What’s News in Markets: Meta’s Ads, Moderna’s Health, Intel’s Struggles
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Hey listeners, it's Saturday, August 3rd. 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. Goodbye July, hello August. This week, traders had a lot to digest, including several quarterly reports from some members of the Magnificent Seven, which we'll get to in a moment, and the Federal Reserve policy decision on Wednesday, the last day of July. We didn't get much of a surprise. The Fed is keeping interest rates where they are while looking ahead to a possible rate cut in September. But the report still propelled stocks higher Wednesday, with the tech-heavy Nasdaq index notching its best day since February.
But in this case, what went up also came down. On Thursday, we kicked off the new calendar month with weak economic data relating to employment, manufacturing and construction, which pushed 10-year Treasury yields below 4% and sparked a broad sell-off in stocks. Then on Friday, the disappointing jobs report sent the market down further, with all three major indexes ending the day lower and the Nasdaq entering correction territory. Looking at individual movers, let's start with the positive. One bright spot this week was Meta Platforms, aka Facebook's parent company. It's also one of the Magnificent Seven stocks, the others being Apple, Amazon, Alphabet, NVIDIA, Microsoft, and Tesla. On Wednesday, Meta reported higher profits and gave a better-than-expected revenue forecast.
Plus, one key metric for Meta that investors watch for is digital ad revenue, and that did not disappoint either. The company's sales increased 22% year over year, and advertising made up 98% of its second quarter revenue. Another interesting thing to note from Meta's report, its costs related to AI surged, weighing on profits as it invests in products like Meta AI to further its artificial intelligence ambitions. Meta's not the only one. Microsoft and Alphabet also reported rising AI costs. But while those two saw their share prices fall after, Meta's was on the rise. Meta's shares gained nearly 5% on Thursday, suggesting investors care more about its sunny sales expectations and profits than spending increases, and ended the week in the green.
Now, on the other hand, Moderna shares were under the weather after its latest quarterly report. The drugmaker that's become a household name, thanks to its COVID shots, cut its sales outlook, thanks to slower demand for said COVID shots, as well as an increasingly competitive environment in the U.S. for respiratory vaccines. Moderna's new RSV vaccine is up against shots from rivals Pfizer and the British GSK. Meanwhile, as we saw during the worst of the pandemic, Moderna's COVID shot primarily competes in the U.S.
How did the Fed decision and July data move markets this week?
with the one from Pfizer and BioNTech. Speaking of Pfizer, the company also recently reported a decline in COVID vaccine sales, but it raised guidance due to strong growth in its oncology program. Moderna shares sank 21% on Thursday, dragging down the S&P 500, and lost about 8% on Friday. And this brings us to Friday, when Intel shares short-circuited. Not just because of the chipmaker's weaker-than-expected second quarter sales that came after the bell on Thursday, Intel is also cutting costs big time with plans to lay off thousands of employees and pause dividend payments. The CEO said that Intel will lay off about 15,000 people, most of them by the end of this year. For context, Intel reported around 117,000 employees in its core business at the end of June.
Unlike other chipmakers that have been soaring thanks to AI demand, Intel has been left in the dust a little bit. The companies struggled to get a foothold in the market for AI-focused chips.
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