😱 Recession coming?

Good morning investors! Stocks and crypto sold off Thursday, with the Dow Jones Industrial Average tumbling nearly 500 points, as investors’ fears over a recession surfaced.

Today we cover:

• Is a recession coming?

• Amazon earnings disappoint as Apple impresses

• More earnings

📊 Economy and News 

Is a recession coming?

Some fresh data stoked fears over a possible recession and the notion that the Federal Reserve could be too late to start cutting interest rates.

• Initial jobless claims rose the most since August 2023.

• The ISM manufacturing index, a barometer of factory activity in the U.S., came in at 46.8%, worse than expected and a signal of economic contraction.

• After these releases, the 10-year Treasury yield dropped below 4% for the first time since February.

These weak data releases come a day after central bank policymakers chose to keep rates at the highest levels in two decades, when Fed Chair Jerome Powell gave investors some hope by signaling a September rate cut is on the table.

Furthermore, some earnings reports have underwhelmed and fear about increased regulation of tech and lackluster AI performance have soured investors’ moods.

Companies have reported consumers have pulled back from restaurants and retailers.

But America’s economy remains undeniably strong. A report last week on second-quarter gross domestic product was particularly robust, showing consumer spending resilience. 

Housing data is starting to show some signs of improvement, including mortgage rates tumbling to their lowest levels since February on Thursday.

And Wall Street seems unfazed by Vice President Kamala Harris’ surprise frontrunner status for the Democratic presidential nomination.

Look for more of this bumpiness over the next few months as economists and investors sort out what may be a new phase in America’s economic growth story.

Global hits:

• Bank of England cuts interest rates for the first time in over four years, causing banks and European stocks to tumble.

• Japan orders ‘drastic reforms’ for Toyota after fresh certification violations.

• EU approves Hewlett Packard Enterprise’s $14 billion Juniper deal.

📈 Stocks

S&P 500 5,446.68 (-1.37%)
DJIA 40,347.97 (-1.21%)
NASDAQ 17,194.14 (-2.30%)
BRENT CRUDE 80.01 (-1.04%)
* Prices as of Aug 1st, 12:20 AM UTC

Amazon, Apple, and more announce earnings

Amazon reported weaker-than-expected revenue for the second quarter and issued a disappointing forecast for the third quarter.

Amazon’s cloud business exceeded analyst estimates but its advertising unit came up short.

Amazon’s online advertising business brought in $12.77 billion during the second quarter, marking a 20% year-over-year increase, but missing analysts’ estimates.

The company’s overall second-quarter sales were $147.98 billion, trailing analysts’ estimates of $148.56 billion.

The stock is up 21% for the year as of Thursday’s close but fell -5% after the bell.

• Snap shares fell more than -20% in extended trading on Thursday after the company reported guidance for the third quarter that trailed analysts’ estimates. Snap said third-quarter revenue guidance will fall in the range of $1.335 billion to $1.375 billion. Analysts were expecting $1.36 billion. Monthly active users rose to 850 million from 800 million in February.

• Moderna reported second-quarter revenue that beat estimates and a narrower than-expected loss for the period. But the company slashed its full-year sales guidance, citing lower sales in Europe, a “competitive environment” for respiratory vaccines in the U.S. and the potential for deferred international revenue into 2025.  This sent the stock down -20%. The biotech company now expects 2024 product revenue to come in between $3 billion and $3.5 billion, down from previous guidance of $4 billion. 

• Block reported better-than-expected earnings for the quarter but missed on revenue. The company reported $6.16 billion in sales, versus the $6.28 billion expected.

• DoorDash shares popped +13% in extended trading Thursday after the company released second-quarter results that beat Wall Street’s revenue expectations. The company’s revenue increased 23% to $2.63 billion. DoorDash received 635 million total orders during the quarter, up 19% year over year.

• Shares of Rolls-Royce jumped more than +11% to hit an all-time high on Thursday after the company reinstated its dividend and raised its profit forecast. CEO Tufan Erginbilgic said strong first-half results showed the aerospace and defense firm’s overhaul plans were “proceeding with pace.”

• Shell reported adjusted earnings of $6.3 billion for the three-month period through to the end of June, beating analyst expectations of $5.9 billion, according to estimates compiled by LSEG. Shell said it would launch a $3.5 billion share buyback program over the next three months, a similar rate to the previous quarter. London-listed shares of the company rose 1.4% on Thursday morning.

• Intel reported worse-than-expected quarterly results and issued light guidance for the current period. The chipmaker announced plans to cut around 15,000 employees, eliminate its fiscal fourth-quarter dividend and reduce capital expenditures.

Worth checking out: Tesla car that killed Seattle motorcyclist was in ‘Full Self-Driving’ mode, police say .

💵 Personal Finance

How much does it cost to raise a child? - Part II

Let’s resume yesterday’s topic and look at more costs associated with bringing up children:

Healthcare

Healthcare includes insurance premiums, drugs, and more. Most families spend about $600 per year on healthcare. However, the amount can increase drastically if you do not have insurance or if your child requires expensive treatment.

Tip: Get insurance to save money.

Miscellaneous Expenses

In addition to the expenses discussed above, you will spend heavily on the following:

• Clothing: Most families spend about $500 per month on garments. Again, the amount can increase dramatically if you buy branded clothes.

• Entertainment: This includes movies, theme park visits, and more. A great way to save money is to find places that offer discounts to children or are free to visit. Parents in the US spend about $1,300 on entertainment for children.

• Travel: It’s believed that transportation costs — gas, car payments, insurance, airline fares, and public transportation — typically peak when children are between the ages of 15 and 17. The average family in the US spends $747 per month on transportation.

In addition, you will be spending money on necessities and luxuries such as football lessons, haircuts, toothbrushes, and more. These items add up to about $300 per month.

So, should you have kids? How many?

This is a personal decision and we cannot answer it for you. Plus, when you look at the chubby cheek of a baby, money doesn’t seem to matter that much.

One has to look not just at the financial side but also the emotional side of having a baby.

Parenting is a big responsibility. You will not only need more money but time as well. However, since this is a personal finance letter, we’re mainly going to look at it from the perspective of money.

The truth is that having kids can prove to be financially beneficial. Based on your location, you might enjoy certain perks such as discounted prices, access to more government programs, and affordable interest rates.

Check this video for more:

💰 Be a Better Investor

Resources:

• Make Money in Retirement

• Side Hustle Ideas

• Stock Deep Dives

• Investing 101 videos

👩🏽‍⚖️ Legal Stuff

👩🏽‍⚖️ Legal Stuff
Nothing in this newsletter is financial advice. Always do your own research and think for yourself.

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