The Rundown - Economy Adds Fewer Jobs than Expected in August, Broadcom Dips on Soft Non-AI Business

Episode Date: September 6, 2024

Stock market update for September 6, 2024.

Public.com presents the rundown, your daily market update in five minutes. My name is Zaid Admani, and today is Friday, September 6th. In today's episode, we tell you about the latest jobs report and the market's reaction that has me kind of confused. We also recap earnings from Broadcom and why it's another sign of a cooling AI boom. We preview Apple's iPhone event next week, then stick around to the end of the show to find out how much it would cost to watch every single NFL game this season. It's getting pretty expensive to be.

a sports fan. All right, let's go. Thursday was a mixed day for the stock market. The S&P was down for the third straight day losing 0.3%, but the NASDAQ was able to squeeze out a small gain of 0.3% thanks to a rebound in max 7 stocks. Overall, though, another relatively slow day, but now investors turned their eye to the jobs report, which could make or break the week. And it looks like the U.S. economy added 142,000 jobs in August, which is more than what it was in July, but less than the 161,000 jobs that was expected. The good news is that the unemployment rate ticked down from 4.3% to 4.2% but that was expected. I think the most interesting thing to come out of this jobs report is that the U.S. Labor Department revised the June and July jobs report

lower by a combined 86,000 jobs. So what that means is that the government now thinks that 86,000 fewer jobs were added to the U.S. economy in June and July. That's not great, and that's going to continue to add concerns about a weakening labor market. Obviously, the markets aren't loving that news. Both the S&P and NASDAQ are in the red at the time of this recording right around the market open. And honestly, it hasn't been a great week. In fact, the S&P 500 is headed for its worst week since April. So unless we get an epic rally today, September off to a pretty bad start. Let's run through some headlines. The 10th largest company in the U.S. as Broadcom reported earnings last night, and it's making investors kind of nervous about the

AI boom. See, Broadcom does a lot of things. They make chips for cars and phones like the iPhone, but lately they've been seeing a huge boost in their AI chips business. Honestly, Broadcom's earnings were pretty solid. They saw revenue growth of 47% from last year to $13 billion. But despite the solid earnings, Broadcom's guidance for the current quarter was lower than expected. It was slightly lower than expected. But that was enough to stand the source. stock tumbling. Shares are down around 7% in the pre-market. Now, my first reaction to seeing this was that investors are worried about an AI slowdown which could impact Broadcom's business, right? Well, digging a little bit deeper into Broadcom's earnings, Broadcom is reporting a slowdown

in their non-AI chips business. In fact, Broadcom still expects a robust growth from their AI part of their business. The company expects to make $12 billion just from their AI business alone, which is more than what analysts expected. But the markets didn't seem to care. The stock is still head had lowered today. I think it's pretty clear that the honeymoon phase between AI companies and investors is coming to an end. The companies that benefited from the AI boom, like Broadcom, like Nvidia, they're just not getting the same level of hype or benefited the doubt anymore. A few months ago, investors were willing to overlook anything as long as the AI narrative was strong. That doesn't seem to be the case anymore. Remember, Nvidia's stock tanked last week, even though they reported

solid earnings. So it's another sign that investors might just be getting over this AI trade. Let's shift gears and talk about Apple. We talked about how Broadcom makes some components for the iPhone. Well, a new iPhone is being revealed on Monday. The iPhone 16 is expected to come in four new models, the 16, the 16 plus, the 16 Pro, and the 16 Pro Max. According to numerous reports, the pro models are expected to get a larger screen and better cameras. I'm sure we're going to learn more information about Apple intelligence. That's Apple's new AI software. That's supposed to be baked into iOS 18. And then on top of the iPhone stuff, Rumor has it that Apple is going to reveal new AirPods and a new Apple Watch,

which I'm really looking forward to because my Apple Watch 7 is starting to get pretty old. So there's a lot to look forward to. The event will be on Monday, starts at 1 p.m. Eastern. I mean, you already know, I'll be tuning in. My favorite thing to do is watch the event, but also have Apple's chart side by side and just watch how the stock reacts to every announcement during the event. I know I'm kind of a sicko. The expectations going into the events are always pretty high,

and the markets usually come out pretty disappointed. Let's talk about some stocks making moves today. Shares of UiPath are jumping after beating earnings estimates and raising their guidance for the full year. UiPath works on automation and AI software, so not every AI company is struggling right now. On top of the earnings beat the company also announced a $500 million stock repurchasing program. Yeah, investors like that, the stock is up around 9% on this news.

On the flip side, a stock not doing so good, Super Micro. Super Micro has been an AI darling for the last 12 month, but shares are falling after J.P. Morgan downgraded the stock to neutral with a price target of $500 per share. J.P. Morgan attributes this downgrade to an uncertain environment brought on by Super Micro's delayed 10K release. Companies are required to file a 10K report every year to the SEC to talk about important business information that investors need to know, and Super Micro just didn't do it. The AI firm said it delayed its 10K release in late August due to an assessment of internal processes related to reporting.

Don't really know what that means, but doesn't sound so great. Shares of Super Micro are down around 2% on this news. Let's wrap the show with the fun fact. We've been doing NFL-related fun facts all week because the NFL season kicked off last night and it was a great game between the Chiefs

and Ravens. And tonight the NFL is playing its first game in South America, where the Packers will take on the Eagles in Brazil. But if you want to watch that game, you have to catch it on Peacock because they have exclusive rights that game. Someone ended up doing the math to figure out how much it would cost to watch every single NFL game this season and it would cost around $1,700 because you have to subscribe to so

many streaming services. A lot of these streaming services have exclusive rights to NFL games now like Peacock, Amazon, even Netflix is getting a couple games this year. These streaming services are hoping that exclusive rights to NFL games will help them get more subscribers and help keep those subscribers. So yeah, it's getting pretty expensive to be a sports fan. But I guess that's how the NFL continues to make a ton of money every year. And these NFL franchises become more and more valuable. Here's a bonus fun fact. The Green Bay Packers are the only publicly owned team in the NFL. There are more than 538,000 owners, but there's a catch. Being an owner of the Packers, you don't get any dividends. There's no intrinsic monetary value. You don't get to decide who's

on the team. I guess the only real perk is able to attend the annual shareholders meeting where you get to vote on the board of directors. I kind of wish that our sports teams would be publicly traded on the stock market because it's like that in Europe. But unfortunately, that's not the case here. It would be pretty interesting though. Well, all right, guys, that's the rundown for today. That's the rundown for this week. It was a short week, but still a lot going on. If you guys enjoyed the podcast, don't forget to hit us with a five-star rating on Apple and Spotify. And if you're listening on Spotify, don't forget to vote in today's Spotify poll. All that engagement really does help us out. Thank you guys so much for listening.

Shout out to Connor and Mike for all the help behind the scenes. Have a great weekend, everybody, 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. 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. Respective professionals.

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