Strong Earnings Couldn't Save Markets From Meltdown
A strong earnings season was not enough to save the markets from a down day of trading Tuesday, another sell off in what's been a pretty depressing year so far for stock markets.
The Dow Jones closed down around 420 points, and was down as much as 600 during the day. The Nasdaq was down more than 120 points, and the S&P 500 fell 35 points.
Art Hogan, the chief market strategist for B. Riley FBR, said in an interview with Cheddar that this market downturn is the exact opposite of what investors might expect after a series of strong first-quarter earnings reports.
He said something else is weighing down the Dow.
"I think it all predicates itself around fears of bad trade policy," said Hogan.
In the fourth quarter of last year, chief executives were excited about the potential of tax reform, but that optimism has shifted, he said.
Now, in their earnings calls, executives are expressing concern about trade policy, tariffs, higher input costs, and commodity prices going even higher. Those changes could affect earnings beyond this quarter, Hogan said.
"While the earnings are spectacular ー they are nothing short of spectacular in the earnings reports themselves ー the tone of the conference calls has changed," said Hogan. "And the market is getting to a point where we are concerned what we are doing about trade policy."
When it comes to advice on what to do now, Hogan said to stay cyclical and, in a rising interest rate environment, avoid high dividend yield sectors like utilities and telecoms.
For full interview, [click here](https://cheddar.com/videos/markets-close-down-over-400-points).
Facebook parent Meta’s miss on Q4 earnings raised alarm bells amongst investors. The tech giant lost users for the first time as it invests a lot into the metaverse, its virtual realm, in the hopes that consumers will move their social media consumption there. The stock dropped around 25 percent on the report, and CEO Mark Zuckerberg chalked it up to people flocking toward apps like TikTok, even as his own platform attempts to make a big pivot to the metaverse future. "It's gonna take a long time to develop and it's gonna take a long time to bring to fruition," Rebecca Walser, president of Walser Wealth Management told Cheddar. "In the meantime, the world is moving on. We have a very short attention span, especially on social media, and we want the short little videos. And Tiktok has just taken off."
Wall Street saw another volatile day after the Federal Reserve left rates unchanged for now, with plans to raise rates in March at its next meeting in order to ease inflation. Fed Chair Jerome Powell said the Fed has not made decisions on the size of rate increases, adding that the Fed is not trying to get inflation below two-percent. Ken Johnson, CFA and Investment Strategy Analyst explains why Powell thinks that high inflation is a significant threat to the labor market.
Ed Butowsky, managing partner at Chapwood Investments, joined Wake Up With Cheddar to break down the disappointing takeaways from Spotify's Q4 earnings report, which sent the stock plunging.
Anu Gaggar, global investment strategist for Commonwealth Financial Network, joined Cheddar News to discuss how global supply chains could be disrupted even further by an armed conflict in Ukraine.
Google parent company Alphabet saw yet another successful quarter reporting its final earnings report for 2021 on Tuesday. The tech giant beat Wall Street expectations across the board with much of that success owed to not only the growth of its cloud business, but also its multi-platform advertising. Joanna O'Connell, Principal Analyst at Forrester explains why advertising may be one of the keys to Alphabet’s future success.
Solid-state battery maker Factorial Energy recently raised $200 million in a Series D round led by Mercedes-Benz and Stellantis. Factorial says the funding will be used to accelerate commercial production and deployment of its solid-state battery technology, which the company says is safer, and offers up to 50% more driving range than current lithium-ion technology. Factorial also has joint development agreements (announced in late 2021) with Mercedes-Benz, Stellantis, and Hyundai, three of the top 10 global automotive manufacturers, to commercialize its batteries. Factorial CEO Siyu Huang joined Cheddar News' Closing Bell to discuss.
