My top 10 things to watch Thursday, May 11
1. The Dow, the S&P 500 and the Nasdaq are headed for a flat open as investors deal with a number of crosscurrents: Disney's slide on earnings, regional banks back in the soup, more evidence of cooling inflation. April's producer price index confirms what the CPI showed Wednesday morning. Check out our commentary on the softer, yet sticky housing component of the CPI and what's next for the Fed.
2. PacWest (PACW) shares tumble 20% early Thursday after the regional bank disclosed that deposits fell 9.5% last week. Other regionals under pressure. PacWest has been the one on the bubble since last week's First Republic failure-JPMorgan acquisition. The collapse of Silicon Valley Bank and Signature Bank touched off the latest bank crisis. Crypto lender Silvergate Capital also failed in March.
3. Disney (DIS): The problem with the quarter, as noted Wednesday evening, was that people thought it was going to be the breakout. We told Club members time and again that it would not be the breakout quarter, and that the way to invest in this one was to wait until we got the actual numbers. But people could not wait. They had to jump ahead and run the stock up last week. It's no wonder that shares of the Dow component are down roughly 5% heading into the open.
4. Artificial intelligence dominates every single call, and it's nauseating because no one other than Wendy's (WEN) seems to have figured out anything about how to use it to save money or make a better customer experience yet. CEO Todd Penegor was on "Mad Money," describing to me how it works. Partnership with Alphabet (GOOGL) owned Google, which held its own AI event on Wednesday.
5. Google explained clearly at its developer event how generative AI will be implemented in its products: Bringing it to search, to Gmail for help writing emails, immersive view for Google Maps. Other highlights: a Google Pixel 7a budget Android phone, Pixel Tablet launch, $1,799 Pixel Fold folding phone.
6. Wedbush says Microsoft (MSFT) leads the AI arms race over Alphabet. Both are Club stocks. The analysts raised price target on Microsoft stock to $340 per share from $325. ChatGPT from Microsoft-backed Open-AI is next leg of growth.
7. Robinhood (HOOD) gets a 4% bump ahead of the open, embracing AI to offer first-class information to its clients. Aims to satisfy the desire to trade 24/5 (all hours of the day, Monday to Friday) with limit orders. Seems harmless as long as you accept that the crowd could be very wrong after hours. People trade after hours all of the time now anyway.
8. Sonos (SONO): Painful to hear the banking crisis may be the reason why sales got soft for this in-home entertainment product. Shares sink more than 20% on per-share loss match for its fiscal second quarter. Revenue beat. But Sonos lower full-year guidance on revenue and adjusted EBITDA (earnings before interest, taxes, depreciation and amortization.)
9. Electronic Arts (EA) says strongest cycle ever for this in-home entertainment product without any worry about the banking crisis. Big quarterly beats on earnings and revenue.
10. UBS analysts raise price target on Ulta Beauty (ULTA) to $640 per share from $590. Keep buy rating. This is a retailer that can do no wrong. I think the projection could make sense. It's been all beat and raise for this one.
(Jim Cramer's Charitable Trust is long DIS, GOOGL, MSFT. See here for a full list of the stocks.)
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