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By Alex Eule
| Tuesday, February 8 This
Is Normal. It felt
like an old-fashioned rally on Wall Street today, with stocks rising across
the board. Unlike the trading that has taken place during much of the
pandemic, success today wasn't a choice between lockdowns and re-openings.
Stay-at-home plays like Chegg and Peloton
Interactive jumped, and so did travel-focused companies
like American Airlines, Royal
Caribbean, and Carnival. It's perhaps another sign of an
approaching normalcy as Covid rates fall and masks begin to come
off. For Chegg, which jumped 16% on the day, the
catalyst was a better-than-feared earnings
report. The online education company said that while enrollments
fell as schools re-opened, students are still turning to Chegg for online
help. For Peloton, the gains were a bit more
complicated. After months of bad news, the company said that co-founder John
Foley was stepping down as CEO and would be replaced by Barry
McCarthy, a former CFO at both Spotify
Technology and Netflix. The stationary bike
maker is also cutting 20% of its corporate workforce, or about 2,800 jobs.
The news sent the stock to its best day ever, closing up 25%. The reaction
could be hope that an acquisition is now more likely. Alternatively, it's
relief among investors that Peloton is imparting a new sense of discipline
after a year of overeager expansion. Barron's Connor Smith notes that Peloton
is up 54%
over the last three trading days. But at today's close of $37, the
stock is still a long way from its Covid peak. In January 2021, shares traded
as high as $171. The tech-heavy Nasdaq
Composite was up 1.3% on the day, a surprisingly strong
performance given rising bond yields. Both the two-year and 10-year Treasury
yields saw substantial moves, reaching 1.34% and 1.95%, respectively. Those
are the highest levels since the pandemic began. And it's one more sign that
investors are putting the Covid era of low interest rates in the rearview
mirror. Meta
Platforms is one tech
stock that continues
to fall regardless of broader sentiment. Shares of the Facebook
parent (down 2.1% today) have fallen in every session since last week's
disappointing earnings report and outlook. The stock is down 32% over that
four-day stretch. The rest of the week could bring a renewed
focus on inflation, with the January consumer price index report due
on Thursday. Economists are expecting year-over-year inflation of 7.3%,
slightly ahead of December's 7% rise. The final number could go a long way in
shaping the Federal Reserve's March meeting. A softer inflation figure would
solidify the likelihood of just one quarter-point increase, while a
higher-than-expected CPI could push the Fed to raise its target rate by a
half-point, or 50 basis points. As of now, the market is pricing in a 71%
chance of the quarter-point rise and a 29% chance of the half-point hike. |
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DJIA: +1.06% to 35,462.78 The Hot Stock: Amgen +7.8% Best Sector: Materials +1.6%
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