📈 Spirit Airlines Hits Turbulence

Nvidia Blackwell revenue in focus, T-Mobile hack linked to China, Tesla stock jumps, Tencent challenges Amazon and Microsoft, Spirit files bankruptcy

Author

Evelio Silvera
November 18, 2024

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Good morning.

⚡ The Fast Five → Nvidia Blackwell revenue in focus, T-Mobile hack linked to China, Tesla stock jumps, Tencent challenges Amazon and Microsoft, Spirit files bankruptcy

🔎 Market Trends → Wall St. sinks on Powell rate-cut caution, Trump cabinet picks; Futures mixed after previous week's slide as focus shifts back to earnings

And now…

⏱️ Your 5-minute briefing for Monday, November 18, 2024:

MARKET BRIEF
Before the Open

As of market close 11/15/2024.

Pre-Market

  • Disney was the top gainer on the Dow and among the best on the S&P 500, up 5.5%, after jumping 6.2% on Thursday.

  • Applied Materials shares slumped 9.2%, the worst performer on the S&P 500 and the Nasdaq.

Fear & Greed

 

Markets in Review

Tech Tumbles, Fed Signals Caution: Markets Digest Mixed Signals

The Nasdaq Composite dropped 2.2% to close at 18,680.1, leading broader declines. The S&P 500 shed 1.3% to 5,870.6, while the Dow Jones Industrial Average fell 0.7% to 43,445. Technology stocks took the biggest hit, down 2.5%, while utilities eked out gains.

The Big Picture:

Investors faced a volatile trading day as Federal Reserve officials delivered mixed messages on the timing of future rate cuts. A surprisingly strong retail sales report further complicated the narrative, signaling resilience in consumer spending.

Bond yields edged higher, with the 10-year Treasury rising to 4.45%, reflecting cautious optimism but underscoring inflation risks. Meanwhile, West Texas Intermediate (WTI) crude fell 2.5% to $67.02 per barrel, weighed down by concerns over weaker Chinese demand.

In the commodity space, gold dipped 0.3% to $2,566.40 per troy ounce, while silver slid 0.8%, reflecting reduced appetite for safe havens as investors balanced inflationary pressures with Fed policy expectations.

Market Movers:

  • Palantir Technologies (PLTR): Shares soared 11.14% after the company announced a transfer to the Nasdaq Global Select Market, positioning itself alongside other major tech players.

  • Applied Materials (AMAT): The semiconductor equipment supplier plunged 9.2%, leading the Nasdaq's losses, following a disappointing revenue outlook that rattled investor confidence.

  • FuelCell Energy (FCEL): The clean energy firm sank 12.13% after revealing a 17% workforce reduction, signaling challenges in scaling amid slower-than-expected green energy investments.

  • Boeing (BA): Shares rose 1.48% as the company rebounded from strike-related production delays, bolstered by optimism over normalized industrial output.

What They’re Saying:

"The data suggests the Fed has room to ease rates, but conflicting signals from policymakers leave investors hesitant," said Austan Goolsbee, Chicago Fed President.

WHAT WE’RE WATCHING
Events

  • Thurs. Nov 27: Dept. of Labor - Unemployment Claims - 8:30am

  • Why You Should Care: Although it's generally viewed as a lagging indicator, the number of unemployed people is an important signal of overall economic health because consumer spending is highly correlated with labor-market conditions. Unemployment is also a major consideration for those steering the country's monetary policy.

Earnings Reports

  • Today: Trip.com, Symbotic, AECOM

  • Tomorrow: Walmart, Lowes, Medtronic,

MARKET BRIEF
Leading News

Spirit Airlines Hits Turbulence: Bankruptcy Filing Amid $2.5B Losses

Spirit of the Runway A vibrant capture of a Spirit Airlines aircraft ready for takeoff, with a contrasting backdrop of clear skies and an airport terminal. The image embodies the energy and readiness of modern travels

Why it matters:

The largest U.S. budget airline’s Chapter 11 filing underscores the challenges of competing in an evolving travel market. Investors should watch for ripple effects in budget aviation and consolidation opportunities.

Zoom Out:

Spirit Airlines (SAVE) has filed for Chapter 11 bankruptcy, marking the first major U.S. airline bankruptcy since 2013. Despite a post-pandemic travel rebound, Spirit has been unable to recover profitability, hemorrhaging $2.5 billion since 2020. Looming $1 billion debt payments in 2024 sealed its fate.

The airline plans to continue normal operations, banking on a “reimagined product” to attract passengers. Spirit’s pivot away from its ultra-low-cost model to bundled fares mirrors a strategic shift toward premium services—a stark departure from its bare-bones roots.

Deep Dive:

  • Earnings turbulence: Revenue per mile has dropped 20% as fares stagnate, squeezing margins even as passenger numbers rise by 2%.

  • Competitive pressure: Larger airlines now offer basic economy fares, cutting into Spirit’s core market, while Frontier (ULCC) and Southwest (LUV) stand to benefit from Spirit’s reduced flight schedule.

  • Operational hurdles: Repairs to Pratt & Whitney engines have grounded dozens of planes, adding to operational woes.

Market Pulse:

“We are focused on refinancing our debt, improving liquidity, and deploying a reimagined product,” said CEO Ted Christie on an earnings call.

Bull’s Take:

Budget airlines remain critical for leisure travel, and Spirit’s young fleet positions it as a potential acquisition target for rivals like Frontier. The bankruptcy could allow Spirit to shed debt and emerge leaner, presenting upside for speculative investors. Spirit’s volatility highlights risks in aviation stocks. Watch for potential buyout rumors or emerging opportunities in competitors poised to capitalize on Spirit’s market retraction.

Headlines

  • Nvidia's Blackwell revenue in focus as sales growth slows (link)

  • T-Mobile Hack Linked To Chinese State Sponsored Hackers (link)

  • Tesla stock jumps on report Trump team to create self-driving rules (link)

  • Tencent challenges Amazon and Microsoft’s cloud dominance by tapping into its WeChat ecosystem (link)

  • Uniqlo’s chief says fast fashion must change with the times (link)

  • For online retail, the holidays are coming earlier and earlier (link)

CRYPTO
Fear & Greed

 

Headlines

  • Bitcoin whale ETF soars to record as crypto races (link)

  • Bitcoin's Correlation to U.S. Equities and Ether Weakens (link)

  • Tether-backed Quantoz launches MiCA-compliant stablecoins USDQ, EURQ (link)

DAILY SHARE
On the Socials

*Hat-tip to RobertMSterling

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