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Stock Market Swings Continue, Dow Drops Over 100 Points As Inflation Roars
• US stocks fell Thursday as a new round of peace talks between Russia and Ukraine failed to make any significant progress. Market observers contend the protracted geopolitical tensions and sanctions that have resulted will be a drain on the global economy. Despite the ban on Russian fossil fuels, oil prices declined for the second straight day. The price of gold and silver moved higher. Zooming out, the combination of potentially slowed economic growth and rising commodity prices seems to be weighing heavily on sentiment.
• Inflation remains at historic levels. The CPI increased to 7.9% in February year-over-year — the fastest rate observed since January 1982. The data shows gasoline and food are the biggest contributors to inflation, and there may be more inflationary pressures on the way. Russia invaded Ukraine in late February, so that didn’t factor much into the latest report. Meanwhile, in February, the core CPI that strips out food and fuel went up 6.4% year-over-year, matching its highest level since August 1982.
What to Be on the Lookout for Today
• The University of Michigan will report March’s preliminary consumer sentiment index, as well as this month’s preliminary five-year inflation expectations. The February survey showed consumer sentiment fell 14% year-over-year. The survey’s director also suggested the Fed missed out on earlier chances to combat rising inflation.
• Communal workspace company WeWork (WE) shares quarterly results. This marks the firm’s second earnings report since going public in October 2021. WeWork’s third-quarter total revenue came in at $661 million, representing an 11% increase from the second quarter of last year.
Get Perspective on CARES.
The CARES act extensions may create a dilemma for borrowers who have been considering refinancing while interest rates are at historic lows. On one hand, they may want to continue benefiting from the government’s temporary pause on student loan payments. On the other hand, inflation is on the rise, which means private lending interest rates may soon follow.
Join SoFi financial planner Brian Walsh to discuss refinancing options and what’s next for the CARES Act.
A Few Headlines That Should Be on Your Radar
Amazon’s (AMZN) board of directors approved a 20-for-1 stock split, marking the fourth such split since the company first went public in 1997. It’s the first since 1999, the height of the dot-com era. Stock splits have been popular among Big Tech companies lately — with Apple (AAPL), Tesla (TSLA), and Google parent Alphabet (GOOGL) all diluting share prices by way of a split in the past couple years. It means more investors will be able to afford shares, and it follows Amazon’s change to its employee compensation structure. Read more >> Peloton (PTON) has stumbled a bit following its 2020 pandemic-fueled success. With profitability lower than before COVID-19 hit, a new bundled pricing model is being tested in select markets. Peloton’s new CEO, Barry McCarthy, aims to grow the company’s customer base by experimenting with a pilot program that offers bundled pricing for the company’s bikes and fitness class subscriptions. It’s rolling out in Texas, Florida, Minnesota, and Colorado. Read more >> The latest funding announcements from the startup world show venture capitalists are interested in data-based solutions to existing problems: from everyday items like spreadsheets to more out-of-this world challenges like space junk. Helping satellite operators navigate is the mission of Slingshot Aerospace, which just completed a Series A fundraising round. Meanwhile, private equity is spurring growth within predictive analysis for spreadsheets and financial bookkeeping, as well as online surveys and quizzes. Read more >> Student loan debt in America varies from major to major. Learn more about which ones often lead to the highest debt. No matter what your major is, these days, there’s a good chance you may have to take on some debt to get the education you need and want. And the final bill could be substantial: The average federal loan debt balance is $37,113, but if you choose a major that requires a graduate degree, it could be two or three times that amount … or more. Read more >>Not-So-Breaking News
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Goldman Sachs (GS) is joining the rapidly growing list of companies that have either ended or suspended business operations in Russia, following the invasion of Ukraine. Yesterday, the bank announced that it plans to wind down activities in Russia while following regulations and helping clients close out positions.
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Chinese electric vehicle maker Nio (NIO) is now listed on the Hong Kong Stock Exchange, less than two weeks after announcing plans to do so. The company took a shortcut to complete the listing, bypassing the raising of additional capital beforehand. Analysts note several US-listed Chinese companies have added listings in Hong Kong, possibly in response to rising geopolitical tensions.
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General Electric (GE) reaffirmed reduced profit forecasts, based largely on challenges associated with supply-chain disruptions and rising input costs. Executives previously indicated they expect those profit headwinds to remain in place through the second half of 2022. GE’s anticipating “mid-to-single-digit” growth in its aviation division.
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Chipotle Mexican Grill (CMG) is launching a new menu item for a limited time in both the US and Canada. Pollo asado will temporarily join the restaurant chain’s existing adobo chicken as a protein option in burritos, bowls, and salads. Executives said test markets responded favorably to the menu item, in a manner similar to when Chipotle rolled out smoked brisket.
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FuelCell Energy (FCEL) reported a wider-than-expected loss in its most recent quarter, although sales came in over two times higher than Wall Street estimates. FuelCell notes it delivered six fuel cell modules to Korea Fuel Cell Company, which is owned by a subsidiary of Korean steelmaker Posco Holdings (PKX).
Financial Planner Tip of the Day
“There are studies that show that people who write their goals down greatly improve the chances that they’ll succeed at those goals. You may find it valuable (and fun) to take this idea a step further and create a vision board or draw out your goals.”
Brian Walsh, CFP® at SoFi