Stocks were lower to start Tuesday with the Dow falling by 227 points, or 0.7%. The S&P 500 slid 1.1%, while the Nasdaq dropped 2.3%.
Tesla shares dropped as much as 13% this morning, sinking below the level where the stock entered the S&P 500 Index in December for the first time. The decline comes amid a wider market selloff and sharp fall in bitcoin to below $50,000, fueled in part by CEO Elon Musk’s comments over the weekend that the price of the cryptocurrency seems “high.” Tesla recently invested $1.5 billion into bitcoin, a move that Wedbush analyst Daniel Ives said means the company’s share price is now directly linked to the price fluctuations of the digital coin. “Musk is now tied to the bitcoin story in the eyes of the Street and although Tesla made a billion paper profit in its first month owning the digital gold, it comes with added risk, as seen this week,” Ives said. “With Tesla diving into the deep end of the pool on bitcoin, Musk runs the risk that this side show can overshadow the fundamental EV (electric vehicle) vision in the near term for investors.”
Federal Reserve Chairman Jerome Powell signaled easy monetary policy is likely to stay in place given that inflation and employment remain well below the central bank’s goals. “The economy is a long way from our employment and inflation goals, and it is likely to take some time for substantial further progress to be achieved,” Powell said in prepared remarks for the Senate Banking Committee, adding that the Fed is “committed to using our full range of tools to support the economy and to help ensure that the recovery from this difficult period will be as robust as possible. …While we should not underestimate the challenges we currently face, developments point to an improved outlook for later this year. In particular, ongoing progress in vaccinations should help speed the return to normal activities.”
The U.S. surpassed the grim milestone of 500,000 deaths from COVID-19. “That’s more Americans who’ve died in one year in this pandemic than in World War I, World War II, and the Vietnam War combined,” said President Joe Biden in a televised address before a candle-lighting ceremony at the White House Monday night. “That’s more lives lost to this virus than any other nation on Earth.” As deaths hit the staggering 500,000 level, new cases and hospitalizations are falling across the nation as more Americans have now received at least one dose of a vaccine for COVID-19 than have tested positive for the virus since the pandemic began, with 63.1 million doses administered in the U.S. as of Sunday. While vaccinations got off to a rocky start, vaccine manufacturers said that the pace of production will substantially ramp up over the coming weeks. Pfizer said it expects to provide more than 13 million doses of its two-shot vaccine per week to the U.S. by mid-March, while Moderna said it is working to double shipments of its vaccine by April. “Since the end of 2020, we have doubled our monthly deliveries to the U.S. government, and we are working to double them again by April to more than 40 million doses per month,” said Moderna President Dr. Stephen Hoge. “As we work to meet these goals, we are continually learning and working closely with our partners and the federal government to identify ways to address bottlenecks and accelerate our production.”
Home Depot shares are down more than 3% this morning even after the home improvement retailer’s fourth-quarter earnings came in above expectations. Home Depot reported earnings per share of $2.65 on revenue of $32.26 billion, compared to Wall Street expectations for earnings of $2.62 per share on revenue of $30.73 billion. “We were pleased with our record financial performance in fiscal 2020,” said executive vice president and CFO Richard McPhail. “As we look ahead to fiscal 2021, while we are not able to predict how consumer spending will evolve, if the demand environment during the back half of fiscal 2020 were to persist through fiscal 2021, it would imply flat to slightly positive comparable sales growth and operating margin of at least 14 percent.”
And Spotify shares are down nearly 6% today amid a broader sell-off in tech. The Swedish audio streaming service said Tuesday that it is planning to almost double its geographic footprint and launch into 85 more countries, adding 36 languages to its platform in the process. Spotify said the expansion into developing countries across Asia, Africa, the Pacific and the Caribbean will enable an additional billion people to use its platform. “These moves represent Spotify’s broadest market expansion to date,” Spotify said.
Stocks We’re Watching
Cassava Sciences Inc (NASDAQ: SAVA): Cassava shares gained as much as 18% yesterday after the company announced that it had successfully completed an end-of-phase 2 meeting with the FDA for its Alzheimer’s treatment, Simufilam. “For over 10 years we’ve been doing basic research and early drug development with simufilam,” said Remi Barbier, President & CEO. “We are excited to finally advance simufilam into pivotal Phase 3 clinical studies in people with Alzheimer’s disease. We believe the underlying science is solid, the drug appears safe and the clinical roadmap makes sense. We’ve crossed the Rubicon.”