The Rundown - UnitedHealth Misses On Revenue, Bezos's Blue Origin Launches Reusable Rocket

Episode Date: January 16, 2025

Stock market update for January 16, 2025.

Public.com presents the rundown. Your daily market update in five minutes. My name is Zayad Mani, and today is Thursday, January 16th. In today's episode, we discuss why the markets are finally starting to see some momentum. We also tell you about a big announcement from Nintendo that has gamers and investors very excited. Then stick around to the end of the show to find out how TSMC is doing, and a big milestone from Jeff Bezos's space company that's looking to compete, with SpaceX. All right, let's go. Well, the stock market finally made a big move up Wednesday,

thanks to a solid inflation report and bank earnings. The S&P 500 was up 1.8%. The NASDAG jumped 2.5%. I mean, we haven't seen a day like that since early November. It looks like investors are starting to get optimistic about the economy again. The labor market is strong. Inflation isn't getting any worse. And early earnings data looks to be pretty solid. We talk more about the CPI inflation report and recap earnings from big banks on yesterday's show, so go check that out if you missed it. Now, I was doing a deeper dive into the inflation numbers yesterday, and one thing that stood out to me was the big increase in energy prices in December. Energy prices were up 2.6% in December compared to November, and some of that might have to do with geopolitical tensions. On top of that, the U.S.

is also imposing stricter sanctions on Russian oil tankers. So that's definitely something to keep an eye on. It's going to be interesting to see how the incoming Trump administration handles sanctions and the impact it'll have on energy prices moving forward. Overall, though, it's great to see some positive momentum in the stock market, especially after the bumpy start that we had to the year. And hopefully that continues throughout earnings season. I'm taking the peak of the earnings calendar right now. Next week is pretty solid. We're getting earnings from Netflix, United Airlines, Verizon. But the week after that is when things get wild. We're going to get earnings from Google, Tesla, Microsoft, Meta, Apple, Amazon, all in the same week. And if that wasn't enough, we're also going to

have a Fed meeting that week? And there's going to be a new president in the White House. That's actually happening on Monday. So the next couple of weeks is about to get wild. I know the actual Super Bowl isn't until February, but that week is going to be my Super Bowl. I can barely contain my excitement. Let's run through some headlines. Let's do some more quick earnings recap. Profits are continuing to roll in at big banks. Bank of America and Morgan Stanley reported better than expected earnings this morning, following a strong batch of earnings yesterday from J.P. Morgan, Goldman and Wells Fargo. Bank of America, which is the second largest lender in the U.S., benefited from a boost

in trading, deal activity, and loan growth. Morgan Stanley also had a strong quarter. Their profits more than doubled in Q4, driven by busy M&A activity, with investment banking revenue rising 25%. Annual revenue for 2024 was the highest ever for Morgan Stanley. So they had a record year. So overall, 2024, very strong year for banks, especially banks involved in M&A activity.

And things could get even better in 2025 under a deal-friendly Trump administration. I know the finance sector and bank stocks don't get as much shine as tech stocks and AI does, but they've quietly been on a tear. The finance sector was one of the best performing sectors in the S&P 500 in 2024. Let's shift gears and talk about Nintendo. The iconic gaming company just released the trailer showing off the new version of the Nintendo Switch. and gamers and investors are hyped. People have been waiting for this for so long, and it's finally here.

The company released a two and a half minute long trailer, showing off the new device. It looks like the Nintendo Switch 2 is going to have a larger display with smaller bezels. The controllers look different. They look to be magnetic instead of sliding out. And it's going to have a different kickstand as well. And I think the video is hinting at 2025 being the release date for the new console. So Nintendo fans are hyped this morning. Investors are also excited.

Many people don't know this, but Nintendo is a publicly traded company, and you can buy their stock on the public app. Nintendo's stock is up more than 3% today. This new console is a long time coming. I mean, the original Switch came out almost eight years ago, and it's gone on to become the third best-selling console of all time, with more than 146 million units sold. I don't know if the Switch 2 will be able to compete with those numbers. I mean, I feel like a lot of people just do casual gaming on their phones now. But we'll see. I'm not a big gamer anymore, but I'll probably still end up getting one, though, because I want to show my kids.

that I still got some talent in Mario Kart. Let's talk about some stocks making moves today. TSM's shares are rising after the world's largest chip manufacturer beat earnings estimates for the quarter. TSM's management cited strong demands for AI chips in the quarter. I mean, do they even have to say that at this point? What was notable, though, was Apple seems to be one of the big customers for these AI chips. According to Counterpoint Research, TSM's revenues were bolstered by demand for advanced chips for Apple's latest iPhone 16 model. Too bad that advanced AI chip is being wasted with Apple Intelligence.

That was a cheap shot. TSM's loving it, though, their shares are up more than 5% this morning on this news. On the flip side, shares of Southwest Airlines are falling after City downgraded the stock to a cell rating with a price target of $29.50. City says that Southwest earnings are diminishing and that the airline's margins are worse than pre-COVID. On top of the cell rating, the Department of Transportation suits Southwest on Wednesday morning for operating too many delayed flights.

I didn't know you can get sued for that, but I'm kind of happy that they are. Southwest is currently trading at $32 a share and is down around 4% this morning on this news. And I think we should also mention United Health Group. Shares of the insurance giant are down after they reported a miss on revenue estimates and rising medical costs.

United Healthcare has been dealing with a lot of backlash since the assassination of their insurance division's CEO last month, which sparked widespread criticism of how insurance companies deny claims. And since then, shares have been on the decline. Add in the stubbornly high medical cost, that is putting additional downward pressure on the stock. The key metric that investors look out for in insurance companies is something called the medical cost ratio, which is how much of the premiums collected by the

company are spent on health services for policyholders. The lower that ratio, the higher the profits. But this ratio has been on an upward trend over the past couple of years. It's approaching 88%. That's higher than the 86% that was expected. And it's well above the 80 to 85% benchmark. that insurance providers typically aim for. So not a great quarter for United Health. This quarterly report also follows news that the FTC is accusing United and other drug middlemen like CVS of overcharging for treatment like cancer and HIV drugs. So yeah, United Health shares are down around 4% this morning in reaction to these earnings.

Let's wrap the show with the fun fact. Jeff Bezos's space company, Blue Origin, finally launched a rocket for the first time ever. This rocket called New Glenn was for. first announced back in 2016, which seems like a lifetime ago, and faced a bunch of delays along the way because of technical and production setbacks. But they finally got the launch to happen, and the rocket is now in orbit. The rocket was launched in Florida at 2 a.m. last night. Now, not everything went perfectly to plan in this launch. The company tried to catch the rocket's boosters on a barge in the Atlantic Ocean, but they weren't able to pull that off. Reusing boosters

is pretty crucial to reduce the cost of rocket launches, and it's something that Elon Musk is SpaceX, incredibly good at. If you guys haven't seen the videos of SpaceX boosters landing on a barge, I highly recommend checking those out. It is really cool stuff. So yeah, Blue Origin still has some work to do to catch up to SpaceX, but the space competition is definitely heating up. Well, all right, guys, that's the rundown for today. Hope you guys enjoyed today's episode. We are going to have a lot to talk about over the next two weeks. So it's a great time to subscribe to the podcast if you're new here. Hit that notification bell if you want to be notified as soon as an episode goes up. And if you have like 15 extra seconds, consider giving us a five-star

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