Dow Jones: 32,245 (-1.99%)
S&P 500: 3,991 (-3.20%)
Nasdaq: 11,623 (-4.29%)
Russell 2000: 1,762 (-4.21%)
Bitcoin: $31,291 (-9.20%)
Ethereum: $2,303 (-9.58%)
Uh oh… The S&P 500 just fell below 4,000 for the first time in over one year (since March 2021). The index is now 17.4% below its all-time high of 4,818…
Stocks got crushed today as earnings volatility and macroeconomic pressures continued to weaken investor confidence. It seems like the market is struggling to find some sort of bullish news to bounce on, but chart analysts are saying that there’s no immediate bottom in sight.
Boeing led the Dow in losses with a 10% plunge as the company announced it’ll be moving its headquarters from Chicago to D.C. Tesla and Nvidia crashed over 9% each — as pretty much every sector other than consumer defensive was demolished on the day.
Earnings: Palantir (PLTR) crashed 21% after reporting weak revenue guidance. PLTR is now trading for just $7.42 — a whopping 74.5% below its 52-week high.
On Deck: Tomorrow be sure to tune into earnings reports from Peloton, SoFi, Coinbase, Roblox, Wynn Resorts, and Matterport.
Crypto: Bitcoin fell below the $32,000 level as investors shed risk like it was their job today. Terra’s algorithmic stablecoin (UST) lost its dollar peg for the second time in just 48 hours… leading LUNA’s market cap to fall below UST’s.
Now, for the top five stories of the day…
Source: Heat Map & Sector Performance — Finviz.com
The EV Carnage Gets Worse
Once the darlings of the booming stock market, electric vehicle stocks are getting CRUSHED right now.
Rivian: RIVN stock was down 20% today after Ford reported over the weekend that it was selling 8 million shares of the company at a heavy discount. This comes as Rivian’s lockup period expired on Sunday, giving company insiders and early investors the opportunity to sell.
CNBC’s David Faber called the sale “done” and said the shares were already being offloaded through Goldman Sachs. Although 8 million shares sounds like a lot, Ford reportedly held 102 million shares prior to the sale. Rivian stock is now down 77% since its red hot IPO in November.
It’s also been reported that JPMorgan is selling between 13 million and 15 million shares.
Lordstown: Lordstown Motors is trading for just $1.78 per share. The company reported earnings today and the stock took a 6.54% hit to the downside. Lordstown roughly met earnings, reporting a 46 cent loss on EPS with no revenue. Cash burn came in at $91 million, beating the expectation of $140 million. The stock is down 81% since IPO.
Tesla & Lucid: There was no negative news around either of these stocks, but they were unable to avoid the market destruction today. Tesla fell 9% today, now down 34% YTD. Lucid dropped 9.92% as well, down 60% on the year.
Bulls Are Getting Eaten Alive…
It’s hard to be a bull right now. Every time you decide to buy the dip… well… you know what happens.
The sheer force of the threats facing the stock market and economy right now make it difficult for any investor who’s name isn’t Micheal Burry.
The Big 3: Everyday we hear about the Fed and the escalating Russia-Ukraine war, but many aren’t talking about the severity of the 3rd factor affecting to the markets: renewed Chinese lockdowns.
- Two of China’s biggest cities, Beijing and Shanghai, are currently on lockdown, adding more pressure to supply chains and decreasing economic activity around the world.
Goldman Sachs believes equity returns will be significantly subdued for the near future. David Kostin has ruled out a short-term rebound as there is far too much uncertainty for investors to spark a rally. Kostin believes market swings will continue to be wild until the “path of inflation is clarified.”
Bear Market: While the Nasdaq and Russell are well into bear territory, the S&P still has a little bit more to go, which is a scary thought considering how far many stocks have already dropped. With today’s market route, the S&P is now down roughly 17.4% from its highs, needing about -2.6% more to hit an official bear market. The S&P fell below 4,000 today for the first time since March 2021.
With how things are looking right now, it looks as if the S&P will eventually hit bear market, and one has to wonder how much further this will bring down individual stocks.
But when will it all end? Surely, no one can no for certain. But Dennis Gartman, the chairman of the University of Akron Endowment, predicts that the final wash-out will come when stocks have a one-day, 5-6% drop.
Until then, Gartman recommends staying conservative in the market. “Be less involved. Be less long. Try to be as conservative as one can be,” he told Bloomberg.
Bitcoin is Down Over 50% From Its All-Time High
Today, Bitcoin’s price dropped below $32,000 and is officially over 50% below its all-time high of nearly $69,000 in November 2021. But Bitcoin isn’t alone here. Ethereum also dropped to its lowest price since January at $2,323. Why the sudden drop?
Fed interest rate hikes
- Papa Powell’s announcement caused the stock market to nosedive, and as it turns out, Bitcoin may be more correlated to the stock market than people thought. According to Bloomberg data, Bitcoin’s 40-day correlation with the S&P 500 benchmark is at a record 0.82.
Institutional interest cooling
- Many companies last year dipped their toes into crypto, but apparently, that enthusiasm has waned. According to CoinShares, there have been four weeks in a row of institutional crypto fund outflows.
Investors flocking to safety
- As some investors panic sell, and attempt to salvage as much of their portfolio as possible, many will settle for safer corners of the market rather than riskier stocks and cryptocurrencies. Chris Kline, co-founder of Bitcoin IRA, said some crypto investors are “moving their money back to the dollar, as a starting point, and then seeing what they’re going to do from there.”
“Bitcoin has followed the lead of the equity market, extending lower after a weak April,” said Katie Stockton, founder of Fairlead Strategies. “Short-term momentum has deteriorated … and bitcoin is no longer oversold from a short-term perspective.” Stockton noted that the equity market looks set for a rebound, likely carrying over to cryptocurrencies.
Bill Gates Just Said This About the Recession
At one point in time, Bill Gates was THE man. That’s a title now held by Elon Musk, as Gates’ innovation has seemed to slow down in the mind of the retail investor and he’s become a controversial figure for some.
Regardless, the man is still insanely wealthy and successful, so when he talks, you should at least listen to like 2 or 3 words.
Unfortunately, the bears have gained another member, as Bill Gates seems to be more pessimistic than optimistic for the near future. Gates is officially on the dark side…
During an interview with CNN on Sunday, Gates made a few alarming statements.
Bill’s Views: “I’m afraid the bears on this one have a pretty strong argument that concerns me a lot,” he said. Gates is concerned with the high level of government debt, supply chain issues, and inflationary issues forcing interest rate hikes and inevitably a economic slowdown.
As a result, poor countries will struggle even more than they already have, causing further economic suppression. Gates sees closing the gap between rich and poor countries as essential to prevent another pandemic and dampen economic impacts.
Gates also noted that the war in Ukraine has and will accelerate “inflationary problems” caused by the pandemic. While many Wall Street firms are mixed on the direction of the economy, Gates believes there is a “strong argument” a global economic slowdown is underway.
4 Things to Watch This Week as Stocks Crash
Equity markets got destroyed last week and we aren’t off to the best start for this week so far. While it looked like markets were prepared to rally following the Feds half percentage point rate hike, it turned out to be a cruel rug pull instead…
Here are some important things to watch for this week to see if there is more pain ahead.
- Inflation Data – On Wednesday, CPI data for April will reveal if inflation is still running rampant, showing signs of plateauing, or maybe declining for the first time. March’s rate came in at 8.5% and current expectations are for a reading of 8.1%. If the reading comes in above 8.5%… Watch out below.
- Earnings – This week is going to be a busy week for retail investors. Palantir got wrecked today following a disappointing earnings report, and many other stocks could face the markets wrath. Heres a few names to watch this week: SoFi, Roblox, Coinbase, Peloton, Disney, Affirm, Rivian, Beyond Meat, Dutch Bros, and many more! Check out our earnings calendar above!
- Consumer Sentiment – The University of Michigan will release the preliminary reading of its Consumer Sentiment Index for May. Expectations are for a reading of 63.6, compared to April’s reading of 65.2. The index is currently near its decade low.
- International data – China’s export growth fell from 15.7% in March to only 3.7% in April as global demands weaken and lockdowns stunt economic activity. For our European followers, Germany is set to release its ZEW sentiment index and the U.K. will announce first quarter GDP growth.
Sprouts (SFM): +4.01% – Sprouts rebounded today following a 25%+ drop last week due to disappointing earnings.
Tyson Foods (TSN): +2.28% – Tyson Foods reported better than expected earnings, beating revenue by 2.12% and EPS by 21.51%.
eBay (EBAY): +0.92% – eBay made a modest comeback today after disappointing earnings from itself and many other e-commerce companies last week.
MicroStrategy (MSTR): -25.55% – Bitcoin has fallen 18% over the past week to below $33,000, inching closer to MicroStrategy’s margin call levels of $21,000.
Palantir (PLTR): -21.31% – Palantir dropped after missing EPS by 45%. Q2 guidance came in below expectations, causing the stop to drop massively.
Uber (UBER): -11.58% – Uber announced it was slashing spending on marketing and incentives to become a “leaner business.”
Tesla (TSLA) – Morgan Stanley reiterated Tesla as overweight saying its energy infrastructure is “underappreciated.” “We believe Tesla’s role in building out U.S. and West European renewable energy infrastructure is underappreciated.”
Virgin Galactic (SPCE) – Truist downgraded Virgin Galactic from buy to hold seeing a lack of operational catalysts and cash burn. “The combination of supply chain delays, timing risk, slide out of comm’l flights to 1Q23, a lack of operational catalysts and rising interest rates drive our downgrade rationale.”
Rivian (RIVN) – Goldman Sachs initiated coverage on Rivian as neutral heading its earnings this week. “We expect one area of investor focus to be on Rivian’s production outlook and its manufacturing ramp progress. We believe the company has made strides in 1Q22 as it produced 2,552 vehicles vs. 1,015 in 2021.”
Quote of the Day: “As sure as the spring will follow the winter, prosperity and economic growth will follow recession.” – Robert Foster Bennett
Fun Fact: Microsoft is worth more than the entire Brazilian stock market.