Tuesday, August 13th, 2024
The promise of today’s pre-market carried through to the closing bell. Positive results from this morning’s wholesale inflation report — the Producer Price Index (PPI) — and a real shot in the arm for Starbucks SBUX ahead of today’s open got the ball rolling, and market indexes closed at session highs: the Dow +407 points, +1.04%, the S&P 500 +1.68%, the Nasdaq +408 points, +2.43%, and the small-cap Russell 2000 gained +1.53%.
Starbucks Shares Skyrocket on CEO News
Normally, when we see the Nasdaq dominate the other indexes, it’s because tech stocks have led the way. Today, however, Starbucks news that the company will be replacing CEO Laxman Narasimhan with current Chipotle CMG CEO Brian Niccol, shares of the retail coffee giant shot up +11% almost immediately, closing +24.5% for the day. Starbucks had been struggling in recent quarters to hit revenue expectations, and the increasing clamor from activist investors put heavy pressure on the company’s board.
Chipotle, meanwhile has been a model of consistency and outperformance (only one slight earnings miss in the past three years), largely due to Niccol’s understanding of the quick-service restaurant (QSR) market and Chipotle’s unique position in it. Thus, while Starbucks shares are down -5% over the past year — even with today’s big surge — Chipotle has gained +39% over the past year. Losing Niccol’s services has caused a -7.5% selloff in CMG shares today.
Consumer Price Index (CPI) in Focus Wednesday Morning, CSCO Q4 in the Afternoon
The PPI’s sister report, the CPI, tracks retail inflation on a monthly and yearly basis. Its report comes out tomorrow ahead of the opening bell, expecting to swing to a positive +0.2% on month over month headline from -0.1% for June (core was +0.1% a month ago). Year over year CPI — otherwise known as the Inflation Rate — is expected to remain steady at +3.0% on headline, down 10 basis points (bps) to +3.2% on core.
After tomorrow’s close, we’ll see fiscal Q4 results for Cisco Systems CSCO. The Zacks Rank #2 (Buy)-rated networking products giant had previously guided conservatively for the quarter, which will pretty much assure another earnings beat; Cisco simply does not miss on earnings. That said, it’s expected the company will report earnings per share -25% year over year, -11% on the top line. Shares are down -10% year to date.
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