The Rundown - Amazon Invests $500M to Develop Nuclear Energy, ASML Warns of Global Chip Slowdown

Episode Date: October 16, 2024

Stock market update for October 16, 2024.

Public.com presents the rundown, your daily market update in five minutes. My name is Zadad Mani, and today is Wednesday, October 16th. In today's episode, we'll dive into why semiconductor stocks like Nvidia tanked yesterday and why investors are getting mixed signals right now. We also tell you about another big tech company going big on nuclear energy. Then stick around to the end of the show to find out why LVMH stock is down and why we might see less chocolate on Halloween this year. All right.

Go. Well, one day after making record highs, we saw a sell-off in the stock market on Tuesday. The S&P 500 dropped 0.8%, and the NASDAQ fell by more than 1%. The markets were dragged down by a sell-off in semiconductor stocks yesterday, which were down across the board. Invidia, AMD, Broadcom, Intel, they were all in the red. Now, I might be partially responsible for this one because I was hyping up Nvidia a lot on yesterday's episode, talking about how they're making all-time highs and how.

The stock is at an incredible month, so maybe I jinxed it. But the more likely reason is the markets were reacting to ASML's earnings. They had a pretty bad day yesterday, and they took the markets down with them. But we'll talk more about that in a bit. Oil prices also took a dip yesterday, dropping more than 4% to a two-week low. Tensions in the Middle East don't seem to be further escalating, and there is also worries of a decline in oil domain from China. And finally, I need to mention crypto because Bitcoin is having a great week.

It's now above $67,000 the highest level since July. Don't look now, but Bitcoin is marching towards $70,000. And as a reminder, Bitcoin's all-time high is $73,800. We're less than 10% away from that. So definitely something to keep an eye on. Let's run through some headlines. And we have to start with ASML because it looks like they took down the entire semiconductor sector yesterday. ASML is a Dutch company and they play a pretty big role

in the AI supply chain because they make super complex lithography machines that are needed to manufacture AI chips. Well, they reported earnings yesterday and the numbers weren't so great, which caused their stock to drop 15%, one of their biggest one-day declines ever. And the whole situation was pretty weird because the company accidentally released their earnings a day earlier than they were supposed to. So that had some people confused. But yeah, the numbers themselves, they weren't great. The company reported net bookings of 2.6 billion euros last quarter, which was well below the 5.6 billion euros that was expected. And they also reported weaker guidance for 2025,

indicating a potential slowdown in their business. The company didn't give any details on why their earnings came in low, except for saying that some of their customers pushed back their plant construction. So now investors are dealing with mixed signals here. You know, on one hand, you have Nvidia saying that the demand for their new Blackwell AI chips are insane. But then on the other hand, you have manufacturers and equipment makers that actually make the chips reporting a slowdown, which has investors worried about a broader sign of a slowdown in the industry. So not only did ASML stock drop yesterday, but that caused stocks of Nvidia, AMD, Broadcom,

Intel to drop between 3 to 5% as well. By the way, TSMC, which is the biggest manufacturer of AI chips and one of ASML's biggest customers is reporting earnings on Thursday. So if they report a slowdown in their business, we might see more red, especially in semiconductor stocks. So we'll definitely keep you updated on that later in the week. By the way, I mentioned yesterday, how NVIDIA was very close of overtaking Apple as the most valuable company in the world. Well, that gap just got bigger because not only did NVIDIA drop 5% yesterday, but Apple actually closed higher and hit new all-time highs. It was also the same day they announced a new iPad Mini. I didn't think that would be what put them over the top. But hey, the iPad Mini,

underrated device. Let's shift gears and talk about another big tech company making news. Amazon, they are going nuclear. Well, they're investing $500 million in nuclear energy. I told you guys yesterday how Google signed the deal for nuclear energy to power their AI data centers. Well, Amazon is joining the trend. They announced a $500 million investment to develop small modular nuclear reactors. It's the same thing that Google is doing. I mean, these big tech companies just end up copying one another anyways. These small modular nuclear reactors are different than a full nuclear reactor.

They don't produce as much energy, but they're cheaper and more flexible. Amazon's investment is with Dominion Energy. It's actually coming from AWS, which needs more and more power for their AI data centers. and that power demand is only expected to increase over time. This $500 million investment is for projects in both Virginia and Washington State, which are the locations of two Amazon's headquarters. I said this yesterday, but AI is reviving nuclear energy. Let's talk about some stocks making moves today.

Morgan Stanley is joining in on the bank party. Their stock is up this morning after reporting better than expected earnings. The company reported a 16% jump in revenue and a 32% jump in profit. And just like the other big banks that have already reported earnings, Morgan Stanley saw a big surge in investment banking activity, which was up 56% compared to last year. And they expect investment banking activity to be strong moving forward. Morgan Stanley's stock is up 3% in reaction to these earnings. So while banks are having a great time right now, luxury companies are not. Like shares of LVMH are down after they reported disappointing earnings.

The French luxury giants saw their sales down 3% in Q3, and they didn't sound very optimistic moving forward. saying that they face an uncertain economic and geopolitical environment. Their biggest drop came in Asia, excluding Japan, which was down 16%. A lot of that has to do with the slowdown in China. But the one bright spot for LVMH is that the Chinese economy might see a bounce back because of the upcoming stimulus plans by the government. Unfortunately, the government has been kind of sparse on details of what the stimulus package will be, but it's something that could help LVMH's business moving forward.

Investors weren't so optimistic, though, LVMH shares were down 4% on the pair of stock exchange. And the stock is down close to 19% this year. Let's wrap the show with a fun fact. Spending on Halloween this year is expected to drop 5% to $11.6 billion, according to the National Retail Federation. So that includes items like candy, costumes, decorations, and greeting cards. Now, part of the reason for the dip this year is a broader pullback in consumer spending, which has been dragged down by higher inflation and a slight tick up in unemployment.

And that's not great news for retailers that count. on these holidays for the candy sales. Like Halloween, Valentine's Day, Easter, and the winter holidays, including Christmas, account for 64% of total confessionary sales for the entire year. This is according to the National Confectioners Association. On a side note, I feel like there's an association for everything. And not to rain on the parade completely, but trick-or-treat candy this year is expected to have less chocolate than usual.

That's because rising prices of cocoa, which have more than doubled this year, have led to shrinking margins and slower sales for chocolate, and that's forcing companies like Hershey's to shift to more non-choc chocolate items. This is according to research firms Circana. So don't be surprised if you see more gummies, licorish, and hard candies during trick-or-treating this year. Like, I'm personally more of a chocolate guy myself, but non-choccal candies can be good too, like Sour Patch Kids. That's some good stuff there.

My favorite thing to do is just to wait until a day after Halloween and then go to the grocery store and buy all the Halloween candy at like 50% off, and then just eat that for the rest of the year. Well, all right, guys, that's the rundown for today. Hope you guys enjoyed today's episode. If you did and you have like 15 seconds, consider giving us a five-star rating on Apple and Spotify. That engagement really does help the show and helps other people find this show as well. And for everyone that leaves nice comments on Spotify every day, thank you guys so much

for the support. Thank you guys again for listening. Shout out to Mike and Connor for all the help behind the scenes and we'll see you guys back here tomorrow. This is the rundown, your real-time resource for news events and trends in the markets. All views presented in the show reflect the opinions of the guests. You should not take any mention of a publicly traded security as recommendation to buy, sell or hold that security. Run down guests are not financial advisors and are not affiliated with public holdings or its subsidiaries.

You should make your own financial and investment decisions or consult. Respected professionals. Learn more at public.com disclosures. In partnership with Zayidamani, brokerage services for U.S. listed, registered securities are offered by open to the public investing incorporated, member FINRA and SIPC.