Wall Street soars; Starbucks ousts CEO

[Pelican Press 0]

This is the hidden content, please

• Sign In
• or
• Sign Up

Wall Street soars; Starbucks ousts CEO

Traders work on the floor of the New York Stock Exchange on April 26, 2023 in New York City. 

Michael M. Santiago | Getty Images

This report is from today’s CNBC Daily Open, our international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

What you need to know today

Wall Street soarsWall Street rose after producer prices came in softer than expected, raising hopes of a rate cut. The

This is the hidden content, please

• Sign In
• or
• Sign Up

jumped more than 400 points, while the

This is the hidden content, please

• Sign In
• or
• Sign Up

jumped 2.4%, with tech megacaps —

This is the hidden content, please

• Sign In
• or
• Sign Up

,

This is the hidden content, please

• Sign In
• or
• Sign Up

and

This is the hidden content, please

• Sign In
• or
• Sign Up

— all closing higher. The

This is the hidden content, please

• Sign In
• or
• Sign Up

rose 1.7% and is now just less than 5% off its July record high.  Meanwhile, the yield on the 10-year

This is the hidden content, please

• Sign In
• or
• Sign Up

This is the hidden content, please

• Sign In
• or
• Sign Up

, while

This is the hidden content, please

• Sign In
• or
• Sign Up

fell 2% on concerns over

This is the hidden content, please

• Sign In
• or
• Sign Up

in China. 

Starbucks ousts CEO

This is the hidden content, please

• Sign In
• or
• Sign Up

surprised investors by

This is the hidden content, please

• Sign In
• or
• Sign Up

with Chipotle CEO Brian Niccol, driving Starbucks’ stock up more than 24% while

This is the hidden content, please

• Sign In
• or
• Sign Up

 

This is the hidden content, please

• Sign In
• or
• Sign Up

as much as 10%. Narasimhan’s departure is effective immediately, with Niccol taking over on Sept. 9. Under Narasimhan’s tenure, Starbucks’ performance has struggled, marked by weak sales in the U.S. and China, its two largest markets. Starbucks has been under mounting pressure from activist investors. You can read more on

This is the hidden content, please

• Sign In
• or
• Sign Up

Economic uncertainty

This is the hidden content, please

• Sign In
• or
• Sign Up

exceeded quarterly expectations but

This is the hidden content, please

• Sign In
• or
• Sign Up

, citing weak demand due to high interest rates and consumer uncertainty. The home improvement retailer forecast comparable sales decline of 3% to 4%, while total sales are projected to increase between 2.5% and 3.5%, primarily driven by its acquisition of SRS Distribution. CFO Richard McPhail noted a shift in consumer behavior, with customers delaying projects not only due to financing costs but also a growing sense of economic uncertainty.

AI-powered phones

This is the hidden content, please

• Sign In
• or
• Sign Up

This is the hidden content, please

• Sign In
• or
• Sign Up

, including its Gemini assistant, that will be a part of Android devices, aiming to lead the AI race with Apple. While

This is the hidden content, please

• Sign In
• or
• Sign Up

’s hardware business isn’t a major revenue driver, the AI enhancements could boost its Gemini AI subscription service. Additionally,

This is the hidden content, please

• Sign In
• or
• Sign Up

launched its Pixel 9 series phones with upgraded cameras, brighter screens, the latest Tensor G4 processor, and 16GB of RAM for enhanced AI capabilities.

Cooling inflationWholesale inflation, as measured by the producer price index,

This is the hidden content, please

• Sign In
• or
• Sign Up

in July, offering the Federal Reserve has more room for lowering interest rates. The PPI increased 0.1%, less than the 0.2% forecast, while core PPI — which excludes volatile food and energy components — remained flat. The latest inflation data strengthens the market’s expectations of an interest rate cut at the Fed’s September meeting. The current focus has shifted to the magnitude of the cut, with the futures market suggesting either a quarter or a half-percentage point reduction.

[PRO] Trading economic printsKey inflation and retail sales data this week could spark significant market movements as investors assess the Fed’s interest rate policy amid concerns about economic growth and a stock market sell-off.

This is the hidden content, please

• Sign In
• or
• Sign Up

.

The bottom line

You may think your last work appraisal was harsh, but spare a thought for the CEOs of publicly traded companies. The market’s reaction can be far more scathing.

This is the hidden content, please

• Sign In
• or
• Sign Up

has replaced

This is the hidden content, please

• Sign In
• or
• Sign Up

with Chipotle’s top boss, Brian Niccol, sending the coffee chain’s shares surging 24.5%. Shares had dropped 21% as of Monday since Narasimhan was appointed in March 2023. 

Mellody Hobson, who recently stepped down as Starbucks’ chair, revealed on CNBC’s “Squawk Box” that

This is the hidden content, please

• Sign In
• or
• Sign Up

— who lacked restaurant experience — for several months. In contrast, Niccol has been Chipotle’s CEO since 2018, during which time its stock has skyrocketed by 773%.

While some on Wall Street were quick to

This is the hidden content, please

• Sign In
• or
• Sign Up

, David Palmer, senior managing director at Evercore ISI,

This is the hidden content, please

• Sign In
• or
• Sign Up

but for now is maintaining his target price at $80.

“What makes Starbucks special is that human connection, that premium brand positioning. The baristas have to be energised, clearly they’ve had some union problems, clearly they’ve had a lot of new products that haven’t worked,” Palmer told CNBC “Squawk on the Street.” “They need to rediscover what the core is, solve their operational problems in such a way that reengages baristas and the consumer. So, they have a lot of heavy lifting ahead.”

The stock ended the session at $95.90, 11% below its high for the year. Meanwhile,

This is the hidden content, please

• Sign In
• or
• Sign Up

as the first of two inflation reports bolstered the likelihood of the Fed cutting rates in September. 

On Tuesday,

This is the hidden content, please

• Sign In
• or
• Sign Up

This is the hidden content, please

• Sign In
• or
• Sign Up

in the second half of the year. 

Chief Financial Officer Richard McPhail told CNBC, “Customers aren’t just deferring because of higher financing costs. They’re deferring because of a sense of greater uncertainty in the economy.”

Sarat Sethi, portfolio manager at Douglas C. Lane & Associates, told CNBC’s “Squawk Box,” “It’s just confirming what we’re seeing.

This is the hidden content, please

• Sign In
• or
• Sign Up

.” He noted the worsening consumer pullback cited by

This is the hidden content, please

• Sign In
• or
• Sign Up

and

This is the hidden content, please

• Sign In
• or
• Sign Up

in their results.

“It’s confirming what the Fed needs to do, which is basically start cutting rates,” Sethi said. “The big question is the Fed going to be cutting rates for the right reason, and hopefully it’s more because inflation is coming down, not because our economy really needs more.”

There’ll be more retail data to digest on Thursday, along with earnings from

This is the hidden content, please

• Sign In
• or
• Sign Up

but before the bell today, there’s more inflation data.

This is the hidden content, please

• Sign In
• or
• Sign Up

. 

— CNBC’s Sarah Min, Amelia Lucas, Brian Evans, Samantha Subin, Jennifer Elias, Jeff Cox and Spencer Kimball contributed to this report.

This is the hidden content, please

• Sign In
• or
• Sign Up

#Wall #Street #soars #Starbucks #ousts #CEO

This is the hidden content, please

• Sign In
• or
• Sign Up

This is the hidden content, please

• Sign In
• or
• Sign Up