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| | Top News  Shutterstock Stocks ended a rough week, with money flowing out of growth stocks and into value stocks as Treasury yields surged across the board. The Nasdaq 100 Index fell for a fourth straight session Friday, concluding its worst week since February, as investors reconsidered high-flying tech stocks as rates rise. The yield on the benchmark 10-year yield hit 1.8% intraday Friday before ending at 1.77%, jumping 27 basis points for the week. The final catalyst was the December employment report, which showed tight labor market conditions with a slowdown in hiring and strong wage gains. The report reaffirmed expectations for the Federal Reserve to be more assertive in normalizing policy. For the week, the Nasdaq plunged 4.5% and the S&P 500 sank 1.8%, while the Dow Jones was off only 0.3%. But the S&P closed just above its 50-day moving average, a key technical reading that has attracted dip buying in the past. | | Tech The first trading day of 2022 resulted in a historic day for the U.S. stock market as Apple ( AAPL) became the first company in history to reach a valuation of $3T. The tech giant crossed the market cap milestone in afternoon trading, with shares climbing nearly 3% to $182.88 apiece. Lifting investor confidence was the belief that Apple will keep launching best-selling products as it explores new markets like self-driving electric cars, augmented-reality glasses and possibly the Metaverse. Runners-up: The only other company that is currently in Apple's market cap ballpark is Microsoft ( MSFT), which has a valuation of $2.5T. Google ( GOOG, GOOGL) parent company Alphabet recently slipped out of the $2T valuation club, and was at $1.93T in market cap on Monday. It took Apple just a year and a half to tack on its latest trillion dollars after reaching a $1T valuation in mid-2018 and $2T in value in August 2020. "Being the first company to join the $3T club is a "flex the muscles moment" for [Apple CEO Tim] Cook and company," said Wedbush analyst Dan Ives, adding that it was a "watershed" event for the iPhone maker. "The company continues to prove the doubters wrong with the renaissance of growth story playing out in Cupertino." Ives also said that Apple is continuing to see strong demand for the iPhone 13, and the company's services business is on track to be worth $1.5T alone. iEcosystem: Nearly 1.65B people across the globe connect to the internet through an Apple product, like the iPhone, iPad or iMac. That has led to steady revenue growth, cash flow, and key products having a strong long-term outlook. It has also benefited from demand for consumer electronics during the pandemic, while the company has managed to largely avoid disruptions seen elsewhere in the supply chain, as well as regulatory threats from Washington. ( 130 comments) | | Featured  During the last six months, Zoom, Lemonade, Beyond Meat, AMC, and Peloton have dropped over 50%.
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Find the bargains now with Seeking Alpha Premium » | | Outlook A federal jury late Monday convicted disgraced former Theranos ( THERA) CEO Elizabeth Holmes on four of 11 counts that her once-hot biotech startup swindled investors out of hundreds of millions of dollars. The failed blood-testing firm was worth about $9B at its peak, reportedly giving Holmes a $4.5B net worth at the time, but was dissolved in 2018 after facing regulatory investigations. Among those allegedly duped by the 37-year-old former CEO are media mogul Rupert Murdoch, the DeVos family, Walmart's Walton family and other wealthy investors. Snapshot: Known for wearing black turtleneck sweaters like late Apple co-founder Steve Jobs, many saw Holmes as Wall Street's next great entrepreneur. She and former Theranos President Ramesh "Sunny" Balwani falsely claimed that the company had developed a device that could test a single drop of human blood for multiple diseases at once, but the product didn't actually work, and "misleading results" were eventually run on conventional equipment. Authorities expect to try Balwani - whom Holmes had a romantic relationship with - later this year. After 50 hours and over seven days of deliberations, jurors in U.S. District Court in San Jose, Calif. finally convicted Holmes on three counts of wire fraud and one count of conspiracy to commit wire fraud, but acquitted her on four charges related to defrauding patients and remain deadlocked on the last three counts of deceiving investors. Holmes faces up to 20 years and $250,000 of restitution for each count covering her role in the collapse of Theranos, though she'll probably get a lot less than that. Holmes pleaded not guilty to all the charges and she can appeal her conviction to the federal appeals court. Lessons learned? "I don't think a verdict is going to change the way founders and VCs work in the ecosystem," said Angela Lee, a professor who teaches venture capital at Columbia Business School and runs an investment network called 37 Angels. "I can't tell you how many times I hear, 'So-and-so is in this deal, they're a name-brand VC, you have five days - are you in or are you out?' People don't want to miss out. I am not seeing more thoughtful diligence. If anything, I'm actually seeing a sped-up timeline for diligence in the last couple of years." ( 41 comments) | | Consumer The global chip shortage is impacting carmakers differently, causing uneven effects down the supply chain. The latest... After 90 years as the top-selling automaker in America, General Motors (NYSE: GM) lost its sales crown to Japan's Toyota (NYSE: TM), which also became the first non-domestic automaker to take the top spot. Newly released figures showed U.S. sales for Toyota jumping 10% last year to 2.3M, compared to the 2.2M vehicles sold by GM, whose sales were down 13% for 2021. Better management: The modern car can have hundreds, if not thousands, of computer chips, and with a growing semiconductor shortage, Toyota began stockpiling silicon ahead of its rivals. It was also earlier to bet on a recovering U.S. car market, cutting parts and production orders less sharply than competitors to make it better prepared for a return in demand. While Toyota executives were successful in navigating many supply chain problems, they don't expect their newfound sales title to lead to a permanent shift. "Yes, we did surpass General Motors in sales," said Jack Hollis, Toyota's senior vice president of operations in North America. "But to be clear, that is not our goal, nor do we see it as sustainable." Siphoning market share: Lofty car prices are expected to persist amid bare dealership lots and an inventory crunch, but those who are able to deliver are poised for outsized gains. Research firm Cox Automotive estimates Tesla's (NASDAQ: TSLA) U.S. sales jumped 61% in 2021 and the EV maker's stock already climbed 13% on Monday after hitting delivery and production records (Tesla doesn't break out its U.S. sales). Shares of Ford ( F) also closed nearly 12% higher on Tuesday as a rise in orders led it to double production plans for its new electric F-150 Lightning pickup truck. ( 118 comments) | | Central Banking A new era of monetary policy is starting to hit investors in the face following previous estimates that any tightening would be limited and gradual. FOMC minutes released on Wednesday showed that officials were fully on board with a faster scale back of the central bank's asset purchase program, which would give it greater flexibility to raise interest rates and could happen as soon as March. Stocks tanked on the news, with the Nasdaq ending the day down more than 3% for the worst start to a calendar year since the financial crisis. Excerpt: "It may become warranted to increase the federal funds rate sooner or at a faster pace than participants had earlier anticipated. Some participants also noted that it could be appropriate to begin to reduce the size of the Federal Reserve's balance sheet relatively soon after beginning to raise the federal funds rate. Some participants judged that a less accommodative future stance of policy would likely be warranted and that the Committee should convey a strong commitment to address elevated inflation pressures." The Fed is also going to be more aggressive in reducing its nearly $9T balance sheet, and while it didn't put a timetable on a runoff (that's when it shrinks holdings by allowing bonds to mature), many are estimating the tightening could happen as soon as the summer. "Participants judged that the appropriate timing of balance sheet runoff would likely be closer to that of policy rate liftoff than in the committee's previous experience... and could warrant a potentially faster pace of policy rate normalization." Some officials even said in the minutes that they preferred to "rely more on balance sheet reduction" and "less on increases in the policy rate" to avoid flattening the yield curve. Whoops? "Participants remarked that inflation readings had been higher and were more persistent and widespread than previously anticipated. Some participants noted that trimmed mean measures of inflation had reached decade-high levels and that the percentage of product categories with substantial price increases continued to climb. While participants generally continued to anticipate that inflation would decline significantly over the course of 2022 as supply constraints eased, almost all stated that they had revised up their forecasts of inflation for 2022 notably, and many did so for 2023 as well." ( 142 comments) | | Covid The Supreme Court heard legal challenges on Friday to two of the Biden administration's COVID-19 vaccine mandates, with rulings likely to follow in short order. The first, which is estimated to cover two-thirds of the private sector, or 100M workers, would compel businesses with 100 or more employees to ensure their staff is vaccinated against COVID or are tested weekly for the virus. A separate healthcare worker mandate, which would require vaccinations for workers at facilities that treat federally funded Medicare and Medicaid patients, is currently blocked in half of the 50 U.S. states. Snapshot: While the Supreme Court had already ruled several cases about COVID vaccine mandates (like healthcare cases in New York and Maine), this time around the case centers around actions by federal agencies. The key legal question here is not whether the mandate is reasonable or necessary in light of the pandemic, but rather if Congress has provided the Occupational Safety and Health Administration with the authority to issue such directives under relevant statutes. Employers who don't adhere to the requirements could face penalties of up to $13,653 for each reported violation, while OSHA has said it will check on compliance through company record-keeping and some in-person inspections. The Biden administration feels that OSHA not only has the authority, but also the responsibility to act. Backing this argument is the ability for the agency to issue emergency workplace rules to protect employees "exposed to grave danger" from "substances or agents determined to be toxic or physically harmful or from new hazards." On the other side of the courtroom, a coalition of business and religious groups, Republican attorneys general or governors, and national industry associations like the National Retail Federation and the American Trucking Associations, say the mandate represents massive overreach. OSHA cannot take a step with such "vast economic and political significance" without specific authorization from Congress, according to the group, which pointed to severe consequences like labor shortages and increased costs for employers. Nation divided: More than half of employees who work in workplaces with 100 employees or more (the size of companies covered by the federal requirement) either say their employer already requires vaccination (36%) or say they want their employer to require it (17%), according to the Kaiser Family Foundation, while four in ten (41%) say they don't want their employer to demand a jab. Meanwhile, 37% of unvaccinated workers say they would rather leave their jobs than comply with a jab or testing mandate, while another 46% would get tested weekly and 11% say they would get the shot (6% don't know or refused to answer the poll). ( 60 comments) | | U.S. Indices
Dow -0.3% to 36,232. S&P 500 -1.9% to 4,677. Nasdaq -4.5% to 14,936. Russell 2000 -2.8% to 2,182. CBOE Volatility Index +8.9% to 18.76.
S&P 500 Sectors
Consumer Staples +0.2%. Utilities -2.4%. Financials +4.2%. Telecom -2.4%. Healthcare -4.2%. Industrials +0.7%. Information Technology -3.7%. Materials -1.4%. Energy +9.%. Consumer Discretionary -1.%.
World Indices
London +1.4% to 7,485. France +0.9% to 7,219. Germany +0.4% to 15,948. Japan -1.1% to 28,479. China -1.7% to 3,580. Hong Kong +0.4% to 23,493. India +2.6% to 59,745.
Commodities and Bonds
Crude Oil WTI +4.9% to $78.89/bbl. Gold -1.8% to $1,796.3/oz. Natural Gas +5.5% to 3.936. Ten-Year Treasury Yield -1.6% to 128.38.
Forex and Cryptos
EUR/USD -0.06%. USD/JPY +0.4%. GBP/USD +0.4%. Bitcoin -9.6%. Litecoin -10.%. Ethereum -13.%. Ripple -8.%.
Top Stock Gainers
Ata Creativity Global ADR (NASDAQ:AACG) +147%. Lixte Biotech Hlds (NASDAQ:LIXT) +80%. China Hgs Real Est (NASDAQ:HGSH) +76%. Genprex Inc (NASDAQ:GNPX) +69%. Merchants Bancorp (NASDAQ:MBIN) +56%.
Top Stock Losers
Jowell Global Ltd (NASDAQ:JWEL) -77%. Aligos Therapeutics Inc (NASDAQ:ALGS) -67%. Ucloudlink Group Inc ADR (NASDAQ:UCL) -66%. Dogness Corp Cl A (NASDAQ:DOGZ) -59%. Applied Therapeutics Inc (NASDAQ:APLT) -53%.
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