This week in the Stock Market (12/08/24-16/08/24)

This week, the S&P 500 was up by 3.78% to an index of 5554.26 and the NASDAQ 100 was up by 5.18% to an index of 19508.52. This recovery after the previous week’s major tumble was driven by the release of positive US economic data. This week, PPI and CPI data were released, which both are a measure of inflation. PPI was at 2.2% while CPI was at 2.9%, both these data points were much lower than predicted and are edging towards the target of 2%. To further this, this week, monthly retail-sales data was released which showed to be strong, relative to previous months. This month had a retail sales growth of +1% in comparison to last month’s -0.2%. and was much higher than the predicted +0.4% for this month. Furthermore, this week (as it normally occurs) the data on US initial jobless claims were released. This data shows the number of people during that week who had filed for unemployment benefits in the US for the first time, thus this data point gives an indication of how well the US labour market is performing. Two weeks ago, the US initial jobless claims were at 250,000 and it was predicted to be around 240,000 this week. Yet, in reality, it was 227,000, significantly lower than predictions and the previous week. The release of the economic data this week showed a positive sign of the US economy, alleviating investors’ fear and increasing investor confidence, enabling the S&P 500 and NASDAQ 100 index to recover from the previous week’s fall.

Out of the Magnificent 7, which are 7 tech companies that have a strong dominance over the stock market due to their extremely large market capitalisation, NVIDIA Corporation has performed the best with their stock going up by 17.17%. The main reason for this was driven by the positive US economic data. Yet, another reason is NVIDIA’s second quarterly earnings report will be released on August 28^th, where it is expected to perform extremely well (in quarter one, it was it $26 billion which was an increase of 18% from the previous quarter) and thus stock price will boom after it releases. As a result, the demand for NVIDIA stocks is currently going up when the stock price is much lower than it is expected to be after August 28^th. This rise in demand is causing an increase in NVIDIA’s stock, enabling NVIDIA to experience its best week this year on the stock market. The other 5 companies experienced rises in their stock price this week due to the strong US economic data apart from Alphabet (Google). On the 13^th and 14^th of August, the US Justice Department was considering breaking up Google’s search engine due to its monopolistic practices which had violated US antitrust laws. This resulted in shareholders becoming fearful, causing Google shares to be sold resulting in a drop in Google’s share price by 3.72% on the 13^th and 14^th of August. By the end of the week, Google had recovered, yet they had still experienced a -0.85% loss in share price and thus market valuation across the week.

This week, on the stock market, one of the worst-performing companies was Terran Orbital Corporation, experiencing a 64.14% drop in their share price. Terran Orbital Corporation is a manufacturer of small satellites in the aerospace and defence industry. It is mostly based in the US. Since 2021, Terran Orbital Corporation has experienced large losses, with net margins of lower than -100% since 2021. Due to this, Terran Orbital have been having large amounts of debt which they have been struggling to pay off and have been running out of cash flows. As a result, since the beginning of this year, Terran Orbital’s market value has dropped significantly. However, this week, on the 14^th of August, a deal was made where a company in the space industry called Lockheed Martin acquired 100% of Terran Orbital Corporation for $450 million. This is much lower compared to two years ago when Terran Orbital Corporation was valued at $1.8 billion. This acquisition resulted in Terran Orbital’s share price dropping from $0.40 on 14^th August to $0.25 on 15^th August. By the end of the week, Terran Orbital’s share price had plummeted by 64.14%, experiencing one of their worst-performing weeks ever on the stock market.