The Rundown - Amazon Workers Strike Ahead of Holidays, Palantir Wins Army Contract

Episode Date: December 19, 2024

Stock market update for December 19, 2024.

Public.com presents the rundown. Your daily market update in five minutes. My name is Zaid Admani, and today is Thursday, December 19th. In today's episode, we'll tell you why the Fed meeting yesterday caused a massive sell-off in the markets. We also tell you about a strike breaking out at Amazon warehouses and Tesla's plans to test robotaxies in Austin. Then stick around to the end of the show to find out why shares of Olive Garden are up, why Micron is down and how much money an AI search engine just raised. All right, let's go.

Yesterday was a total bloodbath in the stock market. Absolutely brutal. The S&P was down 3%. The NASDAQ was down 3.5%. The Dow had its 10th losing day in a row dropping 2.5%. And I'm not even in a mood to make a Dow joke right now because yesterday was one of the worst days of the year for the stock market. It was so bad that more than 480 stocks in the S&P 500 were down on Wednesday.

And what's crazy is that this all happened within the last two hours of trading. Right after the Fed made their decision on interest rates, and Jerome Powell got up on that podium and started talking. So what did the Fed say that caused such a strong reaction? Well, things started off as normal. The Fed decided to cut interest rates by 25 basis points. That was expected going into the meeting. But what came as a surprise,

is the Fed is planning to slow down rate cuts moving forward. The Fed's earlier projections called for maybe three to four rate cuts in 2025. Their latest projections are now calling for only two rate cuts. In fact, Jerome Powell went as far to say that the rate cut for this month was also a close call. And the markets were completely caught off by those comments, which is why there was such a massive sell-off yesterday. You know, the Fed is kind of in a tough spot here. Remember, the Fed's job is to keep inflation loss.

and the job market healthy. That's their dual mandate. Keep prices stable and the unemployment rate low. And that's where the issue is right now. Because inflation continues to be sticky around the 2 and a half percent range, which is above the Fed's 2% target. And Jerome Powell said multiple times they are committed to getting inflation down to 2%. But cutting interest rates could make inflation worse.

But on the other hand, the labor market is starting to show signs of weakness as well. In fact, Jerome Powell himself said the labor market conditions now are looser than they were pre-pandemic. And those conditions could end up getting worse if the Fed keeps interest rates too high. So the Fed has to find the right balance to keep rates where inflation continues to come down, but labor market doesn't get worse. And that's why the Fed's in a tough spot right now. They don't want to keep cutting rates because it can make inflation worse, but they also don't want the labor market to get too bad either, which would require them the cut rates. And I think that element of uncertainty really spooked investors and caused such a big sell-off

yesterday. I got to say, Jerome Powell, man, he still has his fastball. His words can still move markets like no other. It's going to be interesting to see where the markets go from here. Are we going to get a mini Santa Claus rally to close out the year? Or are we going to see stocks continue to sell off in the last two weeks of the year? So the last few trading days of the year could get pretty interesting. Let's run through some headlines. There's a strike breaking out at Amazon warehouses right before Christmas. Employees at seven total warehouses across the U.S. in states like California, California, New York, Illinois, and Georgia are going on strike. This strike involves Teamster union workers at Amazon warehouses.

The two sides had until December 15th to come up with a new contract, and it looks like negotiations broke down between the union and Amazon. It's pretty tough timing for Amazon because it is the busiest time of the year, but Amazon does say it doesn't expect the strike to impact its holiday season performance. The Teamsters union represents about 10,000 employees at the company, and Amazon has more than a million workers working at their warehouses. So not a huge percentage of the workforce is going to be on strike. So we'll see what happens.

Let's shift gears and talk about Tesla. Well, technically, Tesla don't have any gears because they're electric. But the company is making some moves when it comes to their cybercabs. The EV Carmaker is in talks with Austin officials to establish safety guidelines for the cybercab. Right now, Tesla is only testing the cyber cab at the company's Austin campus. But they want to expand and test these cybercabs on the streets of Austin soon. I feel like Waymo is way ahead of the game here. Waymo is already planning to operate in Austin starting next year through a partnership with Uber.

I'm not talking about testing. I'm talking about fully operating and offering rides to the public. Tesla is playing catch up. We got one more story for you today. The Palantir fans are going to love this. Palantir has won a new Army contract worth more than $600 million. This deal will provide the U.S. Army with further data capabilities via Palantir's Vantage software. Now, Palantir already has a software deal with the Army, which began in 2018.

So this new deal is just an extension of that software deal? Palantir is hoping that their software will make the U.S. Army more efficient and also improve their decision-making capabilities. Shares of Palantir are up nearly 3% this morning on this news. Let's talk about some stocks making moves today. Shares of Darden Restaurant are popping this morning after they reported better than expected earnings. Darden restaurants owns a ton of restaurants, including Olive Garden and Longhorn Steakhouse.

Now, Olive Garden makes up a big chunk of Darden's total revenue, about 40% of it. And it saw same store sales grow by 2%, which was ahead of estimates. Longhorn Steakhouse was a big winner as well. It saw same store sales jump by 7.5%. Way ahead of the 4% that was estimated. Now, not all of Darden's restaurants had a good quarter. Like Darden owns Ruth Chris Steakhouse, which saw same store sales drop by 6%. But overall, investors like what they saw in shares of Darden up around 14% this morning in reaction to these earnings.

Now, a stock not doing so good this morning is Micron. Shares are down big after the chipmaker reported earnings last night and delivered weak quarterly guidance. The company says they expect $7.9 billion in revenue next quarter, well below the $9 billion that analysts were expecting. Now, Micron did have a decent quarter. Their data set of revenue was up 400% compared to a year ago. And it currently accounts from more than 50% of the company's total revenue for the first time ever. The company says their demand was driven by its memory chips for AI, but they said that chip volumes for PCs remain flat. But the weak guidance was too much for the investors to look past and shares of Micron are down around 15% this morning in reaction to these earnings. Another company having a tough morning is Lamb Weston.

Now, you might not have heard of these guys, but if you've ordered fries from McDonald's, you've probably eaten their potatoes. Their stock is down nearly 20% this morning, and their CEO has been fired after the company reported another major earnings miss. The fourth time in the past five quarters. Their sales were down 8% as demand for a frozen potato products weekend, and fewer because. consumers eat out at places like McDonald's, which is Lamb-Wenson's biggest customer and accounts for 13% of its annual French fries sales. So yeah, we got potato companies dropping 20% because enough of us aren't eating McDonald's French fries. Let's wrap the show with a fun fact. Perplexity AI, one of the hottest AI companies, just raised $500 million at a $9 billion valuation.

It's the company's fourth fundraising round this year, and it triples the value from the previous round. I mean, Perplexity just raised money back in June at a $3 billion valuation, and they've already tripled their valuation to $9 billion in less than six months. I guess investors can't get enough of AI companies right now, you know? I mean, I use Perplexity's AI search engine all the time. The product is great. Some people call them the next Google, and investors don't mind piling a ton of money to get a piece of that upside. Well, all right, guys, that's the rundown for today. Yesterday was a crazy day, and I really wonder how the rest of the week and the rest of the year are going to finish out, because,

I was expecting a Santa Claus rally. Now I don't know. The vibes have kind of shifted, you know? But who knows? Maybe the markets will brush off to sell off from yesterday. And we might hit all-time eyes by the end of the year. Anything is possible. So we'll be watching the markets closely as we close out the year and keep you guys in the loop.

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