From Wall Street to Silicon Valley, these are the top stories that moved markets and had investors, business leaders, and entrepreneurs talking this week on Cheddar.
STALLING ECONOMY, RISING STOCK MARKET
Stocks notched their best week in months, even after January’s jobs report showed anemic growth amid the winter coronavirus surge. The unemployment rate fell from 6.7 to 6.3 percent as the U.S. economy added just 49,000 jobs for the month. Some investors were happy to see any growth at all coming after December’s atrocious reading, which was revised up from 140,000 to 227,000 jobs lost. The labor market is still running a deficit of almost 10 million jobs from its pre-pandemic levels, and the weak jobs number could add urgency to the Biden administration’s approach when it comes to the next round of economic relief. Senate Democrats are moving forward with a plan to use a parliamentary procedure known as budget reconciliation to ram through that $1.9 trillion bill without Republican support, even amid concerns by economists like Larry Summers that the price tag is more than needed. The White House hopes to have the stimulus done and dusted by March.
MEME STOCKS FALL TO EARTH
The so-called meme stocks that took Wall Street by storm fell back from their lofty highs this week, but then surged again after Robinhood said it would lift all restrictions on trading some of those volatile equities. GameStop ended Friday up almost 20 percent, while AMC lost momentum earlier in the day and fell 3.7 percent. Both of those stocks are still closer to their pre-Reddit lows than those highs they were trading at in the midst of the short-squeeze euphoria of the last few weeks. As more data comes out related to the inflows in stocks like GameStop, the less clear it has become that those rallies were the work of retail traders taking on institutional investors as framed by a David vs. Goliath narrative. JPMorgan said it found GameStop wasn’t even among the top 10 most-purchased stocks by retail investors last month, suggesting that institutional investors were a significant factor in some of those manic swings. The managers of one hedge fund, Senvest, told the WSJ they made $700 million buying GameStop and taking the opposite position of short sellers like Melvin Capital.
BEZOS STEPS ASIDE
Jeff Bezos said he would step down as CEO of Amazon later this year, an announcement that shocked many but didn’t even move the stock. The billionaire founder of the e-commerce giant will be replaced by Andy Jassy, the well-regarded chief of Amazon’s hugely profitable AWS unit, though Bezos will stay on as chairman of the board. The surprising announcement came in Amazon’s earnings report that showed it made $100 billion in quarterly sales for the first time ever during the holiday period. Amazon joins Apple, Walmart, and ExxonMobil as the only American companies to hit that milestone (those days are but a memory for Exxon, which this week reported its first annual loss in 40 years on the plummeting demand for oil during the pandemic).
VACCINE PROGRESS
Two more American vaccine manufacturers are asking for regulatory approval for their COVID shots. After preliminary data showed Johnson & Johnson’s one-shot vaccine to be highly effective at preventing serious illness and death, J&J applied for an emergency use authorization to the FDA. If given the green light, J&J says it can start shipping doses out in March, with 100 million shots out the door in the spring. Novavax, a small Maryland-based vaccine manufacturer that was left for dead by investors before the pandemic, has started a “rolling submission” process with regulators for its jab — also a single dose — which could expedite the approval process. Novavax has not completed its final-stage clinical trials but says interim analysis shows the vaccine to be effective, including against the variant spreading in Britain. Meanwhile, AstraZeneca said its shot is also showing efficacy against that variant, and a study by its partners at Oxford showed that it may be able to not just offer protection, but actually reduce transmission of the virus after a single dose. That shot has not been submitted to the FDA as of yet, though it’s already in use in Europe and India.
PELOTON DEMAND
Peloton has been among the biggest winners of the pandemic, so much so that it cannot keep up with the demand for its connected bikes and treadmills. The company admitted as much in its earnings report, saying it had $1 billion in sales last quarter but future profits will be squeezed as the company invests in fixing its supply chain problem. In December, Peloton acquired fitness equipment manufacturer Precor for that exact reason, but the fruits of that deal will take some time to bear. In the meantime, Peloton buyers have reported months-long delays in getting their orders.
