WSJ What’s News - What’s News in Markets: Tesla Seesaw, Pharma Selloff, Streaming Shines

Episode Date: November 16, 2024

How has Elon Musk’s deepening relationship with President-elect Donald Trump affected Tesla stock? And why did Big Pharma stocks sell off? Plus, what did Disney and Spotify have to say about trends in streaming? Host Francesca Fontana discusses the biggest stock moves of the week and the news that drove them.  Sign up for the WSJ's free Markets A.M. newsletter.  Learn more about your ad choices. Visit megaphone.fm/adchoices

As a Fizz member, you can look forward to free data, big savings on plans, and having your unused data roll over to the following month, every month. At Fizz, you always get more for your money. Terms and conditions for our different programs and policies apply. Details at fizz.ca. Hey, listeners. It's Saturday, November 16th. I'm Francesca Fontana for The Wall Street Journal, and this is What's News in Markets, our look at the biggest stock moves of the week and the news that drove them. Let's get to it. Last week was all about the so-called Trump trade, the big winners and the overall rally we saw in the stock market after Donald Trump won a second term as president. This week was a

little more muted as investors processed potential policy changes under the new administration. Not to mention the latest signals on interest rates, including Fed Chair Jerome Powell saying that recent signs of a solid economy will allow the Fed to take its time in deciding the pace of future rate cuts. And that had traders slashing expectations for a December rate cut. On a weekly basis, all three major indexes ended lower, with the Dow losing about 1%, the S&P 500 losing about 2%, and the NASDAQ losing about 3%. Speaking of the president-elect, we got updates this week on who Trump is keeping in his corner

as he prepares for his second term, and we got to see how some of those updates played out in the stock market. First up, Tesla. Early in the week, Trump said that its CEO, Elon Musk, will co-lead the quote unquote Department of Government Efficiency, which is a new commission that he said will operate outside of the federal government

and aim to cut spending and streamline bureaucracy. So Trump and Musk are deepening their ties. And as we saw, their relationship made Tesla's stock a big winner of the Trump trade. Dedicated listeners will recall me talking about the stock's big rally around election day, including a 15% pop on November 6th. So investors have some optimism that the new administration will be good for Tesla. But they're also weighing some of the possible consequences for the broader electric car industry, like higher tariffs. Tesla shares swung between gains and losses throughout the week, and on a weekly basis the stock ended basically flat, about 0.2% lower. And at the end of the week

we had Pfizer and Moderna. Big pharma stocks around the world were selling off after Trump chose Robert F. Kennedy Jr. as his Health and Human Services Secretary. RFK, who could face a tough confirmation battle, is a vocal vaccine skeptic, and he's promised sweeping changes to food and drug regulation and government-funded scientific research. So in the wake of that news, Pfizer shares fell 2.6% on Thursday, erasing roughly $4 billion from its market value, while Moderna shares dropped 5.6%. And on a weekly basis, Pfizer lost 7.2% and Moderna sank 21%. And in non-election news, two stocks that had some great earnings reports this week

were Spotify and Disney. Let's start with Spotify, the streaming audio giant whose platform you might be using to listen to this episode. So Spotify notched its third consecutive quarterly profit, and the company said it's on track to be in the black for the full year for the first time. And that was music to investors' ears because Spotify has really been focusing on its bottom line and making a big effort to control costs and prioritize profits. The company's gross margin came in at 31.1%, which topped Spotify's own expectations. At its 2022 Investor Day, the company set a goal of achieving 30% gross margins between

2025 and 2027. So that's what the market was really looking at, which is why this quarter's earnings per share figure coming in a bit below analysts' estimates didn't really seem to faze anybody. And as a result, Spotify shares soared 11% on Wednesday and notched weekly gains of about 14%. Then we had Disney, which brought some magic of its own to its earnings report. The entertainment company reported a jump in quarterly net income and higher revenue and offered a bullish earnings outlook.

It notched its own milestone, too. The company's streaming unit, home to Disney+, ESPN+, and Hulu, posted its second consecutive quarterly profit. And this also outweighed the weakness that we saw in other parts of the report, like how its cable TV business is still losing steam and how its income from the theme park and cruise unit fell for the second quarter in a row. So on Thursday, Disney shares rallied 6.2% and finished the week up 16%. And now you know what's news in markets this week. You can read about more stocks that moved on the week's news in The Score, my column in the Wall Street Journal's Exchange section.

Today's show was produced by Anthony Bansi with supervising producer Tali Arbel. I'm Francesca Fontana. Have a great weekend. And see you next Saturday.