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Today in the Market (11/3/2022)

Good Evening. Wall Street reacted negatively to Federal Reserve Chair Jerome Powell’s statements that hopes for a policy reversal were “premature” following the central bank’s fourth consecutive 75-basis-point interest rate hike.

The S&P 500 fell 1.06% after falling 2.5% in the prior day, its largest loss on a Fed day since January 2021, according to data from Bloomberg. The Dow Jones decreased by 0.46%, while the Nasdaq Composite declined by 1.73%.

A CONSUMER DEVICE SLOWDOWN

Qualcomm Inc. (QCOM), the largest manufacturer of smartphone processors, had its stock plummet in pre-market trading after issuing a significantly weaker-than-anticipated estimate, which was impacted by the economic slowdown and Covid-19 lockdowns in China.

  • Revenue: $10 Billion forecasted vs. $12 Billion expected
  • Earnings Per Share: $2.45 forecasted vs. $3.40 expected

Going forward, the outlook revealed that the market for consumer devices is deteriorating more rapidly than anticipated, sending Qualcomm shares down as much as 7.56%. Even before the revelation, the stock was already down 38% for the year due to fears that smartphone demand was unstable.

So what will the company do about it? CEO Cristiano Amon stated that his tenure will be determined by his ability to expand the chipmaker’s technology into new markets, such as automotive equipment, networking, and computers. While Qualcomm is generating more income from these other endeavors, the majority of its sales still come from mobile phones, restricting the company’s total expansion.

$13.8 BILLION LAWSUIT

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CVS Health Corp (CVS), Walgreens Boots Alliance Inc (WBA), and Walmart Inc (WMT) have agreed to pay approximately $13.8 billion to settle tens of thousands of state and local lawsuits accusing them of mishandling opioid painkillers, potentially bringing years of litigation to a stop.

CVS announced that it had agreed to pay approximately $5 billion over 10 years, while Walgreens announced that it had agreed to pay approximately $5.8 billion over 15 years. Both companies denied any wrongdoing. According to two persons familiar with the situation, Walmart has agreed to pay $3.1 billion, primarily upfront.

What could this mean? By market share, CVS, Walgreens, and Walmart are the three largest retail pharmacies in the United States. Cases are still pending against smaller, more regionally-focused drugstore owners, like Rite Aid Corp (RAD) and Kroger Co. (KR), but if their deal becomes final, it will put a stop to much of the vast, years-long lawsuit over opioids.

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