Top Story
Markets Weighed Down By Tech Weakness
• US stocks fell Thursday. The move lower was driven by large technology companies which underperformed on the second-to-last day of the week. Growth-oriented companies, which often tend to be in the technology space, come under pressure when rates rise.
• Given rising inflation and a hawkish Federal Reserve, many investors expect benchmarks like the US 10-year Treasury yield to move closer to 2% in the coming months. If this happens and debt costs become more expensive, future cash flows of high-flying companies will be eroded, making them less attractive investments.
• Wall Street didn't love what it saw on the economic data front Thursday. Another inflation report showed that the December producer price index rose 9.7% year over year, the highest record since 2010. Meanwhile, initial jobless claims came in at 230,000 for the week ending January 8. This was higher than economists' original projections of 200,000, further souring sentiment on the Street.
What to Be on the Lookout for Today
• December retail sales following the holiday shopping period will be released. For a quick preview, Mastercard’s (MA) in-store and online sale data tracking suggests retail closed out 2021 on a high note.
• Later in the morning, the Fed will announce industrial production for December. The Import Price Index and business inventories will also hit the market, as will the University of Michigan’s preliminary Consumer Sentiment Index for January.
• Earnings season is in focus as well with a host of reports from big banks. JPMorgan Chase (JPM) will host a conference call to outline its Q4 and full-year earnings. Analysts increased their earnings estimates for the company last week, with J. Mitchell upping expectations from $14.90 per share to $15.04 for the year. Wells Fargo (WFC), Citigroup (C), First Republic Bank (FRC), and BlackRock (BLK) also report.
How To Get Started With Dividend Investing
There are endless ways to optimize your investment portfolio — dividends are a popular choice with many investors. This video breaks down how dividend investing works, and how it could fit into your overall investment strategy. Said differently, watching this video could pay dividends (wink, wink!) for years to come!
A Few Headlines That Should Be on Your Radar
Companies outside the tech space are exploring the metaverse and how it could benefit their business. While tech giants like Microsoft (MSFT) and Meta (FB) pace the metaverse conversation, a number of other industries see potential in the digital realm. Areas primed for exploration include practical scientific applications as well as ways to improve workplace culture and customer engagement. Read more >> Private equity firm TPG (TPG) went public yesterday, which the investment community views as an important test for the IPO market in 2022. Private equity firms posted big gains in 2021, but analysts say the “cheap” money fueling that growth is going away amid rising interest rates. Relatedly, companies that recently went public saw their stock prices fall toward the end of last year as inflation further spooked investors. Read more >> Digital ordering and fintech continue to drive private investment, with pioneering technologies also on the rise. FlipDish is now a unicorn following its latest fundraising announcement as digital ordering continues to grow during the pandemic. Meanwhile, online French fintech Qonto and MycoWorks announced new rounds of funding, highlighting investor excitement over financial services and biomaterials, respectively. Read more >> How risky is day trading? Generally, there are far more day trading risks than with traditional buy-and-hold strategies. Day trading requires a higher level of sophistication; it has different cost implications, potentially substantial tax outcomes, and involves a greater degree of risk exposure — especially if you trade on margin (which involves borrowing funds to place bigger bets). Read more >>Not-So-Breaking News
-
Cancellations continue to drag down the airline industry, and Delta Air Lines (DAL) expects to suffer another loss during Q1 2022. This comes after executives reported a $408 million loss during the previous quarter but now anticipate a recovery in the spring and summer as more people take to the skies.
-
Shares of Taiwan Semiconductor Manufacturing (TSM) surged after the company announced plans to spend upwards of $40 billion in response to the worldwide chip shortage. Executives also upped this year’s growth expectations. Looking ahead, analysts say supply-chain issues will likely continue to affect semiconductor production for years.
-
CNBC is reporting that crypto exchange Gemini is acquiring BITRIA and moving into the wealth management business. Analysts in fact expect additional acquisitions this year from crypto giants such as Gemini and Coinbase. BITRIA was founded five years ago in San Francisco and offers tools to manage holdings in Bitcoin and other digital tokens.
-
The IRS is advising taxpayers to file early this year, warning refunds may be delayed. Likewise, reports indicate a massive backlog of unprocessed returns. In addition to staffing shortages, the IRS is forced to address pandemic-related tax changes like the child tax credit and stimulus payments.
-
Investors sold shares of Virgin Galactic (SPCE) after the company announced plans to issue up to $500 million in debt through a private offering. This comes as the spaceflight company deals with delays pushing back commercial service to at least the end of 2022.
Financial Planner Tip of the Day
“Figure out engaging ways to learn about personal finances.”
Brian Walsh, CFP® at SoFi