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.
NETFLIX CRATERS
The streaming wars left a crater in Netflix's stock price Wednesday after the company reported a loss of 200,000 subscribers in the first quarter. Shares plunged 35 percent, wiping out $50 billion in value in a single day, and marking the streamer's worst day on Wall Street since 2004. While analysts were expecting subscriber growth to slow given increasingly fierce competition from the likes of Disney, Warner Bros. Discovery, and Paramount, the steep drop-off was a surprise and a signal that the streaming market may be bumping up against its limit. Netflix is also the second FANG stock (Facebook, Amazon, Netflix, Google) to endure a brutal sell-off this year. Meta dropped 26 percent back in February, lopping off $232 billion in value from its market cap. The other members of the tech giant-quartet, which has been a reliable investment for several years now, are set to release their earnings next week. So we'll know soon if the bearish contagion spreads.
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TESLA EARNINGS IMPRESS
Maybe Musk was just feeling himself after a Tesla earnings report knocked it out of the park this week. The company reported a record profit of $3.3 billion in the quarter, and Musk projected that the company would produce 1.5 million vehicles in 2022. That's a 60 percent jump from last year, despite signals in the report that supply chain issues were finally catching up with the EV maker and could curb production in the next quarter. The stock jumped around 3 percent on the news, and Tesla bulls rejoiced.
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WINNERS AND LOSERS
While Netflix plunged and Tesla popped, the rest of the stock market was a similarly mixed bag. Used-car retailer Carvana reported its first-ever quarterly sales decline, and the stock fell as much as 24 percent after-hours on Wednesday before leveling off. On the same day, United Airlines forecasted it would be turning a profit in 2022, sending shares up nearly 18 percent, as investors anticipated a resurgent airline industry this summer. Bank of America shares jumped on an earnings beat, and Charles Schwab shares fell after missing analyst estimates. Shares of Chinese ride-hailing giant Didi, meanwhile, sank on the news that it plans to delist from the New York Stock Exchange before finding another venue for its U.S. shares.
MORE FED RATE HIKES
When Federal Reserve Chair Jerome Powell speaks, markets listen, and this week the country's top banker hinted in recent months that sharp interest rate hikes are coming. He even signaled that a half-point increase was on the table, putting him in line with some of the more hawkish Fed governors who have been calling for faster, steeper hikes to rein in inflation.
RISE OF THE DOLLAR
One beneficiary of looming rate hikes is the U.S. dollar. The dollar index (DXY), which tracks the dollar's value against other major currencies, hit a two-year high this week. The U.S. dollar is up 12 percent from last year, and other currencies are sinking against it, with the Japanese yen, in particular, tumbling to a 20-year low.
The Rev. Al Sharpton is set to lead a protest march on Wall Street to urge corporate America to resist the Trump administration’s campaign to roll back diversity, equity and inclusion initiatives. The New York civil rights leader will join clergy, labor and community leaders Thursday in a demonstration through Manhattan’s Financial District that’s timed with the anniversary of the Civil Rights-era March on Washington in 1963. Sharpton called DEI the “civil rights fight of our generation." He and other Black leaders have called for boycotting American retailers that scaled backed policies and programs aimed at bolstering diversity and reducing discrimination in their ranks.
President Donald Trump's administration last month awarded a $1.2 billion contract to build and operate what's expected to become the nation’s largest immigration detention complex to a tiny Virginia firm with no experience running correction facilities.
Chipmaker Nvidia is poised to release a quarterly report that could provide a better sense of whether the stock market has been riding an overhyped artificial intelligence bubble or is being propelled by a technological boom that’s still gathering momentum.
Cracker Barrel said late Tuesday it’s returning to its old logo after critics — including President Donald Trump — protested the company’s plan to modernize.
Low-value imports are losing their duty-free status in the U.S. this week as part of President Donald Trump's agenda for making the nation less dependent on foreign goods. A widely used customs exemption for international shipments worth $800 or less is set to end starting on Friday. Trump already ended the “de minimis” rule for inexpensive items sent from China and Hong Kong, but having to pay import taxes on small parcels from everywhere else likely will be a big change for some small businesses and online shoppers. Purchases that previously entered the U.S. without needing to clear customs will be subject to the origin country’s tariff rate, which can range from 10% to 50%.
Southwest Airlines will soon require plus-size travelers to pay for an extra seat in advance if they can't fit within the armrests of one seat. This change is part of several updates the airline is making. The new rule starts on Jan. 27, the same day Southwest begins assigning seats. Currently, plus-size passengers can pay for an extra seat in advance and later get a refund, or request a free extra seat at the airport. Under the new policy, refunds are still possible but not guaranteed. Southwest said in a statement it is updating policies to prepare for assigned seating next year.
Cracker Barrel is sticking with its new logo. For now. But the chain is also apologizing to fans who were angered when the change was announced last week.
Elon Musk on Monday targeted Apple and OpenAI in an antitrust lawsuit alleging that the iPhone maker and the ChatGPT maker are teaming up to thwart competition in artificial intelligence.
