WSJ What’s News: Walgreens Talks, Alphabet’s Quantum Leap, Cruise Control
Release Date: December 14, 2024
Host: Francesca Fontana, The Wall Street Journal

Overview

In this episode of WSJ What’s News, host Francesca Fontana delves into the most significant market movements and developments of the week. Covering a range of topics from Federal Reserve policies to major shifts in the tech and automotive industries, the episode provides listeners with a comprehensive analysis of factors influencing today’s financial landscape.

Federal Reserve’s Interest Rate Decision

Francesca opens the discussion by highlighting the impending Federal Reserve interest rate decision scheduled for the following week. She notes that expectations are settling on a 0.25 percentage point cut, bolstered by the latest Consumer Price Index (CPI) data.

“Next week is the big week. The Fed will have another interest rate decision for us, the last one of the year, and it seems like we've all settled on expecting a quarter percentage point cut,” (00:30).

The CPI data, released on Wednesday, met consensus expectations, enhancing investor confidence that a rate cut is imminent.

“Wednesday's Consumer Price Index data, which was in line with consensus expectations, bolstered confidence that we have a cut coming our way,” (00:45).

US-China Chip War and Nvidia’s Antitrust Probe

The episode transitions to international developments, particularly the escalating US-China chip war. Francesca reports that Beijing has initiated an antitrust probe into Nvidia, positioning the AI giant at the center of geopolitical tensions.

“Beijing announced an antitrust probe of Nvidia, the AI poster child stock,” (01:10).

This move underscores the increasing scrutiny foreign tech companies are facing in China, potentially impacting their global operations and market performance.

Big Tech Movements: Oracle and Alphabet

Francesca then shifts focus to significant movements within the tech sector, specifically focusing on Oracle and Alphabet.

Oracle’s Disappointing Quarterly Results

Oracle experienced a notable decline after reporting marginally below expected revenue figures. The company reported revenue growth of 8.6% to $14.06 billion, just shy of the anticipated $14.12 billion.

“Oracle was one of the day's biggest losers thanks to its slightly disappointing quarterly results,” (02:05).

Despite Oracle’s stock appreciating over 80% this year amid AI optimism, the latest results led to a 6% drop on Tuesday and a weekly decline exceeding 9%.

Alphabet’s Quantum Computing Advancement

In contrast, Alphabet made headlines with the unveiling of its state-of-the-art quantum chip, Willow. This breakthrough positions Google as a formidable competitor in the quantum computing arena.

“Alphabet, the parent company of Google, on Monday unveiled a state of the art quantum chip named Willow,” (03:00).

This innovation contributed to Alphabet’s shares gaining over 5% on Tuesday, culminating in a weekly gain of more than 8%.

“Alphabet shares gained more than 5% Tuesday and ended the week with a gain of more than 8%,” (03:15).

Market Indices Performance

Francesca provides an overview of the week's performance across major stock indices:

• S&P 500 and Dow Jones Industrial Average both recorded weekly declines.
• Nasdaq Composite achieved its fourth consecutive week of gains, highlighting resilience in the tech-heavy index.

“The S&P 500 and Dow Jones Industrial Average ended up each posting weekly declines. Meanwhile, the Nasdaq composite secured its fourth consecutive week of gains,” (01:55).

Walgreens’ Potential Sale and Stock Surge

One of the week’s standout stories revolves around Walgreens. The company’s stock had been underperforming, dropping nearly 70% year-to-date due to pressures on its pharmacy and retail segments. However, a significant turnaround occurred following reports that Walgreens is in discussions to be acquired by Sycamore Partners, a private equity firm.

“Walgreens is in talks to sell itself to private equity firm Sycamore Partners,” (02:30).

If successful, the deal could finalize early next year. The announcement spurred Walgreens’ stock to surge by 18% in a single day—the highest one-day jump in its history—and ended the week up over 20%.

“Walgreens shares jumped a whopping 18%, marking the highest one day jump in the company's history, and the stock ended the week up more than 20%,” (02:50).

GM’s Cruise Robo Taxi Program Cancellation and Impact on Rideshare Stocks

The episode also covers significant developments in the automotive and rideshare sectors. General Motors (GM) announced the cancellation of its Cruise robo taxi program after nearly a decade and an investment of $10 billion. The decision stems from rising competition and the substantial time and costs required to scale the business.

“General Motors announced Tuesday that it's scrapping its Cruise robo taxi program after nearly a decade and some $10 billion of development,” (03:45).

This restructuring negatively impacted GM’s stock, which fell by approximately 1% on Wednesday but regained some ground later in the week. More notably, the news adversely affected rideshare companies like Uber Technologies and Lyft, leading to declines of nearly 6% and 5% respectively on Wednesday. On a weekly basis, Uber lost over 9%, while Lyft declined by more than 11%.

“Uber and Lyft shares fell nearly 6 and 5%, respectively,” (04:10).

These declines are attributed to the broader implications for the autonomous vehicle (AV) sector and existing partnerships, such as Uber’s recent collaboration with Cruise for robo taxis.

Conclusion

Francesca Fontana encapsulates the week’s market movements, highlighting the interplay between macroeconomic policies, international trade tensions, and corporate strategies within the tech and automotive industries. As the Federal Reserve gears up for its rate decision and major companies navigate evolving market conditions, investors are poised for a dynamic start to the new year.

“Now you know what's news in markets this week,” (05:00).

For more detailed insights and stock movements, listeners are encouraged to refer to Francesca’s column in the Wall Street Journal's Exchange section.

Produced by: Pierre Bienmé
Supervising Producer: Michael Kosmigas

This summary provides a comprehensive overview of the episode’s key discussions and insights, ensuring that listeners stay informed about the latest developments in the markets even if they haven’t tuned in to the podcast.