The Rundown - Domino's Pizza Drops on Sales Miss, Nasdaq Looks to Recover from Worst Day Since 2022

Episode Date: July 18, 2024

Stock market update for July 18, 2024.

Public.com presents the rundown, your daily market update in five minutes. My name is Zadadmani, and today is Thursday, July 18th. In today's episode, we tell you why the NASDAQ had its worst day in over two years. Also, we'll tell you about Warner Brothers plans to save the company and also recap earnings from TSM, United Airlines, and Domino's. Then stick around to the end of the show to learn which streaming service saw the biggest jump in June. And no, it's not Netflix. All right, let's go.

The markets had been riding a multiple-day winning streak until yesterday. Tech stocks especially took a beating yesterday, bringing the entire market down with them. Both the S&P and NASDAQ finished deep in the red on Wednesday. In fact, the NASDAQ had its worst day in over two years, dropping 2.8%. The Dow Jones, on the other hand, was up, setting new all-time highs. Still a hater, though. Now, tech stocks, especially semiconductor stocks, got crushed for a couple of reasons. We mentioned on yesterday's show that President Biden is considering more restrictive.

on chip exports to China, which would be bad news for chip makers in the U.S. We talked more in detail about that on yesterday's show, so go check that out if you missed it. On top of that, former President Donald Trump made a comment in an interview with Bloomberg that Taiwan needs to pay the U.S. for defense. And that spooked a lot of investors because Taiwan is home to TSMC, which manufactures the majority of high tech chips. So if the relationship between U.S. and Taiwan got bumpy, that could potentially impact the

U.S.'s access to high tech chips. So yeah, investors got nervous, which literally, which literally, you know, led to the sell-off yesterday. It's been a tough few days for big tech stocks in general. In fact, the magnificent seven stocks have lost over a trillion dollars in market cap combined over the last five trading days. And so now people are starting to ask the question, is the big tech bubble starting to burst? These big tech earnings that are coming up at the end of this month are going to be crucial. Let's run through some headlines. Warner Brothers is discussing plans to separate their streaming and studio division from its cable business. This is according to reporting from

the financial times. So the way it would work is that Warner Brothers would split their company into two. One company would include their streaming service Max, formerly known as HBO Max, along with their studio division. And the other company would be the cable business, which includes channels like TNT, TBS, Discovery, Food Network, just to name a few. And there's a very good reason why Warner Brothers is thinking about doing this. Currently, there's nearly $40 billion of debt on the company. Spinning off the streaming and studio unit as its own company, it would be free from the $40 billion debt load. The $40 billion debt would just go on the cable business,

which is already a declining business anyways because people continue to cut the court. So by not having any debt on the streaming and movie studio business, Warner Brothers could then focus on growth of that business without being burdened by all that debt. So it'd be a pretty savvy move, but creditors haven't really responded well to strategies like this in recent times.

For example, Lionsgate, a longtime media player, tried a similar move by separating its TV division, leading to an uproar from credit investors, the people that they owe money to. So we'll see if warners can pull this off. I mean, at this point, they need to try anything because their business is struggling hard. Their stock is down nearly 30% this year. There's rumors that they're going to lose the NBA rights. So they're just trying to do anything at this point.

The market seemed to like this headline, though. The stock is up nearly 4% on this news. Let's shift gears and talk about TSMC, the world's largest chip manufacturer reported earnings today, and they had a pretty solid quarter. They beat estimates on both revenue and profit. The demand for AI chips hasn't really slowed down. TSM grew their revenues by 40% year over year in the second quarter.

Now, the company did say the smartphone market experienced some headwinds in the second quarter, but TSM expects smartphone strength to come back in the third quarter because, you know, there's AI coming to your phone. It's probably going to require special high-power chips. The company also raised their capital budget, which is how much money they plan to invest over the next few years, to between $30 to $32 billion. The company's plan to allocate their budget towards advanced technologies. TSM's stock jumped more than 3% on this news. Now, TSM is starting to see some challenges from its competitors, like, for example, Intel.

At the beginning of 2024, Intel said it plans to surpass TSM and advanced chip manufacturing by 2025. That's a big statement from Intel, so we'll see. Let's talk about some stocks making moves today. United Airlines shares are up this morning after the company reported a 20% jump in profit. The airline to the beat was due to strong demands for international flights. Now, although the company did beat for the second quarter, the company provided weaker guidance for Q3 as United begins to deal with oversupply of flights. We talked about this in previous episodes.

There are just a lot of seats available on planes right now, which is pushing down airfare. As a result of the oversupply, United is planning to cut their flight schedules to reduce the number of seats. Overall, investors like the earnings and the stock is up nearly 2% in the pre-market. On the flip side, stock not doing so good. Domino's Pizza. Shares are plummeting efforted the company reported earnings and missed sales estimates for the quarter. The company reported same store sales growth of 4.8%, which was lower than expected. I feel like I'm partially blamed for that.

I did not eat as much Domino's pizza in Q2, so my fault. The company is also suspending its plan for 1,100 new global locations because it's dealing with store closures from one of its larger franchises. Dominoes expects global store growth to be between 8 to 900 locations this year. But overall, not great earnings from Domino's. Investors didn't like it. The stock is down more than 11% on this news in the pre-market. All right, let's wrap the show with the fun fact.

Americans spent 40% of their TV viewing time in June on streaming services. That's a record high. And that's 6% more than it was in May, according to Nielsen. And the streaming service that saw the biggest increase in viewing time in June was Disney Plus, which tells me that this is just kids staying at home on summer break watching a ton of TV, which is not going to lie, my daughter definitely belongs in that category. She's been watching a lot of Disney Plus over the last few weeks. And speaking of streaming, Netflix is reporting Q2 earnings today after the bell.

We're going to recap the earnings on tomorrow's episode. So make sure you guys, you guys, that's the rundown for today. If you guys liked today's episode and have like 12 seconds of free time, go give us a five-star rating on Apple and Spotify. And if you're listening on Spotify, don't forget to vote in today's poll. That engagement really does help the show.

Thank you guys so much for listening. Shout out to Connor and Mike for all the help behind the scenes. 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, 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 Zaid Admani, brokerage services for U.S. listed, registered securities are offered by Open to the Public Investing Incorporated, member FINRA and SIPC.