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⚡ Not Your Mom’s Utility Company
Plus, UK regulators hit Citigroup with a hefty fine.
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 Fell on Wednesday after the release of minutes from the Federal Reserve’s May meeting, which showed continued concerns over persistent inflation. There is now a growing sentiment among investors that the central bank will not cut interest rates soon.
📈 | One Notable Gainer: First Solar’s stock surged 19% to its highest level in over a decade following optimism about new tariffs on Chinese solar cell imports and a bullish report that the company could be an AI winner.
📉 | One Notable Decliner: Shares of Lululemon dropped 7% after the company announced an organizational restructuring and its Chief Product Officer, Sun Choe, resigned.
⚡ | Tomorrow's Trade: Not Your Mom’s Utility Company. Scroll down for more.
Plus, has Jeff Bezos found the next Nvidia?
YESTERDAY’S POLL RESULTS
🟩🟩🟩🟩🟩🟩 Bullish
🟨🟨🟨🟨⬜️⬜️ Bearish
S&P 500 Heatmap. Credit: Finviz
All Stock Heatmap. Credit: Finviz
Global ADR snapshot. Credit: Finviz
MARKET MOVERS
TGT (-8%) Target’s fiscal first-quarter earnings missed estimates, as sales fell about 3% YoY as consumers bought fewer groceries and home goods (CNBC)
TSLA (-3%) Tesla shares fell after a report showed its vehicle registrations in Europe reached their lowest level since January of 2023 (YF)
HIMS (-8%) Citi downgraded Hims & Hers Health, claiming that any further upside from the addition of GLP-1 drugs has already been priced in (SA)
MRNA (+14%) Shares of Moderna climbed after a child tested positive for avian influenza in Australia, which the biotech giant is testing a vaccine for (TV)
URBN (-5%) Shares of Urban Outfitters fell despite the clothing retailer posting a fiscal first-quarter beat on revenue and EPS (IBD)
PARTNER CONTENT
If you’ve sat back and watched companies like Nvidia and AMD soar over 2,000% over the past several year – And turn $5,000 into $105,000 – And wondered what was next…
You need to listen very closely… Because Jeff Bezos has just found the next big thing…
It’s a technology Bank of America called,
“Bigger than fire and bigger than all the revolutions that humanity has seen.”
And before you start guessing…It has nothing to do with A.I. ChaptGPT software out there… Instead, it’s a technology that’s going to prove to be far more disruptive…
And Jeff Bezos has found one tiny company that’s going to dominate the entire industry…
This is a fast-moving story, but if you want the chance to profit alongside Jeff Bezos in the next big tech trend, go ahead and…
OVERHEARD ON THE STREET
CNN: UK regulators fined Citigroup $79 million for failures in its trading system that almost resulted in the accidental sale of $189 billion in stocks.
WSJ: Analysts claim that meaningful rises or falls in global government bond yields look unlikely in the near term as interest rates have peaked.
Reuters: Biogen has agreed to buy privately held Human Immunology Biosciences for $1.8 billion to increase its supply of rare disease medicines.
WSJ: Pixar Animation Studios is laying off 14% of its workforce as Disney seeks to cut costs and scale back content made exclusively for streaming.
NPR: The Consumer Financial Protection Bureau said it will begin treating buy-no, pay-later companies as credit card providers under the Truth in Lending Act.
TOMORROW’S TRADE IDEA, TODAY
Bucking the Trend
Energy and utility companies are notoriously sensitive to interest rates due to their highly leveraged nature. They typically don’t fare well in higher-for-longer environments – like the one we’re in now.
However, this year has seen just the opposite. Utilities are up 18% over the past three months, outperforming the overall market and big tech companies.
According to Guggenheim Securities analyst Shahriar Pourreza, right now utilities are more fundamentally sound than they’ve been in the past 20 years.
Powering the Future
According to Pourreza, this shift comes as utilities become valued for their future growth potential. The sector was down 10% in 2023, far below the overall market. The analyst believes the market went overboard with pricing in interest rate challenges.
Now, investors can see a future where utilities play a crucial role in powering data centers, AI, and increased residential electricity demand.
According to Wells Fargo (WFC), by 2030 US electricity demand could rise 20%, with 8% of total demand coming from data centers. Stephanie Link of HighTower Advisors calculates that between now and 2050, $4 trillion will need to be spent to meet this demand.
Stock Picks
To capitalize on the data center boom, Pourezza recommends companies that have deregulated assets, allowing them to quickly respond to changing market conditions. He highlighted three energy stocks that fit the bill: Constellation (CEG), NextEra (NEE), and Vistra (VST).
According to the analyst, Constellation and Vistra have the potential to partner directly with companies like Amazon (AMZN), Alphabet (GOOG), and Microsoft (MSFT). He also expects NextEra to partner with hyperscalers due to its deregulated renewable assets.
AI is changing the world, and that takes a lot of power. These stocks could energize the future of tech.
Which stock do you think will outperform over the next 12 months? |
PARTNER CONTENT
If you’ve sat back and watched companies like Nvidia and AMD soar over 2,000% over the past several year – And turn $5,000 into $105,000 – And wondered what was next…
You need to listen very closely… Because Jeff Bezos has just found the next big thing…
It’s a technology Bank of America called,
“Bigger than fire and bigger than all the revolutions that humanity has seen.”
And before you start guessing…It has nothing to do with A.I. ChaptGPT software out there… Instead, it’s a technology that’s going to prove to be far more disruptive…
And Jeff Bezos has found one tiny company that’s going to dominate the entire industry…
This is a fast-moving story, but if you want the chance to profit alongside Jeff Bezos in the next big tech trend, go ahead and…
ON OUR RADAR
CNBC: The Biden administration said today that it will forgive $7.7 billion in student debt for more than 160,000 borrowers.
The Guardian: Treasury Secretary Janet Yellen has urged the EU to intervene urgently to dampen the growing export levels of cheap Chinese products.
Newsweek: Rents in some of Florida's biggest cities declined in April compared to a year ago as some residents are relocating away from the state.
MW: Microsoft’s AI chatbot will have a “photographic memory” of everything you do on a PC to perform as a high-level personal assistant.
YF: US families need to earn a staggering 80% more than they did in 2020 to “comfortably afford” a home nowadays.
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