Markets Bounce Back After Mellow Inflation Data

Good morning! it’s August 15th, and today we will look at positive quarterly reports from Cisco, Nike, and Deere & Co., as well as a tiny pharma stock that is surging 145% in premarket trade.

Previous Close 📈

U.S. stocks rose Wednesday after encouraging inflation data boosted hopes for potential Fed rate cuts in September. All three indices ended up in the green.

Futures

Stock futures are also climbing today as investor fears of a recession ease.

What to Watch

It’s going to be a busy day! Watch out for Walmart, Alibaba, and Grab’s earnings reports during the premarket session.

At 8:30 a.m., the August Initial Jobless Claims, as well as the Empire State and Philadelphia Fed manufacturing surveys, will be released.

July's Retail Sales and Import Price Index data will also come out at 8:30 a.m.

St. Louis Fed President Alberto Musalem will give a speech at 9:10 a.m., and the Industrial Production and Capacity Utilization data for July will be released at 9:15 a.m.

Business Inventories for June will be shared at 10 a.m. Then, Philadelphia Fed President Patrick Harker will give a speech at 1:10 p.m.

Lastly, Applied Materials, Amcor, and H&R Block will share their quarterly reports during aftermarket hours.

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Technology

Cisco Stock Surging After Strong Sales Forecast Despite Job Cuts

Cisco Systems, Inc., provided an optimistic revenue forecast yesterday for the current fiscal quarter (ending in October), predicting sales between $13.65 billion and $13.85 billion. This comes on the heels of a rebound in customer orders. The projection is higher than analysts' lower-end estimates.

Following the announcement, Cisco shares are surging by 6.5% in premarket trading, positioning the company for its largest intraday gain since February 2023. However, on a year-to-date basis, the stock is on a 10% decline.

Despite the positive outlook, Cisco also announced plans to cut more than 6,300 jobs (approximately 7% of its workforce) as part of a strategic pivot towards expanding its offerings in cybersecurity, cloud systems, and artificial intelligence products.

The company emphasized that these layoffs are not aimed at boosting profits but rather reallocating resources to focus on these high-growth areas.

In the fourth quarter, Cisco reported a 10% decline in revenue to $13.6 billion, which also exceeded analyst expectations. Additionally, the company recorded a 14% increase in orders, signaling strong future revenue prospects. Cisco's management remains confident that its strategic shift and investment in long-term contracts will sustain growth in the evolving tech landscape.

Heavy Machinery

Strong Pricing Helps Deere & Co. Beat Q3 Profit Expectations

Deere & Co. exceeded analysts' profit expectations for the third quarter, riding on strong pricing strategies and cost management, even as demand for farm equipment weakened.

The stock is rallying by nearly 4% in premarket trading so far.

The company reported a net income of $6.29 per share, surpassing the $5.63-per-share average forecast by analysts. Despite a 17% drop in net sales to $13.15 billion, Deere's focus on maintaining higher prices has helped protect its margins.

The robust pricing, initially implemented two years ago in response to supply chain disruptions and heightened demand, is continuing to support profitability despite declining crop prices and elevated borrowing costs.

To navigate the slowdown, Deere and other machinery makers have adjusted production and reduced inventories. Deere also announced job cuts in June to further control costs.

The broader agricultural sector faces challenges, with U.S. farm incomes projected to fall in 2024 due to lower crop prices, increased production costs, and reduced government subsidies. Deere's proactive measures, however, have positioned it to sustain profitability amid these headwinds.

Sportswear

Nike Stock Soaring After Significant Investment by Pershing Square Disclosed

Nike Inc. shares are up by 4% in premarket trade after Bill Ackman’s Pershing Square Capital Management disclosed a new stake in the company yesterday.

According to a regulatory filing, the investment firm now holds approximately 3 million shares in Nike, valued at $229 million. This move comes as Nike continues to recover from a recent sales slump.

The disclosure of Pershing Square's stake led to a significant reaction in the market, with Nike's stock price jumping as much as 5.5% in after-hours trading. Before this, its stock had declined nearly 28% over the year.

While Wall Street has speculated on the potential involvement of activist investors at Nike—especially after the company's poor performance in June—Ackman has indicated a shift towards a more subdued approach in his investments, opting for less public agitation with management. The filing did not specify whether Pershing Square intends to push for changes within the company.

Nike's board remains firmly under the control of co-founder Phil Knight and his son Travis, who hold nearly all the voting shares. In 2018, Pershing Square profited from a passive investment in Nike, earning $100 million in just a few months before cashing out.

This latest investment by Pershing Square has reinvigorated interest in Nike as the company works to regain its footing in the competitive sportswear market.

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SciSparc Ltd. [SPRC] - Last Close: $0.32

SciSparc's stock is up by 145% in premarket trading.

The pharmaceutical company shared on Wednesday that it has made significant progress in its planned merger with AutoMax Motors Ltd.

A court in Israel has approved AutoMax's request to hold special shareholder meetings to vote on the merger, which is an important step toward finalizing the deal.

Additionally, SciSparc and AutoMax have agreed to extend the deadline for completing the merger from August 30 to November 30 of this year.

This extension gives both companies more time to finalize the merger, signaling confidence in the deal's completion.

Altamira Therapeutics Ltd. [CYTO] - Last Close $0.92

Altamira Therapeutics is rallying by 37% so far before the opening bell.

The stock is gaining attention because the company announced significant advancements in cancer treatment using their SemaPhore™ nanoparticle technology.

In animal models, they showed that delivering Zbtb46 mRNA with SemaPhore nanoparticles significantly reduced tumor growth.

This breakthrough could potentially make immune therapies like anti-PD1 more effective for a broader range of cancer patients.

Airship AI Holdings, Inc. [AISP] - Last Close: $2.52

Airship AI shares are up by nearly 25% in premarket trading.

The company released its quarterly earnings yesterday, showcasing a strong financial performance in the second quarter of 2024.

Airship AI reported $6.4 million in net revenue and a 70% gross margin on the back of success in its AI-driven video and data management solutions.

This performance is part of a broader trend, with the company already achieving 128% of its total 2023 revenue in just the first half of 2024.

Airship AI's operating income reached $1 million, showing significant progress toward becoming cash flow positive for the full year.

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Everything Else

• European markets are climbing amid positive momentum from U.S. and U.K. inflation data.

• Adyen shares are surging as the payments giant outpaces rivals with strong half-year results.

• Airwallex reached $500 million in annual sales while eyeing a $1-billion milestone and IPO by 2026.

• U.S. lawmakers have called for an investigation into TP-Link’s potential national security risks.

• China will limit antimony exports, raising concerns over the global supply for critical industries.

• JD.com reported strong Q2 profit growth, driven by mid-year sales and cost management.

• Alibaba missed Q1 revenue estimates as China's weak economy continues to weigh on sales.

That’s all for today. Thank you for reading. If you have any feedback, please reply to this email.

Best Regards,

— Adam Garcia
Elite Trade Club

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