From Wall Street to Silicon Valley, these are the top stories that moved markets and had investors, business leaders, and entrepreneurs talking this week on Cheddar.
The rally continues. U.S. stocks put on another show this week, with the Dow breaking 34,000 for the first time on the back of blowout economic data and a strong start to earnings season. Retail sales for March jumped nearly 10 percent — key since consumer spending is the biggest driver of GDP — in a sign that stimulus checks are starting to, well, stimulate. At the same time, weekly unemployment claims dropped to a new pandemic low of 576,000. The Dow and S&P both hit record highs on the back of that news.
It wasn't just the terrific economic data that sent stocks soaring this week. Corporate earnings for the first quarter are coming in hot, with the big financials all reporting profit jumps. Morgan Stanley capped the week with its report showing 150 percent surge in quarterly profits, even as the bank disclosed a nearly $1 billion hit from the collapse of the private fund Archegos. Goldman Sachs, JP Morgan, Citigroup, Bank of America, and Wells Fargo also beat on their top and bottom lines.
Bank earnings were eclipsed by the Coinbase listing that sucked up a lot of the oxygen on the Street this week. The crypto exchange went public in a direct listing on the Nasdaq that amounted to a landmark moment for the maturing cryptocurrency space. Shares soared as high as $429 before closing at $328 in the volatile debut, giving the company a valuation of $86 billion. Unlike many startups that go public, Coinbase is profitable — but its business model is directly tied to the price of Bitcoin and other volatile digital currencies. Bitcoin has been on fire lately, hitting a new all-time high above $64,000 this week before pulling back a bit. (Brian Armstrong, the CEO of Coinbase who is now one of the richest people on the planet, started the company when Bitcoin was at $6.) At the same time, the BTC alternative Dogecoin, which started as an internet joke, hit an all-time high above 33 cents for a market value of $42 billion according to CoinGecko. The digital coin was up 447 percent on the week — more evidence to some that the crypto market is in bubble territory.
Shares of Johnson & Johnson fell more than 1 percent when the CDC and FDA put out a joint statement recommending that its one-and-done COVID vaccine should be "paused" due to concerns over a possible relationship with a handful of rare but severe blood clotting disorders. The six cases — out of roughly seven million Americans who have gotten the shot — happened in women aged 18 to 48. By the end of the week, J&J had recovered most of its losses on the "pause," though the shot remains in limbo as public health officials seek more data on the clotting issue.
Legendary investor David Einhorn wrote a letter to his hedge fund clients this week in which, making a point about the risk of this market to retail investors, he noted the curious case of Hometown International. The company owns a single deli in New Jersey, and not a particularly profitable one at that. The deli did $35,000 in sales over the last two years and was closed for a big chunk of the last one. Despite that, Hometown reached a market cap of $113 million last quarter ("The pastrami must be amazing," Einhorn cracked). Hometown trades OTC under the ticker HWIN; its largest shareholder is the CEO, who happens to be the wrestling coach at the high school next door to the deli. Einhorn was using Hometown as an example of what he sees as a new kind of irrational exuberance in a market that, in his words, is operating without a "cop on the beat."