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Wednesday's Scoop: Shaken 🌦️
Oracle deals out your data & Ford backs off electric
Scoops Team
July 24, 2024
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Here’s what you need to know today to inform your work, spending, and investments:
🌎 Big picture
The US economy is still growing, but prices aren’t.
Mortgage costs keep drifting lower.
Low home affordability has stalled new home sales.
How are you feeling about the economy? |
💼Work trends
Unemployment Rate: 4.1%
Not far from 50-year lows
The US economy is still growing, but prices aren’t. In July, S&P Global’s composite Purchasing Managers Index (PMI), which tracks business activity across the manufacturing and service sectors, rose to the highest level in over two years. Manufacturing activity fell to a seven-month low, while service sector activity hit a 28-month high, highlighting the contrasting trends within the economy. The services sector accounts for most of the economy. Despite the pickup in business, firms reported challenges in maintaining higher prices for goods and services as consumers pushed back on inflated price tags. S&P Global’s gauge of prices charged fell to the lowest rate since January and the second slowest since October 2020. Strong business activity without inflation is ideal for the economy.
🏠Housing trends
30yr Mortgage Rate: 6.8%
That’s down from 7.1% a year ago. (MBA)
Median Home Price: $426,900
That’s up from $410K a year ago. (Existing Homes, NAR)
Mortgage interest rates fell slightly last week, but not enough to encourage potential homebuyers. The Mortgage Bankers Association reported that the average 30-year fixed-rate mortgage decreased to 6.82% from 6.87%, the lowest since February. Despite this, applications for home purchases fell another 4% from the previous week and are now 15% lower than the same week a year ago.
Stubbornly high mortgage costs and home prices stalled buying again last month. According to the Commerce Department, new home sales in the US fell for the second straight month in June. Contract signings on new single-family homes decreased by 0.6% to a 617,000 annual pace, the lowest since November. This decline follows a significant drop in May. Mortgage rates have dipped below 7% recently but remain twice as costly as they were a few years ago. Builders continue to add supply, pushing inventory to the highest level since 2008 and slowing climbing prices. The median sales price of a new home in June was $417,300, barely changed from last year. Existing home sales have also stalled, so it looks like it would take a steep drop in mortgage rates to spur more buying.
📈Investment trends
The Market: ⬇️ -2.3%
S&P 500: 5,427.13
1Mo: -1%| 1Yr: +19%| 5Yr: +79%
The market tumbled today, dragged down by investors selling shares of Google and Tesla after their underwhelming financial updates. Big Tech is so big that it moves the market. It's been responsible for most of the rally this year, and investors have high expectations for their continued growth.
🤓 Inside Scoop: How do big tech companies impact the overall stock market?
The performance of Big Tech companies is critical to overall sentiment in the stock market. The Big Six —Apple, Microsoft, Amazon, Alphabet (Google), Meta and Nvidia—are so enormous compared to every other company that their fluctuations in value drive the changes in The Market as a whole.
The S&P 500 index is the primary way people track whether The Market is rising or falling. It’s a number that follows the value of the biggest 500 public companies in the US. As with most indexes, the actual number isn’t as significant as the direction it moves. It helps us understand whether America’s biggest corporations are growing. Daily fluctuations are very normal.
Because the S&P 500 Index is weighted by company size, the Big Six alone account for more than a quarter of the total size of The Market. The other ~494 companies make up the additional ~70%. So, any changes in the prices of those Big Tech companies’ stocks disproportionately affect the perception of how the whole market is doing.
🏭 Companies worth watching
👍👎 APPROVAL RATINGS
Vote and practice your board member voice. It accelerates your comprehension and comfort with these topics. (+2 pts)
 Oracle | Violating Privacy Oracle agreed to pay $115M to settle a lawsuit over allegations of privacy invasion by collecting and selling personal data profiles on hundreds of millions of people without consent for years. The database and cloud computing company will also stop gathering certain user data from URLs and online forms as regulatory scrutiny pressure mounts.
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 Ford | EV Backtracking Ford will slow its electric vehicle releases and repurpose a Canadian factory initially slated for electric SUVs for larger gasoline-powered trucks due to slowing electric vehicle demand. The automaker's electric business has weighed on profits, and it is on track to lose over $5B this year.
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 Meta Platforms | Sextortion Banned Meta removed tens of thousands of Nigerian accounts involved in extortion scams on Instagram and Facebook demanding money while threatening to release sexually compromising photos. The social media giant faces mounting criticism for failing to protect users, especially children, from sexual predation and threats.
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💭Broader perspectives… (+ 2pts)
Do you feel like social media scammers have gotten worse? |
 Mattel | Toy Shopping Mattel, the toymaker behind Barbie and Hot Wheels, hasn't been able to offset its waning toy sales with movie and media partnerships, reporting another weak quarter. Luxury brands giant LVMH and investment firm L Catterton have reportedly approached the toymaker about a potential buyout.
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 Chipotle | Healthy Growth Chipotle continues to deliver premium results, reporting surging revenue from higher prices and a 9% increase in restaurant traffic last quarter despite a broader slowdown in the fast food industry. The burrito chain plans to open 285-315 new restaurants this year.
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🛠️ Recommended resources (+2 pts)
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