Chip stock earnings, Fed's rate cut path: Morning Brief

US stocks (^DJI, ^IXIC, ^GSPC) are seeking further gains in Thursday trading on the back of expected Big Tech earnings that continue to roll out and the Federal Reserve's decision to hold interest rates. Seana Smith and Brad Smith lead investors into the market open, covering a wide array of stories and corporate earnings results.

The Morning Brief welcomes former St. Louis Fed President Jim Bullard onto the program to talk about his views on the Fed's path forward to cut interest rates come the September FOMC meeting, noting the US labor market is on track to normalize rather than deteriorate.

Yahoo Finance senior health reporter Anjalee Khemlani joins the show to break down Moderna's (MRNA) second quarter results and CEO Stéphane Bancel's comments on the European and US pharmaceutical markets.

Other top trending tickers on the Yahoo Finance platform include Carvana (CVNA), Crocs (CROX), Arm Holdings (ARM), and the Hershey Company (HSY).

This post was written by Luke Carberry Mogan.

Video transcript

It's 9 a.m. here in New York City.

I'm Sha Smith alongside Brad Smith.

And this is Yahoo.

Finances like to show the morning brief good morning, everyone stock futures are higher this morning after the jobless claims rose to an 11 month high.

Who see investor hopes for a September rates cut.

Let's get right to it with the three things that you need to know to start your trading day job finances, Madison Mills, Josh Lift and then how we have more Federal Reserve chair, Jay Powell signaling a rate cut to come in September while focusing on the labor market portion of the feds dual mandate that signal a shift in the central banks focus on inflation which has continued to cool that kept interest rates unchanged coming out of the central banks to a policy meeting.

Here's how said about the path forward.

A reduction in our policy rate could be on the table as soon as the next meeting in September investors now pricing in over 85% chance that the FED could potentially cut rates coming in to that September meeting of this increase following those initial jobless claims coming in higher than expected as well and we're watching shares of meta move higher this morning, the Facebook owner up about 2% in free market trading.

The company beating Wall Street estimates and showing signs that solid digital ad revenue will give its A I investments time to pay off.

Meta did warn the company plans to boost its capital expenditures growth in 2025 shares of meta up 34% so far this year.

And chip makers under pressure this morning, Qualcomm moving to the downside after originally jumping in the wake of its third quarter report, the company saw a 12% rise in its phone chip sales from a year ago.

But Ceo C Christiano Aman warned analysts on its earnings call that the company expects flattish to low single digits in growth in phone shipments this year, arm shares are also in the red while the company beat Wall Street expectations and saw revenue grow 39% in the last year.

Arm issued softer than expected guidance for the current quarter and the full fiscal year.

Our top story today green on the screen.

We're looking at all three of the major averages in positive territory.

Let's go on back to those major averages here just to give you a look at the futures activity that we're tracking here this morning as we've got the S and P 500 futures right now pointing higher by about half a percent.

One of the huge things that we were focusing in on is just exactly where we moved during last month and some of the larger more out size points to really end and wrap up July.

Ultimately, July was the worst month for the NASDAQ 100 the NASDAQ composite since April of 2024 this year.

And here's a look at some of those big names that we were tracking.

Let's give it a one month look here just so people can see exactly where things moved and the red that really transpired for some of those big tech names and mega cap tech stocks and of course, one of the booster Children of the rally over the past 18 months, really NVIDIA even though we're tracking that here this morning as well over the course of the last 30 days was down by about 5.3% as well here.

Yeah, we saw a lot of the rotation that that had played out in the month of July, a bit reverse on the final trading day here of the month.

So let's scroll down here and take a look at what we have really seen in the past month of July to put that further in perspective.

Now tech do.

It was the only one of the S and P 511 sectors to end July in the red mag seven socks lost $364 billion in market cap this past month.

And as we have seen the start of a rotation out of the mega cap tech names into small cap names the Russell 2000 seeing its best month that we have seen since December.

So that rotation out of the mega cap names and names that have been leaving the charge into the Russell 2000.

That is a story that we've been telling you over the last four weeks, we saw a bit of a reversal of that yesterday.

So the big question is as we head into August here, the first trading day here of August, historically, seasonality wise, it is a weaker month as is September.

So lots of questions about what is going to come out of this earnings season.

We have seen some hope about the A I trade, especially when you take a look at meta and that move to the upside on track to open up 9% here today.

Let's talk a little bit more about meta because shares moving higher after its second quarter revenue rose 22% from a year ago, 98% of those sales coming from advertising, the tech giant also continuing to tout its A I investments saying that it expects quote significant growth in Capex in 2025.

CEO Mark Zuckerberg commented on why tech stocks are focusing so much on A I on the earnings calls.

They are all the jokes about how all the, the tech CEO S get on these earnings calls and just talk about A I the whole time.

It's because it's actually super exciting and it's going to change all these different things over multiple time horizons.

Josh Beck, he joins us now.

He's a managing director at Raymond James.

Josh, it's great to see you here.

So obviously the street, very excited by what they heard from Zuckerberg last night.

What they saw in this latest uh earnings print, what was your biggest takeaway from this and what this signals about meta's placement here within the A I trade?

Yeah.

Well, well, well, thank you so much.

Uh you know, for having me on a big change uh from 90 days ago, remember, uh Meta actually traded off there.

I think a lot of concerns on the amount of spend particularly Capex dollars and their ability to monetize uh that Capex this quarter, much more positive nar narrative.

Um I think they were very prescriptive, you know, about this idea of Fung Il not probably exactly something you expect to hear on uh every tech earnings, but it's basically the idea that they're buying a lot of GP US from NVIDIA, which you mentioned earlier, but they have a lot of different use cases lined up.

So I think more of this kind of disciplined uh investment philosophy was really a positive takeaway.

And on top of it, the core ads business is just doing really well.

Uh It's growing in the low twenties percentage and it shows you that already in their core business, they're benefiting from A I.

So it was really uh uh quite a change from 90 days ago and certainly uh viewed positively by, by investors.

Do, do you think consumers are fully grasping and users of these services are fully grasping the use cases for A I?

And how much more do you think meta can extract from those A I use cases that really contributes through to the average revenue that they're seeing per user?

Yeah, I, I think, I think there's a lot of consumer interest there, there's a couple of different um layers there.

I I think at the moment what you're seeing is product like reels.

Um and the recommendation engine behind that is just is, is driving users to spend more time on the platform, which obviously creates a bigger advertising service.

So that that's definitely uh in play, the newer element uh is certainly meta A I.

So this is a chat bot.

Uh They're using Instagram and Facebook to distribute it.

They also have a stand alone product, but they're starting to be kind of a new conversation on meta that you would have never really considered before.

So, hey, meta, can you help me plan this trip with my friends?

Not something you really would have ever um considered uh on your time on Instagram or Facebook, but it is completely net new.

So it's, it's driving more time.

Um It, it's helping their users kind of find a new uh use case on meta.

And uh you know, they're ambitious, they want to be one of the leaders there.

And uh you know, certainly they're tracking really well.

So I think the early consumer feedback is very good and I would also just make this other point.

Uh It's not just consumer.

Uh So one of the areas we're really constructive on is enterprise.

This has been a market that's not really been a focus for meta really at all.

But now with their new set of language models, LMA, they're opening a new door into enterprise budgets and we're really constructive there.

I think investors probably don't quite give them credit for it at the moment.

But that's another kind of multi year driver that it's a little bit underappreciated about the story, Josh, but when we talk about the balancing act here between investment and then the want and need at least from the streets perspective, from analysts perspective for that immediate impact to their bottom line to their financials.

Are, are, are they doing a good job balancing that because it is something that has proven to be challenging to meta in the past.

And it's also proving to be an issue and challenging here for some of its uh larger cap uh tech uh tech peers as well.

Yeah, look, you, you're spot on th this is probably the biggest challenge uh facing the the tech industry and particularly the large platforms is they see a uh a multi year opportunity that's completely changing.

Um the tech stack from the way the consumer behaves to the way the enterprise apps are built.

So it's a massive change and these companies have to have to walk a pretty tight rope.

And I think what investors are holding them to is OK. You can take your cap X up, you can invest, but you need to be pretty prescriptive about where you see the monetization um in your business.

You don't necessarily have to give um investors a number in terms of gen A I revenue every quarter, but you have to give them a pretty strong sense of where you see the returns and how you're managing that capital.

So for example, if something doesn't pan out, um you can shift those resources elsewhere and still get a good return.

And, and that was one of the real messages um from meta last night that I think was most positive.

I think, you know, some of the other tech companies have a little work to do to, to spell out their monition story and how they're thinking about um investment.

But yeah, for meta I think today and, and kind of into the next year, they're in a really good spot just lastly, Josh, while we have you for investors this morning trying to kind of wade through the digital advertising thesis or theme within their own portfolio is meta the best game in town when it comes to digital advertising.

Uh certainly it's a strong buy uh for us.

Uh The digital ad market I think is, is quite healthy right now.

Uh That was certainly a investor concern coming in.

There were certainly some signs of, of weakness and certain verticals like food and beverage, but overall retail uh ended up very strong, that's probably the most important vertical.

Um So, yes, you know, I think Meta is a really good uh investment because not only are they gaining share in the digital ad market, but they have these other emerging uh opportunities in enterprise.

We also like Amazon, we think they're doing really well in the advertising space and also benefiting from JA I on the enterprise side with Aws.

So those are some of our uh preferred plays.

Reddit is another one that we like that we think is doing really well.

Interesting, Josh Beck Raymond James managing director here, Josh, great to grab some time with you here this morning ahead of the opening bell and after these results and the call from Meta.

Appreciate it.

Thanks so much.

Certainly, the Federal Reserve appears to be delivering on rates cut hopes.

The fed deciding to keep interest rates unchanged.

Coming out of the central bank's two day policy meeting in July but fed chair Jay Powell's Dovish comments signaling the central bank could cut rates at its next meeting.

September investors now pricing in an 86.5% chance in totality that the fed could potentially cut rates by 25 basis points at the September meeting.

According to CME Group's fed watch tool.

For more on this, we wanna bring in Jim Bullard, who is the former Saint Lewis fed president.

Great to have you here with us and thanks so much for taking the time here.

I just wanna get your read through on, you know, some of the response that we had heard from Fetcher Jay Powell in the press conference yesterday.

What you make of his tone in comparison to the Jay Powell that, you know, uh well, he's uh uh definitely set up September as a, as a key point for the committee.

Uh I think the market pricing is about right, the 85% there.

Um You do have two inflation reports, you have two jobs reports before that meeting.

Uh So it's possible that uh that it would get derailed, but uh I think the committee is ready to go.

I think it's appropriate.

They're taking on board the uh considerable disinflation that their policy has brought about since uh since they started in 2022.

And um uh so things are looking pretty good for the fed and pretty good for a rate cut in, in September, Jim.

When you take a look at some of the softening that we have seen in the labor market, you have jobless claims rising to the highest level that we've seen in almost a year.

We also saw some, some softening here in the A P AD P print earlier this week is the fed from your perspective.

Are they paying enough attention to, are they closely watching enough some of the deterioration that we are seeing in the labor market?

And is there a real risk maybe that they are waiting a bit too late here if they don't move or they're not going to move obviously until September.

Yeah, unemployment has been creeping up, uh, a little bit but that was something that the committee predicted would happen.

And, uh, the unemployment rate is still below most people's estimate of the natural rate of unemployment for the US, which would be somewhere in the mid 4% range.

So you could see a little bit more, uh, uptick, I think what was unusual about unemployment was that it was below 4% for such a long time.

You really had this, uh, extraordinary, uh, labor market in the last couple of years.

So, it's all about normalizing on the labor market side.

Now, of course, the committee doesn't want to let that, uh, run away from them.

And so they're certainly, uh, you know, paying more attention to it.

They changed the statement a little bit to emphasize that a little bit more.

But I, I don't think right now that they're in bad shape at all, the, the unemployment rate is still low by historical standards in the US.

And other metrics on the labor market have come into line with where they were before the pandemic and the pre pandemic, uh labor market was considered a very good one.

So um so it's more about normalization of the labor market than about deterioration of the labor market.

Jim, you know, given your extensive time at the FED.

There's even during your time, there have been criticism that the data that the FED is looking at is too far backwards looking in some cases where there is perhaps better data.

And if you ask Kathy Wood, she would give you a whole list.

Um As we had heard last year, is there other data though that the FED could be considering, especially if the data that we're seeing come in is actually going to show that we may be in a recession or may see to Shana's point deterioration uh at a more larger or outsized level than is actually taking place uh in, in the near term or real time criticism of the FED.

I never heard of it.

No.

Um So that let me just reassure your uh viewers and listeners here that uh the fed looks at everything.

So if there's any scrap of data that would help uh predict the future evolution of the economy, they're certainly got a team on it and probably written a couple of papers about it.

So um the the truth is that, uh uh you know, recessions are caused by big shocks.

Uh The pandemic is a poster child for that.

You can't predict these big shocks.

So you don't really know when they're gonna happen and that's why uh the future evolution is unpredictable, but uh you can track the economy pretty closely and uh the FED has a very large team, uh that does that as best we can.

Now, I would say that uh the use of real time data has increased uh uh certainly through the pandemic, uh uh you know, high frequency data uh which is always available from financial markets, but from other places.

Uh So there's a whole ream of uh new information that wouldn't have been around, you know, 10 or 15 or 25 years ago.

So it has evolved over time.

Jim, what w what would you say is the biggest challenge or risk here to the Fed right now?

Is it a weaker, much weaker than expected uh print tomorrow on jobs.

Uh I think that that would just uh send the, you know, a, any of these particular reports are just 11 particular uh data point.

So, uh the chair did emphasize that it's the totality of the data and the total narrative.

Um uh You know, we'll see what we get uh tomorrow, I think uh the, probably the biggest issue here is now that the, now the debate will shift because it'll be that September's got high probability and how fast does the committee want to go?

Uh I think the baseline might be that they'll go at every meeting uh starting in September.

And uh also what's the ultimate destination?

So I think that will, and most people would say five and 38 is too high for the policy rate right now.

Uh But where do you want to go to, do you want to be in the mid fours?

Do you want to be lower than that in the mid threes?

I think that's going to be a debate that heats up as we, as we start this process.

But overall, I think it's basically very good news for the Fed.

They've got the economy growing near potential.

They've got unemployment coming up to the natural rate.

They've got inflation coming down to target.

The only piece that they need to, to get uh to get nail, the soft landing is to get the policy rate uh down somewhat from where it is today.

And Jim, we heard uh fed Jr JB yesterday just strongly denying that politics is going to make this impossible for the fed to cut around the election.

I'm curious just from your time in the f how is Powell and his colleagues thinking about this, the risk of cutting too close to the November election, is that really an issue that they are debating?

Yeah, the thing about inside the beltway is you can't make anybody, you know, somebody's gonna be mad at you all the time.

So I think uh previous committees have looked at this and have said, well, we might as well just, just play it straight up based on the data and rationalize our decision based on the data and go that way and uh and not worry too much about uh the election.

I also would dispute the idea that anybody ever won an election based on 25 basis points, uh, at the September meeting.

I don't think that's ever happened.

Uh, so I, I, uh, the, the notion that this is, has some kind of big impact or something on the election is kind of hyperbole, I think.

All right, Jim Bullard.

Great to have you.

Thank you so much for taking the time.

She joined us here this morning, a former Saint Louis fed president in Dina Purdue University's Junior School of Business.

Thanks so much, Jim.

Well, Qualcomm share is pulling back this morning after originally jumping in the wake of its third quarter earnings report, the chip maker reporting a 12% rise in its phone chip sales from a year ago.

But see, but its ceo warning analysts on its earnings call that the company expects quote flattish to low single digits in growth in I and phone shipments here this year.

So you can take into account.

That's, that's attributing to a bit of a reversal that we are seeing in shares with shares off just about 3% here in early market trading.

Now, right, when you take a look at Qualcomm and how it has been trading uh most recently here, obviously, it has been caught up in a lot of the A I excitement, the role here, there's been a lot of uh influx in in terms of what exactly that could do to their business, the upside potential of A I investments in the longer term.

When you take a look at that three month chart, you are seeing that stock up, it is still in the green although up just around 9%.

So underming under performing some of its peers on the street.

But again, that upbeat revenue here warns of the trade curb impact.

That is really what's maybe muting some of that upside momentum or optimism here in early market trading.

Yeah, I think one of the critical points could come later on this year particularly in September to see what the pick up looks like for smartphones or handsets as a result of a lot of the new artificial intelligence features that have been either talked about or put into market or teased by the major behemoths that are set to unveil their new line up of phones and they talked about this on the call a little bit last night.

They're pleased with the growth and trajectory of A I use cases on smartphones.

The expansion of those A I features a precursor to next generation smartphones, which they believe will become A I centric with this own device A I working across applications on the cloud.

What's that mean for Qualcomm?

They essentially think that they are well positioned to drive some of that transformation.

It's just a larger question of what the actual orders and shipments look like for many of the companies.

And, um, that is going to be where Qualcomm sees their own revenue uptick as well as a result.

We'll see.

Also let's turn to another major chip stock that we're tracking here today.

Shares of arm plunging as the company reiterates its annual forecast and gives light guidance for the current quarter, disappointing investors and overshadowing and earnings beat.

Now here with more, we've got Yahoo Finance's tech editor Dan Halley.

Hey Dan, what did you take away from arm here?

Yeah, Brad, the big thing here is clearly that, that guidance uh investors, analysts, they wanted to see arm raise full year guidance, but they obviously ended up not.

And that's why we're starting to see the, the move to the downside arm says expects a full year revenue between 3.8 and $4.1 billion.

That would be an 18 to 20% annual increase in full year earnings per share of between a dollar 45 65.

The Q two guide disappointed investors as well for revenue.

The midpoint of the range came in below what analysts had expected for adjusted earnings per share.

The top end of the guide just met estimates.

And our Ceo Jason Child was pointing to some weakness in certain areas of the market for the full year expects expectations for royalty revenue growth in the low 20% range below the company's prior expectations of the mid 20% range and royalty revenue came in below estimates for the quarter.

Specifically, child says customer feedback revealed inventory issues in industrial iot and networking.

Uh They seem to be more persistent than originally suggested on the positive side, we did see the company beat on first quarter results.

A number of analysts are seeing upsides of the stock naming a few.

We have Deutsche Bank, JP Morgan, Key Bank and Citi.

All right, Halle, thanks so much for breaking that down for us.

Coming up next here on morning Brief Carvana shares are surging on a surprise profit in the second quarter.

You're looking at shares skyrocketing up just about 10% here in pre market trading.

We'll tell you more on why next Carvana shares are surging after reporting a surprise profit in the second quarter.

The company also projected 2024 to be a record year with the CEO touting quote.

A lot of untapped potential for the used car retailer shares, jumping, jumping as Destiny's Child would say they're up by about 10% right now.

We're taking a look at the actuals versus the estimates on your screen better than expected on both of those fronts here.

And ultimately, they did that the second quarter results, they say, clearly demonstrate the differentiation and strength of their consumer offering and business model.

They had said in very big font at the beginning of their press release industry leading second quarter, 2024 results.

And uh we'll see what the results hold for some of their other competitors.

We may not hear from Carmax for uh a few weeks.

Now.

They just reported their first quarter, fiscal year 2025 results in late June.

So it'll be a little bit and we'll be sitting on the edge of our ergonomic chairs for that one.

But at the end of the day, some good stats here from Carvana at the end of the day.

Exactly.

And I really think that this shows one, the strong demand that they are seeing for their vehicles, but to the improvement in inventory management because I think that the inventory side of things has really been the issue for Carvana over the last couple of quarters.

Now they were buying, they had, uh, they bought a lot of vehicles throughout the pandemic at higher prices because of the current dynamics that were play in the autos market.

Then we're selling them at lower cost there.

So obviously that put pressure on their margins, they have been able to write that ship just a bit here.

So that of course, has helped their margins in their most recent quarter.

And then when you look ahead the first ever annual profit and they have also since been reducing inventory and cutting advertising and other expenses in order to strengthen their balance sheet.

So that very much has been helping the company as of late.

And you could see it also registering here with the street as you're looking at gains of just over 10% total retail units sold in the quarter.

That was up about a third, up 33% to just over 100 and 1000.

With the company also expecting this number to rise sequentially there in the third quarter.

So again, stronger than expected guidance there on sales, what they are expecting to see or an improvement, I should say in sales for the third quarter is also something that's encouraging to the street at this point.

So again, you're looking at the stock with shares rising just about 10% here.

Brad.

Yeah, absolutely.

The net income really, I think something that investors are paying close attention to here, $48 million net income margin of about 1.4% as we were discussing here.

Let's as we're just seconds away from the opening bell.

Let's really set up today's trading activity.

I mean, we've had a range of economic data.

We had the fed chair Powell out with some uh spoken word yesterday.

Plus the decision coming from the committee to leave rate unchanged right now, but really said up for the September meeting.

So we'll see if we get that cut then.

But of course, for a lot of the driving of this market momentum that we've seen driven by A I that's gonna be in focus by investors going into the opening bell here.

A lot of A I chatter on the meta call last night, meta looking good here, at least pre market still holding on to gains of about 9%.

We'll see where things open at the opening cross.

Speaking of that opening cross, hey, you got a little magic at the NYSC and uh yeah, at the NASDAQ, you got the first t great organization allowing a lot of young folks to get more access to the game of golf.

A sport that you and I know very well, Shana, we do and it's always great to get more players into the game of golf, of course.

First, he has been doing great stuff now for several, several years.

Let's take a look at where the major averages are opening here today.

Again, like Brad just mentioned, coming off the back of some Dovish commentary from Jay Powell.

At least the market hearing what it wants to hear in terms of the likelihood of a September rate cut.

You've got the dow adding to its recent gains up just about 4/10 of a percent.

The NASDAQ also trading higher.

Again, of course, the question is now that we're seeing some momentum back within the A I trade chip makers really leading the charge yesterday.

You also have meta up pretty significantly here at the open.

The the focus of course is going to turn to Amazon and Apple.

Both of those names are set to report after the bell here today and will be a crucial test for the NASDAQ 100.

We've got all your markets action ahead.

Stay tuned.

You're watching the morning brief, we're watching shares of Crocs today after topping second quarter earnings estimates also raising its full year outlook guidance.

So 1st 3rd quarter adjusted operating margin that came in below estimates sending shares lower here today.

You can see though at least revenue coming in essentially in line with expectations.

You do have a beat on adjusted eps of $4.01.

Of course, when you take a look at Crocs, exactly what this tells us about consumer demand.

We are seeing demand remain relatively steady, resilience on that.

We have seen, I think more broadly, you can say overall so far this earnings season, we are seeing some crack so within the consumer, but obviously that outlook there on operating margin outlook coming in just below estimates.

That's really what's driving the stock here lower, at least in early action.

You're looking at losses of just around 8.5%.

Yes.

And what are really getting in between the holes over those Crocs shares right now?

I tried anyway as we're taking a look at the right now, uh not necessarily in sport mode but some good stuff that we're seeing across the second quarters that actually did exceed the guidance on the enterprise metrics.

The company saying Andrew Reese, the chief executive officer there saying that the quarter was led by their croc brand exceptional growth internationally.

So a lot of international folks looking to get more into sport mode, maybe it's the hey dude.

Um but as it relates to, hey dude, they are trying to make some improvements to support long term brand health focused on driving some what they call brand heat, brand heat by accelerating marketing in the second half of the year.

That's a new spend that investors perhaps didn't account for.

That's also gonna be factored into today's trading activity.

All right, let's take a look at Moderna because shares are sliding here this morning, the farm and giant Flushing.

It's a full year guidance because of a lower expected sales in Europe.

You're looking at losses of just about 20% of Marian Angeli Kan.

He spoke with Moderna's CEO just moments ago.

What did he tell you?

Yeah, I actually got a chance to catch up with the on before the earnings call and that clearly what he said on the call did not sway or you know, help investor sentiment as you saw on your screen with the stock continuing to slide this morning.

Uh They did a pretty good job on revenue coming in at 241 million compared to analyst estimates of 130.

Meanwhile, they missed on Ajus Eps.

And as you just mentioned, they slash their outlook for the year looking at a net loss in the quarter year over year.

So when I did talk to him about was those sales and what really happened because we know that the COVID vaccine story is that you have to continue to be in the market.

And what STAN told me was that they actually had a problem because of the competition, Pfizer has locked up a lot of those contracts and there is no room in the market.

So here's we have to say about that.

So we've been working really hard for quite a long time to try to get some countries to order at least some moderna and what we have put in our budget and in our forecast.

Unfortunately, over the last few weeks, we've spoke and I've been to Europe myself, we spoke to several uh European governments in the largest countries of Europe that decided for budget constraint.

As you know, the situation in Europe is not good, the the growth is low, they still have quite a level of inflation.

There's a war in Ukraine and over every country is investing more in defense.

So as you can hear a lot of macro pressure for them, especially with the situation in Europe.

He is in France, right now and was wasn't able to uh you know, sway any governments there.

But he also talked about why the US market is different.

In addition to the fact that Moderna is basically set up as now a seasonal business, aside from their cancer vaccine, that they've been working on everything else in their pipeline.

The next five vaccines that are coming out are half amount including RSV are set up for a competitive market, a seasonal market.

And so the company is looking at itself more that way.

So the fact that we're getting this guidance early on is the reason why it's problematic for moderna.

Now, the US market remains strong because the government is still looking at the use of doses as well as engaging with the company on contracts.

But there's also another part of it, the pharmacies, here's what he has to say about that the US market is quite different if you know about the US.

Because the retail pharmacy, if you're not unlike what's happening outside the US, that's all controlled by the government, the retail pharmacies are doing a lot of good work to promote to patients and consumers the different vaccines.

So even though they are able to do that, we still see the stocks sliding clearly.

The message to investors didn't get received.

But I did ask him what he hopes investors want out of it or are looking for and what he can tell them to sort of assuage those fears.

And he basically said, you know, TBD, wait but listen to what he had to say in his own words, what I I want investors to understand is that this is a speed bump.

It's not a happy one.

I'm not pleased about it obviously.

Uh But if you think about the company, this company, it most of the value is in the products that are gonna be launching in the next couple of years, the pipeline.

So it looks like really the story from Moderna after the downswing of the COVID vaccines is just to wait a couple more years and see if the MRN A theory plays out if the market actually sees the need for it and the boost and that's where we'll wait for things to play out.

And while we've got you here in studio with us, we're also tracking Teladoc shares here this morning.

You're slipping, falling.

Can't get up.

Can you tell us more on this?

I mean, it seems like there's a little bit of a hit due to the, the revenue side of the business as well.

Yeah, so Teladoc has actually uh segmented its business into two very separate things, the traditional telehealth that you're used to and then also mental health and the mental health side actually dragged down revenue for this quarter.

Um They're looking at ways to uh sort of revamp that and take a look as you see on your screen, they missed on just barely missed on the revenue side, but very heavily missed on the EPS side.

And that is coming from a lot of internal operations and things that had to be taken care of.

Now, they're looking to expand the mental health side to the global market.

They said that they took on a lot of cost for advertising.

Interesting note, the elections, the presidential elections have driven up cost of advertising for them.

And so while it is a hot market, generally, the virtual mental health part of it, they haven't been able to break through, they haven't been able to do much with it.

And so they're looking at a way to really grow the business there.

All right, thanks so much.

Tracking everything across the health care industry and bringing it our direction.

Great, great interview this morning as well with Stefan.

All right, stocks moving higher to kick off the trading day.

Everyone after the number of Americans filing for new unemployment claims hit an 11 month high last week, fueling optimism for a September rate cut to discuss what this means for markets.

We've got Jeffrey Kleintop who is the Charles Schwab chief, Global Investment strategist.

Great to have you here with us this morning just after the opening bell.

So, you know, first and foremost, you get a reading like this on the jobless claims front and of course, we pair that with what we heard from Fed chair, Jay Powell yesterday.

It seems like all systems are go for a September cut.

Well, yeah, I mean, the market is pricing in 100% odds of a first cut in September.

The problem though with that is that any disappointing economic data may no longer be welcomed by the market.

There's no upside to the policy outlook and only downside from a weaker economy and labor market.

In fact, the economic surprise index is now negative in the US, meaning data is coming in below expectations and there's lots of data between now, of course, and the next fed meeting on September 18.

Now we've got the Jackson Hole symposium on the 22nd through the 24th of August.

That's probably the next take on how the fed is seeing this data.

You know, Jeffrey, that's a really interesting point because we have seen the markets react, I guess optimistically maybe is a better way to put it to some weak economic data.

So now are we reaching that point where the markets are going to start viewing weak economic data as bad news then for the market?

And, and, and what would be, what would be the cause?

Do you think of that sentiment shift?

That's what I, that's where I think we're at now.

You know, we, we've got a number of rate cuts priced in over the next two years, uh anywhere from, you know, 456 depending on whether you're looking at the, the uh uh the futures or, or the options.

It's a lot and there, there's still a lot of services inflation, there's still a lot of issues around inflation.

It's not perfectly clear that that's going to happen.

And so I, I think what the more likely outcome is is that the weakening economic data, particularly on the labor front.

Now, we've seen job openings begin to level off.

Now, maybe we start to see it tomorrow begin to show up in actual job counts that could begin to sour the market on the outlook for consumer spending.

So important to sustaining the earnings growth, we've seen this quarter.

And so Jeffrey, as we're continuing to kind of look throughout the second half of this year and try to figure out, ok, if bad news starts becoming bad news, then what does that mean for some of the rotation that investors should be considering within their own portfolio positioning right now?

So I think uh I know tech is super hot right now.

We're going through AAA week where we're getting a lot of uh good, good tech numbers.

But I, I think we want to take a look at sectors like financials, you know, the Bank of England's rate cut this uh rate uh uh cut decision today.

It was a close call UK.

Inflation is at 2% in May and June financials in the UK are outperforming the S and P 500.

And that's because the yield curve there is now re uh un inverting it inverted.

It's now resting again.

There's probably more steepening to go.

Uh The UK financial sector is up 18% in total return terms this year.

That's head of the S and P 500.

I think investors may be missing that with their just sole focus on us equities, Jeffrey.

When you talk about some of that risk on a rotation that we have seen at least in the last 24 hours, 48 hours, we have seen a bit of a sentiment shift in terms of it looks like that appetite for some of these A I stocks is back, particularly when you take a look at chip makers.

I'm curious.

So from your perspective, from, from a, from a strategist perspective, how you're looking at the gap that we're starting to see form between the hyper scalar versus those that manufacture the chips.

And, and whether or not you think that bifurcation maybe is something that's going to hold, at least in the immediate turn.

I think it's interesting to watch.

I think I it's critical um to take a look at what the, the uh uh policy environment is.

It's not just the outlook for demand, but you know, we've got the uh this risk around the foreign direct product rule around the world.

We've seen all the semi equipment and, and other related uh shares really rally powerfully.

But if the US does impose controls on foreign made products that even use the smallest amount of American products uh in their exports to China.

That could be a major problem.

A SML the Netherlands company that is the biggest semiconductor capital equipment company in the world gets 50% of their revenue from China.

And yesterday we had a story from Reuters citing that those aggressive sanctions may not be implemented for Japanese companies and Netherlands companies that the market rallied on that.

I think the market might overlooking the reason those companies may be being excluded.

And that's because they're probably going to agree to even stricter export policies on China that could weigh on sales growth.

That's something the market's not considering right now.

All right, Jeffrey Kleintop.

Great to get your insight.

Thanks so much for having on with us this morning.

Charles Schwab's Chief Global Investment strategist.

Thanks rally yesterday proving the A I trade isn't going anywhere anytime soon, at least for some, but the stock is still sitting well below its all time high.

We're going to dive into that trade on the other side of the NVIDIA shares climbing higher.

Once again today, the stock soared yesterday adding $327 billion to its market cap.

It was driven higher by strong results from competitor A MD.

Now, despite the recent rally, though NVIDIA shares are still sitting roughly 13% below their all time high.

Joining us now for where NVIDIA and some of its competitors are headed.

We want to bring in Stacy Ras and he's Bernstein's managing director and senior analyst Stacy.

It's great to talk to you again.

So it looks like a lot of that excitement has now returned.

I'm curious, do you think there's been just a shift in sentiment following the AM DS results that we got yesterday?

So I don't actually think it was about AM D's results.

I think it's about the Capex guides we're seeing from lots of the Hyper Scalars Microsoft and, and, and Meta and Google.

Um all of those, those Capex outlooks look very supportive, like we're starting to see those numbers continue to go up and I think that's what's been driving uh the A I trade, I actually don't think really it was AM DS A and D results were not bad necessarily.

They took their own A I guidance up a little bit, but I don't think they took it up any more than people thought they were going to.

I don't think it was above where, where people thought.

So Stacy then given that Capex guide that we are getting from some of these hyper scalars, what does that tell us just about the opportunity, the upside here that we are potentially seeing for these chipmakers?

Well, I I mean, look for, for companies like these, I mean, some of the numbers are, are very large, right is here as you're looking for it in terms in terms of where expectations are and you know, the hyperscale, they're, they're big customers, they're doing a lot of that spending.

And so you do want to see those, those numbers, but this was a concern if you go back, I don't know, a quarter or two ago there was a big mismatch at that point between like where the Capex outlook was at the time and a lot of these A I names and we've continued to see the, the Capex guides actually go up materially, I think even meta reported last night and, and not only do they take their Capex guided for the year, they said that they're gonna have like probably substantial increases next year.

And so I think that's really what's important.

The, the big worry that people have is just, is there an air pocket like coming, there's so much spending going on, the numbers have gotten so big so quickly, people worry about sustainability and what we've been hearing from some of the customers is it looks like that spend at least for now is sustaining.

I think that's what's what's been driving things.

And, and so Stacy as we think about growing into some of these valuations, I mean, what are these companies going to have to show that they can do in order to grow into the, the lofty numbers as we've been discussing?

Well, I mean, so, so be careful like lofty numbers, lofty valuations are two different things.

Not all these companies are expensive.

Right.

You can look at a company like, like NVIDIA, it's actually quite a bit cheaper today than it was before the run started, you know, a year, a year and a half ago.

Um, because as much as the stock has gone up, the earnings of estimates have gone up far more than that.

And so that becomes the question, like, is, are, are the earnings actually achievable?

Um, I mean, they need to clearly, I clearly the numbers need to go up.

I mean, I I would say that, you know, given where the sell side numbers are the investor, the buy side numbers are gonna be even higher than that.

Um And so any kind of increases, we can see the customer spending, any sort of clarity we can get on business models.

What are they actually doing with this spend is, is helpful.

And I would say at least in, in, in the near term, what we're hearing from that supply chain and from the customers is constructive and, and so on the customer side or at least on the demand side, I should say is what we're hearing strong enough to, to sustain this long term, the the the growth, at least it seems like all of these companies as they're talking about the demand that they're seeing when they're on these calls and saying, well, the the demand is strong.

So we're just gonna keep building it out, keep investing in it and And so, I mean, that, that is what we're seeing right now.

Right.

And, and there's also a little bit of, you know, they're, they're kind of in a, in a fight right now.

I mean, I think, uh, Google had suggested what, what did he say?

He said that, um, you know, the, the risks of under building were a lot bigger than the risks of over building right now.

Right.

And so, because they can, they can use the, the capacity for something else if they need to and they've got tons of money, right?

This is one difference versus say 2000.

These companies are incredibly well, well, well funded, well, and, and very profitable they can afford to spend right now.

But I think you're, you're getting the heart of it.

This is the controversy on, on some of these names.

It's, you, you know, like the, the, the worry that just these guys tend to build and digest them.

Is there a digestion cycle coming on and at some point maybe, but it, it, it, it clearly is not now, like I'm not really worried about it this year.

I'm, I'm not really worried about it next year.

Um Given some of the product cycles and everything, we've got 2026.

I, I don't know.

Um I also though I'm very bullish on the long term opportunity, I still think in, in five years or in 10 years we'll be talking about numbers that are materially higher than what we're talking about today.

These, these things are never straight lines.

But I do think as we're going along, like, over the next, like, like several years, um, it, it's, it's up, I think the, the opportunity, the numbers we were saying will, will be up.

Interesting.

2026.

Potentially the, the, the big 10.

I mean, I don't, I don't know, I, I, at least for now for this year, probably for next year.

I think things are fine.

I think the spending is going.

Yeah, I mean, you've got the modeling Stacey.

So we, we enjoy these conversations with you and getting your insights and perspective.

Stacy.

Thanks for joining us this morning.

Certainly, Stacy Rosman, who is the Bernstein managing director and senior analyst.

Hey, everyone coming up on the other side of this short break, all your markets action and just a few of those stickers that we're tracking here as we round out the 1st 30 minutes of trading.

Hey, welcome back, everyone.

We're taking a look at 33 of Yahoo Finance's trending tickers.

Of course, there's a whole treasure trove of them, but we're focusing in on Hershey's Roblox and Shake Shack.

Let's start with the chocolate.

Hershey's shares are on the move right now melting lower by about 1.9% after the food and beverage company lowered its full year outlook saying consumers are pulling back on discretionary spending here more notably.

Uh they are mentioning that today's operating environment remains dynamic.

Consumers are pulling back on that discretionary spending.

Um But they are pleased to see the continued growth in the confession category momentum building in the salty snacks portfolio.

That's interesting here.

I mean, at what point are we gonna have these companies?

Perhaps just admitting that maybe these GOP ones are actually impacting the amount of chocolate people are purchasing.

Maybe I'm still caught up on your first line.

There shares are melting, melting.

Hey, I, I got love for Hershey, a great Pennsylvania company here.

I spent my uh my senior physics trip there at Hershey's.

I had a couple of soccer.

I grown up.

All right, let's take a look at Roblox shares are in the red, the video gaming company raising its annual bookings forecast after engagement increased over the summer and more mature content attracted older users to the platform.

Despite all that, you're looking at shares moving lower, they're off just about 3%.

Why?

Well, that's all because of its CFO Michael Guthrie.

He is stepping down the company announcing his exit.

He has been in the role for nearly seven years.

He played a key central role in the public listing of Roblox.

Back in 2021 shares have been off more than 9% in earlier trading.

So they did pair some of their initial losses there in the pre market, but again, still trading to the downside and that is a lot.

A big reason for that is because of the CFO exit.

Yeah, big time.

All right.

Well, let's talk about one more company that we promised you here.

Shake shack that stock is surging here today after beating the streets revenue expectations its second quarter and reaffirming its full year guidance.

Take a look at shares.

They're up by about 19% as investors are snacking on this one right now.

Uh The Shaq has a new CEO at the helm too here.

We are getting to hear from Rob Lynch who we actually interviewed here on Yahoo Finance back when he was at his old gig, Papa John's the former Papa of Papa John's.

Uh but ultimately, as of right now, it seems like the analysts reaction pretty positive here.

We've got one from Sarah San, our own.

Brian Sazi forwarded this one to me.

Appreciate it, Sazzy and ultimately says that the restaurant level margin was in line with consensus modestly ahead of ex health care adjustments as well.

So all those things considered pretty good.

I didn't meet the 32nd marker on, wasn't it?

I didn't even try.

Honestly, there's so much excitement about these names.

We need that clock and they'll keep us on track until you give us a clock.

I'm gonna go over here right here on Yahoo Finance coming up manufacturing pmi data getting released here in just a few moments.

We'll take a look at what essentially that is going to tell us about where we are in the economic cycle, whether or not that's going to point to some deterioration in the economy.

We've got that for you.