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Good Morning! 

Stocks across the world fell yesterday, with all major indexes sliding lower. Tech stocks led most of the decline with Intel dropping more than 20% and other Amazon releasing disappointing earnings.

Grab your flat white and let's get into it! ☕️👇️

Markets

📉 Dow closes nearly 500 points lower on recession fears
Stocks plummeted Thursday, with the Dow Jones Industrial Average falling nearly 500 points as recession fears resurfaced. The S&P 500 lost 1.37% and the Nasdaq Composite slid 2.3%.

Fresh data raised recession fears and concerns about the Federal Reserve's timing on interest rate cuts. Initial jobless claims surged, and the ISM manufacturing index hit 46.8%, signaling economic contraction.

These weak data points followed the Fed's decision to keep rates at a two-decade high, though Fed Chair Jerome Powell hinted at a potential rate cut in September.

👷‍♀️ Intel stock plunges as company announces layoffs
Chip giant Intel reported disappointing second-quarter earnings, missing both top and bottom lines. The company announced a $10 billion cost reduction plan, which includes cutting 15% of its workforce and suspending dividend payments. Intel expects Q3 revenue between $12.5 billion and $13.5 billion, below analysts' expectations of $14.3 billion.

Shares plummeted over 20% in pre-market trading Friday following the news. Intel is undergoing a massive turnaround, aiming to regain market share from rival AMD while expanding its AI chip and third-party foundry businesses.

🔻 MicroStrategy stock tanks 6.5% after Q2 2024 Results
MicroStrategy Inc, the world’s largest Bitcoin holder, reported a Q2 loss of $5.75 per share and revenue of $114 million, down 7% year-over-year. Shares dropped over 6.3% on Thursday following the announcement. The company holds 226,500 BTC, acquired at an average price of $36,821 per Bitcoin, totaling an $8.5 billion investment. In Q2, they added 12,222 BTC for $805 million, with current BTC holdings valued at $14.7 billion.

🐚 Shell launches new $3.5 Billion buyback
Shell announced a new $3.5 billion share buyback, despite a drop in profits due to lower gas prices. This follows a similar buyback earlier this year. Shell has also generated $1.7 billion in structural savings since 2022, with $0.7 billion realized in the first half of this year.

EARNINGS

Amazon

Amazon’s stock took a hit, dropping up to 6% after the company reported weaker-than-expected Q2 revenue and a lackluster forecast. Despite beating earnings estimates with $1.26 per share (vs. $1.03 expected), revenue fell short at $147.98 billion (vs. $148.56 billion expected).

• Earnings: $1.26 per share vs. $1.03 expected

• Revenue: $147.98 billion vs. $148.56 billion expected

• Challenges: Sluggish retail growth, rising competition from discount sites like Temu and Shein

Amazon's finance chief Brian Olsavsky cited a shift towards cheaper products, especially from Chinese competitors like Temu and Shein, impacting average selling prices. To combat this, Amazon is launching a discount store with items mostly under $20, featuring unbranded apparel, home goods, and more.

Meta

Meta’s shares surged over 9% following stellar Q2 earnings, despite warning of "significant" capital expenditure growth in 2025. Investors are closely watching AI spending, hoping for a substantial return from Big Tech’s investments.

Highlights:

• Family of Apps Revenue: $38.72 billion vs. $37.7 billion expected

• Previous Year’s Revenue: $31.7 billion in Q2

CEO Mark Zuckerberg introduced Meta’s latest open-source large language model, Llama 3.1, advocating for open-source AI. Wall Street is keen to see how long Meta's AI investments will take to yield revenue.

With 3.27 billion daily users across its platforms, Meta’s scale and profitability enable bold moves, which Zuck has been previously known for.

Apple

Apple reported a solid fiscal third-quarter performance, with overall revenue rising 5%, beating Wall Street expectations. Despite this, Apple shares remained flat in extended trading.

iPhone revenue reached $39.29 billion, down 1% year-over-year but still accounting for 46% of total sales. CEO Tim Cook mentioned that Apple has significantly increased spending to prepare its new Apple Intelligence service, set to launch this fall.

Cook highlighted the redeployment of staff to AI projects and a hybrid approach to data centres.

Other earnings reports over the last 2 days include:

• Toyota's profit increases 17% to $8.70 bn in Q1 but shares tumble

• Vertex stock slumped on the company's second-quarter miss

• Arm published better-than-expected results but the stock still tanked

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