SpaceX Joins Nasdaq 100 Index, Samsung Profits Surge 19x

**Zaid Admani** (0:00)
Public.com presents The Rundown, your daily market update in 10 minutes. My name is Zaid Admani, and today is Tuesday, July 7th. In today's episode, we'll tell you why there's suddenly too much oil in the world. We'll also recap Samsung's monster earnings and why the stock's still tanked. Then stick around to the end of the show to find out why Netflix viewers aren't sticking around for season two. We've got a great show for you today.
Let's go.
Stocks kicked off the week in rally mode. The S&P 500 added 0.7% while the NASDAQ jumped 1.1%. And it was another one of those days where more than half the stocks in the S&P were in the red, but the index finished higher because tech stocks carried the day. Names like Tesla, AMD and Qualcomm were up more than 5% on Monday. Now, this morning, AI stocks are giving back some of those gains from yesterday because of Samsung's earnings, but we'll talk more about that in a bit. Outside of stocks, the big macro story to watch right now is oil. Oil prices have fallen to near pre-war levels and some on Wall Street are now concerned that we might have too much oil in the market. Just three months ago, oil prices were at $120 a barrel because of the Iran War had effectively shut down the Strait of Hormuz, causing a supply crunch. But now the US and Iran have an interim deal in place and traffic through the Strait of Hormuz is picking back up, which means a bunch of that oil that had been trapped during the war is now hitting the market. And then on top of that, you have OPEC plus countries raising production. They just agreed to raise output for the fifth straight month. So that's creating a scenario where there's a ton of oil hitting the market at the same time, but the demand hasn't returned to pre-war levels. China is a big reason for that. They cut their oil imports by 5 million barrels a day during the war, and they haven't started buying more oil despite the lower prices. And here's a stat that tells you how oversupplied things are right now. Saudi Arabia just cut oil prices for Asian buyers by $11 a barrel. That's the biggest monthly price cut Aramco has done since at least the year 2000, and now Saudi Arabia is selling their oil at a discount to the regional benchmark. So when Saudi Arabia starts discounting their oil like it's TJ Maxx or something, you know the oil market has flipped. Now I have to mention, this is still a fragile situation. In fact, there were reports this morning that two commercial tankers were hit near the Strait of Hormuz with US officials blaming Iran. So geopolitical risk has not disappeared, but the market reaction was pretty muted. Oil prices barely moved on the headline, which tells you that traders are more focused on the oversupply issue than the escalation. Now, as far as what this means for the economy, in the short term, cheaper oil should be good news for consumers and help cool off inflation. And it's a nice skip for Fed shirt Kevin Warsh as well, because now the Fed could potentially hold off on hiking rates. So we'll continue to stay on top of the oil prices, inflation and everything else moving in the market. So if you're new here, definitely get subscribed to the podcast and tune in every day to stay in the loop.
Let's run through some headlines. Starting with Samsung. Samsung reported one of the most absurd earnings you'll ever see, but yet the stock tanked and it's bringing down the overall market with it. The South Korean company said that operating profits for the second quarter came in at around 89.4 trillion won, which is about 58 billion US dollars. That number is up 56% from the previous quarter and roughly 19 times higher than the same period last year. Also the company's revenues more than doubled from a year ago as well to a record $112 billion. So again, those numbers are absolutely insane. And the driver here is the huge demand for memory chips. Samsung is one of the three major makers of memory chips in the world. And the AI boom has led to a huge shortage of memory. You know, all these AI data centers being built require a ton of high bandwidth memory. So that's pushing up prices of all types of memory across the board. Bloomberg says that DRAM prices rose more than 40% last quarter while NAND prices jumped more than 50%. And look, that's been great for Samsung's business. As we can see in their earnings report. But despite the monster quarter, Samsung stock fell around 7% in the Korean stock exchange today. And that sell off in Samsung stock is dragging down chip stocks here in the US too. Micron stock is down around 8% and Intel is down around 10% at the time of this recording. You know, I think we've hit the point now where all the upside in these chip stocks are already priced in. Samsung stock had already more than doubled this year. So expectations were sky high. And according to Bloomberg, Samsung only beat analysts' estimates by about 6%.