Weekly Recap

• Indexes saw a BULLISH reaction last week. In a tremendous comeback, major U.S. stock indexes recorded their strongest weekly gains of 2024.The NASDAQ surged more than 5%, the S&P 500 added 4%, and the Dow rose 3%. Investors were encouraged by optimistic data on inflation, retail sales, and consumer sentiment.
• Economic signs point to an official U.S. recession. July's Producer Price Index (PPI) rose 0.1% month-over-month and 2.2% year-over-year, coming in below economists' forecasts. The 1.0% month-over-month sales gain in July surpassed economists’ consensus forecast for around 0.4%. University of Akron’s endowment committee chairman Dennis Gartman told Morning Brief, "It's highly probable that we'll get a 25, maybe 50-basis-point cut in the overnight Fed funds rate at the September meeting."
• Preliminary data from University of Michigan rolled in. While Friday’s preliminary reading from the University of Michigan’s Consumer Sentiment Index exceeded most economists’ expectations, August’s reading of 67.8 it was still below a recent high of 79.6 in February. Consumers’ expectations of inflation over the next year remained at their lowest level since December 2020.
• Gold hit a new record high over $2,500. Gold rallied to record high on softer dollar, rate-cut expectations. The gold spot price rose to a record high of $2,509.41 an ounce.
• Berkshire Hathaway bet big on Ulta. The Warren Buffett-led conglomerate said in a regulatory filing on Wednesday that it purchased 690,106 shares of the beauty retailer in Q2.
• Social media platform X closed operations in Brazil. The Elon Musk-led company said Saturday it will close its operations in Brazil, claiming Brazilian Supreme Court Justice Alexandre de Moraes threatened to arrest its legal representative in Brazil if they did not comply with orders. The move was effective immediately.
• The earnings score card looked good. As of Friday, analysts were expecting S&P 500 companies overall to post a 10.9% second-quarter earnings increase compared with the same quarter a year earlier, according to FactSet.
• Both Paramount Global and Disney reported earnings. Results revealed both companies had their first quarter of profits in their respective streaming businesses after multiple quarters of bruising losses.

Most Active Stocks

• Nvidia Corp. (NVDA)
• Palantir Technologies (PLTR)
• Tesla (TSLA)
• Nu Holdings (NU)
• Rocket Lab USA (RKLB)

Biggest Gainers

• Aspen Aerogels (ASPN) +22.57%
• Rocket Lab USA (RKLB) +12.52%
• H&R Block (HRB) +12.11%
• QXO (QXO) +11.19%
• Lotus Technology (LOT) +12.43%

Biggest Losers

• Repligen Corp. (RGEN) -9.26%
• Astera Labs (ALAB) -5.52%
• Mitsubishi Heavy Industries (MHVIY) -4.33%
• Rivian Automotive (RIVN) -4.00%
• Neogen Corp. (NEOG) -3.81%

Weekly Notables

Canadian Labor Dispute Could Disrupt U.S. Supply Chain This Week

Canada's two largest railroads have begun to shut down their shipping networks. A labor dispute with the Teamsters union threatens to cause lockouts or strikes that would disrupt cross-border trade with the U.S.

Both the Canadian Pacific Kansas City and Canadian National railroads have stopped taking certain shipments of hazardous materials and refrigerated products.

Warren Buffett's Berkshire Hathaway Makes Bet on Ulta

On Wednesday Berkshire Hathaway, the Warren Buffett-led conglomerate, revealed in a regulatory filing that it bought 690,106 shares of beauty retailer Ulta in the second quarter, worth roughly $266 million as of the end of June. Ulta stock jumped over 11% on Thursday and continued to rally on Friday, up 14.6% since Berkshire disclosed its holdings.

Boeing, Lockheed Martin in Discussions to Sell Rocket-launch Firm ULA to Sierra Space

According to two people familiar with the discussions, Boeing and Lockheed Martin are in talks to sell their rocket-launching joint venture United Launch Alliance to Sierra Space. The potential deal could value ULA at around $2 billion to $3 billion, the sources said. The negotiations could also end without a deal, the sources added.

The Week Ahead

• Potential market moving catalysts this week include: The Conference Board Leading Economic Index for the U.S. on Monday, the release of minutes from the July 30–31 meeting of the U.S. Federal Reserve on Wednesday, and existing home sales data from the National Association of Realtors on Thursday as well as weekly unemployment claims from the U.S. Department of Labor. On Friday investors can expect U.S. Federal Reserve Chair Jerome Powell’s speech at conference in Jackson Hole, Wyoming and new home sales from the U.S. Census Bureau.
• Earnings on deck this week include: Estee Lauder (EL), Palo Alto Networks (PANW), Lowe's (LOW), Toll Brothers (TOL), Alcon (ALC), Macy's (M), Target (TGT), Snowflake (SNOW), TJX (TJX), Urban Outfitters (URBN), Dycom Industries (DY), Ross Stores (ROST), Advance Auto Parts (AAP), BJ's Wholesale Club (BJ), Baidu (BIDU), and Intuit (INTU).

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"We think a key highlight of Powell's speech will be the acknowledgement that progress on inflation has been sufficient to allow the start of rate cuts." 

- Economists at BNP Paribas

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Earnings Spotlight: Target

Target will report earnings ahead of markets opening Wednesday, Aug. 21, following encouraging retail sales data and earnings from retail rival Walmart last week. According to analysts, Target is expected to see its sales and profits rise from the same time last year. JPMorgan analysts expect Target to lower the top range of its full-year earnings per share (EPS) projections.