U.S. inflation is at a high, but so are its markets
June 14 2021 - Team Stockal
The S&P 500 closes just below its all-time closing high
U.S. stocks closed modestly higher at the end of a lazy week that was dotted with scattered market-moving catalysts and incessant concerns over inflation spikes and speculation whether the U.S. Federal Reserve would tighten its dovish policy sooner.
The Labor Department on Thursday revealed that the U.S. economic rebound is driving the biggest surge in inflation in nearly 13 years, with consumer prices rising in May by 5% from a year ago.
Markets cautiously await the Fed’s meeting before making the next big move in the week ahead. However, the Fed has repeatedly said that near-term price surges will not metastasize into lasting inflation. It’s an assertion echoed in the University of Michigan’s Consumer Sentiment report released on Friday, which showed inflation expectations easing from last month’s spike.
For the week, the Nasdaq (IXIC) gained the most among the three major indexes at 1.85%, while the other bellwether S&P 500 (GSPC) rocketed its way to a second straight record closing high with the week’s gain of 0.41%. The Dow Jones Industrial Average (DJI) however, took a moderate hit at negative 0.80%.
Moderna takes a shot at the teen segment
Moderna, Inc. (MRNA) Moderna claimed its Covid vaccine is 100% effective in teens after it found no cases of Covid-19 in a trial involving 3,732 young volunteers who received two doses of the vaccine. The company said it plans to ask the FDA to expand the emergency use of its Covid vaccine for teens early next month.
The FDA could make a decision on Moderna’s request by early July if it follows the same kind of timetable it took with the Covid-19 vaccine from Pfizer (PFE) and BioNTech SE (BNTX).
Moderna submitting its results to the U.S. FDA could help widen the addressable market for the company’s vaccine.
The vaccine is also turning out to be hugely profitable for Moderna, which recorded an incredible 70% net profit margin over Q1 2021. That said, with the worst of the pandemic likely to be behind us this year, what could 2022 have in store for Moderna?
The Covid-19 shot is expected to remain the primary driver of Moderna’s performance in 2022 as well with the global inoculation drive still in its early stages.
Importantly, Moderna’s sizable pipeline of nine additional vaccines and 13 therapeutics in areas including immuno-oncology and rare diseases, will be key to its post-pandemic prospects. Four of the company’s developments, including its CMV vaccine and personalized cancer vaccine, are in phase 2 trials and could also help the stock in the interim.
Google says hola to holograms
Google (GOOGL) unveiled Project Starline, an effort to create a video-chat system that gives participants 3D depth. The innovation takes pride of place with other companies including Microsoft (MSFT) and WeWork that are innovating for remote working experiences with holograms.
Project Starline aims to make video calls more natural by using a large display that allows you to move around and change the angle you’re seeing of the other participant.
The technology leverages computer vision, machine learning, spatial audio, advanced compression, depth-sensing cameras, and an innovative ‘light field’ display to make this happen. Importantly, you can view the high-resolution 3D images without special glasses (Unlike Microsoft’s Mesh), and the depth cameras ensure that you’re able to see multiple angles of participants. Just like real life.
Rosy as its performance has been, Google has had its share of missteps and questionable investments since going public. However, category-defining initiatives like Project starline seem to be a step in the right direction for the big tech company.
The company faces serious challenges moving forward, most of which center around its size and industry dominance. Among these challenges are a need to diversify revenue sources and avoid costly regulations from domestic and international governments.
Nevertheless, the stock remains a safe investment due to the dominance of its search business and massive cash holdings.
Gamestop struggles to stop its slide
GameStop (GME) sales rose 25% in the fiscal first-quarter, as the video game retailer embarks on a turnaround strategy partially fueled by a Reddit-inspired stock rally. The company also named former Amazon executive Matt Furlong as its new CEO.
Looking to reverse years of languishing sales and strategic missteps. GameStop further reset its leadership team, the company named yet another Amazon veteran Ryan Cohen as chairman.
Shares however, fell more than 13% in extended trading on Wednesday, after the company declined to provide an outlook for the year and said it may sell as much as 5 million shares.
GameStop has undoubtedly been one of the most volatile stocks on the market this past year. As the quintessential meme stock on the market, the video game retailer has taken investors and speculators alike on a wild roller coaster ride.
Rampant speculation has pushed shares up to levels that cannot be justified fundamentally. Most experts concede that shares could continue to take a tumble unless management issues significantly more shares in a way that boosts the amount of cash the company has on hand.
The moves being made right now, including naming Matt Furlong as its new CEO, do help to cushion any fall the firm should eventually experience, but when that fall happens is anybody’s guess.
What Else is Hot
- Apple bites Facebook: Recent changes in Apple’s (AAPL) IOS operating system have diminished Facebook’s (FB) ad targeting abilities.
- Campbell in a soup? Campbell Soup Company’s (CPB) pandemic-fueled surge in demand came to an end in the latest quarter.
- UPS delivers: United Parcel (UPS) is looking at same-day service employed by gig-economy players.