Steel Drama Unfolds: Esmark’s Takeover Tango Takes an Unexpected Turn
In the stock market rodeo, the shares of United States Steel Corporation (NYSE:X) took a dive during premarket trading on Wall Street, leaving investors to wonder if they should’ve brought their financial umbrellas. The nosedive comes hot on the heels of the previous session’s somber dance moves – a reaction triggered by Esmark, that behind-the-curtains player, deciding to give up its quest for a takeover of the historic alloy producer. It’s like Esmark threw in the towel on their $35-per-share cash offer for U.S. Steel, probably realizing that sometimes chasing a financial unicorn can lead to tripping over your own shoelaces.
And oh, the plot thickens! Esmark’s change of heart comes amidst a dramatic showdown worthy of a steel-clanging showdown. The United Steelworkers (USW) union has declared its allegiance to the rival Cleveland-Cliffs (NYSE:CLF), which has its own set of takeover dreams. In an unexpected twist, Esmark, flexing its non-union muscles, diplomatically waved the white flag, gracefully admitting they’re on board with the USW’s stance.
So, let this be a lesson in the world of stocks – it’s not just about graphs and figures, but about backstage negotiations, unexpected alliances, and enough drama to put a Shakespearean play to shame. Welcome to the stock market, where numbers are just the opening act for a grand performance of financial theatrics.
Stock market today: Dow slips as consumer staples, energy fall to offset tech
Nvidia delivers quarterly earnings that smash expectations as the chipmaker and AI darling proclaims that computing has entered a “new era.” The results push Nvidia shares higher in premarket trading. Meanwhile, a yearly gathering of central bankers in Jackson Hole, Wyoming is set to begin, with investors focused on comments from Federal Reserve Chair Jerome Powell on Friday.
1. Nvidia beats expectations
Nvidia’s (NASDAQ:NVDA) second quarter revenues crushed lofty Wall Street estimates, sending shares higher in premarket U.S. trading on Thursday, as the California chipmaker was boosted by the intensifying frenzy over generative artificial intelligence.
Estimates heading into the earnings were already sky-high, with some sources reportedly calling for sales of $12 billion in the three months ended on July 30 and $14B in the third quarter.
But even those expectations proved to be modest. Revenue came in at $13.5B during the second quarter, more than doubling the prior mark of $6.7B. Nvidia also projected that sales in the current quarter, set to finish in October, would come in at $16B.
The numbers highlight how central Nvidia has become to this year’s hype over AI. The group has long invested in manufacturing graphics processors that power the burgeoning technology, putting it in pole position to benefit from soaring AI demand.
“A new computing era has begun,” Nvidia Chief Executive Jensen Huang said in a statement on Wednesday, adding that the “race is on” to adopt generative AI.
2. Nvidia’s suppliers rally
The global impact of Nvidia’s stellar release was felt in Asia, where the firm’s regional suppliers rose sharply on Thursday.
TSMC (TG:2330y) (NYSE:TSM), Asia’s biggest chipmaker and a key supplier to Nvidia, jumped by 3.7%, while its U.S. listing moved up by over 3% in premarket dealmaking. South Korea’s SK hynix Inc. (KS:000660), which provides Nvidia with memory chips, also climbed by 4.2%.
A prediction from Huang that the AI boom will last well into next year — as well as a $25B share buyback announcement — fueled a rally across most tech stocks in Asia. Chinese heavyweights Baidu (HK:9888) (NASDAQ:BIDU) and Alibaba Group (HK:9988) (NYSE:BABA) rose in Hong Kong, pushing up their New York listings premarket as well.
Baidu in particular was among the best performers in the region, lifted by strong quarterly returns that were themselves supported by AI demand.
3. ‘Higher for longer’ debate rages ahead of Jackson Hole
Central bankers from across the world will begin an annual two-day economic symposium on Thursday in Jackson Hole, Wyoming, with markets eager to receive any clues about the future direction of interest rate policy.
Much of the conversation ahead of the event has swirled around the implications of recently stronger-than-anticipated U.S. economic data. Fed officials have in recent days floated the idea that the numbers may suggest that another uptick in borrowing costs could be appropriate, confounding some market predictions that cooling inflation would persuade the U.S. central bank to start stepping back from a long-standing tightening campaign. Indeed, policymakers even flagged “upside risks” to price growth in the minutes of the Fed’s latest meeting.
But the issue was further complicated by figures on Wednesday that indicated that U.S. business activity growth was its weakest since February. U.S. Treasury yields, which soared last week, slipped as traders guessed that the Fed now had less headroom to keep interest rates higher for longer.
The Fed has previously stressed that it will remain “data-dependent” — however, what it actually makes of the current numbers remains uncertain. Investors are hoping that a speech by Federal Reserve Chair Jerome Powell from Jackson Hole on Friday may provide more clarity.
4. Futures mixed amid Nvidia earnings, Jackson Hole event
U.S. stock futures were mixed on Thursday as investors digested Nvidia’s better-than-anticipated results and looked ahead to the beginning of the Jackson Hole symposium.
At 05:26 ET (09:26 GMT), the Dow futures contract dropped by 36 points or 0.10% and S&P 500 futures rose by 23 points or 0.52%.
Futures for the tech-heavy Nasdaq 100 was the standout performer, increasing by 172 points or 1.13%, reflecting the excitement sparked by Nvidia’s numbers and bullish outlook.
Earlier this year, a sterling first quarter report from Nvidia helped drive a broader AI-inspired stock market rally. Prior to its latest earnings, analysts were predicting that strong returns could have a similar impact.
5. Oil volatile following mixed stockpile report
Oil prices inched higher, paring back earlier losses, on Thursday after a mixed stockpile report from the Energy Information Administration.
Data on Wednesday showed an unexpected, substantial build in U.S. gasoline and distillate inventories over the past week, which pointed to weakening U.S. fuel demand. However, crude inventories saw a larger-than-anticipated draw of 6.1 million barrels to 433.5M barrels, bringing the number 2% below its five-year average.
By 05:26 ET, the U.S. crude futures traded 0.1% lower at $78.97 a barrel, while the Brent contract rose by 0.1% to $83.31.
‘AI King Reigns Supreme’: Nvidia Obliterates Expectations in the Face of Soaring Demand
Nvidia (NASDAQ:NVDA) just dropped a financial bombshell that left everyone’s calculators in the dust. With the AI revolution gaining momentum faster than a caffeinated cheetah, their latest report is the equivalent of a victory lap for the silicon sensation.
In a pre-market magic trick, their shares skyrocketed by over 7.5% on Thursday. Looks like someone spiked the trading charts with adrenaline!
Hold onto your calculators, because Nvidia spat out an adjusted EPS of $2.70 on a revenue feast of $13.51 billion. Meanwhile, analysts polled by Investing.com were left scratching their heads, expecting a mere EPS of $2.07 on the smaller platter of $11.13 billion.
But here’s the pièce de résistance: their data center business strutted onto the stage, showing off a 171% leap to a staggering $10.32 billion from the previous year. It’s like they traded in their business shoes for rocket boots! Businesses are ditching their general-purpose computing like last season’s fashion and flocking to accelerated computing and generative AI like it’s a limited edition sneaker drop.
Petco’s Profit Paw-sition Takes a 14% Plunge Following Earnings Ruff-lation
Petco Health and Wellness Company (NASDAQ:WOOF) is barking up a storm in the stock market today, with its shares seeing a hefty 14% dip during early Thursday trading. What’s got investors howling? Well, it seems Petco had to trim its tail – I mean, tale – of full-year profit expectations.
Picture this: Petco’s crystal ball now predicts that the adjusted earnings per share (EPS) for the entire 2024 fiscal year will be wagging in the range of 24 cents to 30 cents. That’s a significant downward adjustment from the previously projected range of 40 cents to 48 cents. Someone fetch the calculators, we’ve got some serious math-fetching to do!
Investing smart is like being a savvy shopper in the grand marketplace of opportunities. It’s not about impulsively grabbing every shiny thing that catches your eye – that’s the financial equivalent of buying ten different flavors of ice cream when you’re lactose intolerant. No, investing smart is more like carefully selecting that one scoop of triple-chocolate-fudge with just the right balance of risk and potential. So, grab your financial shopping cart and remember, the best returns are the ones that leave you satisfied, not scrambling for the antacid tablets.