What’s News in Markets: Walgreens Talks, Alphabet’s Quantum Leap, Cruise Control - WSJ What’s News

Summary

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.

Transcript

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Discover more@viking.com hey listeners, it's Saturday, December 14th. 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. Alright guys, 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, especially after investors got to digest Wednesday's Consumer Price Index data, which was in line with consensus expectations and bolstered confidence that we have a cut coming our way. Other stories we saw playing out in stocks this week include developments in the so called US China chip war, with Beijing announcing an antitrust probe of Nvidia, the AI poster child stock. And speaking of big tech, we saw some big moves from Oracle and Alphabet, but we'll come back to those in a bit. Now let's look at the indexes. 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. Looking at individual movers from the week, let's talk about Walgreens. The stock's been pretty under the weather due to mounting pressure on its pharmacy and retail businesses. But things turned around on Tuesday after the Wall Street Journal reported that Walgreens is in talks to sell itself to private equity firm Sycamore Partners. If these talks don't fall apart, a deal could be completed early next year, according to our reporting. Before the Journal reported on this development between Walgreens and Sycamore, Walgreens stock was down nearly 70% far this year. And remember, for those of you playing along at home, The S&P 500 is up more than 25% year to date. But on Tuesday, 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%. Now, as promised, let's circle back to big tech. On Tuesday, two major stocks made two major moves in opposite directions and those two stocks were Oracle and Alphabet. Oracle, the software company, was one of the day's biggest losers thanks to its slightly disappointing quarterly results. From late Monday, the company said revenue rose 8.6% to $14.06 billion, which is just slightly below the $14.12 billion that analysts expected, according to FactSet. Though it's important to remember the larger trend we've been seeing from Oracle. Before Monday's Update, optimism about AI had helped send the stock up more than 80% this year, so we'll have to wait and see whether this is just a slip or a larger slide downward. In any case, Oracle fell more than 6% on Tuesday and notched a weekly decline of more than 9%. On the flip side, a bright spot among tech stocks on Tuesday was Alphabetical, the parent company of Google, which on Monday unveiled a state of the art quantum chip named Willow. And this was a big win for Google in its effort to compete in quantum computing. Not a big tech guy myself, but it even just sounds cool, right? Quantum computing, Quantum mechanics, the show, Quantum Leap. All very cool. So on that good news, Alphabet shares gained more than 5% Tuesday and ended the week with a gain of more than 8%. Speaking of tech AI, quantum computing, why not add robots to the mix? Well, robo taxis because we are looking at General Motors, which announced Tuesday that it's scrapping its Cruise robo taxi program after nearly a decade and some $10 billion of development. The company said the restructuring was due to challenges like rising competition and the time and costs it needed to scale the business. The news did weigh on GM stock, which fell about 1% Wednesday and gained back some ground the rest of the week. But it hit rideshare stocks, Uber Technologies and Lyft even harder. Those stocks can be affected by developments in the autonomous vehicle or AV space, not to mention that Uber had recently partnered with Cruise to bring its Robo taxis onto its ride hailing platform. So on Wednesday, Uber and Lyft shares fell nearly 6 and 5%, respectively. And on a weekly basis, Uber lost more than nine, while Lyft lost more than 11%. 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 was produced by Pierre Bienme, with supervising producer Michael Kosmigas. I'm Francesca Fontana. Have a great week.