November 30, 2021

Powell Pummels the Market

Hey y’all, we hope you survived Tuesday. 💀

Every major sector got slammed after Jerome Powell suggested the Fed may let off its bond-buying program as inflation concerns rise.

The S&P 500 sold off 1.9% and closed at its 50 day-moving average. The Russell 2K got ripped apart 1.92% in its third consecutive down day. The Dow dropped 1.86% and the Nasdaq held up the best, though it still lost 1.55%.

Here’s a heat map of the S&P 500… A sea of red with just a few survivors. 🤦 💔

All sectors closed lower, opposite from yesterday’s green rally. Communications crumbled 3.17% and closed at six-month lows. 🤢 Consumer staples ETF $XLP plummeted 2.56% and had its worst performance since Oct 24, 2020.

Ethereum increased 4.5% to sit less than 3.5% away from a record high. 🏅 Bitcoin bounced around, but it’s even on the day.

Apple ascended 3.16% to all-time highs as the only green member of the FAANG gang. $AAPL is up 24.6% YTD.

$PPSI popped 32.5%, $VERA vaulted 13.76%, and $SHIB.X spiked 7.3%.

Here are the closing prices:

S&P 500	4,567	-1.90%
Nasdaq	15,337	-1.55%
Russell 2000	2,198	-1.92%
Dow Jones	34,483	-1.86%

Policy

Fed Stokes Market Fears

Fed Chair Jerome Powell wants to take the phrase “transitory” out of the Fed’s vocabulary, a sign that America’s central bank has officially recognized the arrival — and temporary staying power — of inflation.

That’s not all, though. Powell also indicated his desire to wind down “large-scale bond purchases at its next policy meeting in two weeks,“ citing a strong economy. That would be a necessary first step to raising rates next year with the aim of warding off inflationary woes by the end of 2022. 🤞

Unfortunately, Powell’s choice words (and taper desires) generated fears which rippled throughout the market. Indexes were deep in the red, adding some points to one of the few corrections we’ve seen this year. 💔

With that being said, despite fears and reservations among investors over rising inflation/Omicron, leading indexes are down no more than 2.5% in the last five trading days. The only exception is the Russell 2000 index, which has fallen over 5.6% in the last week.

Given those figures, the notion that markets are somehow “crashing” or “correcting” feels a little bit overextended. 🤔

Earnings

Salesforce Earnings

Salesforce reported earnings after hours today. The company beat on the top-line, but came up short on the bottom-line.

Salesforce reported diluted earnings of $0.49 per share, which comes out to $468 million in net income. The company’s total revenue was $6.86 billion, +27% YoY.

Earnings consensus among analysts were pinned at $0.92/share and $6.8 billion. In that sense, Salesforce’s earnings report met investors halfway. The company indicated next quarter’s revenue guidance is expected to land around $7.23 billion, which points to slower YoY growth.

$CRM, which lost 4% in trading today, took a 5.7% haircut after hours. That sucks. 😬

The earnings call came with another big announcement. Salesforce announced that the company elevated Bret Taylor to the role of co-CEO, which he will hold with long-time chief executive Marc Benioff. 🎉 Taylor was the founder of Quip, a productivity software startup, which was acquired by Salesforce in 2016. He ascended the ranks and has become a regular staple on Salesforce earnings calls.

Stocks

November Candlesticks 🕯️

The month of November is in the books! 📚 Here’s a curated list of the monthly rippers and dippers for your viewing pleasure.

The S&P 500 poked its head into new highs, but closed the month 0.83% lower. $SPX has finished 8/11 months of 2021 positive so far. 🍀

NVIDIA proved itself as one of the strongest metaverse plays on the market. 💪 $NVDA launched 27.81% to record prices.

Lucid raced ahead to a new monthly high. $LCID leaped 32.53% on the highest volume it has ever traded.

Peloton deflated 51.9% and had its worst monthly performance ever. $PTON is down 71.2% YTD, oof…

Merck & Co. The market said “not so fast” to $MRK as the biotech pulled back 15% from highs and erased all of October’s gains.

Stocks

Merck Gets Un-Mercked

Merck got merked 5.4% in the market yesterday after a new study showed the company’s COVID-19 antiviral pill is much less effective than originally thought. However, an FDA advisory panel voted 13-10 in favor of supporting the pill anyway, endorsing Merck’s drug as a therapeutic for adults at high risk for severe COVID infections.

Initially, Merck published results claiming its COVID pill (known as molnupiravir) reduced risk of hospitalization or death by 30% among adults with severe infection. The company’s most recent study showed the pill’s effectiveness to be significantly lower. The Biden administration has already purchased enough molnupiravir for 3.1 million patients pending FDA approval, and as Omicron fears spread throughout the globe, it looks like the FDA wants all hands on deck. 🤷

Nick Kartsonis, a member of Merck’s clinical research team, shared “We expect, based on what we know about the Omicron variant, that molnupiravir would be effective against this particular variant.”

Meanwhile, Pfizer is also developing a COVID-19 therapeutic — a pill known as Paxlovid. Paxlovid demonstrated about 89% effectiveness in reducing hospitalization and death among patients with severe COVID infections.

EU health authorities have also backed the use of Merck’s pill as an emergency therapeutic. $MRK gained 0.03% today.