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.
WORST WEEK SINCE OCT.
U.S. markets had a downright awful week, with the Dow putting in its worst five-day stretch since October. The selloff started after the Federal Reserve moved up its forecast for interest rate hikes, saying it expects to do a pair in 2023 — an acknowledgment that the economy is recovering more quickly than the central bank predicted just a few months ago and that rising inflation threatens to slow that recovery down. Fed Chair Jerome Powell said the economy isn’t “out of the woods at this point” but that the labor market is looking strong. He also said inflation is rising faster than the Fed expected, and the Fed’s forecast now calls for 3.4 percent inflation in 2021, up from the prior estimate of 2.4 percent. That sent sectors like energy and industrials that had been leading the recovery lower, with the broader market following suit. Then St. Louis Federal Reserve President James Bullard remarked that he expects the first rate hike to come as early as 2022. The S&P lost more than 1.5 percent on the week.
VAX STOCKS SINK
The big COVID vaccine makers also had a miserable week, led by Novavax. The Maryland-based biotech fell 8 percent after reporting extremely positive results for its forthcoming vaccine, as investors looked to take profits on a stock that was at one point up close to 200 percent over the last year. BioNTech, Pfizer, and Moderna also fell on the Novavax news, given that they’re likely to face a new competitor in the market. Pfizer fell the least of the bunch; that stock has been remarkably steady despite being the first out of the gate with a life-saving vaccine that is helping to end a global pandemic. PFE shares are up just over 5 percent on the year while the S&P is up about 13 percent.
SPACS TAKE NASDAQ
It was a fairly busy week for IPOs with two big names joining the Nasdaq. The cannabis review site Weedmaps and the at-home, genetic-testing powerhouse 23andMe both debuted on the exchange via SPACs. Weedmaps CEO Chris Beals said the company chose the SPAC route, merging with Silver Spike Acquisition Corp, in order to better “curate” its investor base. Weedmaps, which runs a SaaS platform for users to rate and buy from cannabis dispensaries in states where it’s legal — think Yelp for pot — received $579 million in a cash infusion in the deal. Meanwhile, 23andMe also went the SPAC route in its debut, merging with Richard Branson’s VG Acquisition Corp. in a deal that values the company at $3.5 billion. The stock spiked 21 percent on its first day of trade.
Jessica Alba’s Honest Co. announced its first quarterly earnings release since going public, beating expectations on a narrower-than-expected loss and higher revenues, but showing signs of stagnation in some key areas. Honest’s diaper and wipes segment fell 2 percent year-over-year while digital sales rose just 2 percent, compared to 23 percent in the prior period. (The disappointing diaper sales were in line with Procter & Gamble’s numbers for its Pampers brand, for what it’s worth.) Honest has been branching out into new categories, which appears to be working. Sales of skin and personal care products and household and wellness products were up 42 and 53 percent year-over-year, respectively. The stock is trading roughly where it priced its IPO last month.
The sponsors of the Euro 2020 soccer tournament are learning a valuable lesson about endorsements in the social media era. Shares of Coca-Cola slipped after Cristiano Ronaldo — one of the biggest soccer stars in the world with a social media following numbering half a billion — swapped two bottles of Coke for a bottle of water at his post-match press conference, urging people to drink “agua.” The clip immediately went viral online, wiping about $4 billion off Coke’s market cap and upsetting the delicate balance of power between superstars and brands in the online era. (Ronaldo started a bit of a trend at the Euro; Italian star Manuel Locatelli copied his move with the Coke bottles, and Manchester United’s Paul Pogba removed a strategically placed bottle of Heineken beer from his presser.) Coke, of course, is too big to feel much long-term pain from a fleeting viral video; the beverage giant said in April its global case volume is already back to pre-pandemic levels and the stock is up more than 15 percent in the last year.