What’s News in Markets: ‘Trump Trade,’ Warner Bros. Streaming Win, Hershey Sours

Summary

WSJ What’s News in Markets: 'Trump Trade,' Warner Bros. Streaming Win, Hershey Sours
Released: November 9, 2024
Host: Francesca Fontana, The Wall Street Journal

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Introduction

On the November 9th episode of WSJ What’s News in Markets, host Francesca Fontana delves into the pivotal events that shaped the financial markets over the past week. Two major developments—the outcome of Tuesday’s presidential election and the Federal Reserve’s policy meeting—set the stage for significant market movements, influencing investor sentiment and sector performance.

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Market Movers: Presidential Election and Federal Reserve Decision

Francesca begins by highlighting the twin catalysts for the week's market dynamics:

1. Trump's Presidential Victory: Donald Trump's win ignited a broad market rally on Wednesday, marking the Dow Jones Industrial Average's largest gain in two years. Francesca notes, “Donald Trump's win powered a big and broad market rally on Wednesday, pushing the Dow to its biggest gain in two years” [00:48].

2. Federal Reserve's Interest Rate Cut: Following September’s half-point rate reduction, the Federal Reserve announced a quarter-point cut on Thursday, aligning with investor expectations. This decision, coupled with the election outcome, fostered an environment conducive to stock growth. Francesca remarks, “A quarter point cut which was in line with what many investors were expecting” [02:15].

The combination of lower interest rates and the anticipation of a Republican administration promoting tax cuts and deregulation created a bullish outlook. This sentiment was reflected in the market's performance:

• Dow Jones Industrial Average: Surpassed 44,000 for the first time ever.
• S&P 500: Crossed the 6,000 mark.
• Weekly Gains: The Dow and S&P 500 each rose by over 4%, while the Nasdaq increased by more than 5%.

Francesca summarizes, “All of these developments… are creating an environment that traders see as allowing stocks to continue to run” [01:50].

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The Trump Trade: Winners and Losers

The episode delves into the implications of the so-called "Trump trade," where investors are positioning themselves for potential gains under a Trump presidency.

Big Winners:

• Banking Sector: Benefiting from expectations of reduced regulation and increased interest income:

  • JPMorgan Chase: Stock surged by 12%, reaching a new all-time high.
  • Wells Fargo and Goldman Sachs: Both saw a 13% increase.

• Industrials: Including equipment manufacturers, domestic steel producers, and railroads, rising on the back of anticipated lighter regulation and protective tariffs.

• Cryptocurrency: With Trump positioning himself as a pro-crypto candidate, Bitcoin prices and crypto-linked stocks experienced rallies.

Francesca explains, “Trump has branded himself the pro crypto candidate and so with his win, bitcoin prices and crypto linked stocks also rallied” [04:10].

Contrasting Performance:

• Clean Energy and Electric Vehicles: Industries expected to thrive under Democratic policies faced declines. Notably, Tesla bucked this trend, gaining 15%, under the leadership of Trump ally and donor Elon Musk.

Francesca observes, “Except Tesla, which is led by Trump ally and donor Elon Musk” [04:50].

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Earnings Highlights: Warner Bros. and Hershey

The episode transitions to corporate earnings, spotlighting two contrasting performances:

Warner Bros. Discovery: A Streaming Success

• Profit Surge: The entertainment giant reported its first quarterly profit in over two years, with a surprise profit of $135 million.
• Driving Factors: Significant growth in streaming subscriptions for its flagship platforms, Discovery and Max.
• Market Reaction: Shares soared approximately 12% on Thursday, maintaining a weekly gain of 11.5% despite a slight dip on Friday.

Francesca points out, “That surprise profit of $135 million was driven by better than expected growth in streaming subscribers” [05:25].

Hershey: Facing Sweet Challenges

• Revenue and Profit Misses: The chocolate maker lowered its annual guidance due to skyrocketing cocoa prices.
• Challenges: Adverse weather conditions impacting cocoa-producing regions and global inflation pushing up consumer goods prices, making Hershey’s products more expensive.
• Market Impact: Shares declined by about 2.2% on Thursday, culminating in a weekly loss of 2%.

Francesca notes, “Sky high cocoa prices which have been eating into its sales… has made cocoa based candies more expensive than ever in 2024 for Hershey and its rivals” [05:15].

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Conclusion

Francesca Fontana wraps up the episode by directing listeners to additional resources and upcoming segments. She emphasizes the intertwined nature of political events and economic policies in driving market trends and underscores the importance of staying informed through reliable financial reporting.

“You can read about more stocks that moved on the week's news in the Score. My column in the Wall Street Journal's Exchange section” [05:30].

Produced by Pierre Piedeme with supervising producer Taliar Bell, the episode provides a comprehensive overview of the week's market movements, offering valuable insights for investors navigating the evolving financial landscape.

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Notable Quotes:

• Francesca Fontana: “Donald Trump's win powered a big and broad market rally on Wednesday, pushing the Dow to its biggest gain in two years” [00:48].
• Francesca Fontana: “A quarter point cut which was in line with what many investors were expecting” [02:15].
• Francesca Fontana: “Trump has branded himself the pro crypto candidate and so with his win, bitcoin prices and crypto linked stocks also rallied” [04:10].
• Francesca Fontana: “Sky high cocoa prices which have been eating into its sales… has made cocoa based candies more expensive than ever in 2024 for Hershey and its rivals” [05:15].

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Additional Resources

For an in-depth analysis of the week's stock movements and market news, visit Francesca Fontana's column in the Wall Street Journal's Exchange section.

Transcript

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[C]

Hey listeners, it's Saturday, November 9th. 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. Welcome back everybody. We had two big events setting the tone for markets this week. You probably heard something about them already, right? Tuesday's presidential election and the Federal Reserve's two day policy meeting. Donald Trump's win powered a big and broad market rally on Wednesday, pushing the Dow to its biggest gain in two years. And we'll get to more of the winners and losers of the so called Trump trade in a second. Then the Fed announced its latest interest rate decision on Thursday, which remember is following September's half point reduction. The verdict? A quarter point cut which was in line with what many investors were expecting. So all of these developments, lower interest rates plus a Republican presidency bringing the prospect of tax cuts and lighter regulation are creating an environment that traders see as allowing stocks to continue to run. And they certainly did this week. On Friday, the Dow traded above 44,000 for the first time ever and the S&P 500 crossed 6,000 with both indexes closing a bit below those marks. On the week, both indexes gained more than 4% while the Nasdaq rose more than 5%. All right, back to the Trump trade. That's what markets have been calling investors bets that could pay off in a second Trump presidency. And we got to see those trends continue to play out on Wednesday as that second Trump presidency became a reality. First, the big winners we had the banks which were lifted by hopes for reduced regulation and higher interest income under the new administration. JPMorgan Chase's stock climbed 12% to a new all time high. And Wells Fargo and Goldman Sachs both rose 13%. Then there were the industrials, including equipment makers, domestic steel makers, railroads and the like. We saw those stocks gaining on the prospect of lighter regulation as well as protective tariffs. And of course there was crypto. Trump has branded himself the pro crypto candidate and so with his win, bitcoin prices and crypto linked stocks also rallied. Meanwhile, the sectors that were expected to benefit from Democratic policies in the event of a Kamala Harris presidency, those were on the decline and they included clean energy related industries and electric vehicle companies. Except Tesla, which is led by Trump ally and donor Elon Musk. So Tesla bucked that trend and ended up gaining 15%. While markets were busy digesting all of the big news of this week, we also had earnings season marching right along, including the latest from Warner Brothers. Discovery, the entertainment conglomerate swung to its first quarterly profit in more than two years. That surprise profit of $135 million was driven by better than expected growth in streaming subscrib. You've probably heard of the company's two flagship platforms, which are Discovery and Max. On the other hand, its legacy studio business and cable networks weighed on results. The company said that lower box office revenue from this year's releases, Beetlejuice, Beetlejuice and Twisters didn't match the strong performance by Barbie last year. Thanks to that big boost from streaming, Warner Bros. Shares soared about 12% on Thursday. The stock gave back some of Those gains Friday, falling 2%, but it ended the week with a gain of about 11.5%. A company whose latest quarter wasn't so sweet was Hershey. The chocolate maker lowered its annual guidance and missed revenue and profit expectations. Why? Sky high cocoa prices which have been eating into its sales. The price of that key chocolate ingredient has been on the rise due to adverse weather hurting the areas where cocoa's grown. That plus global inflation pushing consumer goods prices higher has made cocoa based candies more expensive than ever in 2024 for Hershey and its rivals. Investors, in turn did not have much of a sweet tooth after the report and Hershey shares lost about 2.2% Thursday, notching a weekly decline of 2%. And now you know what's news in markets this week. You can read about more stocks that moved on. The week's news in the Score. My column in the Wall Street Journal's Exchange section. Today's show is produced by Pierre Piedeme with supervising producer Taliar Bell. I'm Francesca Fontana. Have a great weekend and see you next Saturday.

[B]

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