The Rundown - Stocks Tank on Weak Jobs Data, Apple Returns to Revenue Growth

Episode Date: August 2, 2024

Stock market update for August 2, 2024.

Public.com presents the rundown, your daily market update in five minutes. My name is Zadadmani, and today is Friday, August 2nd. In today's episode, we tell you why stocks got off to a bad start in August and what it might mean moving forward. We also recap earnings from Apple, Amazon, Snap, and Intel. And let me tell you, investors not loving what they heard. Then stick around to the end of the show to find out how much the Olympic Committee made from selling TV broadcasting rights for the Summer Olympics.

All right, let's go. Stocks were off to a terrible start in August. One day after an epic rally to end July, the markets gave a chunk of it back. The S&P 500 dropped more than 1.3% and the NASDAQ was down over 2%. Even though Russell 2000, which has been the favorite index for investors over the last few weeks, dropped more than 3%. That's the worst day since February. So even small-cap stocks got crushed.

Tech stocks were the worst performing sector, though, led by Nvidia, which dropped nearly 7%. Just one day after Nvidia added 12%. I mean, Nvidia is casually adding and losing hundreds of billions of dollars in market cap on a daily basis. That's pretty wild. So, I don't know, maybe we all just got faked out by the markets on Wednesday with that epic rally and things are just back to moving lower. Maybe there's some underlying worry that the economy might not be as strong as we thought.

And even if we do get a rate cut or two from the Fed this year, that might not be enough to avoid a downturn in the near future. And we just got some more bad news. The July jobs report just came out. And the economy only added 114,000 jobs in July, which is much less than the 185,000 jobs that was estimated. That's a pretty big miss. And the unemployment rate increased to 4.3%. I'm recording this before the stock market opens, and stock futures are now deep in the red,

because investors are definitely concerned about the health of the economy right now. Now there's data showing that the job market is starting to cool. Today might be one of those days where you don't want to look at your stock portfolio, unless you're an investor in gold because gold prices did hit all-time highs yesterday. What a crazy week. All right, let's run through some headlines. Let's start with earnings from Apple. Apple reported pretty solid numbers in their Q2 earnings.

Overall, the revenues were up 5% to $85.7 billion. That's the highest growth that Apple has had since Q4 of 2022. Apple also made over $21 billion in profit, both those numbers beating Wall Street estimates. The big winner was iPad sales, which grew by 24% last quarter, likely because the new iPads came out earlier this year. iPhone sales were down about 1% but still beat Wall Street estimates. And sales in China dropped by 6.5% last quarter compared to a 6.5% increase in sales in the Americas.

Now, Apple has been dealing with a heavy competition in the smartphone market in China. We talked a lot about that in the past, and it's still affecting their sales there. Looking forward, though, all eyes will be on the iPhone 16, which comes out at the end of this quarter. Typically, new iPhones come out in September. And with the new iPhone will come iOS 18 that brings Apple Intelligence, that's Apple's AI features, to the iPhone and other Apple devices. There seems to be a lot of hype around Apple intelligence. Apple thinks it's going to lead to a huge boost in iPhone 16 sales. They're expecting a 5% increase on their overall revenues for Q3.

Markets didn't really have a strong reaction to Apple earnings. Shares initially jumped, then fell, but ultimately flatlined on this news. Let's talk about Amazon's earnings because the markets did have a strong reaction to their earnings. Amazon's revenues missed expectations, and they issued a weaker than expected sales guidance for the current quarter. One of the bright spots continued to be Amazon Web Services, which grew by 19% to $26.3 billion in revenue, but that growth is slower than that of Microsoft and Google. On the advertising side, sales grew by 20%. Amazon made over $12 billion in revenue in advertising, which sounds pretty great, but that was lower than what analysts had expected.

Now, as for Amazon's plans for AI, Amazon said they spent over $30 billion on, capital expenditure in the first half of the year. And their plan is to spend even more on the second half of the year. So Amazon is doing what the other big tech companies like Microsoft and Google are doing, investing heavily in AI. That's going to hurt their margins. And with e-commerce sales slowing down and advertising not growing as fast as investors that initially thought, the markets had a pretty negative reaction to Amazon's earnings. The stock is down more than 9% in the pre-market. I'm telling you, man, investors are just looking for a reason to sell big tech. Let's talk about some stocks making moves today. We'd like to start with winners, but to be honest, there's not a lot of winners today,

okay? Now, there are a ton of stocks that aren't doing great this morning, but we're going to highlight two of them. Let's start with Intel because they are getting cooked right now. The stock is at a 10-year low after they reported earnings and missed big time. Not only that, the company also announced that they're cutting 15% of its staff in order to reduce costs by $10 billion. It looks like Intel might have missed the boat on AI because customers are choosing to buy chips from rivals like Nvidia and AMD. Like Intel's data center sales dropped by 3%. Compared that to AMD, which saw a 115% jump in data center sales.

I mean, that's just sad. Overall, Intel sales were down by 1%. And the company reported a loss of $1.6 billion. That is terrible. And that's why the stock is down more than 24% in the pre-market and reaction to these earnings. The stock is now trading at a 10-year low. The last time Intel stock, was this low was back in 2013. I mean, this is just sad. Now, the other company that's having a

terrible morning is SNAP. They also reported earnings last night and the earnings weren't great. The revenues last quarter missed estimates and their guidance for the current quarter also missed estimates. Revenue's last quarter was up 16% to $1.2 billion. Snap is blaming this on a weak brand advertising environment, but they did say the revenue got a boost from their subscription products, Snapchat Plus, which has 11 million paying users. That's up 22%. percent from the first quarter. I'll be honest, I didn't even know that Snapchat plus existed. Snapchat also grew their daily active users by 9% to 432 million. So Snap continues to grow with users. They just can't figure out how to monetize it. I mean, that's been the story of Snap since

the beginning. Snap stock is down more than 20% in the pre-market and reaction to these earnings. All right, let's wrap the show with a fun fact. The Olympics is big business for sports media. The organizers of the Olympics are reportedly charging media companies about $3.3 billion to broadcast games. And these broadcasting rights are the biggest income generator for the event. I mean, sports IP has become a gold mine recently. It was responsible for over $159 billion in revenue last year. This is according to consulting firm, two circles. And 39% of sports IP is from broadcasting rights, which kind of shows you how important sports are to the TV industry. The value of sports rights and sports teams have just been going up like crazy. I wish there was a way to invest

invest in that. Well, all right, guys, that's the rundown for today. That's the rundown for this week. What a week it was. Action-packed, a lot of ups and downs literally in the stock market, ton of earnings, ton of drama, a lot to talk about. And we're going to be doing it again next week as earnings season rolls on. If you guys enjoyed the show this week and you have like 12 seconds, please hit us with that five-star rating on Apple and Spotify. And if you're listening to us on Spotify, don't forget to vote in today's poll.

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. 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 this 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 Zayidamani, brokerage services for U.S. listed, registered securities are offered by Open to the Public Investing Incorporated, member FINRA and SIPC.