NEWS
Dollars Don’t Grow On Trees

The labor market continues to cool, causing market participants to push their bets for a 50 bp September rate cut even further. Meanwhile, it was a mixed day in the market with defensive stocks continuing to lead the way. 👀

Today's issue covers Dollar Tree getting cut down, today’s biggest M&A deals, C3.ai’s post-earnings breakdown, and a classic example of a ‘broken’ growth stock. 📰

Here’s the S&P 500 heatmap. 6 of 11 sectors closed green, with utilities (+0.85%) leading and energy (-1.38%) lagging.

And here are the closing prices: 

Most bullish/bearish symbols on Stocktwits at the close: 📈 $FYBR, $BYRN, $AIEV, $SOAR, $YEXT 📉 $HPE, $CASY, $ZS, $CXM, $AI*

*If you’re a business and want to access this data via our API, email us.

EARNINGS
Dollars Don’t Grow On Trees, Apparently 😰

They say money doesn’t grow on trees. And unfortunately investors and traders in dollar stores are learning dollars don’t grow in the stores either. 😭

After Dollar General’s lackluster results sent the stock to multi-year lows, Dollar Tree is following suit today. The dollar store giant cut its full-year forecast, citing increasing pressure on middle-income and higher-income consumers who also shop at the chain during challenging environments.

Management said, “Our original second-quarter outlook did not anticipate those pressures migrating to Dollar Tree’s customer base to the degree that they did.” 🛒

Same-store sales rose 0.70% for the entire company, jumping 1.30% at Dollar Tree stores, while Family Dollar’s same-store sales fell 0.10%.

The company’s $9 billion acquisition of Family Dollar in 2015 was supposed to strengthen its grocery offerings and improve its competitiveness vs. Dollar General. But now it seems like Walmart’s value-oriented strategy around groceries is sucking up market share across all income groups. 🥔

Additionally, liability claims remain a headwind for the company, with management saying this about the potential outcomes, “…it has become increasingly challenging to predict given the higher settlement and litigation costs that have resulted from a more volatile insurance environment.” 

Shares fell 22% on the day toward an 11-year low as Stocktwits sentiment dipped further into ‘extremely bearish’ territory. 🐻

As for the economy, the JOLTs data showed a continued cooling of the labor market during July. The number of open jobs per unemployed worker fell to 1.10, now firmly below its pre-pandemic highs. 👨‍💼

This will continue to relieve pressure on wages and give the Fed the justification it needs to cut rates beginning this month. We’ll wait and see if the rest of the labor market data this week confirms this and sets the Fed up for a 50 bp cut the market is hoping for. ✂️

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