June 22, 2022

Markets Mixed Amid Fed Chatter

It was a whacky Wednesday of price action — here’s what you missed.

Stocks gapped down, rallied hard at the open, and ended the day below yesterday’s close. 📉

Fed chatter continued today, with Jerome Powell testifying before the Senate and other fed members talking their talk. More on that below. 👇

Here’s today’s heat map.

4/11 sectors closed green, with real estate leading (+1.62%). Energy continued to cool (-4.00%). 🔻

In earnings news, homebuilder $KBH rallied 2.42% after beating on the top and bottom lines. Like its industry peers, it warned of a “moderating” housing market. 🏠

Altria shares went up in smoke after news that the FDA is close to ordering Juul E-Cigarettes off the U.S. Market. Additionally, U.S. legislators are setting up to propose a rule limiting nicotine levels in cigarettes. $MO was down 9.19% today. 🚭

Amazon was in the news today, debuting a fully autonomous warehouse robot. Additionally, we got this ridiculous headline about a new Alexa feature under development: “Alexa will soon be able to read stories as your dead grandma.” Shout out to TechCrunch for the killer clickbait. 🤖

Twitter is teaming up with Shopify to create “Twitter Shopping” and rolled out its long-form content ‘Notes’ feature. Despite the news, $TWTR shares were still down 0.98%.

Retail favorite $REV rallied another 34.32% today. Also topping the charts was the recent IPO $PEV, which rose 70.47% on news that ATIF holdings Limited invested in the company. 👀

In crypto news, $COIN shares fell 9.71% after Binance.US dropped its spot bitcoin trading fees. Additionally, Elon Musk is making headlines for saying he never told people to invest in crypto.

Other names active on the streams included: $RDBX (-12.93%), $WEBR (+10.36%), $RAD (6.17%), $KSS (-8.79%), $GGPI (+11.87%), and $MULN (+5.26%). 🔥

Here are the closing prices:

S&P 500	3,760	-0.13%
Nasdaq	11,053	-0.15%
Russell 2000	1,690	-0.22%
Dow Jones	30,483	-0.15%

Policy

Congress Goes “Tit For Tat” With Powell

Today’s talk of the town was Fed Chairman Powell testifying in front of the Senate Banking Committee.

As most congressional hearings go, this one was just as unhelpful as most are for market participants looking to gain an edge on the Fed’s overall policy stance. 👂

You can read Newsweek’s solid summary, but we’ll recap below. 📰

Congress members spent their time taking jabs at the Fed over inflation. Some seemed to think Powell controlled the oil supply, grilling him on oil and food prices, which have been a significant driver of the headline inflation number. But alas, he is not moonlighting on an oil derrick in his spare time. 🛢️

Meanwhile, Powell spent his time reassuring congress members that the Fed is committed to bringing down inflation. However, he reiterated that its monetary policy tools don’t affect some critical components like energy and food. 🧰

He also noted that a recession is “certainly possible,” but not in the near term as the U.S. economy remains “in good shape.” 👍

That received pushback from congress members who think the Fed has been behind the curve. And as we discussed last week, the market also seems to disagree with the Fed’s assessment of the economy. 👎

At the end of the day, nothing changed from today’s testimony.

Congress members got to express their grievances/concerns to earn some political points, and Powell did his best to calm them while not spooking markets with any new policy information.

Other Fed member speeches today pointed to further tightening in the months ahead, which the market largely expected anyway. 📈

For now, we all know the problem is inflation and the blame game will continue until it comes down, that’s just how it is. 👉👈

How and when it will revert lower remains the big question… 🤔

P.S. in case we haven’t said it enough, inflation remains a global issue. Today’s data showed that U.K. and Canadian inflation rates remained near 40-year highs. 🌐

Bullets

Bullets From The Day:

✈️ Airline unions leverage summer travel woes. As airline cancellations heat up, 1,300 uniformed Southwest Airlines pilots picketed to protest management amid contract negotiations. They’re not the only ones though, as unions look to capitalize on strong travel demand and secure better terms for their workers. Read more from AP News.

💰 Morgan Stanley to purchase deferred compensation plan provider. Morgan Stanley is furthering its big bet on corporate customers by acquiring American Financial Systems, a provider of deferred compensation plans for executives. The terms of the deal were not disclosed but should close this fall. AdvisorHub has more.

🦄 Crypto Platform FalconX doubles valuation. Despite the market turbulence, digital assets platform FalconX raised $150 million at an $8 billion valuation, more than double its valuation just ten months ago. The funding round was led by Singapore’s sovereign wealth fund GIC and B Capital. The new funding will help the company increase headcount by 30%, potentially make acquisitions, and expand its services to institutions, among other things. More from Reuters.

📺 Which ad giant will service Netflix’s ad-supported plan? According to reports from the Wall Street Journal, NBCUniversal and Alphabet are leading a race to partner with Netflix on its advertisement-supported subscription plan. The deal will mean big business for whoever partners with Netflix, which is currently working to reignite growth in its business after a rough stretch over the last year. Reuters has more.

🏘️ Demand for adjustable-rate mortgages ticks up. As mortgage rates rise, adjustable-rate mortgages are becoming more popular again amid rising interest rates. Mortgage applications rose 8% week-over-week, and the average loan size is just over $420,000, down from its peak of $460,000 earlier this year. Read more from CNBC.