Earnings Turbulence: Trade Desk Plunges 24%, Plug Power Stumbles, Diageo Faces Sales Warning
Nov 10, 2023
It has been a notably subdued week for the stock market, following the substantial movements observed in the previous week. Both the S&P 500 and the Nasdaq Composite have experienced minimal shifts, each moving less than 0.5% since a week ago. Yesterday, in particular, marked one of the more significant movements of the week, with the S&P declining by 0.8%, and the Nasdaq dropping by 0.9%.
The current lack of notable earnings reports and economic data has left investors in a state of anticipation, awaiting fresh insight to interpret. In the absence of data, markets often attempt to quantify qualitative statements, such as those recently made by Federal Reserve Chairman Jerome Powell. While cautioning that the recent pause in raising interest rates shouldn't be seen as a victory, Powell emphasized the Fed stands ready to resume rate hikes if inflation signals intensify.
As Powell delivered his remarks, the Treasury simultaneously encountered challenges in selling $24 billion worth of long-term debt. While such auctions typically don't draw much attention, yesterday's proved weaker than anticipated. This resulted in a drop in bond prices and an increase in yields. The 10-year note hit a peak yesterday at 4.65%, closing slightly below at 4.64%. This represented a significant uptick from the previous day's low of 4.48%.
Despite the higher rates and Powell's cautious stance, the market has seen a retreat from inflation hedge trades, such as gold. Over the past few weeks, gold prices have declined by 3.5%. In times of inflation concerns, a shift toward commodities like precious metals is common. The decrease in gold prices may signal the market's belief that the peak of inflationary pressure is now behind us.
Among the individual stocks making headlines today is Meta Platforms (META), the parent company of Facebook. It secured a deal with Tencent (TCEHY) to sell Meta's headset in China, marking Meta's return to Chinese markets after a 14-year absence.
On the downside, shares in Trade Desk (TTD) are down 24% in premarket trading following its third-quarter earnings report, which exceeded estimates but forecasted fourth-quarter revenues well below expectations. Plug Power (PLUG) is also down by 38% in premarket after missing both earnings and revenue projections. Supply chain issues have plagued the once-thriving company, with shares falling significantly from their high of $46.50 just two years ago. Lastly, Diageo (DEO) shares have dipped by 14% after the beverage company warned of lower sales in Latin America and the Caribbean. Diageo, known for brands like Johnnie Walker, Tanqueray and Guinness, is feeling the impact of economic challenges in those regions.
As the week concludes, a couple of focal points include whether the S&P 500 can break and sustain 4400, a critical technical level discussed in the past. Additionally, attention is on Washington, where the government has until next Friday to devise a solution and avert a potential shutdown. While this story garnered more attention a few months ago, especially with the potential removal of Kevin McCarthy as speaker of the House, the expectation now is that another continuing resolution will be adopted. Nonetheless, it remains a story worth monitoring. In navigating these market dynamics, it is advisable to adhere to your investing strategy and long-term plans.
JJ Kinahan is CEO of IG North America—which includes tastylive, tastytrade and IG's FX Business. Kinahan traded for 21 years at the Chicago Board Options Exchange. He serves on the CBOE Advisory Board and the SIFMA Options Committee. @thejjkinahan
Trade with a better broker, open a tastytrade account today. tastylive, Inc. and tastytrade, Inc. are separate but affiliated companies.
Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.
tastylive content is created, produced, and provided solely by tastylive, Inc. (“tastylive”) and is for informational and educational purposes only. It is not, nor is it intended to be, trading or investment advice or a recommendation that any security, futures contract, digital asset, other product, transaction, or investment strategy is suitable for any person. Trading securities, futures products, and digital assets involve risk and may result in a loss greater than the original amount invested. tastylive, through its content, financial programming or otherwise, does not provide investment or financial advice or make investment recommendations. Investment information provided may not be appropriate for all investors and is provided without respect to individual investor financial sophistication, financial situation, investing time horizon or risk tolerance. tastylive is not in the business of transacting securities trades, nor does it direct client commodity accounts or give commodity trading advice tailored to any particular client’s situation or investment objectives. Supporting documentation for any claims (including claims made on behalf of options programs), comparisons, statistics, or other technical data, if applicable, will be supplied upon request. tastylive is not a licensed financial adviser, registered investment adviser, or a registered broker-dealer. Options, futures, and futures options are not suitable for all investors. Prior to trading securities, options, futures, or futures options, please read the applicable risk disclosures, including, but not limited to, the Characteristics and Risks of Standardized Options Disclosure and the Futures and Exchange-Traded Options Risk Disclosure found on tastytrade.com/disclosures.
tastytrade, Inc. ("tastytrade”) is a registered broker-dealer and member of FINRA, NFA, and SIPC. tastytrade was previously known as tastyworks, Inc. (“tastyworks”). tastytrade offers self-directed brokerage accounts to its customers. tastytrade does not give financial or trading advice, nor does it make investment recommendations. You alone are responsible for making your investment and trading decisions and for evaluating the merits and risks associated with the use of tastytrade’s systems, services or products. tastytrade is a wholly-owned subsidiary of tastylive, Inc.
tastytrade has entered into a Marketing Agreement with tastylive (“Marketing Agent”) whereby tastytrade pays compensation to Marketing Agent to recommend tastytrade’s brokerage services. The existence of this Marketing Agreement should not be deemed as an endorsement or recommendation of Marketing Agent by tastytrade. tastytrade and Marketing Agent are separate entities with their own products and services. tastylive is the parent company of tastytrade.
tastycrypto is provided solely by tasty Software Solutions, LLC. tasty Software Solutions, LLC is a separate but affiliate company of tastylive, Inc. Neither tastylive nor any of its affiliates are responsible for the products or services provided by tasty Software Solutions, LLC. Cryptocurrency trading is not suitable for all investors due to the number of risks involved. The value of any cryptocurrency, including digital assets pegged to fiat currency, commodities, or any other asset, may go to zero.