Markets Win Five Straight, Consumer Prices Ease, GameStop Roars Back, and OpenAI Introduces new GPT AI Model

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By: Alex Nahigian , Ryen Fitzwater , and Cameron Morgan

In this week's rundown, we analyze major events from this past week, including taking a deeper look into consecutive weekly gains for market indices, the latest inflation data, GameStop’s resurgence, and OpenAI’s latest GPT model.

What You Should Know Going Into Your Week

• Dow closes at record high above 40,000 to cinch a five-week winning streak*
• Consumer price index increased 0.3% from March, slightly below the Dow Jones estimate of 0.4%*
• GameStop shares surged on Roaring Kitty resurfacing, plunged 20% after filing to sell additional stock*
• OpenAI launches new AI model and desktop version of ChatGPT*

• Wholesale prices rose 0.5% in April, more than expected

• NRF rejects Shein membership as retailer pursues U.S. IPO
• Fed Chair Powell says inflation has been higher than thought, expects rates to hold steady
• Walmart is laying off, and relocating hundreds of corporate workers across the country
• Home Depot misses on revenue, as high interest rates hurt sales
• Walmart earnings beat as discounter wins over more high-income shoppers, e-commerce sales jump
• Wayfair to open its first large store, as physical locations make a comeback
• Boeing supplier Spirit AeroSystems lays off workers, citing lower plane delivery rates
• FDA approves Amgen’s treatment for the most deadly form of lung cancer?
• Canada Goose jumps 16% after the company reports growth surge in China

*indicates topic will be discussed further

Dow Closes at Record High, Clinching Five-Week Winning Streak

Major market averages embraced positive sentiment this week as the Dow Jones Industrial Average recorded its fifth consecutive winning week, with the S&P 500 and the Nasdaq Composite clinching their longest winning streaks since February. An “easing” in consumer prices has echoed optimism among investors as stocks finished the week strong on the back end of a better-than-expected CPI report, which we’ll comment on later in the publication.

Here’s how major indices and key equity performers finished, according to CNBC.

The Dow Jones Industrial Average closed Friday above the key 40,000 level for the first time in history, a day after hitting that benchmark in the previous trading session. The S&P 500 closed up 70.19 points on the week, or 1.34%, to 5,303.27, while the Nasdaq Composite added 285.66 points, or 1.74%, to 16,685.97 to end the week. Shares of Walmart and Caterpillar, both trading 1% higher, led the Dow. Chubb and Valero Energy, up more than 3% and 4%, were the biggest gainers in the S&P 500.

Last week’s ascent has helped propel the three key indices into positive territory for the second quarter, despite a tough start. The S&P 500 and Nasdaq are now each up more than 11% in 2024, while the Dow has climbed more than 6% this year.

Equity valuations are extremely high in the current macroeconomic landscape. But as seen in the past few weeks, companies continue to report strong earnings growth, which drives earnings stability despite high borrowing costs. Upsides for the asset class as a whole could depend on the presidential election, which may contribute to tax cuts and loosening monetary policy.

CPI Reported In-Line With Expectations

Inflation numbers came in slightly below expectations, providing a brief relief for consumers. The consumer price index, a broad measure of how much goods and services cost at the cash register, increased by 0.3% from March, the Labor Department’s Bureau of Labor Statistics reported Wednesday. That was slightly below the Dow Jones estimate of 0.4% and is the lowest reading since January of this year.

Excluding food and energy, the key core inflation reading came in at 0.3% monthly and 3.6% on an annual basis, both as forecast. The core 12-month inflation reading was the lowest since April 2021, while the monthly increase was the smallest since December.

As mentioned previously, markets reacted positively after the CPI release, with futures tied to major stock indexes rallying and Treasury yields tumbling. Futures traders raised the implied probability that the Federal Reserve would start cutting interest rates in September.

This is the first CPI reading in a couple of months that wasn’t hotter than expected, which was reflected in market sentiment last week. The Fed has remarked on the fact that there has been a lack of consistency in inflation data, however, April’s CPI could be a great starting point for the Fed to find some confidence in the numbers.

GameStop Rallies 115% in Rollercoaster Week

Gamestop stock surged over 200% earlier in the week, partly due to posts from "Roaring Kitty," but the rally lost momentum just as fast, closing Thursday at $27.67, north of a 50% drop from the peak. Despite a 27% increase for the week, analysts are pessimistic about GameStop's future, forecasting ongoing losses and imminent store closures.

Shares fell 19.7% on Friday after the company announced its intention to sell upwards of 45 million class A common shares while simultaneously disclosing a sharp decline in first-quarter sales, with preliminary results showing sales ranging from $872 million to $892 million. A notable approximate 30% decline as the company saw sales of $1.24 billion in the same period last year. The net loss for the quarter is anticipated to be between $27 million and $37 million, a positive improvement from last year’s $50.5 million loss, as the company fights an uphill battle against e-commerce competitors.

AMC Entertainment, also experiencing volatility, saw its shares drop 5.2% on Friday. Both GameStop and AMC experienced a significant drop in retail investor activity compared to the 2021 meme stock craze. The recent surge brought back high volatility and options activity, but the momentum is fading as market sentiment remains unstable.

OpenAI Launches New AI Model, GPT-4o

“You now have limited access to our latest model, GPT-4o. It’s smarter, understands images, can browse the web, and speaks more languages,” is the new message you are now greeted with as you open the popular AI website.?

On Monday, the latest AI model was introduced to all OpenAI users and comes with an array of improvements, including speed, intelligence, and even personable features. Per CNBC, spoken by the technology chief, Mira Murati, of OpenAI, “This is the first time that we are really making a huge step forward when it comes to the ease of use.”

While not yet released to the public, the latest model now comes equipped with an audio mode that can handle 50 different languages and act as a live translator for the user. New capabilities can also determine speaking patterns and respond to emotions, calm people down, change voice tones to fit a prompt, and even sing.?

This mode aligns with the updated efficiency, responding “in as little as 232 milliseconds, with an average of 320 milliseconds, which is similar to human response time in a conservation,” according to OpenAI.

Along with this new model came a desktop version of ChatGPT and an updated user interface, both efforts to expand capabilities. Additional improvements were made to the model’s equation-solving and code-writing skills, further pushing it ahead against one of its top competitors, Microsoft’s GitHub Copilot.?

Providing twice the efficiency at only half the cost, this model offers relief to the 80 billion-dollar company facing pressure to keep a leading position in the generative AI market while expenditures are high.?

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Weathering Wall Street references CNBC and Bloomberg for research.