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.
MARKET TURMOIL
The markets had some wild swings this week with the Dow Jones Industrial index dropping 800 points on Tuesday in its biggest drop since 2020. The major indexes recovered some of those gains as the week went on but then fell off again at the end of the trading week. In the meantime, the sources of this volatility remain very much at large. COVID-19 lockdowns continue in China, shifting from Shanghai to Beijing. Russia has cut off gas supply to Poland for refusing to pay in rubles. Inflation remains at a four-decade high, and investors are bracing for more Federal Reserve rate hikes at next week's FOMC meeting.
TECH EARNINGS MIXED
Amidst all this, basically, all the major tech companies turned in their first quarter earnings reports, making for a whirlwind week of investors trying to read the tea leaves about what's next for the U.S. economy. Netflix kicked off the earnings bonanza last week and saw a brutal sell-off after showing a loss of 200,000 subscribers. None of the companies reporting this week were quite so unlucky, but there were definitely some underperformers. Google parent company Alphabet took a hit after reporting a loss in YouTube subscribers. Twitter dropped slightly after reporting a revenue miss just days after accepting Elon Musk's deal to buy and take the company private, and Apple shares dipped after the company predicted a possible $8 billion hit to sales due to supply chain constraints.
META SURGES/AMAZON PLUNGES
The biggest moves, however, came from Meta and Amazon. Meta's stock jumped as high as 18 percent, despite missing revenue estimates, because the social media app increased users by 4 percent last quarter. The gain marks a reversal of some of the drop-off in users that helped tank Meta's stock earlier this year. Amazon had a very different week, reporting its slowest quarterly growth in two decades and a $3.8 billion drop in profits. The sluggish growth figures sent the stock plummeting as much as 15 percent, putting the company on pace for its worst day on Wall Street in eight years.
BEYOND TECH
Outside of the tech bubble, earnings were fairly upbeat. Both Coca-Cola and Pepsi beat estimates and showed themselves to be "a stable safe haven" in a rough-and-tumble market, in part because they benefited from price hikes. McDonald's, likewise, saw better-than-expected earnings and revenue on the back of price increases, even as the company reported losing $100 million in food inventory due to cutting ties with Russia. GM had a surprisingly good quarter and said it was sticking to its forward guidance despite headwinds from supply chain issues. Ford, meanwhile, hit a rough patch. The legacy car company reported a 41 percent drop in earnings from a year ago, in part because of its large stake in Rivian, the electric truck company that's been hamstrung by supply chain issues.
TESLA TANKS
We'd be remiss if Elon Musk didn't come up at least twice in this weekly round-up, so it's worth mentioning that Tesla dropped 12 percent on Tuesday as investors fretted that the billionaire would sell some of his personal shares to fund his Twitter takeover. As it turned out, Musk announced the sale of $8.5 billion worth of shares later in the week.
FACTS AND FORECASTS
The Commerce Department reported a 1.4 percent annualized decline in U.S. gross domestic product on Thursday. The Dow Jones had estimated a 1 percent gain, so the drop into the red was a bit of a shock, but not so surprising when considering the sorry state of the world economy heading into the middle stretch of 2022.
