Stocks Tumble as Recession Fears Return

Good morning. It’s August 5th, and we’re going to take a look at Berkshire Hathaway’s big pullout from Apple, the escalating weight-loss drug war between Eli Lilly and Novo Nordisk, and all the major movers and shakers of the day.

Previous Close 📈

All three major indices closed in the red on Friday. The Nasdaq and S&P 500 saw a third straight week of losses, while the Dow Jones Industrial Average, which had been bucking the trend so far, also slipped against its previous week’s close.

Futures

Stock futures are down today amid rising fears of a recession. S&P 500 futures are 3% lower, Nasdaq futures are 4.7% lower, and Dow Jones Industrial Average futures are 2% lower than the previous close.

What to Watch

Keep an eye out for Tyson Foods’ and BioNTech’s earnings reports before the opening bell today.

At 9:45 a.m., the S&P final U.S. Services PMI for July will be released, and at 10:00 a.m., the ISM Services report will become available.

After closing, Palantir Technologies, ONEOK, and BioMarin Pharmaceutical will release their quarterly numbers.

Exclusive Early Access: Invest in the Next Media Powerhouse!

Unlock the future of media with this rare Reg A+ opportunity! Invest early in a groundbreaking company poised to revolutionize the $786.2 billion digital marketing industry with advanced AI and predictive analytics.

Don't miss your chance to be part of this media evolution and secure your place in the next big success story. Act now and ride the wave of innovation and growth!

Get early access now and start your investment journey!

» Want an Ad-Free Experience + Top Growth Stock Picks? Upgrade Now! 

Technology

Buffett's Berkshire Hathaway Halves Apple Stake, Sells $76 Billion in Stocks

Warren Buffett’s Berkshire Hathaway significantly reduced its stake in Apple, slashing its position by more than $50 billion to $84.2 billion in the second quarter.

This move is part of a broader $76 billion stock sell-off, which generated substantial investment profits. According to filings published on Saturday, Berkshire sold approximately 390 million Apple shares, resulting in an after-tax realized gain of $47.2 billion.

These sales have boosted Berkshire’s cash reserves to a record $277 billion, an $88 billion increase from the previous quarter. Buffett has redirected these funds into short-term Treasuries, scaling back investments in the U.S. equity markets. Despite the reductions, Apple remains one of Berkshire's core long-term investments, alongside Coca-Cola and American Express.

Buffett indicated in May that while Apple will continue to be a significant holding, he sees value in building cash reserves given the current market conditions. Apple, which has been one of Berkshire's most lucrative investments, has delivered nearly 800% in total returns since the conglomerate first disclosed its stake in 2016.

Technology

Carlyle Group's Q2 Profit Falls Short of Estimates Due to Decline in Performance Fees

Private equity firm Carlyle Group is reporting a significant 11.7% year-over-year decline in second-quarter distributable earnings, falling short of Wall Street expectations.

The firm attributes the decline to a substantial drop in performance fees due to a reduction in cash generated from asset sales. Record revenue from management and transaction fees is up by 32%. However, this isn’t sufficient to offset the reduced performance fees. Carlyle's fee-related earnings margin has improved to 46% from 34% last year.

Despite these challenges, Carlyle's assets under management are up by 13% to $435 billion. The firm is seeing modest gains in its corporate, private equity, real estate, infrastructure, and global credit funds, with increases ranging from 1% to 3%.

During the quarter, Carlyle raised $12.4 billion from investors, largely driven by commitments in real estate and the closing of four new collateralized loan obligations. Notably, the firm secured $2.8 billion for its fifth Japan buyout fund, the largest of its kind.

Pharmaceuticals

Weight-Loss Drug Demand Surges, Eli Lilly and Novo Nordisk Face Supply Challenges

Eli Lilly's weight-loss drug Zepbound is gaining traction against Novo Nordisk's Wegovy, with doctors prioritizing availability when prescribing. Zepbound has captured roughly 40% of the U.S. market since its December launch, filling 130,000 prescriptions in the week ending July 19, compared to Wegovy's 200,000, according to IQVIA data.

Clinical trials suggest Zepbound may lead to slightly higher weight loss than Wegovy, but both companies are struggling to meet the demand for these weekly injections.

Novo Nordisk has acknowledged ongoing supply issues for Wegovy, while Lilly's CEO has indicated that the Zepbound shortage will end "very soon." The FDA still lists Zepbound as in shortage but notes efforts to stabilize supplies.

Analysts predict Lilly and Novo will split the U.S. market roughly 50-50 by the end of 2024 as the former ramps up manufacturing. Patient preference for Zepbound is growing due to reports of its effectiveness, but supply constraints for both drugs mean availability often dictates treatment access.

Zevra Therapeutics, Inc. [ZVRA] - Last Close: $6.30

Zevra Therapeutics' stock is up in pre-market trading by 23%.

Zevra is rallying because an advisory panel to the U.S. FDA has voted in favor of its new drug, Arimoclomol, for treating the rare Niemann-Pick disease type C.

This positive vote suggests the drug is effective, boosting investor confidence that the FDA might approve it soon.

The final decision is expected by September 21, 2024.

Tandem Diabetes Care, Inc. [TNDM] - Last Close: $41.67

Tandem Diabetes Care's stock is trading at nearly 18% above its previous close in pre-market due to its impressive second-quarter results.

The company has reported revenues of $222 million, exceeding expectations by 7.2%, and smaller-than-expected losses at $0.47 per share.

The company’s U.S. sales are up by 20% sequentially and 8% year-over-year, while international sales are also up by 22%.

NVIDIA Corporation [NVDA] - Last Close: $107.27

NVIDIA's stock has plunged nearly 10% so far in pre-market trading, dragging other semiconductor stocks down with it.

The drop is part of the broader tech sector decline being seen in recent weeks. NVIDIA's sharp fall today is partly because it had previously outperformed other tech stocks.

Additionally, rumors of a delay in the company's next-gen Blackwell accelerators are further fueling investor concerns.

Everything Else

• European stocks drop 2.5% as global market turmoil escalates.

• The Japanese stock market tumbles as Nikkei 225 experiences a historic decline.

• The Crypto market loses $500 billion amid weak jobs data and recession fears.

• Recession concerns in the U.S. trigger a drop in oil futures.

• U.S. unemployment rose to 4.3% as July job gains fell short of expectations.

• Honda anticipates over $3 billion in operating profit for Q1.

• A Vietnamese tycoon was sentenced to 21 years for $150 million stockholder fraud.

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

Click here to get our daily newsletter straight to your cell for free.

P.S. Just like this newsletter, it's 100% free*, and you can stop at any time by replying STOP.