Wall Street Breakfast: What Moved Markets
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Stocks rallied Friday to close a volatile week, as U.S. Treasury yields pulled back from their recent highs and economic data helped investors look past the growing likelihood that the Federal Reserve will keep its restrictive policy in place for longer than anticipated. The yield on the benchmark 10-year Treasury settled back below 4%, shedding 11 basis points to 3.96%, and the two-year yield fell five basis points to 4.86%. U.S. economic data released Friday showed better than expected demand for services in February, new orders rose to the highest level in more than a year, and hiring increased. The three major stock market indexes rose for the week, with the Dow Jones adding 1.7% to snap a four-week losing streak, the S&P 500 closing 1.9% higher, and the Nasdaq gaining 2.6%. Check out Seeking Alpha's Catalyst Watch for a preview of next week's big events.
"The corporate kingdom finally comes to an end," Florida Governor Ron DeSantis declared on Monday, after signing a bill that gives the state control over Walt Disney World's (NYSE:DIS) self-governing district. The move was a long time coming, and follows the "Don't Say Gay" tussle between Disney and Florida's legislature last year (see more on the controversy here). DeSantis will be able to appoint a five-member board that will have external oversight over the Reedy Creek Improvement District, which has its own tax and bond authority, and it will no longer be exempt from certain state codes and regulations. The "new red tape may dissuade DIS' new infrastructure investments in Florida for the intermediate term," SA contributor Juxtaposed Ideas wrote in an article that discussed other impacts on the company's theme parks. (285 comments)
SoFi Technologies (NASDAQ:SOFI) rose as much as 4% in afternoon trading on Tuesday following reports that conservative justices were skeptically questioning President Biden's plan to forgive billions of dollars of student debt. SoFi is a known player for refinancing student loans, with SA contributors like Data Driven Investing recently pointing out that growth at its lending arm should accelerate again when the student loan moratorium expires in the back half of the year. Other related stocks were less affected by the opening arguments at SCOTUS, such as Navient (NASDAQ:NAVI), Nelnet (NYSE:NNI) and SLM Corp. (NASDAQ:SLM). Chief Justice John Roberts also contended that a program as large as Biden's student loan forgiveness plan, which is estimated to cost $430B over three decades, should be something that casual observers would expect Congress to take up. (223 comments)
Headlines from the fixed income world rattled equity investors as the yield on the 10-year Treasury (US10Y) topped 4.00% on Wednesday for the first time since November. The 2-year yield (US2Y) also rose 2 basis points to 4.91%, hitting a new post-2007 high. Looking at the latest comments from policymakers, Atlanta Fed President Raphael Bostic advocated for rates to rise above 5%, while Minneapolis Fed President Neel Kashkari expressed concerns about incoming economic data. "Stocks are in trouble if Treasury yields keep rising," noted SA contributor Tyson Halsey, CFA, who said to "buy high yields to hedge your portfolio." See the full article, Is The Federal Reserve Wrong Again In Believing Inflation Is Transitory? (104 comments)
The jury is still out on Tesla's (NASDAQ:TSLA) Investor Day event at its Gigafactory in Austin, Texas. Elon Musk started off his "Master Plan Part 3" by talking about the clear path to a fully sustainable Earth, highlighting the dirty and wasteful energy economy that is currently in place, but investors were underwhelmed by the presentation, sending the stock down nearly 6% in AH trading on Wednesday. The future of Full Self-Driving, a robotaxi network, and charging infrastructure was also discussed in broad strokes, and while a "next generation" electric-vehicle platform was announced, it didn't include too many details. Note that Tesla shares have been on rip since investors welcomed in 2023 - sending the stock up 90% YTD - and those betting against the volatile stock have, at times, found themselves in the opposite lane facing traffic. (240 comments)
Another high-profile investor day was broadcast earlier in the week. CEO David Solomon took the podium to discuss the latest happenings at Goldman Sachs (GS), but ended up getting some flak over the Wall Street stalwart's foray into the consumer arena. The business has resulted in billions of dollars in losses over the past few years, and Goldman is now exploring strategic alternatives for its Platform Solutions unit. It's also in the process of selling some loans in its Marcus consumer bank portfolio, as well as evaluating the sale of installment lending platform GreenSky. Solomon had sought to diversify Goldman's revenue stream away from traditional businesses like investment banking, but his lack of answers saw the stock dive 4% by the end of his presentation. (7 comments)
Dow +1.8% to 33,391. S&P 500 +1.9% to 4,046. Nasdaq +2.6% to 11,689. Russell 2000 +2% to 1,928. CBOE Volatility Index -14.7% to 18.49.
S&P 500 Sectors
Consumer Staples -0.4%. Utilities -0.7%. Financials +0.8%. Telecom +3.3%. Healthcare +0.5%. Industrials +3.3%. Information Technology +2.9%. Materials +4%. Energy +2.9%. Consumer Discretionary +1.6%. Real Estate +1.6%.
London +0.9% to 7,947. France +2.2% to 7,348. Germany +2.4% to 15,578. Japan +1.7% to 27,927. China +1.9% to 3,328. Hong Kong +2.8% to 20,568. India +0.6% to 59,809.
Commodities and Bonds
Crude Oil WTI +4.6% to $79.85/bbl. Gold +3% to $1,862.8/oz. Natural Gas +23.1% to 3.016. Ten-Year Bond Yield -0.2 bps to 3.958.
Forex and Cryptos
EUR/USD +0.85%. USD/JPY -0.43%. GBP/USD +0.81%. Bitcoin -3.5%. Litecoin -3%. Ethereum -1.4%. XRP -0.6%.
Top S&P 500 Gainers
First Solar (FSLR) +30%. Salesforce (CRM) +15%. Steel Dynamics (STLD) +15%. DENTSPLY SIRONA (XRAY) +13%. Illumina (ILMN) +13%.
Top S&P 500 Losers
DISH Network (DISH) -15%. Universal Health Services (UHS) -13%. Lumen Technologies (LUMN) -11%. Hormel Foods (HRL) -10%. Bath & Body Works (BBWI) -7%.
Where will the markets be headed next week? Current trends and ideas? Add your thoughts to the comments section.
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