🏔 3 reasons stocks hit all-time highs
Hey Snackers,
Time spent watching Netflix: 2 hours/day. Time spent searching for something to watch on Netflix: 2,000 hours/day. Netflix knows you're 10 hours deep into Reddit reviews of a Korean rom-com, so it's testing a curated shuffle button to help your decision paralysis.
The S&P 500 closed lower yesterday on a grim economic outlook from the Fed. Also: Apple became the 1st US company to hit a $2 trillion market cap.
The stock market hits an all-time high in the middle of a pandemic/economic crisis
80 and sunny on Wall Street... The S&P 500 index is kind of like a scoreboard for the stock market, since it tracks the stocks of the 500 most valuable publicly-traded companies in America. On Tuesday, the S&P notched a record close. The all-time high confirms the end of Wall Street's shortest bear market ever.
- On February 19, the S&P closed at an all-time high. By March 13, the S&P had fallen over 20%, confirming we were in a bear market.
- On March 23, the S&P hit its lowest low since the February record. Since then, it has rallied over 50%. Tuesday's record confirms that a bull market started on March 23rd.
Instagram vs. reality... The stock market is drinking rosé on a flamingo float in the Hamptons. The economy is eating Safeway frozen pizza and watching 90 Day Fiancé in bed. The US' GDP shrank at a record rate last quarter, unemployment is at 10%, and we're still mid-pandemic with no vaccine. A few reasons for the market party:
- The US government spent trillions to stimulate the economy by keeping companies' and families' finances afloat. Then the Fed gave us near-zero interest rates to make savings accounts less attractive and stocks more attractive.
- Investors are forward-looking. 3-straight months of falling unemployment and rising retail spending suggest positive momentum. Promising vaccine tests also helped.
The "Big Tech 5" carried the market rally... Since the S&P 500 is weighted based on market value, it's dominated by America's 5 largest companies: Apple, Amazon, Alphabet, Microsoft, and Facebook. Those 5 stocks soared 37% in the 1st 7 months of 2020 — the rest of the S&P fell a combined 6%. The Big Tech 5 now make up over 20% of the total stock market value. They're benefiting big from the corona-conomy — Apple just hit a historic $2T market cap. The S&P 500 should rename itself to "Big Tech 5 + 495."
Impossible makes a quick pivot and raises $200M to take on Beyond Meat
Plant-based player... gets money. Impossible Foods raised a fresh $200M for its alt-meat operations. Since its founding in 2011, Impossible has raised $1.5B — over half of that came in 2020 alone. Back in March, Impossible raised $500M. That money hasn't just been chilling in the company safe. Since June, Impossible has been spending to turn the corona-conomy tide around.
- Scared of going outside? Impossible launched a direct-to-consumer business to deliver bulks of plant-based patties to your door.
- Not the ecommerce type? Impossible majorly expanded its grocery presence, launching at Trader Joe's and Walmart.
- Don't know how to cook? Impossible partnered with Home Chef to be included in its meal kits.
- Not so adventurous? Impossible launched breakfast sandwiches at Starbucks and Burger King to bring alt-meat mainstream.
The theme here is... Distribution. For the first eight years, Impossible focused on restaurants. In March, its patties were only available in 150 grocery stores. When COVID shut restaurants down, Impossible had to make an impossibly quick distribution pivot. Its grocery store presence has soared 60X to 9K stores.
Impossible is playing catch up... to older, publicly-traded rival Beyond Meat. Impossible started by offering pricey patties to high-end restaurants. Beyond focused more on retail and going international. But Impossible could catch up quickly if it keeps expanding its distribution. It's also developing new products like pork, steak, and milk, which could give it an edge over patty-focused Beyond.
What else we’re Snackin’
- Bullseye: Target posts all-time high quarterly sales growth and an 80% profit bump — it added 10M new online customers.
- Muskier: Elon Musk's SpaceX raises $1.9B in its largest funding round ever — that historic launch in May definitely helped.
- Lowded: Lowe's quarterly sales soared 35% and online sales more than 2X'd on lockdown "House Hype."
- Citrusy: Flavored water star Hint raises $25M in extra funding — it's America's fastest-growing still flavored water (insert La Croix eyeroll).
- Vicky: Victoria's Secret-owner L Brands posted a surprise profit and expectation-beating sales thanks to Bath & Body Works growth.
- Pharma: Johnson & Johnson is buying Momenta Pharma for $6.5B. Momenta's experimental autoimmune drug was on J&J's wishlist.
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Thursday
- Weekly jobless claims. Earnings expected from Alibaba, Ross, and Estee Lauder
Disclosure: Authors of this Snacks own shares of Microsoft, Apple, Amazon, Beyond Meat, and Alphabet
ID: 1308524
Correction: The expected earnings on yesterday's newsletter were incorrectly pulled from the August 5th newsletter. Apologies for the derp 🙄