Can McDonald’s make money on $5 meals when inflation is so high?

By Philip van Doorn

Also: Stock-market winners and losers for the first half of 2024, a possible AI infrastructure bubble and personal financial advice

When McDonald’s Corp. announced its mixed first-quarter results on April 30, CEO Chris Kempczinski said customers were being “more discriminating with every dollar” they spent and that the company would “continue to earn their visits by delivering leading, reliable, everyday value and outstanding execution” in its restaurants.

On the value side of the equation are the new $5 meals McDonald’s rolled out this week. With inflation such a hot topic, Charles Passy asked – and answered – an important question: How profitable can $5 meals be for McDonalds?

A good first half of 2024 for the stock market

The S&P 500 SPX was up 15.8% for the first half of 2024 through Thursday’s close. Christine Idzelis put this performance into perspective based on analysis of market data going back many decades.

Here is a list of the best-performing stocks among the S&P 500 during the first half of the year, led by Super Micro and Nvidia.

And here’s the list of this year’s worst performers in the U.S. benchmark index.

More broad looks at the stock market:

Tech’s dominance of Russell 1000 will hit record levels after latest reconstitutionApple’s huge stock buyback proves one thing: companies are lousy market timersAre stocks melting up? Two S&P 500 sectors swell to pre-‘Tech Wreck’ levels.

The big AI bubble question

Rapid investment in computing infrastructure to support development of products and services making use of generative artificial intelligence has been the dominant theme for the stock market’s rally during the first half of 2024. But so much of this spending is riding on projections for coming eaves of profits from AI-enabled technology.

And Nvidia Corp. (NVDA) has been at the forefront of this wave, as it has continued to dominate the market for graphics processing units (GPU) being installed by data centers.

Nvidia’s stock closed at $118.22 on Monday, down 19% from their intraday (split-adjusted) of $146.70 high on June 20. Then the stock bounced back 7% on Tuesday.

The obvious question is whether or not the AI-related equipment investment has gotten too far ahead of the eventual payoff. Emily Bary looked into the spending mismatch between AI infrastructure and revenue projections for AI-enabled applications.

Related: Nvidia’s rebound from its correction only makes the stock more dangerous to buy

Some bad corporate news

Here is coverage of two companies that disappointed investors this week – Nike Inc. (NKE) and Walgreens Boots Alliance Inc. (WBA):

Nike shares head for biggest drop in more than 20 yearsNike entering a ‘transitional’ year as it wrestles consumer demand challenges, say analystsNike wants to sell fewer classic sneakers, roll out more new ones in bid to revive demandWalgreens Boots Alliance’s stock headed for 27-year low after profit miss and lowered guidanceWalgreens’ junk bonds among biggest decliners in high-yield market after earnings disappoint

What to do if you are getting the runaround

Beth Pinsker answered an important question from a reader this week: How can she pursue a claim for long-term healthcare insurance coverage more effectively?

More from Beth Pinsker’s Fix My Portfolio column:

Are you getting more than 5% or less than 1% in your savings account? Do you even know?Should I pay tax now or later on my retirement savings – and from what funds?

A good retirement savings trend

Alessandra Malito looked into three trends making it easier for people to save and invest to prepare for retirement.

Higher education and money

Maya Levine looked into a different type of market-driven phenomenon – the closing of colleges.

Many law-school students carry six-figure debt loads – but most don’t earn six-figure salaries after they graduateA former beauty industry executive wanted to fund a Harvard scholarship to honor her heritage. The school said no.

Are you waiting for home prices to decline?

Aarthi Swaminathan interviewed six economists, discussed whether and when we might see a decline in housing prices.

The Moneyist gives straight answers

Quentin Fottrell – the Moneyist – at times has a pleasant job of helping people tweak their retirement portfolios, for example. Other times he is confronted with nasty family financial squabbles, such as these:

I’m disinheriting my ungrateful and selfish daughter. Could she contest my will?’My stepmother makes me feel unwelcome’: I bought a house for my father in 2008, but now he wants me to sign over a 50% share for his third wife

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-Philip van Doorn

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