Top News  Shutterstock The major averages finished the week with sharp losses, despite a Friday rebound in the big tech stocks following an earlier selloff sparked by surging yields. Bonds saw a lot of late afternoon buying Friday, pushing the 10-year Treasury yield back down to as low as 1.39% after surging above 1.6% at one point on Thursday. But the move did not translate to a broader risk-on investor sentiment, as stocks and commodities still ended broadly lower. Meanwhile, U.S. personal incomes soared in January as Americans received another round of pandemic relief checks. For the week, fears of higher rates and inflation weighed on all three major averages, as the Dow Jones dropped 1.8%, the S&P 500 slid 2.5%, and the Nasdaq tumbled 4.9%    | | Top News Shutterstock The major averages finished the week with sharp losses, despite a Friday rebound in the big tech stocks following an earlier selloff sparked by surging yields. Bonds saw a lot of late afternoon buying Friday, pushing the 10-year Treasury yield back down to as low as 1.39% after surging above 1.6% at one point on Thursday. But the move did not translate to a broader risk-on investor sentiment, as stocks and commodities still ended broadly lower. Meanwhile, U.S. personal incomes soared in January as Americans received another round of pandemic relief checks. For the week, fears of higher rates and inflation weighed on all three major averages, as the Dow Jones dropped 1.8%, the S&P 500 slid 2.5%, and the Nasdaq tumbled 4.9% | |
| Outlook Reassuring comments from Jerome Powell helped stocks recover on Tuesday following steep losses since the start of the week triggered by rising bond yields. The Fed Chair told the Senate Banking Committee that the central bank would keep its foot on the gas pedal as the pandemic recovery path remains "highly uncertain," though he forecast a return to more normal and improved economic activity later in the year. Powell also said the Fed is in no rush to raise interest rates or begin trimming its $120B in monthly bond purchases in his semiannual monetary policy testimony to Congress.
Bigger picture: As worries grew over yields, Powell called the recent run-up "a statement of confidence" in a strong economic outlook and played down inflation worries from another big fiscal stimulus package. While prices might pick up in the coming months, he said those increases are expected to be temporary given supply chain constraints. Not only did his comments help backstop the market, some other influential names lent a hand to notable names that came under pressure.
As electric vehicle stocks tumbled, Cathie Wood bought more shares of Tesla (TSLA) (for a second day running), adding 11,893 shares to the ARK Autonomous Technology & Robotics ETF (ARKQ), 177,214 shares for the ARK Innovation Fund (ARKK) and 51,441 shares for the ARK Next Generation Internet ETF (ARKW). During an interview on Bloomberg Radio, Wood said she loves the liquidity that the shakeout in the market brings in general and sees a $7T opportunity in the autonomous car industry.
Go deeper: The crypto washout also deepened, with Bitcoin (BTC-USD) sinking to $45,000, but it rapidly made its way back to the $50,000 level. MicroStrategy (MSTR) CEO Michael Saylor was not bothered by the shaky price action, noting that the crypto became a $1T digital monetary network in just a dozen years, way faster than other $1T club members like Apple (AAPL), Amazon (AMZN), Microsoft (MSFT), and Google (GOOG, GOOGL). Meanwhile, Jack Dorsey's Square tripled its last investment in Bitcoin via a $170M purchase of 3,318 tokens, while Cathie Wood said she was "very positive" on the crypto and welcomed its "healthy correction." (39 comments) | |
| Media Facebook (FB) reached an agreement with the Australian government that will restore news pages in the country after the latter proposed amendments to a controversial media bill. The original law, if passed, would leave digital platforms on the hook for news content displayed in search results or feeds, meaning they would have to shell out cash to local media outlets and publishers for linking to their content. Google (GOOG, GOOGL) already agreed to pay for news, but Facebook appears to have held out for a better arrangement.
Under the amendments to the proposed bill, the Australian government will take into account commercial agreements that digital platforms have already made with local news media businesses before deciding if the code applies to the tech giants. The government will also give digital platforms one month's notice before reaching the final decision and would also include a two-month mediation period that grants the two sides more time to negotiate commercial deals before forcing them into final-offer arbitration.
Quote: "As a result of these changes, we can now work to further our investment in public interest journalism and restore news on Facebook for Australians in the coming days," Facebook regional managing director William Easton declared.
Go deeper: Microsoft (MSFT), which has previously pitched Bing after Google threatened its search engine Down Under, is joining EU publishers pushing for paid content laws. It's proposing regulations that "mandate payment" for news content by "gatekeepers that have dominant market power," which is a shot at Google and Facebook. The coalition would also support a form of arbitration and is looking at Australia's pending news payment legislation for guidance. (32 comments) | |
| Manufacturing President Biden signed a fresh executive order mandating a 100-day review of critical product supply chains in the U.S., focused on semiconductors, key minerals and materials, active pharmaceutical ingredients and advanced batteries like the ones used in electric vehicles. "There is strong bipartisan support for fast reviews of these four areas because they're essential for protecting and strengthening American competitiveness," he told a press conference. The order will also initiate a long-term review, to be completed within one year, that takes a look into fortifying six industry-specific sectors including defense, public health and biological preparedness, communications technology, transportation, energy and food production.
Backdrop: The order is part of the administration's effort to secure domestic supply chains in the wake of the COVID-19 pandemic that highlighted several vulnerabilities. The U.S. struggled to get the personal protective equipment needed for health care workers early on in the pandemic, relying on China and other nations for the critical supplies. There has also been an ongoing shortage of semiconductor chips (especially for automobiles), while reports suggest China is exploring whether it can hurt U.S. defense contractors by limiting the export of rare earths.
Response from Beijing: Chinese Foreign Ministry spokesman Zhao Lijian said the measures would "not help solve domestic problems" and only harm global trade. "China believes that artificial efforts to shift these chains and to decouple is not realistic. We hope the U.S. will earnestly respect market laws and free trade rules and uphold the safety and reliability and stability of global supply chains."
While the order doesn't directly call out China or any specific country, White House officials have said an overreliance on Beijing for critical goods was a key risk. The Biden administration may also work with a "carrot and stick" approach, meaning financial incentives for companies that manufacture items domestically or limiting some imports for those who don't. In a letter to Biden, Sens. Marco Rubio (R., Fla.) and Chris Coons (D., Del.) recommended he invoke the Defense Production Act to "incentivize or, if necessary, require American companies to retain their domestic capacities during this time." (64 comments) | |
| On The Move It was the catalyst the WSB/Reddit crowd had been waiting for... GameStop (NYSE:GME) announced Wednesday that its chief financial officer Jim Bell would resign on March 26. Several sources indicating that the board pushed him out to execute its turnaround more quickly, but an outsized reaction ensued amid a sudden burst of activity. Shares surged more than 104% following two afternoon halts, and even rose another 83% in AH trading to $168.13.
When all was said and done, more than 82M GameStop shares traded hands on Wednesday, the highest level since January 27. Derivatives trading also seemed to exacerbate the move in GameStop, according to Susquehanna's Christopher Jacobson, with some 262,000 call options contracts trading hands. Looking back, another management change prompted all the activity back in January. The appointment of Ryan Cohen (co-founder of Chewy) to the GameStop board helped drive shares heavily upward and eventually resulted in the epic short squeeze that saw retail traders inflict severe losses on hedge funds. The stock still has significant short interest at nearly 42%.
Note: The new advance came after Barstool Sports founder Dave Portnoy faced off with Robinhood's (RBNHD) Vlad Tenev over the GameStop saga. Reddit also went down after GameStop shot up, sparking a range of theories. While subreddit r/WallStreetBets, which has championed the stock, seemed to be getting a lot of heavy traffic right before the crash, it's unclear if the two were related. Last week, GameStop bull Keith Gill, also known as Roaring Kitty, shared a screenshot showing he had doubled his long position to 100K shares.
On the move: Other meme stocks also took off on the developments, with AMC Entertainment (NYSE:AMC) soaring 18% and Koss (KOSS) skyrocketing 55%. Some of the usual suspects also got a lift, including American Airlines (AAL), BlackBerry (BB), Bed Bath & Beyond (BBBY), Express (EXPR), Naked Brand (NAKD), Nokia (NOK), Sundial Growers (SNDL), Tootsie Roll (TR) and Trivago (TRVG). (38 comments) | |
| Johnson & Johnson (NYSE:JNJ) landed unanimous approval from an FDA advisory panel for emergency use authorization on its COVID-19 vaccine. The panel found the benefits of the vaccine outweighed the risks to set up the vaccine's final approval. Johnson & Johnson's COVID-19 vaccine is now on a path to be the third to be deployed after vaccines from. Pfizer/BioNTech (PFE, BNTX) and Moderna (NASDAQ:MRNA).
Next steps: If J&J's vaccine follows the path of the first two, it could be approved by the full FDA this weekend and be ready to distribute. But doses will be limited at first, with just a few million going out immediately. The company has a deal to supply 100M doses by the end of June. | |
| U.S. Indices
Dow -1.8% to 30,932. S&P 500 -2.5% to 3,811. Nasdaq -4.9% to 13,192. Russell 2000 -2.6% to 2,208. CBOE Volatility Index +26.8% to 27.95.
S&P 500 Sectors
Consumer Staples -2.7%. Utilities -5.1%. Financials -0.4%. Telecom -1.4%. Healthcare -1.6%. Industrials -0.5%. Information Technology -4.%. Materials -2.1%. Energy +4.3%. Consumer Discretionary -4.9%.
World Indices
London -2.1% to 6,483. France -1.2% to 5,703. Germany -1.5% to 13,786. Japan -3.5% to 28,966. China -5.1% to 3,509. Hong Kong -5.4% to 28,980. India -3.5% to 49,100.
Commodities and Bonds
Crude Oil WTI +4.% to $61.62/bbl. Gold -2.5% to $1,732.5/oz. Natural Gas -9.6% to 2.773. Ten-Year Treasury Yield -0.9% to 134.23.
Forex and Cryptos
EUR/USD -0.34%. USD/JPY +1.09%. GBP/USD -0.59%. Bitcoin -14.8%. Litecoin -22.2%. Ethereum -21.9%. Ripple -14.3%.
Top Stock Gainers
Pandion Therapeutics (NASDAQ:PAND) +157%. GameStop Corp. (NYSE:GME) +151%. Xtant Medical Holdings (NYSEMKT:XTNT) +104%. ChromaDex (NASDAQ:CDXC) +68%. Fisker (NYSE:FSR) +58%.
Top Stock Losers
The9 Limited (NASDAQ:NCTY) -61%. SOS Limited (NYSE:SOS) -58%. Ebix (NASDAQ:EBIX) -52%. Workhorse Group (NASDAQ:WKHS) -51%. Otonomy (NASDAQ:OTIC) -46%.
Where will the markets be headed next week? Current trends and ideas? Add your thoughts to the comments section. | |
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