🍨 Daily Scoop: What a yo-yo

By Hoda Mehr Fri, Aug 2, 2019

What you need to know?

When Thursday began, investors came to their senses and celebrated the interest rate cut that was gifted to them by the Federal Reserve on Wednesday. But, by noontime, the celebrations reversed, and the stock market lost all its luster. What a yo-yo! Read more in the Overall Market section.

Aside from the overall stock market, a letter by the FDA caused a heart pump maker a lot of troubles and crashed its stock, and investors showed some love for the cloud and pinned their appreciation for smaller tech companies. Scroll to the “What’s up?” and “What’s down?” sections to learn more.

• U.S. markets: All three major indices were on track to recover from Wednesday’s fall, but some bad news crashed their hope and the day wrapped up in the red zone. Scroll to the Overall Market section to read more about what happened.
• Cryptocurrency: Bitcoin’s price moved slightly higher to mid $10,000 per coin. Analysts associate the upward move to the interest rate cut.

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What made the investors to yo-yo up and down? 

What happened on Thursday?

After Wednesday’s overall stock market gloom, came some excitements and investors started to feel grateful for the interest rate cut. But the party came to an abrupt halt when Presidential tweet arrived. Additional 10% tariff on Chinese goods entering the U.S. wasn’t exactly what investors wanted to hear, and all three major indices changed course and ended the day in the red zone.

Now What?

Some attribute the decline in the stock market to the fact that the Fed’s Chairman initially closed the door for additional cuts in the coming months.

Also, don’t forget that almost all of the trades in the stock market are managed and initiated by algorithms. Therefore, regardless of what investors feel, the algorithms follow their own patterns. The decline may not be entirely due to the news of the interest rate cut. Don’t be too surprised to see such a drop after seemingly positive news.

Now what?

Well, there is no dull moment in the stock market, that’s for sure. But, you see, there is no way one can predict what will drive the market. Did you, even for one minute, think that the interest rate cut will cause the market to fall? Not to mention that no one knows when a Presidential tweet may arrive. You have two options:

• Ignore the day to day fluctuations of the market
• Add more stress to your life by worrying about the market

What’s it gonna be?

These stocks had a good day.

So what happened?

• One cloud-based data management platform for the internet of things era had a great day, and the stock jumped close to 20%. Cloudera (Ticker: CLDR) didn’t announce its earnings results. There was no particularly good news, either. It’s just the analysts that are expecting the company to announce good results in early August and the market is buying the stock up in preparation of such good results.
• Pinning the good news is what Pinterest’s (Ticker: PINS) investors did on Thursday. The company announced a 62% jump in revenue. While the revenue reached more than $260 Million, the company’s expenses topped $1 billion. But, what’s a billion dollar in costs compared to 62% revenue jump? Right?! To be fair, the high cost is mostly related to the cost of the company’s IPO earlier this year. But still, investors love a good revenue growth.
• Remember when Shopify’s stock was $85 per stock? That was so cute! Shares of Shopify (Ticker: SHOP) jumped more than 7%, after one more quarter with better than expected performance. This is what investors call momentum. And, Shopify definitely has it.

These stocks didn’t have a good day. 

• Earlier in the year, FDA published a letter about Abiomed’s (Ticker: ABMD) heart pump technology, and the customers wrongfully interpreted that letter as a warning. Such disastrous PR has crushed the company’s sales in the last quarter and forced the company to revise down its revenue forecast. The stock lost more than 20% of its value after the earnings on Thursday.
• Unlike its Canadian rival Shopify, shares of Open Text (Ticker: OTEX)did not have a great day. The company that makes managing unstructured information easy has been underperforming the analysts’ expectations for a few quarters, and this quarter was no different.
• Retail turnaround stories are always heartwarming and good for our pockets. However, keeping up with the turnaround is not as easy. Best Buy’s (Ticker: BBY) more than 10% decline on Thursday proved that. The stock got hit after the new round of tariffs on Chinese products. The decline was nothing of the company’s own fault.

A dream job. 

So, what happened? 

Have you ever dreamt of living in a foreign country and writing your memoir that everybody is counting down to get their hands on it?

That’s a dream life. Right?

Well, not so fast. That can also be the life a person on the list of people living in exile. Edward Snowdown is such a person, and his memoir is coming in September. From Edward’s point of view, living in a foreign country and writing your memoir doesn’t seem like a dream job. Mind blown …

Disclosure: Authors of this Scoop own shares of Abiomed (Ticker: ABMD) and Open Text (Ticker: OTEX). 

About the Author

The authors of this Scoop are the editorial team at Stock Card, led by Hoda Mehr. Hoda Mehr is CEO and Co-founder of Stock Card and the host of Renegade Investors podcast. She runs a community of 40,000 stock market investors and manages Stock Card's successful flagship portfolio, Roll with Our CEO, on Stock Card Portfolio Store. Hoda is an Economist with an MBA from Concordia, John Molson School of Business. She applies behavioral economics, data journalism, and storytelling to all aspects of her work. Before starting Stock Card, Hoda worked as a strategy and insights lead at technology companies including Symantec, Aimia and Sony. Create a free account to do your stock market research easily and mistake-free: Stock Card Stock Card