Wall Street Lunch: No Starbucks For You?

In today's edition of Wall Street Lunch, we explore a brewing situation at Starbucks (NASDAQ: SBUX) that could lead to one of the largest strikes in its history. The coffee giant is facing potential walkouts by a record number of unionized workers on Christmas Eve, as the Workers United union rallies support from baristas across the country.

Over the weekend, Starbucks reported that around 60 locations temporarily closed, responding to strikes called by the union. Workers United plans to escalate its unfair labor practice strike significantly, with predictions that more than 5,000 employees from over 300 stores nationwide will walk off their jobs this Christmas Eve. This potential strike is expected to surpass the previous 2023 Red Cup Rebellion.

Despite these actions, Starbucks maintains that the majority of its stores will remain operational. The company highlighted that 97-99% of locations are expected to continue serving customers as scheduled, suggesting that while some disruptions may occur, overall operations should not be significantly impacted.

On the trading front, the market welcomed the festive season with the Santa Claus rally kicking off. Stocks moved upward, with the Nasdaq (.COMP.IND) leading gains at 1.35%, reclaiming the 20,000-level. The S&P 500 gained 1.1%, while the Dow rose by 0.9%, closing above 43,000.

The Santa Claus rally, first noted in 1972 by Yale Hirsch, has become a valuable indicator for investors. His son, Jeff, now continues this legacy through the Stock Trader's Almanac. He emphasizes that when all three indicators—Santa Claus Rally, First Five Days, and January Barometer—are positive, the market has been historically strong.

In addition, the annual rebalancing of the Nasdaq 100 has led to reduced weights for Meta (META), Broadcom (AVGO), and Tesla (TSLA), as their significant rises this year prompted a shift in the index's major components. Meanwhile, Apple (AAPL) and Nvidia (NVDA) saw increased weights, reflecting their robust performances.

The travel industry experienced some turbulence as American Airlines (AAL) temporarily grounded all flights in the U.S. due to a vendor technical issue this morning. The FAA has since lifted the ground stop, and flights are resuming. American Airlines expressed thanks to customers for their understanding as they worked through the technical difficulties.

A new legal development has arisen as several banks have taken legal action against the Federal Reserve concerning the annual stress test for banks. This stress test dictates that financial institutions must uphold sufficient reserves for potential loan losses while managing their share buybacks and dividends. The Bank Policy Institute criticized the current system for being unclear and producing excessive capital charges, hindering economic growth.

In entertainment news, Netflix (NFLX) is gearing up to make waves on Christmas Day with its NFL broadcast debut. The streaming service will showcase two key matchups featuring teams like the Kansas City Chiefs and Pittsburgh Steelers, alongside a highly anticipated halftime show by Beyoncé.

Finally, in a light-hearted turn, Scrooge & Marley Counting House, a brokerage in London, is making headlines for its surprise shift in strategy, involving significant increases in labor costs and investments aimed at providing welfare assistance. While this news has left investors puzzled, some see potential in Scrooge's historical ability to maximize profits.

As the holiday season approaches, all eyes will be on how these developments unfold, potentially affecting both the companies involved and the broader market landscape.

Starbucks, Union, Market, Stocks, NFL