Stocks wobble with inflation data in focus

Live10 updates

• Mon, May 13, 2024 at 8:40 AM MST

  GameStop stock soars, slapping short sellers with $1.3 billion in losses in May

  GameStop shares soared as much as 110% Monday, prompting heavy losses for short sellers.

  “Including today’s losses, GME shorts are now down -$1.34 billion in May month-to-date losses, and now down -$952 million for the year,” Ihor Dusaniwsky, managing partner at S3 Partners, told Yahoo Finance Monday.

  Short interest on the video game retailer’s stock is relatively high, hovering just north of 24% of the float.

  Other meme stocks rose along with GameStop Monday after social media star “Roaring Kitty”, seen as the kickstarter for the GME short squeeze in January 2021, posted online for the first time in about three years.

  Shares of theater operator AMC (AMC) gained 20% while Trump Media & Technology Group (DJT) increased 8% during the session.

  “Short sellers may be in for a bumpy and bloody ride in these stocks,” said Dusanniwsky.

• Mon, May 13, 2024 at 8:35 AM MST

  Cocoa futures tank 18% Monday, sharply off April’s all-time highs

  Cocoa (CC=F) futures tanked as much as 18% Monday, their biggest one day drop since 1960.

  The commodity was trading below the $7,400 level during the session.

  Cocoa has drastically come off its all-time high of more than $12,000 per metric ton last month.

• Mon, May 13, 2024 at 8:09 AM MST

  Fed’s Jefferson calls for holding rates steady until inflation cools further

  Yahoo Finance’s Jennifer Schonberger reports:

  Federal Reserve vice chair Philip Jefferson on Monday became the latest central bank official to call for holding interest rates at current levels until inflation shows more signs of cooling.

  “We continue to look for additional evidence that inflation is going to return to our 2% target,” Jefferson said during a question and answer session at the Cleveland Fed.

  “Until we have that, I think it is appropriate to keep the policy rate in restrictive territory.”

  Jefferson said he changed his view after hotter-than-expected inflation data in the first quarter.

  The Fed decided on May 1 to keep its benchmark interest rate in a range of 5.25%-5.50%, a 23-year high. Its next policy meeting is not until June 12, when the central bank is again expected to hold rates steady.

  Read more here.

• Mon, May 13, 2024 at 7:21 AM MST

  GameStop soars 70% after social media star ‘Roaring Kitty’ post

  GameStop (GME) shares soared as much as 80% Monday and were temporarily halted for volatility after “Roaring Kitty”, seen as the kickstarter of the meme frenzy during the pandemic, posted for the first time since 2021.

  Sunday’s post on X included a meme of a video gamer leaning forward, a sign that things are getting serious.

  Monday’s rise comes amid a recent rally in meme stocks. GameStop shares are up 90% year-to-date. Short interest on the stock is about 24% of the float.

  Roaring Kitty, identified in 2021 as Keith Gill, became a prominent figure followed on the WallStreetBets forum and on YouTube for his bullish stance on GameStop.

  He posted videos about why GameStop was poised to go higher. In February 2021, he testified before Congress as lawmakers looked into a massive short squeeze spurred by an army of retail traders.

  Hedge fund Melvin Capital, at the center of a massive bet that GameStop shares would fall, lost billions of dollars during the meme frenzy. The phenomenon attracted millions of retail traders and prompted greater scrutiny over payment for order flow, a way in which some trading platforms make money.

• Mon, May 13, 2024 at 6:31 AM MST

  Stocks rise to begin CPI-focused week, with Dow eyeing 9th straight win

  Stocks opened higher Monday as investors turned their attention to the latest monthly inflation report due out this week for clues to how the Federal Reserve will move on interest rates this year.

  The S&P 500 (^GSPC) rose roughly 0.2%, while the tech-heavy Nasdaq Composite (^IXIC) moved up about 0.3%. The Dow Jones Industrial Average (^DJI) also added about 0.3%, eyeing a ninth straight daily win. The blue-chip index notched its best week of the year on Friday.

  On Wednesday, investors will find out whether the stickier-than-expected inflation trend continued into the second quarter with the release of the Consumer Price Index (CPI) reading for April.

  On the retail spending front, quarterly results from Home Depot (HD) due out Tuesday and Walmart (WMT) on Thursday may give insight into the health of the US consumer.

• Mon, May 13, 2024 at 3:40 AM MST

  Netflix stock rallies ahead of Upfront event

  Here’s an interesting, fun fact on Netflix (NFLX) you probably didn’t realize.

  The stock has rallied 12% since May 1 and is now trading at the levels seen before the company’s disappointing earnings day in late April.

  In a new note this morning, JPMorgan analyst Doug Anmuth credits the rebound to “1) increased comfort with both the 2024 reported revenue outlook and NFLX’s decision to no longer report subscribers beginning in 2025; 2) recognition that NFLX is not subject to heavy AI-driven capex intensity like Meta, Alphabet, and Amazon; and 3) excitement into the Upfront presentation on May 16.”

  The annual Upfront presentation is when TV networks and streaming services pitch their programming and ad products to advertisers and agencies.

  Anmuth thinks Netflix will have bullish things to say at the event that could be a catalyst to the stock:

  “At the Upfront we expect an update to the 23 million plus ad tier monthly active user (MAU) disclosure, with our conversations suggesting investors are looking for 35-40 million plus ad tier MAUs, including the benefit of the T-Mobile bundle. Outside of ad tier metrics, we expect updates on the upcoming content slate and NFLX’s sports strategy, with articles suggesting NFLX could host two NFL games on Christmas later this year. NFLX would bring the NFL large global distribution while the games could serve as a boost to NFLX’s ad tier and enable the company to actively promote upcoming content. Finally, we look for progress around improving the ad product, tech, and sales, with some investors expecting a 3P demand side platform announcement.”

• Mon, May 13, 2024 at 3:30 AM MST

  Bullish trading call on Walmart into earnings from EvercoreISI

  Walmart (WMT) stock has been lagging the S&P 500 the past month as sticky inflation data calls into question the spending power of US consumers.

  There has been some chatter on the Street of extra-conservative guidance from Walmart when it reports earnings this Thursday morning.

  But Evercore ISI’s retail analyst Greg Melich is putting those worries to the side, adding Walmart to his tactical buy list into the results.

  Said Melich this morning:

  “We believe the company is executing at a high level while pursuing initiatives such as digital advertising, Walmart Plus, and automation. Even a modest improvement in digital profitability (before considering incremental advertising/alternative profit opportunity) provides a considerable margin capture opportunity. Our sense is that the company will speak to a fairly steady low to middle income consumer, in addition to higher income share capture, with positive traffic and share gain reasons for the commentary to skew constructive through the year. Normally Walmart does not raise full year EPS and comparable sales guidance in 1Q, but we do see them taking a positive tone with respect to underlying momentum in the business. This may prove especially pronounced in international operations — which continue to see positive double-digit percentage comparable sales, with positive industry commentary on Walmart’s continued share capture likely under appreciated by investors.”

• Mon, May 13, 2024 at 3:20 AM MST

  A look at earnings growth

  An interesting dynamic in markets begins to form.

  After several years of explosive earnings per share growth for the “Magnificent 7” names, the space is headed for a slowdown this year and next (see the chart on the left from RBC strategist Lori Calvasina). By the same token, after several years of limp growth for the 493 other S&P 500 components, EPS growth is seen accelerating this year and next.

  The question on the horizon is this: Do the other 493 S&P 500 companies represent better value than the Magnificent 7 as their profit growth is likely to accelerate again in 2025?

• Mon, May 13, 2024 at 3:10 AM MST

  Save this date: May 20, JPMorgan…