Today in the Market (12/8/2022)

Good Evening. US stocks gained Thursday, preventing this week’s markets carnage from extending into another day as rate fears and recession talk impeded Wall Street’s traditionally optimistic time.

After five days of losses, the S&P 500 gained 0.75%, while the Dow Jones climbed 0.55%. According to Bespoke Investment Group, the Nasdaq Composite increased 1.13% after the index experienced its worst first week of December since 1975.

VALUE-CONSCIOUS CUSTOMERS

Costco Wholesale Corp (COST) reported quarterly sales on Thursday that fell short of analysts’ expectations, as shoppers pulled down on discretionary purchases such as jewelry and gadgets in the face of decades-high inflation.

  • Revenue: $54.44 Billion vs. $54.64 Billion expected
  • Earnings Per Share: $3.10 vs. $3.12 expected

The CEO of Costco stated “Our jewelry business has slowed down. If you look at the really high-end television sets, they’ve slowed down. I think right now people are very, very value-conscious. They’re always value-conscious, but I think more so now than ever.”

This statement is backed by the fact that the revenue shortfall is the company’s first in three years. Meanwhile, the earnings per share announcement decrease are the first since February 2021. On top of that, Costco may have also suffered from the general drop in gas prices in the United States, which have dropped more than 30% since reaching an all-time high of $5.10 per gallon earlier this summer.

THE REAL BATTLE BEGINS

The Federal Trade Commission (FTC) launched an antitrust action against Microsoft (MSFT) on Thursday, attempting to halt Microsoft’s $69 billion purchase of Activision Blizzard (ATVI). The main concern is that Microsoft makes its own platform, the Xbox, and if it also owns Activision’s games, it may withhold such titles from rivals like Sony’s PlayStation.

Why is this happening? Given the immense popularity of Call of Duty, Sony being locked out of the brand would be a nightmarish situation. The series has produced $30 billion in revenue on its own, with the most recent release, Modern Warfare II, selling more than $1 billion in its first ten days.

However, the main fight for Microsoft is about to begin. Under the Biden administration, antitrust authorities have gone full beast mode in attempting to stop mergers. So far under Biden’s presidency, the DOJ has sued to stop eight mergers, and the FTC has sued to stop eight more. According to the New York Times, the DOJ contested one merger and the FTC five under the Trump presidency.

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