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📣 The Daily Breakdown from Bret Kenwell @Bretman, eToro's investment and Options Analyst 🗓️ Thursday's TLDR — August 8, 2024 🎢 Volatility roars to life, then fades hard. 💪 Eli Lilly crushes earnings estimates. 📈 Consumer staples stocks shine amid turbulence. ✳️ What's happening? Wednesday looked like it was going to be a good day with a strong rebound. Instead, the $SPX500 ended lower by 0.7%, the $NSDQ100 fell 1.1%, and both indices closed near session lows. Remember, on Monday the VIX had its second-largest one-day rally ever. Then on Tuesday, it had its second-largest one-day fall. Volatility has the potential to come in waves and just because the VIX has faded significantly from the highs, doesn't mean it can't roar back to life. Today we’ll get the weekly jobless claims number, which has been trending higher over the past few months. With so many investors now worried about the labor market after Friday’s disappointing monthly jobs report, this report will likely warrant some extra attention. A lower-than-expected result would be a good thing and — even just for a moment — could give investors some relief. However, a bad report will likely exacerbate the economic and labor market worries on Wall Street. Just remember that we’re in a heightened volatility environment. For long-term investors, it’s a time to stick to your established investment plan. For active short-term traders, it’s a time to put a lot more focus on the “risk” portion of “risk-reward.” ✳️ The setup — Consumer Staples As things get turbulent, this group has been shining. Consumer staples stocks — like $KO (Coca-Cola), $PEP (PepsiCo), and $PG (Procter & Gamble Co) — can act as a “flight to safety” trade for investors in times of uncertainty. Up 8.7% year to date, this group is the fourth-best performing sector in the S&P 500 this year, only trailing utilities, communications, and financials. Look at the recent action in the consumer staples ETF — the $XLP (Chart below as of the close on August 8, 2024. Source: eToro ProCharts, courtesy of TradingView.) Notice how well the XLP has held up lately, which pays a dividend yield of 2.8% and is currently within 2% of its 52-week high — not many sectors can say that after the action we’ve seen this week. The flip side is, when markets do finally regain momentum, consumer staples are usually not the types of stocks that benefit the most. Instead, investors tend to flock back to tech, communications, and consumer discretionary stocks. However, the action here highlights how this group’s collection of stable businesses can hold up better under duress than some of the more popular “risk-on” stocks. When looking at the XLP specifically, the top five holdings include: $PG, $COST (Costco Wholesale Corp), $WMT (Walmart Inc.), $KO and $PM (Philip Morris International Inc) 👀 What Wall Street is watching 👀 $LLY (Eli Lilly & Co) At one point this year, Eli Lilly looked set to join the $1 trillion market cap club. Lately though, it’s been under pressure, falling 22.6% to its recent low. But shares are rallying this morning after the company delivered a robust quarterly result, with earnings of $3.92 a share beating expectations of $2.76 a share, while revenue of $11.3 billion grew 36% year over year and easily topped expectations of $10 billion. $HOOD (Robinhood Markets Inc.) Shares of Robinhood are up slightly this morning, after the firm delivered a top- and bottom-line beat, but reported disappointing user growth. Earnings of 21 cents a share beat expectations by 6 cents, while revenue of $682 million grew 40.3% year over year and beat estimates by $40 million. While its monthly active users of 11.8 million grew from 10.8 million year over year, it was down from 13.7 million users last quarter. $SMCI (Super Micro Computer, Inc) Super Micro Computer shares plunged on Wednesday after missing fiscal Q4 earnings expectations. The company announced a 10-for-1 stock split, starting October 1, and reported a gross margin drop to 11.2% from 17% last year. Revenue of $5.31 billion grew more than 140% year over year and slightly exceeded estimates. 🔎 📚 Are your investments in line with today's news? Check your portfolio on eToro to make sure you aren't missing any opportunities. 🤑 If you want to upgrade your investing knowledge this summer, make sure to join our eToro Academy Learn & Earn Challenge, where you can take courses, pass quizzes, and earn up to $18 in rewards (T&Cs apply): www.etoro.com/en-us/academy/learn-and-earn/ Disclaimer: Please note that due to market volatility, some of the prices may have already been reached and scenarios played out. Content, research, tools, and stock symbols displayed are for educational purposes only and do not imply a recommendation or solicitation to engage in any specific investment strategy. All investments involve risk, losses may exceed the amount of principal invested, and past performance does not guarantee future results.