Wednesday,
April 20, 2022
Market recap
Dow Jones
34,911.20
+499.51 (+1.45%)
S&P 500
4,462.21
+70.52 (+1.61%)
Nasdaq
13,619.66
+287.30 (+2.15%)
Top Story
Stocks Rebound As Earnings Season Plows Ahead, Homebuilding Increased Overall in March
• US stocks rose Tuesday as investors studied a fresh round of earnings reports, in an attempt to determine how well companies are dealing with inflation. Analysts say the prospect of rising inflation and the Fed’s expected interest rate hikes has led to traders selling bonds, and yields increasing.
• The world’s energy markets continue to be volatile, a trend that’s been ongoing since Russia’s invasion of Ukraine. Both the price of oil and natural gas fell yesterday.
• US homebuilding increased overall in March, but single-family housing starts fell amid rising interest rates. The fact that housing starts went up last month surprised analysts, who had been expecting a decline.
What to Be on the Lookout for Today
• Last month’s seasonally-adjusted existing home sales are due. Existing-home sales declined 7.2% in February, which analysts blamed on the dual impacts of rising inflation and already-elevated home prices.
• The Fed will release its Beige Book, formally known as the Summary of Commentary on Current Economic Conditions, which comes out eight times a year. Investors will be looking for additional insight into the central bank’s thinking, which has embraced a more hawkish monetary policy.
• Tesla (TSLA) hands in its latest report card, all while CEO Elon Musk remains in the headlines for attempting to buy out Twitter (TWTR). The electric-vehicle industry leader has faced production disruptions due to China’s COVID-19 lockdown in Shanghai. A fake press release suggesting Tesla had purchased a lithium mine also sent that company’s stock on a wild ride last week.
Cannabis is a Budding Industry
The trend toward cannabis legalization has turned the business of growing it and selling it into one of the hottest industries in recent years.
The global legal marijuana market is estimated to reach $70.6 billion by 2028, with the market expected to expand at a compound annual growth rate (CAGR) of 26.7%. Such trends have lured stock investors who are eager to benefit from potential gains. But wild swings in marijuana company shares show how volatile the industry can be.
Hunting for the next big marijuana investment may seem like an exciting endeavor. But investors should keep in mind that the cannabis industry may continue to encounter obstacles even if broader-scale legalization occurs in the near future. And outside the regulatory challenges, cannabis-related businesses tend to be newer, untested, and not yet profitable, posing greater risks for investors.
Cannabis companies are cashing in on the legalization of marijuana. Here are some companies that may benefit from this budding industry.
A Few Headlines That Should Be on Your Radar
Blackstone (BX) has commited just under $13 billion to acquire student housing American Campus Communities (ACC). The global investing giant sees profit potential in student housing. American Campus Communities is the nation’s largest owner, manager, and developer of student housing. Blackstone expects the current economic environment favorable for near-campus landlords and conducive to rent increases in a sector that has proven resilient in the face of economic downturns. Read more >> When it comes to stock splits, it seems like everyone’s doing it. Amazon (AMZN), Tesla (TSLA), and Google (GOOGL) have all announced plans to reduce their price per share, which will make their stocks affordable to more people. With a high percentage of companies trading at lofty price-points, market observers expect the trend to continue. Public companies are taking notice of individual investors. By using stock splits to reduce their share prices they can broaden their investor base. Some market participants caution that unsophisticated investors may contribute to undesirable market volatility. Read more >> The Garden State has given the green light for licensed marijuana sales, and they start tomorrow. On this 4/20, investors are closely watching New Jersey’s legalization efforts, especially given the lucrative New York City metropolitan market is right next door. There’s also pending legislation in Congress that could eventually decriminalize marijuana on the federal level, which would make things like banking and raising investment capital easier. Investors have been taking note, as the pot industry’s largest ETF grew significantly last month. Read more >> Are NFTs bad for the environment? It turns out that NFTs, or non-fungible tokens, require vast amounts of computing power that are adding to greenhouse gas emissions — fueling a debate about how sustainable these digital artworks and collectibles really are. Although the NFT space is exciting and full of possibility, the revelation that NFT production consumes enormous amounts of energy has raised red flags — and a search for sustainable solutions. Here’s what you need to know. Read more >>Not-So-Breaking News
- Johnson & Johnson (JNJ) will no longer provide a forecast for sales of its COVID-19 vaccine, as the pharmaceutical giant now reportedly has a glut of supply amid falling demand. This has been attributed to vaccine hesitancy in lower-income nations, and already diminished demand in the US and elsewhere. J&J also cut its full-year profit forecast but said that was mostly based on currency fluctuations.
- Uber (UBER) and fellow ride-hailing giant Lyft (LYFT) both suspended their mask requirements, one day after a federal judge in Florida struck down the Biden administration’s mandate for planes, trains, buses, and other forms of mass transit. Uber noted the CDC still recommends mask usage in areas of high transmission or for people at elevated risk, adding some just feel more comfortable wearing one.
- Aerospace company Lockheed Martin (LMT) fell short of Wall Street estimates for sales in its second quarter, which executives blamed on supply chain disruptions. The firm’s quarterly profit came in stronger than expected, however. Lockheed Martin also said it remains confident in its previously-delivered 2022 guidance.
- Mercedes-Benz (DMLRY) introduced its EQS SUV yesterday, following last year’s release of the EQS sedan. The SUV is Mercedes-Benz’s first fully-electric model that’s built domestically for the US market. It’s anticipated that production will soon start at the automakers Tuscaloosa, Alabama plant, with a scheduled showroom arrival of late 2022.
- Travelers Companies (TRV) posted a 48% increase in profit during its most recent quarter, beating analyst expectations. Executives attributed the bottom-line growth to lower catastrophe-related claims. The New York-based Travelers is often seen as an indicator for the broader insurance industry, which has been hard hit by claims due to canceled events over the past two years.
Financial Planner Tip of the Day
“When people don’t know how much they spend and when, it can be difficult to stick to a savings plan. If you don’t know how much money hits the bank account each month and how much you spend, how do you know what’s a realistic amount to save? Before creating savings strategies, many people find it helpful to track their spending and expenses, organized by week, month, or year.”
Brian Walsh, CFP® at SoFi