Coffee With Greta: U.S. Downgraded
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DJIA Futures: -150 (-0.4%)
SPX Futures: -27 (-0.6%)
NASDAQ Futures: -127 (-0.8%)
Good morning friends!
Futures are falling after the U.S. credit rating was downgraded overnight.
Let’s get right to it!
Fitch Downgrades U.S.
Global credit rating agency Fitch Ratings downgraded the United States to AA+ from AAA on Tuesday.
Fitch cited “expected fiscal deterioration over the next three years” as the reason for that move after putting the U.S. on negative watch in May amid the debt ceiling fight.
The agency said, “The repeated debt-limit political standoffs and last-minute resolutions have eroded confidence in fiscal management.”
This is only the second time the U.S. has been downgraded by a credit rating agency.
S&P cut the nation’s rating from AAA to AA+ in 2011 amid a similar debt ceiling fight.
Private Job Growth Booms
The U.S. private sector added far more jobs than expected in July.
ADP reported private employers added 324,000 jobs last month vs 175,000 expected.
But it was still a slowdown from 455,000 in June.
The services sector as a whole added 303,000 jobs, led by leisure and hospitality which gained 201,000.
The goods producing sector added just 21,000 as natural resources and mining grew by 48,000 but manufacturing lost 36,000.
The Labor Department releases the official July jobs report on Friday which is expected to show the economy added just 200,000 jobs with the unemployment rate unchanged at 3.6%.
AMD Earnings Beat
Advanced Micro Devices (AMD) shares up 2.5% ahead of the open after beating Q2 expectations on the top and bottom line.
Here’s how the chipmaker’s results compared to analysts’ estimates:
- Adjusted EPS: $0.58 vs $0.57 expected
- Revenue: $5.36 billion vs $5.31 billion expected
Despite the beat, revenue was down 18% year over year.
AMD is seeing falling demand in its PC business but says it expects AI to boost its sales in the future.
The company is one of few that makes the high-end graphics processing units needed for AI.
AMD forecast Q3 revenue of $5.7 billion vs $5.81 billion expected by analysts.
Starbucks Sales Disappoint
Starbucks (SBUX) shares are falling 0.9% in premarket trade after missing Q2 sales expectations.
Here’s how the coffee chain’s results compared to analysts’ estimates:
- Adjusted EPS: $1 vs $0.95 expected
- Revenue: $9.17 billion vs $9.29 billion expected
Total same-store sales grew 10% year over year vs 11% expected.
North American same-store sales also missed estimates, up 7% vs 8.4% expected.
Pinterest Expenses Soar
Pinterest (PINS) shares are dropping 4% ahead of the open despite beating Q2 expectations as expenses jumped sharply.
Here’s how the social media company’s results compared to analysts’ estimates:
- Adjusted EPS: $0.21 vs $0.12 expected
- Revenue: $708 million vs $696 million expected
Sales were up 6% year over year but total costs and expenses jumped 11%.
Global monthly active users rose 8% year over year to 465 million during the quarter.
Pinterest said it expects Q3 revenue growth “in the high single digits range year over year”.
E.L.F. Surges
e.l.f. Beauty (ELF) shares are surging 15.9% in premarket trade after beating fiscal Q1 expectations and hiking its outlook.
Here’s how the beauty company’s results compared to analysts’ estimates:
- Adjusted EPS: $1.10 vs $0.57 expected
- Revenue: $216.3 million vs $185 million expected
For fiscal 2024, Elf now expects between $792 million and $802 million in revenue vs $705 million to $720 million previously.
The company forecast full-year adjusted EPS between $2.19 and $2.22 vs $1.73 to $1.76 previously.
CVS Slips
CVS Health (CVS) shares are down 2.2% ahead of the open despite beating Q2 expectations.
Here’s how the pharmacy giant’s results compared to analysts’ estimates:
- Adjusted EPS: $2.21 vs $2.11 expected
- Revenue: $88.9 billion vs $86.5 billion expected
Net income dropped 37% year over year while revenue rose 10%.
CVS maintained its full-year outlook as it continues cost cutting efforts.
In Case You Missed It
- Ford Motor (F) shares rose 1.6% on Tuesday after the automaker reopened its F-150 Lightning factory. The facility had been closed for six weeks for upgrades. Ford also said recent price cuts on the Lightning had significantly increased demand. The EV unit’s chief customer officer said the company has “about 45 days’ worth” of orders for the electric truck.
- Job openings fell unexpectedly in June. The Labor Department’s Job Openings and Labor Turnover Survey (JOLTS) released on Tuesday showed there were 9.58 million available jobs for the month. That was a decrease from the downwardly revised 9.62 million in May and lower than 9.7 million expected. It was the lowest level of job openings since April 2021. Layoffs also fell to 1.53 million in June from 1.55 million in May.