What’s News in Markets: McDonald’s Outbreak, Fashion Merger, Spirit’s Wild Ride
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Hey, listeners. It's Saturday, October 26th. I'm Francesca Fontana for The Wall Street Journal, and this is What's News in Markets, our look at the biggest stock moves of the week and the news that drove them. Let's get to it. All eyes were on earnings this week, and there was no shortage of results for investors to digest. According to FactSet, we had reports from more than 110 S&P 500 companies, including seven members of the Dow. And there were some big names in there, including Coca-Cola, IBM, and Tesla. So during the week, we got to see how some of these reports affected the overall market. For instance, when Tesla's better-than-expected earnings sparked a big rally in its shares on Thursday — a 22 percent jump, to be exact — which led other tech stocks higher as well.
Speaking of tech stocks, a spoiler for next week. Some more of the so-called magnificent seven tech giants will be reporting their latest results. Alphabet, Microsoft, meta platforms, Amazon.com. So lots of tech news coming our way then. All in all, the major indexes ended the week mixed. The S&P 500 and the Dow posted their first weekly decline since the start of September, snapping their six-week winning streaks, while the Nasdaq rose for a seventh consecutive week. First up, let's talk McDonald's. Investors didn't have much of an appetite for McDonald's shares on Wednesday, thanks to the fast food chain's link to a deadly E. coli outbreak. That link was the Quarter Pounder, specifically slivered onions that are used in the Quarter Pounder, which, according to the company, might have been connected to a subset of the illnesses.
As of Friday, the outbreak had sickened at least 75 people and killed one person, according to the Centers for Disease Control and Prevention. Interestingly, this E. coli outbreak is a relatively rare occurrence for McDonald's, whereas we've seen other chains such as Wendy's and Chipotle Mexican Grill struggle in recent years with their own outbreaks of foodborne illnesses. McDonald's shares ended up losing about 5% Wednesday and logged a weekly loss of about 7.6%. Next up, let's look at two fashion stocks, Capri and Tapestry. Capri owns the Michael Kors brand, along with Versace and Jimmy Choo, and Tapestry's brands include Coach and Kate Spade.
What market context and big earnings moved stocks this week?
These two fashion giants had been hoping to combine and become one fashion giant, with Tapestry acquiring Capri in an $8.5 billion deal. But a federal judge in New York blocked the tie-up Thursday, siding with the Federal Trade Commission in its argument that the acquisition would reduce competition in the so-called accessible luxury handbag category, and that it would raise prices for the budget-conscious consumers who shop in the relatively affordable purse space. As for the companies, both Tapestry and Capri said that they would appeal the ruling. So how did each stock do? Well, Capri shares dropped a whopping 49% Friday, while Tapestry shares ended up gaining about 14%. Last but not least, Spirit Airlines.
Spirit's stock went on a wild ride this week. As you might have heard recently, the budget carrier has been struggling with financial pressures and exploring bankruptcy. Let's start this week's play-by-play. On Monday, Spirit's shares jumped 53% after it got an extension on refinancing its debt the Friday before. Tuesday... The Journal reported that Frontier Airlines is exploring a renewed bid for Spirit and that a potential deal would likely happen as a part of Spirit restructuring its debt and other liabilities in bankruptcy. As a result, on Wednesday, Spirit shares shot up more than 40 percent. Then on Thursday, the stock pairs some of its gains, dropping 21 percent.
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