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From ‘Nvidia Day’ To ‘Opposite Day’
Dollar General's damning commentary, big tech's AI push, GameStop's retro console bet, and tomorrow's core PCE data expectations.
Tom Bruni
August 29, 2024
NEWS
From ‘Nvidia Day’ To ‘Opposite Day’
Source: Tenor.com
Today’s market action was flipped from yesterday, with the stock market indexes going green while Nvidia shares dipped. Earnings drove the largest moves in the market, with retailers and the consumer remaining a key focus area. Let’s see what you missed. 👀
Today's issue covers Dollar General’s damning commentary, big tech fighting for a piece of the AI pie, GameStop’s bet on retro consoles, and expectations ahead of tomorrow’s core PCE inflation data. 📰
Here’s the S&P 500 heatmap. 7 of 11 sectors closed green, with energy (+1.30%) leading and technology (-0.90%) lagging.
Source: Finviz.com
And here are the closing prices:
S&P 500 | 5,592 | -0.01% |
Nasdaq | 17,516 | -0.23% |
Russell 2000 | 2,203 | +0.66% |
Dow Jones | 41,335 | +0.59% |
Most bullish/bearish symbols on Stocktwits at the close: 📈 $SCWX, $FCUV, $DG, $MBD, $BBY 📉 $AILE, $DMRC, $LULU, $GLTO, $AZUL*
*If you’re a business and want to access this data via our API, email us.
EARNINGS
Dollar General’s Damning Commentary 😰
The discount retailer is once again making waves in the market after slashing its full-year revenue and earnings guidance, telling Wall Street that its lower-income customers are struggling significantly in this economy. ⚠️
Adjusted earnings per share of $1.70 on revenues of $10.21 billion missed estimates of $1.79 and $10.37 billion. Same-store sales grew 0.50% YoY, with customer traffic rising enough to offset a decline in average transaction amounts.
Dollar General’s ‘core customers’ earn less than $35,000 annually and account for 60% of total sales. The company has consistently noted that rising costs have made it difficult for those customers to manage their budgets in the current environment, and today signaled those conditions are only worsening. 📉
CEO Todd Vasos said this during the company’s conference call:
I want to provide some additional context around what we're seeing and hearing from our customers. The majority of them state that they feel worse off financially than they were 6 months ago as higher prices, softer employment levels and increased borrowing costs have negatively impacted low income consumer sentiment. As a result, our core customer who contributes approximately 60% of our overall sales comes predominantly from households earning less than $35,000 annually. Inflation has continued to negatively impact these households with more than 60% claiming they have had to sacrifice on purchasing basic necessities due to the higher cost of those items, in addition to paying more for expenses such as rent, utilities and healthcare. More of our customers report that they are now resorting to using credit cards for basic household needs and approximately 30% have at least one credit card that has reached its limit.
In addition, the company has struggled operationally over the last few years due to its overly aggressive expansion strategy. As a result of these headwinds and continued company-specific headwinds, management lowered its full-year earnings and sales growth forecasts materially. ✂️
Shares experienced their largest daily drop ever, falling 32% to roughly 7-year lows. Still, Stocktwits sentiment remained in ‘extremely bullish’ territory, suggesting some retail investors and traders are betting on a rebound. 🤔
Source: Stocktwits.com
In addition to Dollar General, there were a ton of other big earnings movers, but too many to recap. Check out the earnings calendar and sort by percentage change to see some of the top movers and shakers. 🫨
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