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Today in the Market (3/6/2024)

Good Morning! On Wednesday, U.S. stocks experienced a small increase in response to Federal Reserve Chair Jerome Powell’s position that there is still a high probability of interest rate cuts occurring later this year. The S&P 500  gained 0.51%, while the Dow Jones almost went into the red but finished up by 0.20%. The NASDAQ increased by 0.70%.

YOU DIDN'T THINK YOU COULD GET AWAY WITH IT?

Lyft (LYFT) is facing a lawsuit from shareholders for engaging in securities fraud. This is due to an error in a recent earnings release, which provided inaccurate information about an important profit measure. As a result, the stock price of the ride-sharing company experienced significant volatility, initially increasing and then decreasing.

If you missed it, here is what happened: Shareholders criticized Lyft for its initial statement on February 13, accusing the company of being negligent in stating that one of its profit margins would increase by 500 basis points (equivalent to 5%) in 2024 when in reality it only expected a 50 basis point increase (0.50%).

Who gets to be part of the lawsuit? The lawsuit aims to obtain compensation for investors who purchased Lyft shares at prices that were artificially increased between 4:05 p.m. and 4:51 p.m. on February 13th. During that time frame, Lyft’s market capitalization increased by approximately $3.2 billion and subsequently decreased by approximately $2.9 billion.

 

FIRST UNIONIZED TEAM!

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The Dartmouth men’s basketball team voted 13-2 in favor of unionizing, becoming the first college sports team in the U.S. to do so. The decision could fundamentally change all aspects of collegiate athletics, leading to an actual existential problem for the NCAA.

How did we get here? In September, the Dartmouth men’s basketball team submitted a formal request to the National Labor Relations Board (NLRB) to form a union. In February, the NLRB ruled that student-athletes are considered employees, overturning the NCAA’s longstanding belief that they are amateurs and therefore not eligible for employment benefits such as workers’ compensation or the ability to negotiate collectively.

But why could this be an issue? The introduction of the employment model in schools has the potential to endanger certain sports that do not generate any revenue. Dartmouth has expressed its intention to challenge the decision. Analysts speculate that this case could be escalated to the Supreme Court.

 

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