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Belly Flop

Pool stocks are plunging

Gloomy guidance from Pool Corp. is rippling across the industry.

6/25/24 1:26PM

This summer, it’s not time for a dip in the pool – but rather, a dip in pool stocks.

Shares of pool companies are sinking on Tuesday after an industry bellwether suggested new and remodeling activity could be down double digits this year.

Updated guidance from Pool Corp. has the stock down nearly 7%, its worst session in almost two years, that leaves shares near their October 2023 lows. Others in the industry, like Hayward Holdings, Latham Group, Leslie’s, and Pentair, have also been trounced, down anywhere from 5% to 9% in tandem.

“The most recent pool permit data suggests persistently weak demand for new pool construction, and with the peak selling season almost complete, we now believe that new pool construction activity could be down 15% to 20% for the year with remodel activity down as much as 15%,” said Pool Corp. President and CEO Peter D. Arvan.

The damage has even seeped over to another continent: Shares of Spanish pool firm Fluidra ended down nearly 8%, their worst day since last July.

Record-breaking earnings from Carnival Cruise show that the American consumer isn’t in dire straits, nor has some kind of newfound aversion to water. Rather, the signal from Pool is twofold: high borrowing costs are still weighing on interest rate sensitive sectors, and some industries that over-earned due to changes in Americans’ spending patterns during COVID are facing a drawn-out reversion to the mean.

The effective interest rate on mortgage debt outstanding in the US is still lower than it was before the pandemic, despite 30-year mortgage rates having risen more than 300 basis points to about 6.9% over this period. Households were able to refinance their mortgage at low rates, and (understandably) don’t want to sacrifice that. No new house? No new pool.

And if you wanted a pool, you probably already got one: Pool’s revenues are about 30% above their 2012-2019 trendline, as the pandemic pulled forward and accelerated home improvement spending. While the company was predicting another annual decline in revenues, it hadn’t been anticipating a belly flop this bad.

Tasha Matsumoto

58m

The S&P 500 and Nasdaq-100 notch new closing highs as investors shake off the government shutdown

The S&P 500 closed 0.3% higher, the Nasdaq-100 was up 0.5%, and the Russell 2000 gained 0.2%.

Matt Phillips2h

Intel jumps on report of customer talks with AMD for foundry division

Intel shares popped in afternoon trading Wednesday after Semafor reported that it’s in preliminary talks for AMD to come aboard as a customer for Intel’s troubled contract chip manufacturing division, known as a foundry.

Shares were recently up 5.7%.

Semafor stressed that sources said, “It’s unclear how much of their manufacturing would shift to Intel if the two companies reach a deal, or whether it would come with a direct investment by AMD, similar to the deals cut by other companies. It is possible that no agreement will be reached, the people said.”

The addition of AMD — which competes with Intel in the CPU space — as a customer would be another big win for the US chipmaker following its partnership with Nvidia announced in mid-September.

TSMC, the primary manufacturer of AMD chips, was only briefly rattled by the news, and remains well in the green on the day.

Intel in early talks to add AMD as foundry customer

The addition of AMD — which competes with Intel in the CPU space — as a customer would be another big win for the US chipmaker following its partnership with Nvidia announced in mid-September.

TSMC, the primary manufacturer of AMD chips, was only briefly rattled by the news, and remains well in the green on the day.

Jon Keegan4h

ChargePoint jumps as EV sales soar

Riding along with some other EV stocks, shares of ChargePoint jumped 4.1% in recent trading. The last rush to take advantage of Biden-era federal EV incentives has put a bunch of new electric vehicles on the road, sending ChargePoint up along with Tesla, Rivian, and Lucid.

Ford said earlier Wednesday that its EV sales hit a quarterly record, and it and other EV makers have been exploring unorthodox ways to replicate the EV tax credits for consumers through year-end.

Still, ChargePoint is down over 47% for the year and narrowly escaped NYSE delisting with a 20-for-1 reverse stock split back in July. And it’s not hard to see why: the company has never had a profitable quarter.

J. Edward Moreno4h

Trump admin reportedly backs off on pharma tariffs

The Trump Administration will not be imposing tariffs on pharmaceutical companies by the deadline it had initially given them, a White House official told STAT.

Last week, President Trump announced on Truth Social that starting on October 1 there will be a 100% tariff on patented, branded pharmaceuticals “unless a Company IS BUILDING their Pharmaceutical Manufacturing Plant in America." As of October 1, those tariffs have not gone into effect and its unclear when they will, according to STAT.

Trump administration backs off 100% pharma tariffs threatened to start today

Matt Phillips4h

GE Vernova declines after analyst downgrade of top AI energy trade

Power turbine maker GE Vernova is down midday after RBC analysts cut their rating on the stock from “outperform” (essentially a “buy”) to “sector perform” (essentially a “hold”), suggesting that long-term earnings expectations for the company might have gotten too optimistic.

RBC’s Christopher Dendrinos wrote:

“Our longer-term expectations are more conservative than consensus expectations which we think could be over appreciating the cadence of revenue growth in the power segment in 2029-2030. We believe investors are already fully valuing the company on the longer-term 2030 outlook and there could be more limited opportunity for positive rate of change in current expectations.”

Dendrinos argues that the Street’s expectations for when the river of payments will materialize from the service contracts GE sells to maintain the newly installed turbines is too soon. He wrote that it will take a much longer cycle:

“Mgmt sees an opportunity to double the installed base of baseload power over the next 10 years which should support significant rev growth and stronger margins (we estimate gas service margins over 30%).

However, the first major service cycle typically occurs ~3-4 years after installation so the benefit of service price increases and new LTSAs are unlikely to begin to benefit the income statement until later in the decade and will be a gradual increase.”

Earlier in the year, GE Vernova was a top performer as the AI data center trade boomed. It was up roughly 100% for the year in late July, making it the third-best gainer in the S&P 500 for the year.

It has stalled since then, though it remains up more than 80% in 2025.