Top News  Shutterstock The three major U.S. stock averages rallied in the last two sessions of the week as inflation fears eased, but it wasn't enough to offset declines from earlier in the week. On Friday, the tech-heavy Nasdaq gained 2.3%, the S&P 500 rose 1.5%, and the Dow Jones Industrial Average advanced 1.1%. For the week, the Nasdaq fell 2.3%, the S&P dropped 1.4%, and the Do slipped 1.1%. Early in the week, commodities grabbed the headlines after a ransomware attack shut the Colonial Pipeline that transports fuel products to the East. Cyclicals such as energy and consumer staples gained while tech names swooned. Inflation fears were stoked as April's core consumer price index surged the most since 1982. The month's producer price index also rang in stronger than expected. In the mid-week bitcoin comments from Elon Musk rattled the crypto markets, pushing bitcoin down 13% for the week. Bonds fell during the week, pushing the 10-year Treasury yield to 1.63% from 1.60% at the beginning of the week.    | TOGETHER WITH  |
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| | Top News Shutterstock The three major U.S. stock averages rallied in the last two sessions of the week as inflation fears eased, but it wasn't enough to offset declines from earlier in the week. On Friday, the tech-heavy Nasdaq gained 2.3%, the S&P 500 rose 1.5%, and the Dow Jones Industrial Average advanced 1.1%. For the week, the Nasdaq fell 2.3%, the S&P dropped 1.4%, and the Do slipped 1.1%. Early in the week, commodities grabbed the headlines after a ransomware attack shut the Colonial Pipeline that transports fuel products to the East. Cyclicals such as energy and consumer staples gained while tech names swooned. Inflation fears were stoked as April's core consumer price index surged the most since 1982. The month's producer price index also rang in stronger than expected. In the mid-week bitcoin comments from Elon Musk rattled the crypto markets, pushing bitcoin down 13% for the week. Bonds fell during the week, pushing the 10-year Treasury yield to 1.63% from 1.60% at the beginning of the week. | |
| Economy A flurry of inflation jitters clobbered tech stocks early in the week as data from the U.S. Bureau of Labor Statistics showed that inflation in the year to April climbed at its fastest pace since 2008. The Consumer Price Index came in at 4.2% vs. expectations of 3.6%, which is already ahead of the Fed's 2% target. While much of the rising costs reflect growing industrial and consumer activity after last year's COVID-related shutdowns, panic still spread amid concerns over how long it will take for prices to settle down, and if the Fed could be forced to taper or bring some rate hikes forward.
How is the CPI calculated? The measure uses a "basket of goods" approach that aims to compare the costs of various consumer goods and services. These can include transportation, food, rent, haircuts and medical care (80,000 items are included in the report). Each month, data collectors from the Bureau of Labor Statistics call, visit, or check the websites of thousands of retail stores, professional offices and other establishments to assess nationwide price information. Specialists then examine the data for accuracy and make statistical adjustments based on any given item's value.
While traders have been quick to dump growth stocks as inflation fears spring up in the economy, concerns spread to the broader market, before paring losses at the end of the week. Fed officials reiterated that the central bank has no intention to withdraw its support, while new Fed board member Christopher Waller also helped calm jitters by saying the central bank would need several more months of data before assessing economic progress.
Outlook: Investors have already seen widespread price increases on commodities like copper and lumber, while the bond market's forecast for inflation over the next decade has risen substantially. That's helped trigger swings in the stock market, sending the Cboe Volatility Index on Tuesday to its highest level since March. Meanwhile, executive usage of the word "inflation" has increased 800% in Q1 earnings calls, according to Bank of America, while last week's big jobs report miss is being viewed as a sign that companies will have to raise wages to lure more unemployed people into the workforce. (22 comments)
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| Energy The Colonial Pipeline, the largest gasoline pipeline in the U.S., reopened late on Wednesday after a ransomware attack caused it to close five days ago. The cyber breach has sent prices at the pump above $3 per gallon, the highest since October 2014, amid shortages and panic buying across the southeastern United States. Gasoline stations also ran dry from Florida to Virginia and Colonial said it will still take "several days for the product delivery supply chain to return to normal."
Ransom? An early report from the Washington Post indicated that Colonial didn't want to make a payment to the hackers. The publication also said the company was working with cybersecurity firm Mandiant to restore data from backup systems where possible and rebuild systems where necessary. However, a piece from Bloomberg later in the week disclosed that Colonial paid shadowy criminal gang DarkSide nearly $5M last Friday despite publicly saying it wouldn't pay for help in getting the fuel pipeline back online.
DarkSide is believed to be operating out of Russia, but the White House has said it has no evidence so far that the attack was state-sponsored or directed by the Kremlin. On Wednesday, the criminal gang even posted the names of another three new targets on the dark web that have been cyberattacked. While the companies have not publicly confirmed the breaches, one is said to be based in Illinois, one in the U.K. and the other in Brazil.
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Go deeper: Following a series of sweeping cyberattacks on private companies and federal government networks over the past year, President Biden signed an executive order on Wednesday aimed at strengthening U.S. cybersecurity defenses. It will create a standardized playbook for federal responses to cyber incidents and push the federal government toward upgrading to secure cloud services and other cyber infrastructure. It will also establish a "Cybersecurity Safety Review Board" and require IT service providers to tell the government about cyber breaches that could impact U.S. networks. (
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| Cryptocurrency The crypto world erupted Wednesday night after Tesla (TSLA) CEO Elon Musk said he would suspend vehicle purchases using Bitcoin (BTC-USD). "We are concerned about rapidly increasing use of fossil fuels for Bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel," he wrote in a tweet. "Cryptocurrency is a good idea on many levels and we believe it has a promising future, but this cannot come at a great cost to the environment."
Trading at about $58K earlier in the day, Bitcoin slumped to as low as $47K, or roughly 30% below its all-time high just shy of $65K. Musk still clarified that Tesla will not be selling any Bitcoin and "we intend to use it for transactions as soon as mining transitions to more sustainable energy." Tesla is also looking at other cryptocurrencies that "use <1% of Bitcoin's energy/transaction," a move that could be bullish for something like Ethereum (ETH-USD), which uses less energy-intensive proof-of-stake.
Twitter blows up: "Unlike @elonmusk I am not flip flopping every other second about #bitcoin. You will have to rip my bitcoin from my cold dead hands," writes Dave Portnoy. "When Elon realizes that bitcoin mining is actually pushing the renewable energy industry forward, he will refresh position and #bitcoin will moon," added Cameron Winklevoss, while his brother Tyler declared: "Bitcoin mining is a massive subsidy for renewable energy." Another bite from Bitcoin Magazine: "[We've] suspended purchasing any Teslas. We are concerned about the rapid increase in bad arguments, especially energy FUD, from the company's CEO."
Recap: During the first quarter of 2021, Tesla bought $1.5B worth of Bitcoin, then sold $272M worth. According to the company's most recent earnings, profits from Bitcoin sales specifically allowed the company to notch a $101M "positive impact" toward profitability. Interestingly enough, Musk just three weeks ago was in agreement with Square's (SQ) Jack Dorsey who said Bitcoin would be a "key driver of renewable energy's future." It also begs the question of what kind of durability Bitcoin has as a future currency, when prices can plunge nearly 20% at the turn of a tweet. (606 comments) | |
| Covid The FDA, as well as the CDC's Advisory Committee, cleared a coronavirus vaccine's use in adolescents aged 12 to 15, paving the way for many to be immunized before summer camp and the new school year in the fall. "The light at the end of the tunnel is growing, and today it got a little brighter," President Biden said in a statement. At least 55M people in the U.S. have so far been vaccinated with Pfizer-BioNTech's (PFE, BNTX) jab, according to the CDC, including about 2M 16- to 18-year-olds.
Data: Pfizer's shot demonstrated 100% efficacy in an ongoing placebo-controlled trial with 2,260 participants between the ages of 12 and 15 years old. Pfizer also recently said it expects to ask the FDA in September to authorize its vaccine's use in children 2 to 11 years should ongoing studies prove positive. Moderna (MRNA) is also studying its vaccine in children and J&J (JNJ) has said it is in talks with regulators to do so.
The expansion would be a major development in the country's vaccination campaign, but is likely to divide parents between those who are eager to expand the level of immunity and those that are skeptical about long-term side effects (the shots are currently authorized for emergency use rather than fully approved). With much of the world banking a surplus of vaccines made in the U.S., the use also raises questions about whether the supply should be targeted to an age group that so far appears to be mostly spared from the severe effects of the disease. (224 comments)
Other happenings: On Thursday, the CDC updated its guidelines to recommend anyone that's fully vaccinated to participate in indoor or outdoor activities, large or small, without wearing a mask or physical distancing. Traders reacted to the news by selling off shares in notable mask makers. Allied Healthcare Products (AHPI) and Alpha Pro Tech (APT) closed the session down nearly 11% and 6%, respectively. On the other side of the trade, shares of Ulta Beauty (ULTA) finished the day up 3% after D.A. Davidson analyst Michael Baker said the beauty retailer was likely to be a beneficiary of the mask lifting restrictions. (26 comments) | |
| Earnings The pandemic dealt a heavy blow to Disney's (DIS) theme parks, but it was a boon for the company's streaming service. However, investors weren't as impressed this past quarter as Disney+ signed up another 9M users, taking its total number to 103.6M paid subs vs. expectations of 109M. Average monthly revenue per subscriber also fell 29% to $3.99 - a move the company blamed on the launch of Disney+ Hotstar - and DIS shares slid 4.2% in AH trading on Thursday.
Coming up fast: While Netflix (NFLX) has double the number of subscribers than rival Disney, the latter's figures look a whole lot better when adding in its other streaming services: ESPN Plus had 13.8M subs (up 75% year-over-year), and Hulu had 41.6M subscribers (up 30%). Netflix has also reported a sharp slowdown in new signups, putting the godfather of streaming on the defensive, but CEO Reed Hastings has attributed the downturn to pandemic distortions and feels it will grow again as more shows come back in the second half of 2021.
Meanwhile, revenue at Disney's Parks, Experiences and Products segment tumbled 44% to $3.17B, and the pandemic cost the division around $1.2B in lost operating income. Similar losses were reported in each of the company's last four earnings reports, with many of its theme parks closed or operating at reduced capacity, while its cruise ships and guided tours remained suspended. Looking to get back to business, Disney reopened its two California-based parks on April 30 and has high expectations for the coming quarters.
Outlook: "We're pleased to see more encouraging signs of recovery across our businesses, and we remain focused on ramping up our operations while also fueling long-term growth for the company," said CEO Bob Chapek. "This is clearly reflected in the reopening of our theme parks and resorts, increased production at our studios, the continued success of our streaming services, and the expansion of our unrivaled portfolio of multiyear sports rights deals for ESPN and ESPN Plus." (49 comments) | |
TOGETHER WITH  U.S. Indices
Dow -1.1% to 34,382. S&P 500 -1.4% to 4,174. Nasdaq -2.3% to 13,430. Russell 2000 -2.2% to 2,223. CBOE Volatility Index +12.7% to 18.81.
S&P 500 Sectors
Consumer Staples +0.4%. Utilities -0.4%. Financials +0.3%. Telecom -2.0%. Healthcare -0.6%. Industrials -0.6%. Information Technology -2.2%. Materials +0.1%. Energy -0.8%. Consumer Discretionary -3.7%.
World Indices
London -1.2% to 7,044. France 0.% to 6,385. Germany +0.1% to 15,417. Japan -4.3% to 28,084. China +2.1% to 3,490. Hong Kong -2.1% to 28,010. India -1.% to 48,733.
Commodities and Bonds
Crude Oil WTI +0.9% to $65.51/bbl. Gold +0.7% to $1,843.9/oz. Natural Gas +0.4% to 2.971. Ten-Year Treasury Yield -0.2% to 132.45.
Forex and Cryptos
EUR/USD -0.18%. USD/JPY +0.68%. GBP/USD +0.9%. Bitcoin -14.5%. Litecoin -5.6%. Ethereum +4.4%. Ripple -9.4%.
Top Stock Gainers
InnSuites Hospitality Trust (NYSE:IHT) +92%. Moxian (NASDAQ:MOXC) +70%. Birks Group (NYSE:BGI) +58%. Bridgford Foods (NASDAQ:BRID) +49%. Comstock Holding Companies (NASDAQ:CHCI) +37%.
Top Stock Losers
Alset EHome International (NASDAQ:AEI) -51%. Rekor Systems (NASDAQ:REKR) -49%. Reneo Pharmaceuticals (NASDAQ:RPHM) -48%. Array Technologies (NASDAQ:ARRY) -44%. Brooklyn ImmunoTherapeutics (NYSE:BTX) -44%.
Where will the markets be headed next week? Current trends and ideas? Add your thoughts to the comments section. | |
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