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Summary

Stocks finished the day modestly in the red in a very choppy session as equities struggled to sustain momentum from last week’s rally, which saw the S&P 500 (SPY) gain over 6%. The S&P 500 and Dow Jones Industrial Average each dipped 0.2% after swinging between the red and the green for much of the session. The Nasdaq Composite declined 0.6%.

Last week, the Federal Reserve Chairman delivered his semi-annual address before Congress. . Powell told Congress that the Fed is strongly committed to bringing down inflation and conceded that a recession was a “possibility” and acknowledged that a soft landing would be “very challenging”.  

Powell reiterated that ongoing increases in the Fed’s policy rate would be appropriate, with the exact pace dependent on the economic outlook. He declined to rule out a 100-basis-point move if it proved warranted. “Inflation has obviously surprised to the upside over the past year, and further surprises could be in store.”

Despite all the headwinds facing the market, some notable analysts have begun to sound hopeful that the market is approaching the bottom (I don’t necessarily agree with this, think the timing is too soon to make any conclusions). JP Morgan strategists Marko Kolanovic predicted that U.S. equities may climb as much as 7% this week as investors rebalance portfolios amid the end of the month, second quarter, and first half of the year.

Quarterly results from Nike (NKE) and Micron (MU) will be closely watched for signs of rising inventories and slowing orders like Target and some other retailers have warned about recently, which may renew worries of an economic slowdown among Corporate America.

Looking ahead, market participants are waiting for a fairly loaded economic calendar this week, with core personal consumption expenditures – the Fed’s preferred gauge for inflation – due Wednesday, the Conference Board’s consumer sentiment survey, and manufacturing and housing reports.

Highlights

  • Even after a -77.60% decline from IPO, shares of Coinbase (COIN) slid a further 10% after Goldman Sachs slashed their price target on the stock from $70 to $45, noting that recent layoff of 18% of the staff will not be enough to bring company’s costa in line with lowered sales amid a volatile crypto environment.
  • Share of much-maligned Robinhood (HOOD) surged double-digits percent after Bloomberg reported that FTX is considering a deal to acquire Robinhood. 
  • Ford Motor Co said Monday it will recall about 2,900 F-150 Lightning trucks because a software issue may result in a failure to provide adequate warning of low tire pressure.
  • Tech industry analyst Ming-Chi Kuo has offered the most specific prediction about a release date for an Apple augmented reality/virtual reality headset yet: January 2023. Kuo called the headset “the most complicated product Apple has ever designed,” noting that many current Apple suppliers are involved in the supply chain for the product
  • While information is opaque, Bernstein analysts estimate that Apple has between 20 and 40 million subscribers paying for Apple TV+, bringing in $1-2 billion in revenue.
  •  Warren Buffet’s Berkshire Hathaway bought 9.6 million more shares of Occidental Petroleum (OXY), bringing BRK’s position to 152.7 million shares worth roughly $8.52 billion.
  • The FDA banned electronic cigarettes company Juul from selling its products in the US, a major blow to Altria (MO), who bought a $12 billion stake in Juul in 2018 that is now effectively worthless

“Success is not final; failure is not fatal: It is the courage to continue that counts. -Winston S. Churchill