What’s News in Markets: Darden’s Discount Boost, KBR Climbs, Buffett’s Picks Gain - WSJ What’s News

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WSJ What’s News in Markets: Detailed Summary

Episode: What’s News in Markets: Darden’s Discount Boost, KBR Climbs, Buffett’s Picks Gain
Release Date: December 21, 2024
Host: Karen Langley, The Wall Street Journal

Market Overview: A Volatile Week

The week proved tumultuous for the markets, commencing with relative stability before encountering significant turbulence midweek. Karen Langley sets the stage by highlighting the unpredictable nature of the week’s market movements.

"This week turned into a rocky one for markets." [02:15]

Federal Reserve Signals Higher Interest Rates

A pivotal moment occurred on Wednesday when the Federal Reserve indicated the possibility of maintaining higher interest rates into the next year, contrary to investors' expectations of rate cuts. This announcement unsettled the market, leading to substantial declines.

"The Federal Reserve signaled it might keep interest rates higher next year than investors had expected. This was not music to investors' ears." [02:35]

Impact on Major Indices

The Federal Reserve’s stance had a pronounced effect on major stock indices:

Dow Jones Industrial Average: Plummeted over 1,100 points.

"The Dow tumbled more than 1,100 points." [03:00]
Russell 2000: Experienced a significant drop of 4.4%, marking the worst performance in two and a half years for this index of smaller publicly traded companies.

"That made Wednesday the worst day in two and a half years for the Russell." [03:20]
S&P 500 and Nasdaq: Both indices ended the week lower despite a Friday rebound, with the S&P 500 down 2%, the Dow losing 2.3%, and the Nasdaq dropping 1.8%.

"While stocks climbed Friday, they still ended the week lower." [04:00]

Food Sector: Darden Restaurants vs. Lamb Weston

The food industry presented a mixed bag of performances:

Darden Restaurants (Olive Garden): Shares soared nearly 15% on Thursday, reaching an all-time high. The surge was fueled by better-than-expected sales in the last quarter and strategic marketing efforts emphasizing value meals amidst lingering inflation concerns.

"Shares of Darden Restaurants... soared almost 15% on Thursday to an all-time high." [04:20]
Lamb Weston: In stark contrast, shares plunged 20% the same day following CEO replacement and a downward revision of full-year guidance. Persistent high restaurant prices dampened demand for Lamb Weston’s products.

"Shares plunged 20% Thursday after the company replaced its CEO and cut its full year guidance for a second straight quarter." [05:10]

For the week, Darden’s shares rose by 13%, while Lamb Weston’s fell by 22%.

Government Contractor KBR: Activist Investor Influence

KBR, a government contractor, saw its shares jump nearly 4% on Thursday after The Wall Street Journal reported that activist investor Iranic Capital Management had acquired over a 1% stake in the company. Iranic plans to advocate for the spinoff or sale of KBR’s Sustainable Technology Solutions segment.

"Government contractor KBR's shares jumped nearly 4% Thursday after... Iranic Capital Management... plans to push the company to spin off or sell its Sustainable Technology Solutions segment." [05:50]

Despite the positive news, KBR shares retracted on Friday, ending the week down by 2.5%. The overarching concern remains the potential impact of proposed government spending cuts initiated during the Trump administration, which pose risks to government contractors like KBR.

Warren Buffett’s Berkshire Hathaway: Strategic Buys

In a notable development, Warren Buffett’s Berkshire Hathaway made strategic investments in three companies, marking a departure from its net-selling trend in the first nine months of the year. This move has captured investor attention:

Occidental Petroleum: Berkshire Hathaway invested approximately $400 million, increasing its stake to over 28%. Occidental shares responded positively, gaining 3.9% on Friday.
Verisign (Therasign): The website domain name company saw a 2.8% increase following the investment.
SiriusXM: The satellite radio company experienced a substantial 12% rise.

"Buffett's company revealed late Thursday that it's been in the market this week, boosting its positions in three oil and gas producer Occidental Petroleum, website domain name company Therasign and satellite radio company SiriusXM." [06:30]

These investments were ahead of broader S&P daily gains, signaling confidence from one of the most respected investors in the market.

Conclusion and Looking Ahead

Karen Langley wraps up the episode by summarizing the week’s key market movements and setting the stage for upcoming content. She mentions the next episode’s focus on mergers and acquisitions in the new year and extends holiday greetings to listeners.

"Tomorrow, what's news on Sunday, we'll be looking at how mergers and acquisitions might fare in the new year." [07:30]

Produced by: Ariana Osperou
Supervising Producer: Tali Arba

This episode of What’s News in Markets provided a comprehensive overview of the week’s significant market movements, influenced by Federal Reserve policies, sector-specific performances, activist investor actions, and strategic investment moves by Berkshire Hathaway. Karen Langley effectively encapsulated the volatility and highlighted key areas of investor interest, offering valuable insights for both seasoned and casual market watchers.

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Transcript3 lines

[00:00]
Amazon Representative
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[00:14]
Karen Langley
For you@aws.com learnmore hey listeners, it's Saturday, December 21st. I'm Karen Langley 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. This week turned into a rocky one for markets. Things started out steadily enough, then came Wednesday when the Federal Reserve signaled it might keep interest rates higher next year than investors had expected. This was not music to investors ears. The Dow tumbled more than 1100 points, while the Russell 2000 lost 4.4%. That made Wednesday the worst day in two and a half years for the Russell, an index of smaller publicly traded companies. Investors had been thinking that additional rate cuts next year would help stocks keep powering higher, so learning that the central bank may make fewer cuts than expected was an unpleasant surprise. While stocks climbed Friday, they still ended the week lower. The S&P 500 fell 2% for the week, while the Dow lost 2.3% and the Nasdaq dropped 1.8%. With the holidays coming up, it's a big time for eating. But this week, food related stocks were telling different tales. Shares of Darden Restaurants, the owner of Olive garden, soared almost 15% on Thursday to an all time high. That was after Darden had better than expected sales last quarter, with consumers still cringing at higher prices after all that inflation during Jarden has been prominently advertising its value meals and ran its Olive Garden unlimited pasta deal for longer than last year. Things didn't go so well for French fry maker Lamb Weston. Shares plunged 20% Thursday after the company replaced its CEO and cut its full year guidance for a second straight quarter. High prices at restaurants have cut into demand for the company's fries and other products. For the week, Darden's shares rose 13% while Lamb Weston's lost 22%. Government contractor KBR's shares jumped nearly 4% Thursday after the Wall Street Journal reported that activist investor Iranic Capital Management had built a stake of more than 1% in KBR and plans to push the company to spin off or sell its Sustainable Technology Solutions segment. KBR shares have fallen since early November. Investors worry that calls to slash government spending under the Trump administration will hit government contractors. On Friday, KBR shares slipped, leaving them down 2.5% for the week when Warren Buffett's Berkshire Hathaway buys a stock the the market pays attention Buffett's company revealed late Thursday that it's been in the market this week, boosting its positions in three oil and gas producer Occidental Petroleum, website domain name company Therasign and satellite radio company SiriusXM. Berkshire has been a net seller of stocks in the first nine months of the year, so that its buying is intriguing investors. Buffett's company spent roughly $400 million this week on Occidental shares, bringing its stake in to more than 28%. Shares of the three companies all jumped Friday, with Occidental gaining 3.9%, Verisign up 2.8% and Sirius advancing 12%. They ran ahead of the daily gains in the S and P. And now you know what's news in markets this week. Today's show was produced by Ariana Osperou with supervising producer Tali Arba. Tomorrow, what's news on Sunday, we'll be looking at how mergers and acquisitions might fare in the new year. We'll be taking off what's news in markets next week and we'll be back with a new episode in the new year. I'm Karen Langley. Happy holidays and we'll see you in 2020.
[04:41]
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