✂️ No Rate Cuts? No Problem

Plus, two tech giants are making big workforce cuts.

Happy Wednesday afternoon to everyone on The Street. Here's a snapshot of where markets ended the trading session, plus tomorrow's trade idea delivered to you today.

  • 🟨 | US Stocks Were Mixed on Wednesday. The Federal Reserve voted to keep interest rates unchanged, meaning there won’t be immediate relief from the current high borrowing costs. However, Fed Chair Jerome Powell boosted investor sentiment by ruling out a potential move to hike rates to bring inflation down.

  • 📈 | One Notable Gainer: Shares of New York Community Bank shot up 28% despite posting a quarterly loss of $335 million. CEO Joseph Otting said in a release that the bank is on a “clear path to profitability over the following two years.”

  • 📉 | One Notable Decliner: Starbucks’ stock fell 16% after nearly a dozen analysts slashed their price targets or downgraded the coffee chain after its disappointing quarterly report. William Blair analyst Sharon Zackfia said the quarterly report showed “a stunning across-the-board miss on all key metrics.”

  • ✂️ | Tomorrow's Trade: No Rate Cuts? No Problem. Scroll down for more.

Plus, this company secured a game-changing $30,000,000 investment as it aims to become a key lithium supplier in the global EV battery materials supply chain.

YESTERDAY’S POLL RESULTS

🟩🟩🟩🟩🟩🟩 Bullish

🟨⬜️⬜️⬜️⬜️⬜️ Bearish

S&P 500 Heatmap. Credit: Finviz

All stocks on US exchanges. Credit: Finviz

Global ADR snapshot. Credit: Finviz

MARKET MOVERS

JNJ (+5%) Johnson & Johnson reported its $6.5 billion settlement plans for talc cancer cases, possibly bringing an end to years of litigation (InvestorPlace)

SMCI (-14%) Shares of server company Super Micro Computer plummeted after posting third-quarter revenue that slightly missed estimates (CNBC)

PFE (+6%) Pfizer’s stock jumped after the company easily beat analysts’ first-quarter earnings forecasts through higher sales of Covid treatment Paxlovid (IBD)

CVS (-17%) Drugstore chain CVS revised down its 2024 guidance and reported a revenue miss that one analyst “did not even believe” (YF)

EL (-13%) Cosmetics company Estée Lauder lowered its sales outlook for the year, saying demand in China is expected to remain weak (Barron’s)

TOGETHER WITH ATLAS LITHIUM

Atlas Lithium Corporation (NASDAQ: ATLX) has secured a definitive investment and offtake agreement with Mitsui & Co., Ltd. (OTC: MITSF), signaling confidence in the company's project and team. Mitsui will invest $30 million in Atlas Lithium and has committed to purchasing 15,000 tons of lithium concentrate from phase 1 of the Neves Project in Brazil's Lithium Valley, with a further agreement for 60,000 tons per year for five years from phase 2. 

The investment will provide immediate funding for Atlas Lithium to continue project development and focus on generating revenue from the production and sale of environmentally friendly lithium concentrate. This partnership marks a significant milestone for Atlas Lithium as it aims to become a key lithium supplier in the global EV battery materials supply chain. Mitsui's long-established presence in Brazil and profitable mining investments add further credibility to the collaboration.

OVERHEARD ON THE STREET

Barron’s: Powell said stagflation wasn’t in the Fed’s current forecast and stated: “I don’t really understand where that’s coming from.”

WP: The Biden administration seeks to spur the growth of sustainable jet fuel through a system of tax credits for producers.

Time: Tesla eliminated almost its entire Supercharger organization, which built the public charging station network that every major autoworker is tapping into.

SA: More cuts… Google plans to lay off hundreds of “core” employees and has started hiring employees in cheaper countries like India and Mexico.

Space.com: Satellite operator SES is acquiring Intelsat in a $3.1 billion deal designed to help the company compete with SpaceX’s Starlink network.

TOMORROW’S TRADE IDEA, TODAY

oil GIF

Stubborn Inflation

Inflation has proven stubborn lately and investors are starting to wonder if rate cuts are truly in the cards. Wolfe Research has found one bright side in this situation, saying it’s a great time to buy energy stocks. 

Inflation was up 2.8% in March year-over-year as economic growth dwindled to 1.6% in the first quarter. The market is now pricing in fewer rate cuts as investors adjust to the reality that the Fed hasn’t been able to tame inflation as expected.

Energy’s Time to Shine

Energy stocks have been soaring – particularly oil – as OPEC+ continues production cuts. The sector as a whole is up 14% this year, well above the benchmark S&P 500. US crude is up 16% over the same period, following geopolitical instability and supply and demand issues. 

According to Wolfe, crude oil and the 10-year breakeven inflation rate are both trending upwards. The breakeven represents the difference between the 10-year Treasury yield and the 10-year Treasury Inflation-Protected Securities yield. This rate gives analysts an idea of the market’s sentiment surrounding inflation.

Stock Picks

Wolfe is singling out oil services company Halliburton (HAL) and natural gas producer EQT Corporation (EQT) as top stock picks in the energy space.

Halliburton has been on an upward trend for the past three years. Wolfe analysts suggest that investors “buy the dip” if the price remains above the trendline. The stock is up over 3% year-to-date.

Meanwhile, EQT hit a five-month high last week. Wolfe analysts suggest investors take advantage of consolidations and look for the stock to move back around the mid-$40s. The stock is up 3% this year and currently trades at around 40$ per share. 

As the stock market struggles and rate cuts seem less and less likely, energy could be a bright spot for investors throughout the remainder of 2024.

Which stock do you think will outperform over the rest of the year?

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TOGETHER WITH ATLAS LITHIUM

Atlas Lithium Corporation (NASDAQ: ATLX) has secured a definitive investment and offtake agreement with Mitsui & Co., Ltd. (OTC: MITSF), signaling confidence in the company's project and team. Mitsui will invest $30 million in Atlas Lithium and has committed to purchasing 15,000 tons of lithium concentrate from phase 1 of the Neves Project in Brazil's Lithium Valley, with a further agreement for 60,000 tons per year for five years from phase 2. 

The investment will provide immediate funding for Atlas Lithium to continue project development and focus on generating revenue from the production and sale of environmentally friendly lithium concentrate. This partnership marks a significant milestone for Atlas Lithium as it aims to become a key lithium supplier in the global EV battery materials supply chain. Mitsui's long-established presence in Brazil and profitable mining investments add further credibility to the collaboration.

ON OUR RADAR

CNBC: Microsoft signed a deal to invest more than $10 billion on renewable energy capacity to power data centers that support AI expansion.

CNN: The worst could be over for gas prices this spring, as they have stopped rising and even briefly dipped in recent days despite the global conflict.

Bloomberg: BlackRock to recieve $5 billion from Saudi Arabia’s sovereign wealth fund to invest in the Middle East and build a local investment team.

Reuters: Denmark will start putting patients suffering from type 2 diabetes on cheaper drugs before prescribing drugs such as Novo Nordisk's Ozempic.

BI: A leaked memo from Amazon shows the company plans to suspend new US Green Card applications for foreign workers.

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