U.S. equites fell again on Friday, as rising Covid-19 cases added to an already strange day for markets.
The Dow Jones Industrial Average fell around 1.68% during the week, 1.5% on Friday which was its worst day since Nov 30. The S&P 500 dropped 2% and has been down three of the past four weeks. The Nasdaq Composite fared better on Friday, dropping less than 0.1% on the day, however during the week it still lost around 3% of its value.
Investors were also closely watching Federal reserve meetings during the week. At the Fed meeting this week, the central bank said the pace of tapering will be doubled to $30B a month - with further reductions coming next year - while interest rate projections were updated to show a median forecast of three hikes in 2022.
Top sectors last week:
- S&P 500 Health Care sector up 2.45% (ETF: XLV)
- S&P 500 Real Estate sector up 1.60% (ETF: XLRE)
- S&P 500 Utilities sector up 1.21% (ETF: XLU)
Top news last week:
- Stay-At-Home Stocks rise again: Nasdaq index got an assist from a rally in stay-at-home stocks, which have been beaten down for much of the year. Zoom Video Communications jumped 9.5% for its best day since March 9. The stock is still down 65% from its all-time closing high of $568.34. It wasn't just Zoom. Stationary bike maker Peloton Interactive rose 6.6% while streaming platform Roku stock closed up about 8%. Online-education firm Chegg, which fell last month following a disappointing outlook amid the reopening, rose 6.4% on Friday. The so-called stay-at-home stocks tend to move in line with pandemic worries, and fears about the Omicron variant were on top of investors’ agenda. New York state reported 21,027 new Covid-19 cases on Friday, the highest daily mark since the pandemic began.
- Electric motorcycles: Shares of Harley-Davidson (HOG) soared as much as 14% on Monday after detailing plans to merge its electric motorcycle division with SPAC AEA-Bridges Impact Corp. (IMPX). The deal valued at $1.77bn would result in the first publicly traded EV motorcycle company in the U.S. by listing on the New York Stock Exchange under ticker "LVW." Harley-Davidson would retain a 74% stake in the company, with CEO Jochen Zeitz becoming chairman of LiveWire for up to two years following the completion of the listing. In an accompanying investor presentation, LiveWire forecasts sales volumes of 100,961 electric bikes by 2026. The latest deal is also expected to raise $545mn, including a PIPE of $100mn from Harley and a similar amount from Taiwan-based power sports manufacturer KYMCO. LiveWire hopes to benefit from at-scale manufacturing, as well as distribution capabilities from Harley and KYMCO, and will also loop in STACYC (a kids electric bike company) into the operation.
- Reddit files for IPO: Online message board Reddit (REDDIT) confidentially filed to go public, submitting a draft registration statement with the SEC. Not too many other details were disclosed, like how many shares would be offered or the price range for the proposed listing. As for the timing, Reddit said the IPO is "expected to occur after the SEC completes its review process, subject to market and other conditions." The shift to public markets will be interesting as Reddit looks to build on the attention it gained at the start of the year when the platform became a force on Wall Street. Its r/WallStreetBets forum transformed into a hot spot for retail traders who rallied around GameStop (GME), and coordinating their buying to drive up the prices of other stocks. The meme trading frenzy brought in millions of new users, as well as new advertisers, the source of the bulk of the company's revenue. In fact, Reddit reached $100mn in advertising revenue during Q2 of 2021, up 192% from the previous year.
Earnings:
Stock and bond markets around the world will be closed on Friday in observance of Christmas.
Monday, December 20 - Carnival (CCL), Nike (NKE) and Micron (MU).
Tuesday, December 21 - Rite Aid (RAD), General Mills (GIS), CalAmp (CAMP) and BlackBerry (BB).
Wednesday, December 22 - CarMax (KMX), Cintas (CTAS) and PayChex (PAYX).
Thursday, December 23 - Sanderson Farms (SAFM).
For more watch video in GEO
