📈 Rates Hold Steady

Good afternoon! Spirit Airlines ($SAVE), the master of budget travel where every perk costs extra, is trying to class things up—well, sort of. The airline, famous for charging passengers for everything from bags to water, is rolling out a new "Go Big" package. This highest-priced tier comes with free Wi-Fi, a checked bag, a carry-on, and unlimited snacks and drinks, including alcohol. The goal? To compete with premium carriers like Delta ($DAL) and United ($UAL) by offering a little more comfort without losing its low-cost edge.

This move comes as Spirit faces challenges in the profit department, warning of a bigger-than-expected quarterly loss due to lower-than-anticipated revenue from add-on fees. The airline industry overall is feeling the squeeze, with high travel demand but weak ticket prices leading to disappointing earnings.

MARKETS

• The Nasdaq jumped, fueled by stellar earnings from semiconductor stocks, and tech stocks also lifted the S&P 500. Even the Dow joined the party, wrapping up a strong month for the index.

• Treasury yields seesawed throughout the day, but following the 2 pm FOMC announcement (more on that below), they finally dipped.

STOCKS
Winners & Losers

What’s up 📈

• Match Group ($MTCH) skyrocketed 13.21% after revealing plans to cut headcount to offset declining subscriber numbers.

• Arista Networks ($ANET) jumped 11.32% on strong demand from AI users for its data centers.

• AutoNation ($AN) surged 6.30% as the company reported impressive growth despite a major cyberattack on its car dealerships earlier this year.

• DuPont ($DD) climbed 4.10% with investors optimistic about the chemical company’s ongoing turnaround efforts.

• Starbucks ($SBUX) edged up 2.65%, as shareholders focused on optimistic business forecasts rather than missed sales expectations.

• Boeing ($BA) gained 2% in a surprising move after weak earnings, with investors showing confidence in the new CEO, Robert Ortberg..

What’s down 📉

• Pinterest ($PINS) plummeted 14.46% following disappointing guidance for the third quarter.

• Humana ($HUM) plunged 10.60% despite beating earnings expectations, as investors focused on rising medical expense ratios.

• Marriott International ($MAR) dropped 4.80% after missing analyst forecasts and guiding for lower profits in the next quarter.

• Skyworks Solutions ($SWKS) slipped 3.46% as the semiconductor company reported declining demand for its automotive chips.

• Altria Group ($MO) declined 3.09% after falling short of analyst expectations and narrowing its forward guidance due to lower cigarette sales.

• Microsoft ($MSFT) dipped 1.08% as earnings revealed the extended timeline needed for its AI investments to pay off.

ECONOMY
Fed Keeps Rates Steady, But September Cut Looms

Jerome Powell took center stage at the Fed’s July meeting, setting the scene for what could be a rate-cutting September—if the data plays nice. While Powell didn’t drop any explicit hints, his optimism on falling inflation and a cooling labor market has Wall Street betting on a September rate decision.

Here’s the scoop:

1. September Cut in the Cards? Powell kept things ambiguous but hinted at a possible rate cut in September. The Fed had a “nice conversation” about it, and while a 50 basis-point move isn’t likely, Powell left the door open for action if conditions warrant.

2. A Delicate Balancing Act: Powell described the decision-making process as a “very difficult judgment call,” outlining scenarios from multiple cuts to none at all. The plan? If inflation keeps easing, growth holds steady, and the job market doesn’t fall apart, a cut could be on the horizon.

3. Dovish Vibes: Powell’s remarks leaned more dovish than the official FOMC statement. With inflation risks decreasing and the labor market softening, he’s still banking on a soft landing for the economy.

4. Market Reactions: The stock market loved it, with the S&P 500 inching towards its best day since February. Treasury yields dipped, and the dollar slid as traders began pricing in at least two rate cuts by year’s end.

5. Patience, Grasshopper: Despite the growing anticipation, Powell emphasized patience. The Fed’s dual mandate—curbing inflation while keeping employment high—requires careful maneuvering. Investors might need to wait for the weather (and rates) to cool down.

So, as summer sizzles on, the Fed’s next move is still in the oven. Keep an eye on those labor market stats and inflation readings; they’re the key ingredients for what happens in September.

NEWS
Market Movements

• Nvidia ($NVDA) shares surged 12.81% following strong results from AMD, boosting confidence in the semiconductor sector.

• Nancy Pelosi loads up on Nvidia ($NVDA) shares while trimming her Microsoft ($MSFT) stake ahead of Q4 earnings.

• Bill Ackman called off Pershing Square’s IPO after failing to meet fundraising targets.

• Meta ($META) agreed to a $1.4 billion settlement with the state of Texas over allegations that the company used facial recognition to collect data on Texans without their consent.

• U.S. National Debt surpassed $35 trillion for the first time

• Tesla ($TSLA) issued its ninth recall of 2024, affecting over 1.8 million vehicles to fix faulty latches that could cause “unintended hood opening events.”

• Boeing ($BA) named former Collins Aerospace CEO Kelly Ortberg as the replacement for Dave Calhoun.

• Microsoft ($MSFT) encountered another series of outages in its apps and services, unrelated to the earlier Crowdstrike outage this month.

• Amazon ($AMZN) aims to speed up deliveries in rural America, pushing further into under-served markets.

• Stellantis is offering a new round of voluntary buyouts to its U.S. salaried workers

• Disneyland workers ($DIS) voted to approve a new contract with wage hikes, avoiding a potential strike that could have halted operations at the California theme park.

• An older GLP-1 drug from Novo Nordisk may slow Alzheimer’s disease, according to a recent study.

• UBER ($UBER) and BYD ($BYDDY) are partnering to introduce EVs to the ride-hailing platform globally.

• Friend, a $99 AI wearable that listens in on your life and texts you based on what it hears, is set to ship in early 2025.

EARNINGS
Meta's Q2: The Zuck Strikes Back

Meta ($META) is having a moment. Shares popped nearly 7% in after-hours trading after the company not only beat Wall Street’s expectations but also threw down a strong forecast for Q3. So, what’s driving the hype? Let's dive in.

By the Numbers

• Earnings per Share: $5.16 vs. $4.73 expected

• Revenue: $39.07 billion vs. $38.31 billion expected

• Q3 Revenue Forecast: $38.5 billion to $41 billion

• Ad Revenue Growth: 22% year-over-year

• Reality Labs Loss: $4.5 billion this quarter

• Operating Margin: 38%, up from 29% a year ago

• 2024 Share Performance: Up 34% year-to-date

Core Business Keeps Delivering

Despite all the chatter about the metaverse and Reality Labs burning through cash like it’s going out of style (a $4.5 billion loss this quarter, no less), Meta's core business—digital advertising—continues to deliver. Ad revenue alone soared 22% year-over-year, driven largely by the Facebook and Instagram power duo. That’s more than double what rival Alphabet ($GOOGL) pulled off with its ad sales.

On the spending side, Meta's AI and virtual reality ambitions are no small potatoes. The company is shelling out big bucks on infrastructure, with expenses expected to surge even more in 2025 as they continue to scale up. But with AI being the buzzword of the year, investors are keeping a close eye on when those hefty investments will start paying off.

Mark Zuckerberg, Meta's head honcho, is bullish. He’s not only talking up Meta AI as potentially the most used AI assistant by year-end but also boasting about their Ray-Ban Meta AI glasses (because nothing says futuristic like AI-infused eyewear). Plus, Meta’s open-source AI model, Llama 3.1, is making waves in the tech world, pushing the company to the forefront of the AI race.

The Reality Labs Money Pit

Even with all this success, it's not all sunshine and rainbows. Reality Labs, Meta’s bet on the metaverse, is still a money pit, and the legal bills are piling up too. The recent $1.4 billion settlement with Texas over facial recognition data is a reminder that Meta's past still haunts it.

But for now, Zuckerberg's 2023 "year of efficiency" mantra is paying off. Meta’s operating margin jumped to 38%, and the company’s cost-cutting measures seem to be hitting the right notes with investors. With shares up 34% for the year, double that of the Nasdaq, Meta's comeback story is one for the books.

Calendar
On The Horizon

All eyes were glued to the FOMC announcement today, but now that the dust has settled, things are cooling off as we head into the rest of the week. We’re still on the lookout for updates with weekly jobless claims, which will shed more light on the labor market, while Q2 nonfarm productivity, ISM manufacturing, and the S&P US manufacturing PMI will offer insights into how the manufacturing sector is faring this month.

On the earnings front, there’s still plenty of action to keep an eye on.

Before Market Open:

• Anheuser-Busch Inbev (BUD) has seen its stock slide over the last year, largely due to a customer boycott following a controversial ad campaign. Adding salt to the wound, competitors like Diageo are also reporting weaker alcohol sales as consumers tighten their belts. Despite these challenges, BUD's brand power remains strong, and Wall Street is still optimistic, with an average analyst price target 26% higher than current levels. Expectations: $0.87 EPS, $13.56 billion in revenue.

• Ferrari (RACE) might seem like it’s in the same boat as other luxury brands dealing with consumers cutting back, but not so fast. Ferrari buyers aren’t feeling the pinch of inflation like most folks, and analysts believe the company will keep raking in the profits. Expectations: $2.23 EPS, $1.74 billion in revenue.

After Market Close:

• Apple (AAPL) made waves in June at its WWDC event, unveiling AI projects, new phone upgrades, payment services, and more. This earnings report will give investors a closer look at how these new ventures are impacting the bottom line. Wall Street remains bullish, with just one out of 35 analysts rating Apple a “sell.” Expectations: $1.34 EPS, $84.36 billion in revenue.

• Amazon (AMZN) hasn’t seen the same sky-high gains as some other tech giants this year, but investors are still confident in its cloud business, post-pandemic profitability, and AI initiatives. And if you thought the love for Apple was strong, every one of the 39 analysts covering Amazon rates it a “buy.” Expectations: $1.03 EPS, $148.57 billion in revenue.