Weekly News Recap 19 – 23 August 2024

News for 19 August 2024

Gold Closes the Week Above $2,500/oz, Sees Slight Dip This Morning

Last week, gold prices rose to a peak of $2,509/oz. The increase was driven by disappointing U.S. housing starts data, which put pressure on the dollar. Housing starts plunged 6.8% to 1.24 million units in July, contrary to analysts’ expectations of an increase to 1.34 million units from 1.33 million units in June. Additionally, the dollar index weakened from 103.00 to close at 102.44, supporting the rise in gold prices.

On August 19th at 20:15, there will be a statement from Waller, a member of the U.S. Federal Reserve.

Mastercard to Lay Off Employees in Cost-Cutting Move, Focus on Core Business

On Friday, August 16, a spokesperson for Mastercard announced that the company plans to reduce its global workforce by 3%, affecting approximately 1,000 employees. This move is part of a broader organizational restructuring announced earlier this year, aimed at focusing on the company’s core business operations.

According to a report by Reuters, Mastercard, headquartered in Purchase, New York, had a total of 33,400 employees at the end of 2023. The majority of the impacted employees will be notified by the company within the third quarter of 2024.

Harris Campaign to Spend $370 Million on Advertising in Key Battleground States

The campaign team for Kamala Harris, the Democratic candidate for U.S. President, is set to spend at least $370 million on television and online advertisements in key battleground states.

The campaign plans to allocate $170 million for television ads and $200 million for online platforms like Hulu, YouTube, Paramount, and Spotify over the nine weeks leading up to Election Day.

Additionally, the Harris campaign is preparing for a major advertising blitz in the fall, during the final stretch of the election, following the national conventions of both the Republican and Democratic parties. This effort will be aimed at persuading voters in swing states where the competition is expected to be tight.

News for 20 August 2024

Gold Rebounds This Morning, Closes Above $2,500/oz

On August 19, gold prices rebounded, closing above $2,500 per ounce. This surge comes as markets anticipate the possibility of the Federal Reserve signaling further monetary easing at the upcoming Jackson Hole meeting in Wyoming, scheduled for August 22-24. The weakening of the U.S. dollar has further supported the rebound in gold prices.

No significant economic data was released during the day that could have impacted the market.

Analysts at Citigroup have issued a report predicting that gold prices could soar to $3,000 per ounce by mid-2025, with an average forecast of $2,550 per ounce for Q4 2024. Meanwhile, analysts from BMI suggest that gold prices could reach $2,700 per ounce if the Federal Reserve starts cutting interest rates in September.

AMD Shares Surge 4.5%

AMD’s stock price jumped 4.5% after the company announced its plan to acquire ZT Systems, a server manufacturer, for $4.9 billion. This strategic move aims to expand AMD’s portfolio in the AI sector, enhancing its competitiveness against NVIDIA.

NVIDIA 2Q24 Preview: Strong YoY and QoQ Growth Expected

Earlier in August, NVIDIA’s stock (NVDA) hit a low of around $98, pressured by negative sentiment surrounding the weakening core businesses of major U.S. tech companies like Apple and Google. This environment cast a shadow over NVDA, which had not yet reported its earnings.

However, NVDA’s stock has since rebounded, climbing approximately 15% over the past five days. This upward trend is fueled by optimistic expectations for NVIDIA’s 2Q24 performance, with projected revenue reaching $28.6 billion, up 112% year-over-year (YoY) and 10% quarter-over-quarter (QoQ). Earnings per share (EPS) are also anticipated to rise to $0.64, representing a 137% increase YoY and 5% QoQ. This growth is largely driven by continued revenue increases in the Data segment, which accounts for 80% of the company’s total revenue. The net profit margin is expected to remain stable above 56%.

Most analysts have set a 2024 price target of $140 for NVDA, reflecting a price-to-earnings (P/E) ratio of 78. However, if the 2Q24 results meet expectations, the P/E ratio could decrease to 65, potentially leading to an upward revision of the price target.

News for 21 August 2024

Gold Holds Steady Above $2,500/oz Ahead of Jackson Hole Meeting

On August 20, gold prices edged higher, closing at $2,513 per ounce. This rise is attributed to market expectations that the upcoming Jackson Hole meeting may signal a potential interest rate cut in September. Additionally, the U.S. dollar index weakened from 102.09 to 101.37, further supporting the increase in gold prices.

The stability of gold prices at these elevated levels is likely as some investors have already begun gradually reducing their positions.

Eli Lilly Shares Surge 3% as Weight-Loss Drug Becomes New Star

On August 20, Eli Lilly’s stock surged by 3% following reports that its weight-loss drug, “Zepbound,” significantly reduced the risk of developing type 2 diabetes in adults with prediabetes. The drug has been shown to achieve an average weight reduction of 22.9%.

In 2Q24, Eli Lilly reported a massive 300% year-over-year increase in sales of Mounjaro, reaching $3.09 billion, while Zepbound sales exceeded $1 billion.

Company executives highlighted that obesity is a chronic condition affecting nearly 900 million adults worldwide, increasing their risk of complications like diabetes. They view the success of Zepbound as a significant opportunity to boost the company’s revenue.

News for 22 August 2024

Gold Experiences Slight Rebound at Market Close

On August 21, gold prices slightly eased, closing at $2,512 per ounce. This modest decline is attributed to some investors adjusting their positions to mitigate risk ahead of the Jackson Hole meeting, resulting in limited movement in gold prices.

On August 22, key economic data will be announced: weekly initial jobless claims are expected to be 232k at 19:30, followed by the U.S. manufacturing and services PMI indices at 20:45, with forecasts of 49.5 and 54.0, respectively.

U.S. Labor Market Faces Major Issue as Government Revises Non-Farm Employment Figures

The U.S. Department of Labor has revised its non-farm employment numbers for the 12 months from April 2023 to March 2024, reducing the figures by nearly 30%, or 818,000 positions. The revised total now stands at 2.1 million jobs, down from the previously reported 2.9 million. This marks the largest downward adjustment in employment estimates since the global financial crisis and indicates that the U.S. labor market is slowing more than previously reported.

Snowflake Reports Strong 2Q25 Growth, With Positive Outlook for 3Q25

On August 21, Snowflake (SNOW) reported its 2Q25 results for the period ending July 31, 2024. The company, which provides cloud-based data management and analytics services, saw product revenue increase to $829 million, up 30% year-over-year (YoY). The average growth rate over the past five quarters stands at around 30% CAGR.

Areas of Weakness:

• Customer Retention Rate: Dropped to 127% from 142%.
• Gross Margin: Reduced to 76% from 78%.
• Operating Margin: Decreased to 5% from 8%.

Outlook for 3Q25 and FY25:

• 3Q25: Expected product revenue between $850 million and $855 million, representing a 22% YoY increase, with an operating profit of 3%.
• FY25: Forecasted product revenue of $3.356 billion, up 26% YoY, with a gross margin of 75% and an operating profit of 3%.

News for 23 August 2024

Gold Declines as Investors Take Profits Ahead of Jackson Hole Meeting

Gold prices fell to $2,484 per ounce as investors rebalanced their portfolios to mitigate risk ahead of the Jackson Hole meeting. Additionally, the U.S. dollar index strengthened from 101.13 to 101.50, further pressuring gold prices.

On August 23, starting at 21:00, market participants will closely monitor Fed Chair Jerome Powell’s statements regarding monetary policy. Positive outcomes from the meeting could indicate that the Fed may signal an interest rate cut at the September FOMC meeting.

US10Y Yields Surge Above 3.8%, Pressuring Markets

The yield on the 10-year U.S. Treasury bond (US10Y) has surged above 3.8%, creating significant pressure on the market. This rise in yields, which influences global bond pricing and U.S. mortgage rates, is expected to increase borrowing costs for consumers. As a result, shares of seven major technology companies, known as the “Magnificent Seven,” have declined, contributing to a nearly 300-point drop in the Nasdaq index.

The CBOE Volatility Index (VIX), a gauge of investor anxiety in the U.S. stock market, spiked above 18 during the day, reaching its highest level in a week before closing at 17.56.