Wednesday,
April 13, 2022
Market recap
Dow Jones
34,220.36
-87.72 (-0.26%)
S&P 500
4,397.45
-15.08 (-0.34%)
Nasdaq
13,371.57
-40.38 (-0.30%)
Top Story
Stocks Can’t Sustain Morning Rally As CPI Hits New 40-Year High at 8.5%
• US stocks fell Tuesday as all three major indexes gave up gains from earlier in the session. Equities got a bump in the morning after the latest CPI data likely convinced some investors that inflation may start to cool off from here. While March’s CPI came in at 8.5%, a new 40-year high, core CPI grew at a more modest rate.
• Investors are trying to figure out how this data could impact the Fed’s thinking regarding inflation and coming rate hikes, as well as decisions regarding its balance sheet. Fed Governor Lael Brainaid said she feels the central bank needs to take a much more aggressive stance. Some worry this could slow economic growth.
• China began lifting some of its most recent COVID-19 lockdowns, which had been causing concerns for both the supply chain and global demand for oil. Oil prices rose, potentially as a result of the eased restrictions in China.
• The NFIB Small Business Index for March came in lower than expectations. Last month’s federal budget deficit narrowed significantly over the previous year.
What to Be on the Lookout for Today
• March’s Producer Price Index is due. This is an important inflation gauge, as it tracks the prices domestic producers are receiving for their products. Manufacturers have been raising prices to cover increased input costs. In February, the PPI rose by 10% year-over-year.
• MBA mortgage applications are also something to watch for. They’ve been declining as interest rates have risen.
• Two titans of the financial world are among the companies scheduled to report earnings. JP Morgan Chase (JPM) will hand in its Q1 2022 report card after beating on profit but missing on revenue during its most recent quarter. Additionally, investment management firm Blackrock (BLK) will share results for its first quarter. It similarly fell short of Wall Street expectations for sales during the fourth quarter of last year, even while exceeding earnings estimates.
How Does Option Math Work?
Options are financial contracts whose values are tied to another underlying asset. Options are a complex, risky market and may not be suitable for everyone.
But for investors who have experience with risk-taking, the options market may be a helpful way to take bets or hedge other positions. Financial educator Ro$$ Mac explains the math of options trading. Watch the video to understand how option math works.
A Few Headlines That Should Be on Your Radar
Digital ad revenue soared 35% in 2021, nearly triple the growth rate of 2020. Marketers capitalized on the increasing popularity of online shopping during the pandemic and raked in $189 billion for the year. Just 10 digital publishers and platforms grabbed nearly 80% of the revenue, with most of the dollars flowing to Google (GOOGL), Meta Platforms (FB), and Amazon (AMZN). New businesses entering the online space helped to spur demand for advertising as they sought to claim their place in the digital market. Read more >> Office building owners may not have felt the worst of what’s to come as a result of the pandemic, because so many of their tenants typically sign long-term leases. Now, a record number of those leases are expiring, and the hybrid work model has companies shrinking office space. As vacancies continue to increase for the office sector, lenders are also feeling the squeeze, contributing to an increased number of so-called troubled loans. Data indicates things aren’t likely to get better for the office sector either, with rising interest rates and a potential economic downturn are on the horizon. Read more >> Meta Platform’s (FB) Mark Zuckerberg envisions a digital marketplace in the metaverse where goods, services, and experiences are peddled, and the money is real. The concept will be tested in the company’s virtual reality game Horizon World. Meta is experimenting with the creation of a creator economy within the metaverse, a new frontier linking the real and virtual worlds. The latest step reflects the evolution of the metaverse economy that Citibank (C) has recently predicted could one day grow to valuations in the trillions of dollars. Read more >> Homeowners have kept their homes for eight years on average, according to the 2021 National Association of Realtors® Profile of Home Buyers and Sellers. Knowing how long you plan to stay in your home can affect the type of home loan that fits your situation when you shop for a mortgage — short or long term, fixed or adjustable interest rate? Finding the right mortgage term can be tough, but knowing the pros and cons of various options can help narrow the field. Look at your budget, decide how long you plan to stay in the home, and weigh your priorities. Read more >>Not-So-Breaking News
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Beyond Meat’s (BM) meatless chicken tenders will soon be available at an additional 8,000 grocery, pharmacy, and big-box retail stores as the company looks to expand its distribution network. The plant-based tenders first hit the market at restaurants last July, while grocery stores started offering the product in October 2021.
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Reports indicate that Apple (AAPL) could announce a $90 billion share buyback during its next earnings call, which is scheduled for April 28. Analysts note the tech giant has enormous cash reserves at present, in excess of $200 billion.
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Grocery store chain Albertsons (ACI) swung to a profit in its most recent quarter, exceeding analyst expectations on the top and bottom lines. The company also issued sales guidance, predicting growth of around 2% to 3% for fiscal 2022, which would be in line with the previous year.
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CarMax (KMX) missed analyst expectations for profit, but did beat on revenue, with executives citing several factors. The used car retailer said fourth-quarter sales were dragged lower by declining consumer confidence, the omicron variant surge, and vehicle affordability.
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President Biden visited Iowa yesterday, where around 16% of the nation’s corn is grown, to announce he suspended a rule that prohibited the sale of a higher ethanol blend of gasoline. This comes as the White House is looking for ways to slow down the rise of fuel prices, especially in light of Russia’s invasion of Ukraine.
Financial Planner Tip of the Day
“As you work toward paying your credit card debt, consider making more than the monthly minimum payments. This can help you pay off your debt faster and in doing so, could help you reduce the amount of money you spend in interest over the life of the debt. This can be helpful in both the avalanche and snowball methods of debt repayment.”
Brian Walsh, CFP® at SoFi