Inflation’s downward progress has the market getting its rate cut hopes up and embracing other sectors outside of big tech. Stocks ended the week mixed but broadly in the green today on the back of better-than-expected economic data. Let’s see what else you missed. 👀

Today's issue covers disinflation helping the appetite for industrial socks, tech consulting firm Booz finally getting bruised, Andrew Left being sued by the SEC, and three beaten-down names bouncing back. 📰

Here's today's heat map:

11 of 11 sectors closed green. Communications (+1.87%) led, & energy (+0.32%) lagged. 💚

Russia’s central bank hiked rates by 200 bps to 18% and promised further tightening as it fights inflation well above its 4% target. 🔺

Biogen shares fell 7% after European drug regulators rejected the Alzheimer treatment it’s developing with Eisai, saying its risks outweigh the benefits. ❌

New York private equity firm Apollo Global Management is buying Everi Holdings and International Game Technology (IGT) 's gambling and slot machine business in a $6.30 billion deal. 🎰

WW International dropped 13% after Morgan Stanley downgraded it from overweight to equal weight, citing obesity drugs as a long-term headwind. 💊

Food delivery stock DoorDash rose 4% after Redburn Atlantic initiated coverage as a buy and forecasted a 68% upside from current levels. 🥡

Here are the closing prices: 

Industrial stocks (and other cyclicals) have been a big theme this year as money rotates beyond big tech and into other sectors. And today that trend continued, with Dow component 3M soaring after earnings. 🤯

The stock had its best day in history, rising 23%, while investor sentiment on Stocktwits hit a one-year high (95/100). Its earnings and revenue surpassed analyst estimates, and management also raised its full-year profit forecast.

After a rough few years, the company embarked on a turnaround plan marked by significant restructuring, including the spin-off of its healthcare division, workforce reductions, and facility closures. ❤️‍🩹

CEO Bill Brown’s strategic pivot towards higher-growth areas such as automotive electrification and climate technology has helped the company stabilize. In May, he made it clear to employees that the company’s top priorities are innovative-driven organic growth and operating efficiency, and so far, those efforts are paying dividends.

Analysts also applauded the company’s efforts to manage its legal liabilities and external factors, such as improving end markets for electronics. 👏

But 3M is not the only industrial company enjoying the limelight. Railroad operator Norfolk Southern rose 11% after beating earnings estimates, and FTAI Aviation made new all-time highs after beating revenue. 🌟

And don’t forget aerospace and defense, which is hot for obvious reasons.

Point being, investors are buying up industrial stocks across the board and don’t see this trend slowing down anytime soon. We’ll have to wait and see if that bullish bet on the economy and the Fed pays off. So far, it certainly has. 💸

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Consulting firms have had a rough time, especially those in the tech space. One exception has been management and tech consulting giant Booz Allen Hamilton, buoyed by its government/military clientele. 🛡️

As recently as last quarter, the company touted a strong backlog of work and strong potential for artificial intelligence (AI) to improve efficiency and provide additional revenue sources.

However, that bullish thesis was questioned today after the company’s adjusted earnings per share of $1.38 came in well below the $1.52 expected by analysts. 🤔

Management said headcount rising 7.70% YoY and a gap between new hires’ start dates and when they became billable raised costs for the current quarter and hurt margins.

Although it stuck by its previous full-year revenue and earnings guidance, the stock’s largest daily decline since early January 2021 suggests some investors are uneasy about seeing a chink in their shining knight’s armor. 😬

Despite the decline, retail investors are sticking with the stock as Stocktwits sentiment meter remained in “extremely bullish” territory as users discussed the news. Time will tell if they’re right, but for now, the stock’s short-term momentum has shifted to the downside. 🐂

Several of today’s biggest earnings movers came from the bottom of the proverbial barrel, and investors have mixed feelings about their turnaround.

Newell Brands had its best day ever, rising 40% after signs emerged that the company’s turnaround efforts are working and management raised its full-year guidance. The Yankee Candle and Crock-Pot maker expects its sales to decline less than anticipated, with earnings picking up alongside margins. Stocktwits sentiment hit bullish territory for the first time in over a month. 🕯️

Charter Communications had its best day ever, rising 17% after reporting narrower-than-expected internet subscriber losses. Its profits also beat expectations, with Evercore ISI analyst Vijay Jayant saying the company saw a “broad-based upside across nearly every line item that matters.” Stocktwits sentiment stayed in bearish territory (33/100), suggesting continued skepticism from retail investors. 📡

Bristol-Myers Squibb bounced back 11% after its second-quarter earnings and revenue topped estimates, primarily driven by its blockbuster blood thinner Eliquis and its current growth drug portfolio. Management raised its full-year revenue and earnings guidance as its big bets show promise. Stocktwits sentiment hit a 1-year high in “extremely bullish” territory (96/100). 💊

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Short seller Andrew Left and his firm Citron Research have made it their mission to find bad companies and short them into eternity. But what if they were one of the bad companies they were searching for all along? 🤔

That’s what the Securities and Exchange Commission (SEC) alleges in its new lawsuit against the short seller and his related companies. 🙃

The civil complaint accused Left and Citron of “engaging in a $20 million multi-year scheme to defraud followers by publishing false and misleading statements regarding his supposed stock trading recommendations.”

It alleges Left used his public platform to manipulate stock market activity and rake in $16 million in illegal profits from 2018 through 2023.

The fraudulent conduct is related to 23 companies on at least 26 separate occasions and involved him allegedly trading positions that contradicted his public statements and tipping other hedge funds ahead of his publications in return for a kickback. 🫨

As for Left’s response, his lawyers said that the DOJ and SEC’s allegations mean that Left had a duty to disclose his private trading intentions when publishing truthful information, and that theory is defective for several reasons. You can read more of their comments here, but that was the main gist.

Retail investors and traders quickly jumped on the news, given that Left and Citron were caught up in (unsuccessfully) shorting GameStop during the pandemic. Let’s just say this group doesn’t typically like the SEC but made an exception this time to cheer its lawsuit against Left.

“The enemy of my enemy is my friend,” as they say… 😆

Time will tell how this all plays out, but the situation raises many questions about short selling, public disclosures, social media activity, and more. We’ll certainly keep an eye on this as it develops. 🧐

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