WSJ What’s News - What’s News in Markets: United Soars, CVS Warns, Netflix Shines

Episode Date: October 19, 2024

How did rivals help United take off? And what has investors worried about the health of CVS? Plus, why Netflix shares jumped. 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

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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. Welcome back, everybody. I have got some breaking news for you. Between last episode and right now, I have turned another year older. I am very excited to be in my 30s. From what I have heard, it should be any day now that I get totally bowled over by self-actualization. That is what happens in your 30s, right?

I don't know. We'll see. In other equally important news, earnings season kept rolling on this week, with more good signs from banks. We also saw a sell-off in chip stocks on Tuesday amid some mounting AI worries, which were quelled and then some later in the week by TSMC, but more on that later. And on Wednesday, the S&P 500 got a lift from banks as well as airline stocks after United Airlines earnings. But we'll come back to that too. All in all, the major indexes extended their weekly winning streak, with the Dow gaining 1%,

the S&P adding 0.9%, and the NASDAQ adding 0.8%. and the NASDAQ adding 0.8%. Back to United. Shares took off on Wednesday after the carrier on Tuesday reported a better-than-expected quarterly profit and said that it's been getting back its pricing power since budget airlines cut a bunch of cheap flights that were weighing down fares. United also said it would buy back $1.5 billion in shares, having suspended buybacks in 2020, which was, I'm sure we all remember, back when demand for travel got totally decooked over the AI

boom this week. That was thanks to a gloomy forecast from chipmaking equipment supplier ASML Holding earlier in the week. But then we got the latest quarterly report from TSMC, aka Taiwan Semiconductor Manufacturing Company, a record quarterly profit from the world's largest contract chipmaker. The company said revenue from AI-related products is expected to triple this year and would account for about 15% of its total revenue. And all of that was more than enough to make the clouds part and let the chip stocks rally. US traded shares of TSMC jumped to 9.8% Thursday, and for the week

the stock was up about 5%. Friday we had two big movers. One in the red, one in the green. CVS Health and Netflix. Let's start with CVS, the struggling healthcare giant. The company delivered two big pieces of news on Friday. One, new CEO, and two, another warning about earnings. According to CVS, the coming earnings will once again fall short of Wall Street expectations, largely due to continued issues in its Aetna insurance business. This isn't the first time it's cutting guidance this year. In fact, it is the fourth time.

This year, CVS has also been facing a push for changes by a major hedge fund and a strategic review by the company's board with options including a possible breakup. Executives told the Wall Street Journal the company will now move forward intact. Plus, its share price sure could use a booster shot. As of Thursday's close, the stock was down 19% this year. And Friday, it didn't get any better, with CVS shares losing about 5%. Meanwhile, the big winner Friday was Netflix. The streaming giant reported its most profitable quarter ever, with net income rising to $2.36 billion, although the company also forecast

a fourth quarter drop to $1.85 billion. Netflix said it added roughly 5 million subscribers, which was less than it did in the quarter a year earlier. But investors seemed to care more about the profits, and Netflix shares gained 11% on Friday. 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 Pierre Bienemé, supervising producer Tali Arbel. I'm Francesca Fontana. Have a great weekend and see you next Saturday.