Penn-ESPN Deal Transforms Sports Betting, 2 Inflation Data Points Send Mixed Signals, Markets Look Ahead To Retail Earnings

The S&P 500 lost 0.11% on the week and the Dow Jones gained 0.44%, while the tech-heavy Nasdaq Composite lost 2.34%.

The consumer price index for July rose to 3.2% in annual inflation, up from 3% in June. The rate came below market expectations of 3.3%. Core CPI, which accounts for all prices minus food and fuel and is the Fed's favorite inflation measure, decreased to 4.7% in July, from 4.8% in June.

Stifel's Chief Equity Strategist Barry Bannister said the “no-recession relief rally” has ended and investors should now expect the market to remain flat for the rest of the year.

The analyst said that the final stretch to 2% annual inflation will require a lot more work by the Federal Reserve. The drop in core CPI, which shows a positive deflationary trend, might lead the Fed to pause rate hikes in its September meeting, he said, though upcoming inflation data from August will also influence that decision.

The PPI index, which measures inflation on prices that manufacturers pay before reaching consumers, also grew in July. The measure was 0.3% annually, led by an uptick of 0.5% from the service sector. Without a seasonal adjustment, the real uptick was 0.8% as compared to last year.

Shares of gambling and sports betting company Penn Entertainment Inc PENN spiked more than 20% on Tuesday as the company announced an exclusive sports betting deal with ESPN, a subsidiary of The Walt Disney Company DIS. The agreement includes the launch of ESPN Bet, a sportsbook that will be operated by Penn, which has agreed to pay roughly $2 billion over the next decade for using the ESPN brand. The deal also included the sale of Barstool Sports back to its founder Dave Portnoy. Penn shares, however, took a dive after the deal, losing 4.47% on the week.

Disney stock gained 2.82% on a weekly basis after the company reported a mixed third quarter. Revenue grew 4% annually for the quarter but came in below analyst expectations at $22.3 billion. Despite lackluster results, analysts expressed hope on future plans for the company.

Shares of meme stock AMC Entertainment Holdings AMC spiked on Tuesday after the company reported earnings and ultimately ended the week 4.37% higher.

AMC’s revenue beat the Street consensus and grew 15.6% year-on-year. Big movie releases for the third quarter including “Barbie” and “Oppenheimer” paint a good picture for AMC in the third quarter.

EV manufacturer Rivian Automotive Inc RIVN lost more than 16% of its value this week as the company reported losses of $1.08 per share on its quarterly latest call. Management said it still has enough cash to last until 2025, as the company burns through its reserves in an effort to ramp up production and compete with market leader Tesla TSLA, which slashed prices earlier this year.

Hydrogen fuel cell bull Plug Power Inc PLUG was one of the worst losers of the week, with shares tanking 20.78% weekly basis on Friday, despite reporting better-than-expected quarterly results. Investors expressed frustration over yet another delay on schedule for the company's plants to reach full production.

Earnings season also had an impact on the cannabis industry. Shares of pioneer Canadian producer Canopy Growth CGC fell 10.55% weekly after the company's financial struggles and difficulties reaching profitability destabilized investor trust. 

American multi-state operator Curaleaf Holdings CURLF lost 12.35% of its value after reporting losses of 9 cents per share, almost double than the anticipated 5-cent loss. Still, quarterly sales grew 4% year-over-year to $339 million. 

Canadian producer Aurora Cannabis Inc ACB lost nearly 5% on a weekly basis after reporting quarterly revenues of $75.1 million, down from $50.1 million in the prior year period.

What To Watch: Many of the largest companies are already in the rearview mirror in second-quarter earnings season, but some big players are still left to release results next week. Home Depot HD will issue earnings on Tuesday. Cisco Systems CSCO will report on Wednesday and Walmart WMT will do so on Thursday.

On Tuesday, we'll have data on U.S. retail sales for the month of July, which will further expand on how June's drop in prices is affecting consumer behavior. On Wednesday, minutes from the latest FOMC meeting will shed light on the possible future of interest rate hikes (or pauses).

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