan, has warned he expects US households to burn through whatever savings they have left by the end of 2023, which could lead to tighter consumer spending and fuel a potential recession. However, the jobs market remains strong and wages keep growing, suggesting it could hold up better than anticipated.
The rest of the economic calendar today includes the NAHB Housing Market Index, Business Inventories and a speech from the president of the Federal Reserve of Minneapolis, Neel Kashkari.
Most discussed Reddit stocks
Below is a list of the top 10 most mentioned US stocks on the WallStreetBets thread on Reddit over the last 24 hours, according to data from Quiver Quantitative. Exchange-Traded Funds (ETFs) and other instruments have been excluded:
- US Steel
- AMC Entertainment
- Home Depot
- Advanced Micro Devices
- Eli Lilly
Most active US stocks before the bell
Below are the most active stocks with a valuation of at least $500 million before the bell, based on trading data taken from Bloomberg:
- AMC Entertainment
- SoundHound AI
- Freedom Holding
- Lucid Group
- Advanced Micro Devices
US premarket winners and losers
Here are the stocks worth at least $500 million experiencing the sharpest movements in premarket trade, according to data from Bloomberg:
Discover Financial Services
Top US stocks to watch
Let’s have a look at the top stocks to watch today.
Home Depot stock: Outlook overshadows beat
Alongside the latest US retail sales data, we discovered this morning that Home Depot beat expectations in the latest quarter, posting a milder fall in sales and stronger earnings than Wall Street anticipated while launching a new $15 billion buyback to keep investors sweet. The stock is down 0.6% this morning.
Revenue was down 2% from last year in the second quarter at $42.9 billion, with comparable sales in the US also down 2%. That was welcomed considering Wall Street anticipated both metrics to fall about 4%! It said demand for big-ticket items remains under pressure but that products used in smaller projects had remained in demand. Adjusted EPS of $4.65 was also ahead of the $4.46 forecast.
Still, the DIY retailer is struggling to find higher ground given its share price had risen by about 17% since its last set of results, setting a high bar. That is especially true considering Home Depot is still expecting to report its first fall in annual sales and earnings this year since 2010 as the surge in demand seen during the pandemic unwinds and consumers tighten their belts.
Walmart and Target, both of which report results this week, are down 0.3% and 1%, respectively, in this morning.
Chinese stocks: Economy weighs on shares
Chinese stock such as Alibaba, JD.com and Bilibili are down 0.8% to 1.4% this morning after China’s central bank surprised the markets by cutting key interest rates in wake of weak industrial output, retail sales and investment data out this week, which heightened concerns that the economy is still struggling since reopening this year.
Its decision to stop publishing youth unemployment figures after they hit record highs in June is also stoking fears, while the ongoing trouble at property firm Country Garden is another concern weighing on the minds of the markets.
This is raising the threat that China will not achieve its 5% GDP growth target by the end of the year, which could rippled through and impact global growth.
Notably, JD.com and Tencent report quarterly results tomorrow, followed by Bilibili on Thursday and XPeng on Friday.
US Steel stock: Bidding war begins
US Steel shares are down 0.6% at $30.88 this morning after jumping almost 37% yesterday now that the steelmaker is subject to a bidding war.
Esmark, a privately-owned processor and distributor of steel, has launched a $7.8 billion all-cash offer for US Steel, outbidding the $7.3 billion cash-and-stock offer tabled by Cleveland-Cliffs that US Steel rejected over the weekend. Notably, Esmark’s brief press release said it had launched a ‘voluntary public cash and exchange offer’ that will run to an initial deadline of November 30.
US Steel launched a strategic review after receiving multiple unsolicited bids for the business, but said the most recent bid from Esmark was the first contact it has had with the company, making it a surprise new entry into the race. Esmark currently has the highest public bid, but Cleveland-Cliffs is still feeling confident as it has the backing of the United Steelworkers union.
There is a good chance that more bidders could emerge, although markets appear cautious given the US Steel share price remains notably below the offer prices.
NVIDIA stock: Brokers see buying opportunity
NVIDIA shares are up 2.3% at $447.60 and building on its strongest daily gain in almost three months yesterday, when it popped over 7% as brokers said the recent pullback in the chipmaker presents a good entry point ahead of its quarterly results due out on Wednesday August 28.
NVIDIA shares have exploded in value this year but have struggled since peaking in July. Morgan Stanley analyst Joseph Moore said the company remains his Top Pick ahead of the results with a price target of $500 and said the pullback ‘materially de-risks the print from the more elevated expectations’.
UBS followed yesterday when it said investors should ‘stay the course here and remain bullish amid the recent pullback’ as it raised its price target on NVIDIA to $540 from $475. It said demand for AI chips will not be the problem over the coming year and that its performance will be decided by how quickly it can keep up supplies. With that in mind, the Financial Times reported that Saudi Arabia and the UAE have been buying thousands of NVIDIA’s H100 chips as they race to build AI models.
“NVIDIA is quite literally serving as ‘kingmaker’ as a huge wave of capital and new financing vehicles are chasing new AI software and specialized cloud infrastructure models,’ said UBS analyst Timothy Arcuri.
Wells Fargo also upped its view on NVIDIA today to $500 from $450.
NVIDIA is forecast to report quarterly revenue of $11 billion, which would mark a new quarterly record as the new demand from AI takes off. That would be up 65% from the year before and mark a significant jump from the $7.2 billion in sales we saw in the previous quarter. Adjusted earnings are forecast to quadruple from the year before!
NVIDIA’s push higher provided support to other chipmakers, with AMD rising over 4% yesterday and booking its biggest daily gain since May. AMD shares are trading marginally higher this morning.
Tesla stock: Launches cheaper US models
Tesla shares are down 0.8% after introducing cheaper versions of its Model S sedan and Model X SUV in the US, offering shorter range but priced about $10,000 less than standard versions.
The new additions to the website show the new Model S will cost $78,490 while the new Model X is priced at $88,490. That is around 10% below the previous cheapest models and are available for delivery from September. Both models, which are the oldest in its lineup, currently account for a fraction of sales considering most orders are for the newer Model 3 and Model Y, but they are pricier vehicles that help lift profitability.
The new Model S will have a range of up to 320 miles, below the 405 miles offered by the previous floor versions. The new Model X has a range of up to 269 miles, below the 348 miles range on the standard version.
VinFast stock: Vietnamese EV maker to go public
VinFast, the electric vehicle maker from Vietnam, will go public on the Nasdaq today when it completes its merger with special purpose acquisition vehicle (SPAC) Black Spade Acquisition, which is up 7.5% today.
VinFast is Vietnam’s first domestic automaker. Its first EV models were motorcycles, and its first car was the VF e34, which reached customers in December 2021. Its first electric SUV vehicles were delivered in September 2022. Like most players, it is unprofitable.
The deal values the company at about $23 billion, according to a filing made last month. That is a sharp drop from the $60 billion price tag rumoured when it was first considering an IPO. Notably, Black Spade is currently listed on the NYSE but it will delist from there and become a subsidiary of Nasdaq-listed VinFast upon completion.
You can read more about the company in Everything You Need to Know About the VinFast IPO.
US housebuilders: Buffet provides support
Housebuilders Lennar, DR Horton and NVR are up 0.8% to 2.4% in premarket trade after we discovered that Berkshire Hathaway, run by renowned billionaire investor Warren Buffett, snapped up shares in all three companies during the second quarter of 2023.
The move has been seen as even more significant considering Berkshire Hathaway was a net seller of stocks in the period, selling 2.7x more shares in terms of value compared to what it purchased.
PayPal stock: New CEO lifts shares
PayPal shares are down 0.8% after rebounding from a two-and-a-half-month low yesterday, when it announced Alex Chriss will become its new chief executive on September 27. He is replacing Dan Schulman, who will remain on the board until the next AGM in May 2024.
Markets welcomed the news. Chriss made his name by leading Intuit’s QuickBooks arm and was a driving force behind Intuit’s acquisition of email marketing firm MailChimp back in 2021, which is fuelling theories that he could turn to M&A to help revive the payment company’s fortunes.
Eli Lilly stock: Can it hit new all-time highs?
Eli Lilly is down 0.4% at $536.04 after closing at all-time highs of $538 yesterday, having surged higher since beating expectations and raising its full year outlook earlier this month thanks to strong demand for its weight-loss drug named Mounjaro.
The pharmaceutical giant has managed to keep up the momentum after completing several acquisitions over the past week, having bought immunology-focused DICE Therapeutics, diabetes treatment research firm Sigilon Therapeutics and Versanis Bio, which is developing its own weight-loss drug.
Interestingly, European rival Novo Nordisk has been under severe pressure since popping to all-time highs a week ago, driven by strong demand and positive trial results out for its own weight-loss drug named Wegovy. Novo Nordisk shares on the NYSE are up 2.7% today.
AMC stock: Spread vs APE shares narrows
AMC shares are up 1.8% today at $3.45 and APE preferred shares are up 0.5% at $2.08, with the gap between the two sets of shares hitting its narrowest range ever yesterday after a court gave its approval for AMC’s plan to convert APE shares into ordinary stock.
The conversion is expected to happen on August 25. Reuters said the conversion will mean APE shareholders will own around 37.15% of the company, significantly diluting the stake held by existing AMC shareholders to 62.85%.
AMC has said being able to sell APE shares and convert them is vital to its ability to keep raising cash as it continues to recover from the pandemic, although it has faced some objection from shareholders that are set to face significant dilution as a result. The additional fear is that they could face more dilution in the future now that AMC has a way of raising more money by issuing APE shares and converting them later, all without the need to get approval from shareholders.
Getty stock: Sinks on lower guidance
Getty Images is down over 18% and at a five-month low after lowering its full year outlook following a challenging first half, when sales declined 3.3% to $225.7 million and adjusted Ebitda dropped over 10% to $66.5 million. It turned to a loss at the bottom-line from a profit the year before.
The company said it is now forecasting annual revenue of $920 million to $930 million and adjusted Ebitda of $292 million to $303 million. That is down from its previous target for revenue of $936 million to $963 million and earnings of $305 million to $315 million.
Citigroup said the reduced outlook takes tougher macroeconomic conditions into account and assumes the writers’ strike in Hollywood, which is hurting demand for content, will continue throughout the second half of 2023.
Freedom Holding stock: Hit by short-seller attack
Freedom Holding shares are down 7% after short-seller Hindenburg Research opened a short position on the brokerage, accusing it of ‘brazenly’ evading sanctions and claiming there are ‘hallmark signs of fake revenue’.