The Week's Top Stories is a guided tour through the biggest market stories of the week, from winning stocks to brutal dips to the facts and forecasts generating buzz on Wall Street.
It was another whiplash-inducing week on Wall Street. Despite continued pain in the tech sector, the S&P 500 had its best week since June, and a couple of factors were likely behind the rally. First, midterm results raised the possibility of a split Congress, which many investors interpreted as a good thing for the stock market. In this view, the pullback in stimulus means less inflation pressure, which means a quicker slowdown in Federal Reserve rate hikes, which means less pressure on equities. Whatever you think about these assumptions, it was something for investors to hang their hat on after weeks of turbulence. Second, the consumer price index came in cooler than expected, which gave investors hope that the Fed might ease up sooner rather than later. Basically, investors seemed to latch onto any new data that might translate into moderation — although it's an open question, of course, if the Fed actually does pull back in the near-term.
All this positive sentiment was wasted on Tesla, however, as shares of the automaker plunged earlier in the week. The megacap stock is currently down around 6 percent for the week, and many are pointing the finger squarely at CEO Elon Musk. The industry-straddling executive's latest acquisition of Twitter is now widely seen as a debacle, and some are convinced that it's hurting the rest of his business empire. Long-time Tesla bull Dan Ives, analyst for Wedbush Securities, wrote Thursday that Musk's "Twitter antics" have put the stock "deep in the investor penalty box…" Another investor told Cheddar that Tesla is "stalling" and needs more attention from its top executive, and the dire situation at Twitter is likely making that difficult.
CARVANA CRASH COARSE
Carvana started the week with a brutal sell-off that sent shares tumbling over 50 percent, as investors processed a lackluster earnings report and data showing a decline in the price of used cars. The online retailer bounced back, however, amid the broader market rally, and shares were up more than 30 percent Thursday. There doesn't seem to be a clear reason for the recovery, other than the fact that the stock is heavily shorted. Overall, shares of the company are still down 96 percent this year after excelling earlier in the pandemic due to surging used car prices.
Disney shares plunged around 12 percent on Wednesday following an earnings report that showed the entertainment giant finally feeling the squeeze from higher costs. Both the company's media and entertainment division and its parks and product division missed Wall Street estimates, as inflation took a bit out of earnings and a limited number of theatrical releases cut demand. One bright spot though was Disney+. The streaming service added 12.1 million subscribers in the fourth quarter, which is a full four million subscribers above expectations.
Breaking down the whole saga of FTX and founder Sam Bankman Fried deserves its own article, but suffice it to say, the crypto world hit the skids this week. The price of Bitcoin is down nearly 20 percent this week to a recent low of roughly $16,000, and some are expecting it to plumb new depths in the coming days and weeks as the FTX fallout continues. The pain has been widespread, with the second-largest cryptocurrency Ether also falling around 20 percent.