Supported by the conclusion of the debt ceiling saga and some hopes the Federal Reserve can engineer a soft landing for the US economy the S&P 500 edged into bull market territory over the past week.
The index has risen 20% from its October 2022 lows, meeting the technical definition of a bull market. A decisive moment awaits next week when the Fed delivers its next decision on interest rates.
On a stock level both Tesla (TSLA:NASDAQ) and Ford (F:NYSE) were motoring. Tesla was higher amid talk about first deliveries of its hotly anticipated Cybertruck later this year. Its more traditional automotive counterpart Ford was boosted by positive broker comment.
The big winner was Warner Bros Discovery (WBD:NASDAQ) as investors reacted positively to the company’s progress on paying down debt.
Soup and snacks firm Campbell Soup (CPB:NYSE) slumped despite reporting better-than-expected earnings as, crucially, guidance was worse than anticipated.
APPLE
You can see why Apple (AAPL:NASDAQ) has broken new share price ground over the past week, as investors digested a deluge of software updates from the Cupertino firm and the launch of a new virtual/mixed reality headset.
At a punchy $3,499 a pop, investors maybe think the Vision Pro a tad pricey and hardly mass market, but the longer-term is up for grabs as developers pile in to make applications for virtual reality, augmented reality and the metaverse, a somewhat stalled concept that has yet to really grab investors by the collar.
Apple, though, has a knack for taking a product and making it exceptional with a cache of cool, certainly in the minds of the buying public. And its powerful ecosystem of millions of users is a ready-made market, with seamless integration with iPhones, iPads. Apple Watches with a similar user-experience and low barrier to entry.
‘Familiar, yet revolutionary,’ as the announcement put it. As Apple’s first new product in almost a decade, investors are willing to believe that there is a very good business case behind Vision Pro and are evidently happy to back it. The stock hit an all-time $180.95 high in the run-up to the launch event.
This serves as a ‘welcome bridge into the world of AR and VR by a company known for creating seamless, reliable, and integrated technology,’ said Rolf Illenberger, CEO of virtual reality software designer VRdirect.
‘They hit a home run,’ Illenberger believes. We’ll see.
COINBASE
Cryptocurrency platform provider Coinbase Global (COIN:NASDAQ) got caught up in the escalating regulatory crackdown on cryptocurrencies after the SEC (Securities and exchange commission) sued the company on Tuesday.
The shares are down around 17% this week but remain up over 58% for the year.
The SEC said Coinbase has been making billions of dollars since 2019 acting as a middleman on cryptocurrency transactions and evading disclosure requirements which exist to protect investors.
For years cryptocurrency platforms have argued their coins and alternative assets do not constitute securities as defied by the regulator.
But chair of the SEC Gary Gensler told CNBC: ‘The whole business model is built on a noncompliance with the U.S. securities laws and we're asking them to come into compliance.’
Cathy Wood’s ARK Investment Management jumped on the share price weakness to increase her holding. Collectively ARK’s funds have a combined holding worth over $600 million making it the second largest shareholder.
GAMESTOP
It is game over for Matthew Furlong as CEO of GameStop (GME:NYSE), the US video games retailer whose shares tanked this week after opting for a leadership reset (7 June). That saw Furlong fired and board chairman Ryan Cohen appointed as executive chairman with responsibility for ‘capital allocation and overseeing management’.
Activist investor and so-called ‘Meme King’ Cohen’s investment firm RC Ventures has an 11.9% stake in the embattled, Texas-headquartered company, which didn’t provide a reason for Furlong’s surprise exit. Former Amazon man Furlong was appointed CEO in the summer of 2021 to lead GameStop’s turnaround and online expansion and the sacking comes just months after he presided over GameStop’s first quarterly profit in two years.
The executive shake-up coincided with first quarter results showing a fourth consecutive fall in quarterly sales and a bigger-than-expected $50.5 million loss.
Investor skittishness surrounding what one analyst described as Furlong’s ‘callous termination’, one that will make it tough for Cohen to recruit a replacement, twinned with the disappointing results, sent GameStop’s shares plunging 15% lower over the week to $21.
