What's News in Markets: Airline Turmoil, Bank Earnings, Chips’ Strength
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What is the main topic discussed in this episode?
Hey, your money briefing listeners. I'm Charlie Grant filling in for Francesca Fontana for The Wall Street Journal. I'm one of the markets reporters here at The Journal, keeping you up to date on the latest economic and corporate news that's affecting stocks. Last month, we ran a little experiment bringing you what's news in markets each weekend. And the response we got was so overwhelmingly positive that we're going to make it a regular fixture in the YMB feed every Saturday morning. We are so excited to be joining you each week. So let's get right to it.
This week, it looks like markets have left the everything rally in 2023.
Why did markets cool off after the 2023 everything rally and how did Fed signals affect stocks?
There were hopes that strength could extend into the new year, along with the fresh optimism for interest rate cuts by the Federal Reserve. But this shortened trading week started off worse for stocks, as investors scaled back hopes for rapid rate cuts thanks to strong economic data and cautious comments from Fed officials. But things picked up later in the week, led higher by chip makers like NVIDIA and AMD. And we'll come back to what drove those gains in just a little bit. The S&P 500 still closed at a record despite the weakness to start the week. There's new turmoil among airline stocks, and it has nothing to do with the fallout from the Boeing groundings after that recent Alaska Airlines flight's emergency landing.
We're actually talking about JetBlue. As we reported on Tuesday, a federal judge blocked JetBlue's $3.8 billion deal to buy Spirit Airlines. It would have been the biggest US airline merger in over a decade, but the judge decided it would hamper competition and lead to higher fares. It's a tough blow for the airlines, especially since JetBlue fought so hard to win Spirit over from another rival.
What caused the sudden turmoil in airline stocks and why was JetBlue’s buy of Spirit blocked?
And the decision could have repercussions for other airlines that are hoping to merge, like Alaska Air Group and Hawaiian Airlines. As for JetBlue and Spirit's stock performance, the news took a much bigger toll on Spirit. Its shares nearly halved on Tuesday, falling 47%, while JetBlue actually rose about 5%. And that wasn't all. Spirit lost another 7.2% on Thursday after the Wall Street Journal reported that it's exploring restructuring options now that the merger is off the table. There was some good news on Friday. The stock bounced after Spirit raised its fourth quarter guidance. The company also said it's considering refinancing $1.1 billion in debt that's due in 2025. But the stock still lost about half its value this week.
Earnings season continued with more reports from Wall Street. Last week, we saw bank giants like JP Morgan and Bank of America report how well they did in 2023 and how the one-time fee they took because of last year's regional banking crisis weighed on fourth quarter earnings. Investors who were watching Fed officials for clues about the U.S.
How did Spirit and JetBlue stocks react after the merger was blocked and what are Spirit’s next steps?
economy were also keeping a close eye on Tuesday's reports from Goldman Sachs and Morgan Stanley. And those two banks, which are very similar, had two very different quarters, both in terms of results and in how Wall Street reacted to them. Goldman Sachs' fourth quarter profit surged 51%, while Morgan Stanley's profit fell 32%. Goldman stock rose slightly on the announcement, but shares of Morgan Stanley fell more than 4% on the same day. For the week, Goldman was little changed, while Morgan Stanley lost about 6%. I promised we'd come back to it, and now back to those chip makers. On Thursday, stocks like NVIDIA and Advanced Micro Devices led a rally in tech shares, thanks to industry heavyweight Taiwan Semiconductor Manufacturing Co., or TSMC.
You might not have heard much about them, but the company is the world's biggest contract chip maker.
Why did Goldman Sachs and Morgan Stanley report such different fourth‑quarter results?
It's a supplier to Apple, as well as NVIDIA, Qualcomm, and other household names. So it was a big deal when TSMC said this week that it expects its revenue to grow over 20% this year, a stronger outlook than Wall Street was expecting. Last year was a mixed bag for chip makers as they dealt with an inventory glut left over from the pandemic-era electronics boom.
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Chapters
6 chapters
1
What is the main topic discussed in this episode?
0:03–0:43
2
Why did markets cool off after the 2023 everything rally and how did Fed signals affect stocks?
0:43–1:48
3
What caused the sudden turmoil in airline stocks and why was JetBlue’s buy of Spirit blocked?
1:48–2:56
4
How did Spirit and JetBlue stocks react after the merger was blocked and what are Spirit’s next steps?
2:56–3:51
5
Why did Goldman Sachs and Morgan Stanley report such different fourth‑quarter results?
3:51–4:31
6
Why did TSMC’s outlook lift chip makers like NVIDIA and AMD and what does it mean for the AI trade?
4:31–4:48
Speakers
1 identifiedMore from WSJ Your Money Briefing
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