Weekly Market Recap

Published Jan. 16, 2022
Covid-19

WEEKLY MARKET SUMMARY

Dow Jones S&P 500 Nasdaq
35,911 (-0.73%)
4,662 (+0.16%)
14,893 (+0.96%)

Over the last week, the average number of new Covid cases each day has increased by 50%

According to Johns Hopkins University statistics, the United States has seen an average of 754,000 new Covid cases each day over the last week, up more than 50% from the previous week as the omicron strain rages throughout the nation. This includes the disclosure on Monday of almost 1.5 million new Covid cases, some of which occurred over the weekend, when many states cease reporting data. The nation is reporting an average of 1,650 fatalities per day, which is higher from last year but still less than half of the highest numbers recorded at this time last year before vaccines were readily available.

Goldman Sachs raises the Fed’s rate rise prediction for this year to four times

Bond rates climbed marginally on Monday, with the 10-year yield trading at 1.77 percent, up from a high of over 1.8 percent on Friday. Goldman Sachs expects the Federal Reserve to hike interest rates four times this year from near-zero levels as inflation rises and unemployment declines. In addition to signalling rate rises and hastening tapering, the Fed addressed a balance sheet reduction in its December meeting minutes. The chairman of the Federal Reserve, Jerome Powell, is due to testify before a Senate committee on Tuesday.

Since the meme stock frenzy started last year, GameStop has had a wild ride

Tuesday, Jan. 11, marks the one-year anniversary of the GameStop trading frenzy, which was spurred by amateur investors joining together on social media in an unparalleled short squeeze that had ramifications on Wall Street and in Washington. On January 28, 2021, GameStop increased by more than 2,600% in less than three weeks, hitting an all-time intraday high of $483. The stock, on the other hand, finished that day at $193.60 before falling to a low of $40.59 on February 19, 2021. GameStop’s share price reached $300 for the first time in June. However, the trend has been decreasing since then. Along the way, the company got some criticism, notably on Friday, when it revealed plans to create a marketplace for nonfungible tokens, or NFTs. On Monday, though, the stock finished at $131.

Consumer prices are rising at the quickest rate since 1982, yet the rate is in line with expectations

More predictable scorching inflation data; fresh unemployment claims rise. On Wednesday, the government’s December consumer price index showed a 7% year-over-year rise, in line with predictions and the fastest increase since June 1982. The core CPI, which excludes food and energy, increased by 5.5 percent year on year, slightly more than projected and the most since February 1991. Inflation has been reducing employees’ otherwise significant wage increases. Following the announcement of the data, the 10-year Treasury yield slipped below 1.72 percent on Wednesday, after climbing over 1.8 percent earlier this week. According to Federal Reserve officials, rising pricing pressures are mostly due to pandemic-specific challenges such as clogged supply chains and empty store shelves. On Thursday, the Commerce Department disclosed that the producer price index jumped 9.7 percent year over year in December, slightly less than expected but still the largest rise on record. The PPI follows a consumer pricing index rise of 7% year on year in December, the fastest since June 1982 but in line with predictions. The Labor Department said on Thursday that weekly initial unemployment claims jumped to 230,000, a rise of 23,000 over the previous week’s unadjusted figure.

Delta Air Lines announces great profits and sales; the company’s stock rises

Delta Air Lines’ shares rose more than 2% in premarket trade on Thursday after the airline posted its greatest quarterly revenue since late 2019, $9.47 billion, which was more than anticipated. Strong holiday bookings and increased business travel enabled the firm to earn 22 cents per share, above forecasts. Delta anticipates a loss in the first quarter, blaming the Covid omicron type for increased expenses and lower-than-expected bookings. However, the airline anticipates a rebound in future travel demand and a profit this year.

December retail sales fell far more than predicted

According to the government, December retail sales fell 1.9 percent overall and 2.3 percent excluding automobiles, falling well short of projections of a 0.1 percent reduction and a 0.3 percent gain, respectively. The precipitous drops came against a background of shoppers postponing Christmas purchases earlier this year due to supply chain worries as prices soared. The consumer price index increased 7% year on year in December, matching predictions and the quickest rate since June 1982, while the producer price index increased 9.7% year on year, slightly lower than estimates but still the largest rise on record.

The PC slowdown creates a new battleground for chip manufacturers.

After a spectacular run, personal computer sales are expected to fall substantially this year. This, ironically, boosts the market’s significance as a fight for Intel and AMD. The two chip makers’ competition in PCs extends back decades. However, it really took off in 2018 when AMD started launching CPUs manufactured on Taiwan Semiconductor Manufacturing’s (TSM) most advanced manufacturing lines. This gave AMD’s processors an edge against Intel’s, which was attempting to modernise its own manufacturing process. According to Mercury Research, AMD accounted for around 21% of the central processor chips provided for PCs in the third quarter of 2021, up from 8% only four years before.

Investors in real estate swap office buildings for data centres

Real estate investors are transferring funds out of offices and into data centres as a hedge against the effect of remote working. Data centres, on the other hand, are plagued by oversupply and demanding tenants. Interest in data centres has been rising for years, but it skyrocketed when the epidemic caused more people to go online. Acquisitions are one metric: Synergy Research Group estimates that worldwide data centre acquisitions will reach a record $47.1 billion in 2021, more than three times the amount in 2019 and up from $34.5 billion in 2020.

Apple did not invent the current metaverse trend, but the company is enjoying the benefits

According to investors and analysts, a key characteristic of the recent climb in the iPhone maker’s share price has been excitement about how the firm may gain from widespread adoption of digital alternative worlds. Earlier this month, during afternoon trade, Apple briefly became the first corporation to be valued at more than $3 trillion. Investors and experts predict Apple will deliver extended reality devices within the next year or two, ushering in a new era of growth. Apple, for its part, has been tight-lipped about its future intentions, despite the fact that Chief Executive Tim Cook has previously praised such technology and suggested that it would play a big role in the company’s future. Morgan Stanley analyst Katy Huberty boosted her price estimate for Apple shares to $200 from $164 last month to account for the potential value associated with those product lines.

BlackRock now manages assets at more than $10 trillion.

BlackRock announced a higher quarterly profit as market gains and new client money increased the investment firm’s assets under management to a new high of $10 trillion. The money manager recorded a net income of $1.64 billion, or $10.63 per share, in the fourth quarter, up 6% from $1.55 billion, or $10.02, the previous year. Analysts surveyed by S&P Global Market Intelligence predicted a per-share profit of $10.22. Revenue rose 14% to $5.11 billion, falling short of analysts’ forecasts of $5.15 billion. At the conclusion of the year, BlackRock’s assets totaled $10.01 trillion, a record for any money management firm. BlackRock is the world’s biggest money manager, and demand for exchange-traded funds (ETFs) and other low-cost investments that follow market indexes has fuelled the company’s transformation from a bond-investing specialist to the world’s largest money manager.
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