The Big Tech Show May Be Over. But Volatility Is Not.

US stocks notched their second consecutive week of gains last week but that fails to tell the full story.

Amazon.com enjoyed the biggest one-day market cap gain in stock market history — $191.3 billion—just a day after


facebook
owner Meta recorded the worst ever daily drop, losing $232 billion.

While earnings season continues with plenty of big names, including Twitter and


Disney,
in the coming days, the focus of this week may also lie elsewhere.

The Federal Reserve’s nimble approach to the future path of interest rates has put investors on red alert, particularly when it comes to economic data. A rate hike in March is expected but anything beyond that will be determined by the data.

A strong January jobs report Friday—the US economy added 467,000 jobs, beating expectations for a 150,000 gain—further cemented the Fed’s hawkish pivot. However, the market reacted positively, seemingly taking confidence from hiring strength.

The next key data point, in the form of January’s consumer-price index due Thursday, will reveal whether surging inflation is beginning to ease or not—a key factor for the Fed’s policy moving forward.

It’s unlikely stocks will be quite as volatile as last week, but the market’s fear gauge—the Cboe Volatility Index, or VIX—was climbing again Monday.

With earnings, inflation data and the Fed’s uncertain path, there’s still plenty of reasons to expect volatility ahead.

Callum Keown

*** Join Barron’s senior managing editor Lauren R. Rublin today at noon as she speaks with deputy editor Ben Levisohn and Jonathan Waghorn, portfolio manager of Guinness Atkinson Asset Management, on the outlook for global energy markets. Sign up here.

***

Spotify CEO Apologizes but Won’t Remove Joe Rogan

Spotify Technology CEO Daniel Ek told staff he was “deeply sorry” for the controversy surrounding podcaster Joe Rogan’s use of a racial slur in previous podcast episodes. However, he said he has no plans to remove Rogan from the platform.

  • “There are no words I can say to adequately convey how deeply sorry I am for the way ‘The Joe Rogan Experience’ controversy continues to impact each of you,” Ek said to Spotify staffers in a letter that was shared with The Wall Street Journal by a company spokesman.

  • I said Rogan has removed some episodes from Spotify following discussions with the company. “While I strongly condemn what Joe has said . . . I do not believe that silencing Joe is the answer,” Ek said in the letter.

  • Ek said Spotify would spend $100 million on music and audio content from what he called historically marginalized groupsthe Journal reported.

What’s Next: Rogan issued an apology over the weekend for using a racial slur during previous podcast episodes. It’s the second apology he has had to make in recent weeks — the first centered around misinformation on Covid-19 vaccines that was spread by Rogan on his podcast. The popular podcaster said he would try to present more balanced information about the virus.

Joe Woelfel

***

Biden’s Vaccine Mandates Tied Up in Federal Courts

Several federal appeals courts are weighing whether to revive coronavirus mandates for US government contractors and federal workers after January’s Supreme Court rulings blocked mandates for private employers but allowed them for most healthcare workers, The Wall Street Journal reported.

  • The Justice Department said rules for contractors should be reinstated because they are supported by federal spending. But Republican-led states and businesses have challenged them as an overreach of powers. States and local governments require vaccinations for government offices, healthcare facilities and public universities.

  • Roughly one in five Americans had contracted the Omicron variant by the mid-January peak, but that number could double by the time the surge ends in mid-February, Trevor Bedford, a virologist at the Fred Hutchinson Cancer Research Center, told the Journal.

  • in Canada, protests against vaccine mandates and restrictions expanded beyond the capital Ottawa this weekend. Hundreds of trucks remain in downtown Ottawa, and truckers have stockpiled diesel fuel and set up an outdoor kitchen in a park, Bloomberg reported.

  • US opponents of Covid-19 restrictions are planning their own convoy to head to Washington, DC, though their group Facebook page was removed by the social media platform last week. GoFundMe shut down a fundraising account that had raised nearly $8 million for Ottawa protesters.

What’s Next: The Biden administration must decide its next move regarding a vaccine mandate for teachers in the Head Start program, which supports young children from low-income families. It has been blocked by at least two courts, which makes it unenforceable across much of the US, the Journal reported.

Janet H. Cho

***

Americans Ready for Economy’s Post-Omicron Reopening

Millions of Americans—triple vaccinated or recovered from coronavirus infections—are looking forward to schools, offices and in-person leisure activities reopening after the latest Omicron wave. Fed up with Covid mandates and restrictions, they are ready to spend the savings they built up during the pandemic.

  • Seven in 10 Americans agreed “it’s time we accept that Covid is here to stay and we just need to get on with our lives,” a Monmouth University poll found. One in five consumers in a New York Fed Survey expected to spend money on a vacation over the first four months of 2022.

  • US Covid cases have declined 57% over the past two weeks to an average of 313,000, according to The Wall Street Journal’s analysis of Johns Hopkins University data. More than 213 million are fully vaccinated, and


    Pfizer
    and


    BioNTech
    aim to vaccinate children 6 months to 4 years old.

  • Not only are leisure travelers under age 55 upgrading to premium airline tickets or five-star hotels, they are extending their trips, said Mike Daher, vice chairman of Deloitte’s transportation, hospitality, and services sector. Nearly a quarter of respondents told Deloitte they plan to spend “significantly more” than in 2019.

  • Middle-income consumers are sitting on roughly $1 trillion more in liquid assets than they were prepandemic, said Tom Porcelli, chief US economist at RBC Capital Markets. More than 4 in 5 Americans feel “ready to travel” or have already started doing so, a Destination Analysts survey reported.

What’s Next: Pent-up demand to splurge on leisure travel, including to international destinations, along with a recovery in business travel, could boost revenue for the airline industry back to 2019 levels by the third quarter of 2022, Bank of America analyst Andrew Didora said.

Megan Cassella and Janet H. Cho

***

Speculation Swells on Possible Suitors for Platoon

platoon has emerged as a possible takeover target, and that has encouraged people to talk about potential buyers. Wedbush analyst Dan Ives said in a note on Sunday that Apple could buy the connected fitness company to supercharge its efforts in health and fitness.

  • On Friday, Peloton stock popped 26% in after-hours trading after The Wall Street Journal reported it was receiving interest from potential suitors, including


    Amazon.com.
    The Financial Times reported


    Nike
    was evaluating a bid. Peloton wasn’t immediately available to comment to Barron’s on Sunday.

  • In January, activist investor Blackwells Capital said it sent a letter to Peloton’s board of directors suggesting the company fire CEO John Foley and explore a sale to a company such as


    apple,

    Walt Disney, Nike, and


    Sony.

  • Peloton charges $39.99 a month for connected fitness subscriptions, which hook up with the company’s upscale stationary bikes and treadmills. Foley said in January that the firm was taking steps to cut costs and improve its margins.

  • In 2020, amid surging demand for Peloton’s bikes during lockdowns, the stock soared above $160. But the shares have tumbled as gyms reopened, down 31% year to date.

What’s Next: Peloton has 2.8 million paid subscribers. A winning bidder would get an immediate jump on the health and fitness front, not to mention gain a foothold in consumer living rooms, making it easier to cross-sell other products and services, Ives wrote in his note.

Joe Woelfel and Liz Moyer

***

This Week: Disney, Coca-Cola, Twitter, Plus January’s CPI

About 75 S&P 500 companies report earnings this week, including Walt Disney, Pfizer,


CVS Health,
and


Twitter.
The most anticipated economic reports this week are the Bureau of Labor Statistics’ consumer-price index for January, and the Labor Department’s initial jobless claims from last week, both Thursday.

  • Economists expect the consumer price index to have risen 7.3% year-over-year in January, higher than December’s 7% increase and the highest reading since 1981. Core CPI, excluding volatile food and energy prices, is expected to rise 5.9%.

  • Pfizer and ride sharing app


    Lyft
    report earnings on Tuesday, while rival


    Uber
    is hosting an investor day on Thursday.


    Honda Engine
    and


    Toyota Engine
    both report earnings on Wednesday, as do Disney and CVS. And


    Coca-Cola
    and


    PepsiCo
    both report on Thursday.

  • Coke, which is one of the official nonalcoholic beverage sponsors of the Olympic Games, has been scrutinized by human-rights groups about its sugar supplier in Xinjiang, China. The supplier has denied abuses, but Coke isn’t selling Olympic-branded Coke cans or airing TV commercials touting its sponsorships.

What’s Next: Investors are especially interested in Twitter’s results on Thursday, after Google’s parent


Alphabet
crushed expectations last week, and Facebook’s


meta
offered disappointing guidance for its March quarter. This will be the first earnings report since CEO Parag Agrawal replaced Jack Dorsey on Nov. 29.

Nicholas Jasinski and Janet H. Choz

***

MarketWatch Wants to Hear From You

I’m thinking about quitting my job and becoming self-employed. How would that affect my taxes?

A MarketWatch correspondent will answer this question soon. Meanwhile, send any questions you would like answered to thebarronsdaily@barrons.com.

***

—Newsletter edited by Liz Moyer, Rupert Steiner, Steve Goldstein and Callum Keown

.

Leave a Comment

Your email address will not be published.