The Rundown - Banks Deliver Mixed Bag of Earnings, Tesla Postpones Robotaxi Event

Episode Date: July 12, 2024

Stock market update for July 12, 2024.

Public.com presents the rundown, your daily market update in five minutes. My name is Zadadmani, and today is Friday, July 12th. In today's episode, we tell you why the stock market's wind streak came to an end yesterday, and if investors are tired of big tech stocks. Also, we'll recap the earnings from big banks and tell you about an announcement from Tesla that disappointed investors. Then stick around to the end of the show to find out how many Americans are still writing checks. Spoiler alert, it's way more than you.

think it is. All right, let's go. Well, guys, the stock market win streak came to an end on Thursday with a bang. The S&P and NASDAQ both finished lower. In fact, the NASDAQ dropped nearly 2%, having its worst day since April. And it was kind of a weird day for the stock market in general. The overall market did fine. In fact, 394 companies in the S&P 500 were up, but the big tech stocks got crushed yesterday. Invitya dropped 5%. Meta was down 4%. Tesla dropped. 8% snapping an 11-day win streak. And because the S&P and NASDAQ are so top-heavy, whenever big tech has a bad day, the entire index tends to drop. Now, some analysts are thinking that this might be the start of investors selling out of big tech stocks and investing that

money into smaller companies. One reason for that could be the positive CPI report that we got yesterday. The report yesterday showed that inflation is cooling faster than expected, and it likely means that Fed's going to be cutting interest rates pretty soon. In a lower interest rate environment could be advantageous to smaller companies. At least that's the thinking. I don't know, something to keep an eye on over the next few weeks. But hey, I mean, it's been a good run for big tech this year, so it's hard to complain. Let's run through some headlines.

Starting with big banks. Big bank earnings are rolling in. J.P. Morgan, Wells Fargo, and Citibank reported earnings this morning. And the results were kind of a mixed bag. Let's start with J.P. Morgan, the biggest bank in the world. They reported a double-digit jump in quarterly profits, but most of that came from selling their visa shares. underlying profit actually fell. Wells Fargo's profits and revenues also fell and the bank cut its annual outlook. Looks like City had a pretty good quarter though. Their profits rose by 10%

and revenues were up across the bank. City's shares are up more than 2% in the pre-market. JP Morgan shares are up slightly and Wells Fargo shares are down more than 5%. Now something to note, all these banks reported weak net interest income. That's the money they make off of loans. Over the last few quarters, these banks have been raking it in on this side of the business to to high interest rates. But not anymore. See, before they were able to charge high interest for their loans, but they weren't paying anything on their savings account. Well, I guess consumers have gotten smart and are starting to move their money out of big banks to high yield savings account that pay much higher interest rates in these big banks. And just an FYI, one of the places where you can do that

is the public app. You can open up a high yield account there that pays over 5%. So if you're interested in doing that, go check out the public app. It's pretty easy to set up. Now, don't feel so bad for these banks, although the loan side of their business isn't doing so great, the investment division is getting a boost right now. All three banks reported they jump in revenue for their investment division. I think it's because the stock market is doing well and a lot more companies are interested in doing M&A and IPOing, which is going to help these investment banks. An important part of these bank earnings is also hearing from bank executives to see what they have to say about the economy. These guys are in the thick of the financial system every day,

so people tend to listen to them to hear about how they feel about the economy. J.P. Morgan's CEO, Jamie Diamond, warned that the bank is still caused. about inflation. Despite the recent CPI report showed that inflation was declining for the first time since 2020, Jamie Diamond's still a little nervous about it. He also noted that there are other inflationary risks he's watching, including high fiscal spending, trade restructuring, and an elevated military spending as geopolitical tensions rise. I feel like Jamie Diamond's been cautious about the economy for 12 years. But, you know, that's kind of his job. Let's shift gears and talk about Tesla. They're delaying their highly anticipated robotaxie event, pushing

it back by two months. Tesla was supposed to hold the Robotaxy event on August 8th, but Elon Musk's team needs extra time to build additional prototypes according to Bloomberg. That news sent the stock tanking yesterday. The stock fell 8% and snapped in an 11-day winning streak. Tesla investors have been pretty optimistic about Tesla's autonomous taxi fleet. It's been a contributing factor to Tesla's rally since the start of July. Up until yesterday, Tesla added nearly $260 billion to its market cap. Now, the bad news for Tesla was good news for Uber and Lyft, which are seen as a possible robo-taxy rival. Uber closed up 6% yesterday while Lyft rallied about 4.5%. Some people might be shocked about Tesla delaying the event, but this is just part for the course for

Tesla. Tesla makes big promises, especially about their autonomous driving. Back in 2015, Elon said that Tesla cars would reach full autonomy within three years. And then in 2019, Tesla told investors it'd be 1 million robo taxis on the road by 2020. So I'm not really holding my breath anymore. I'm trying to keep my expectations in check. Let's talk about some stocks, Chicken moves today, starting with Lucid. The stock of the luxury EV maker continues to ride high this week after they reported encouraging delivery numbers on Monday. Lucid delivered almost 2,400 cars in Q2, which is up 70% from a year ago.

I guess investors still have a nice buzz off that number because the stock is up 3% in the pre-market today, and it's up more than 15% this week. I'm not going to lie, I've seen like two Lucid's on the road over the last month or so. They do look pretty sweet. On the flip side, stock not doing so good this morning is AT&T. Shares of the telecommunication giant are down in the pre-market after they disclosed a new hack. The company said they learned of this data breach in April and includes records of customer calls and text messages that used AT&T between May 1st, 2022 to October 31, 2021, 2022. Now, what's crazy is that this hack follows another hack that was reported earlier this year at AT&T, where 73 million AT&T customer accounts were leaked onto the dark web.

Seems like AT&T really needs to start investing into their cybersecurity. I mean, come on, guys. No surprise here, but AT&T shares are down more than 2% in the pre-market off this news. Let's wrap the show with a fun fact. 61% of Americans are still writing checks. That's according to the 2024 report by Abrigo. Now, that number is pretty shocking to me because I didn't even know there was places still accepting checks, you know? But apparently up until this week, Target was still accepting checks.

But that's no longer going to be the case starting July 15th. Target said they're going to stop accepting checks due to extremely low volume. Now, I kind of wish they were more specific on the low volumes part. Like, how many checks were they getting per week? Less than 100 in the entire country? Could you imagine waiting in line at Target to check out? And then someone bust out a checkbook in front of you? I've never seen that, but I kind of wish I had.

So yeah, if you're one of like the 26 people that's still writing checks at Target, you're going to have to figure out Apple Pay or something. I bet most people under the age of 30 don't even know. know how to write a check. I mean, I barely remember. Well, all right, guys, that's the rundown for today. That's the rundown for this week. Another week in the books. A very up and down week. Markets were red hot to start off the week. Then it cooled off a bit near the end. Earning season is now kicking off. We're going to have a lot to talk about over the next three, four, five weeks. We'll be keeping you guys updated here on the rundowns. Make sure you guys are tuning in every day.

Maybe hit the notification bell on Spotify, so you don't miss an episode. Also, shout out to everyone that voted in the Spotify polls this week and everyone that gave us a five-star rating. Like I always say that engagement really does help the show. That's all we got. Thank you again, everyone for listening. Shout out to Connor and Mike for all the help behind the scenes. And we'll see you guys back here on Monday. 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. Rundown 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. Respective professionals. Learn more at public.com disclosures. In partnership with Zaidamani, brokerage services for U.S. listed, registered securities are offered by Open to the Public Investing Incorporated, member FINRA and SIPC.