Market Daily

Market Daily

Another Dip for Stock Futures, Traders Brace for the Start of Earnings Season

Early Monday morning, US stock futures fell significantly, particularly those tied to the Dow Jones Industrial Average. These fell 0.44% or 139 points, while S&P 500 futures fell 0.6% and Nasdaq 100 futures fell 0.89%.

The Dow and the S&P traded slightly lower last Friday, while the Nasdaq Composite rose for a fifth consecutive day.

Most of the major medians had a positive week after a stronger-than-expected jobs report on Friday, which shows that the economic downturn that investors feared is not yet here, giving them some hope.

Treasury yields also rose with 2-year Treasury yields above the 10-year yield, a reversal that many believe to be an indicator of recession. Greg Bassuk, Managing Director of AXS Investments, also said:

“While the markets ended in solid green for the week, investors should brace for continued volatility in July, with ongoing uncertainties looming with respect to inflation, Fed policy, recession concerns, the enduring Russian-Ukraine war, all as we also move into corporate earnings season.”

Read also: Stock Future Takes a Dip While Wall Street’s Momentum Shows Irregularities

Regardless of how beneficial this is for the economy, the jobs reports could encourage the Federal Reserve to continue its policy of aggressively raising interest rates in the coming months to combat high inflation. That remains to be seen, but speculation will be tested this week with a string of big bank earnings and consumer inflation data this week.

“With recessionary fears weighing on the markets, investors are hyper-focused on corporate earnings for greater clues about the health of corporate America and the broader US economy,” said Bassuk. “A sharper lens will be needed to dissect these earnings reports, as a strong second quarter might be accompanied by very conservative outlooks.”

“As commodity and other producer costs remain high, companies will be factoring in the extent to which those heightened prices can be passed on to consumers and, likewise, how to keep earnings vigorous amid economic, geopolitical and other key headwinds,” he added.

Investors also expect key inflation data this week, with the June CPI due out on Wednesday. Headline inflation is expected to rise above the 8.6% level from May.

“Investors expect more aggressive Fed rate hike actions,” said Bassuk. “Unless the inflation data shows an outsized reduction in prices, balanced against concerns that an over-aggressive boost in rates could tip the US into recessionary territory.”

The June Producer Price Index will be released on Thursday, while the University of Michigan Consumer Confidence report will arrive on Friday.

Read also: 5 of the best-selling stocks of September

​​With Growing Demand and Impressive Milestones, Investors Should Pay Attention To This Canadian Stock

PlantX Life Inc. (CSE: VEGA | Frankfurt: WNT1), a Canadian vegan company founded in 2011, is at the forefront of the veganism movement, promoting a healthy and sustainable lifestyle.

The company has quickly grown to become the one-stop shop for everything plant-based by acquiring high-quality businesses, forming strategic partnerships with well-known vegan brands and major e-commerce channels such as,,, and as well as delivery platform Instacart. PlantX currently offers over 10,000 plant-based products across North America, including meal and indoor plant delivery services, and is gradually expanding into the United Kingdom, Germany, Austria, and Israel.

The company is experiencing impressive demand for its product and services resulting in strong revenue growth.

Figure 1: PlantX 2022 Monthly Progress

Source: PlantX Press Releases

March was the best month for the company so far with revenue increasing 168% year-over-year as the company expanded into new markets such as Austria and the Republic of Ireland. The company also collaborated with BESTIES Vegan Paradise (“BESTIES”), the only vegan marketplace in the country selling products exclusively from 100% vegan brands, to redesign and rebrand PlnatX’s brick-and-mortar stores in Venice and Hillcrest, California, as BESTIES. This collaboration resulted in an increase of 30% in sales revenue in the first month since PlantX’s Venice location was rebranded to reflect the BESTIES model. In March, the company also announced same-day grocery delivery across Ottawa and Toronto to broaden its on-demand delivery options.

In July, PlantX generated monthly gross revenue of $1.2 million, a 35% increase over July 2021. Little West, a brand of cold-pressed juice that PlantX acquired in 2021, contributed significantly to this growth. Little West offers a diverse range of beverages and products made from locally sourced, high-quality, and fresh ingredients, which are selling well as people return to offices and coffee shops. On August 3, the company announced the expansion of Little West to Canada. Little West has launched a Canadian version of its e-commerce website and plans to expand wholesale distribution throughout the country.

PlantX is expected to be one of the long-term winners as veganism brings significant changes to the food industry. Capital Y Management, a New York-based hedge fund, published an independent research report on PlantX in July, referring to the company as “a market leader with a revolutionary business in a growing industry with long-term tailwinds.” Capital Y Management has set PlantX a 12-month price target of C$0.67 per common share, equating to a C$68 million enterprise value for the company. According to the report, PlantX’s partnerships with Amazon and Walmart are likely to increase the company’s sales by 12%.

PlantX seems poised for sustainable growth as it continues to invest heavily in improving the quality of its existing services and programs in order to raise brand awareness and expand its customer base. PlantX announced the U.S. expansion of its XMeals online platform on June 23 by launching its new website, XMeals provides a subscription service as well as one-time purchases from PlantX’s weekly à la carte menu options. Customers in the United States will now be able to access XMeals’ plant-based menu items, chef-curated meals, and 3- and 5-day meal plans selected by a licensed dietitian and member of the Medical Advisory Board.

Additionally, PlantX has been granted permission to sell and distribute alcoholic beverages at its retail locations in Chicago, Illinois, and Venice Beach, California. With the alcohol license, the company will be able to deliver alcoholic beverages across the United States for orders placed on its U.S. e-commerce platform, as well as offer same-day delivery through partnerships with UberEats and Instacart. The authorization grants PlantX access to the $284.10 billion alcoholic beverages market, and PlantX’s goal of providing high-quality, sustainable, and ethical alcoholic beverages will provide the company the competitive edge it needs to succeed.

PlantX has accomplished significant milestones this year and continues to expand its partnerships and product offerings. The company’s strong brand portfolio and online channels continue to drive positive revenue growth. In addition, PlantX is eliminating entry barriers to promote environmentally friendly and animal cruelty-free living by supporting new and established plant-based brands through the “Vegan Popup by XMarket” initiative. These initiatives, including a customer awareness program, partnerships, and an expansion plan, have all produced excellent results and will continue to do so in the future.

Navigating the Current Market: What Spikes in Inflation Mean for your Stock Portfolio

Inflation in the US has become one of the most popular topics in headlines during the past few months, with many articles focused on why it is spiking and what can be done to bring it under control. The big question for investors, however, has been what to expect from the market as spikes in inflation continue to affect the economy.

“The general impact of inflation on the market is insidious,” explains Josh Answers. “It’s gradual and subtle at the same time, which is why gauging its real impact on the market can feel elusive.”

Josh is a financial streaming pioneer and 15-year stock market veteran who hosts the YouTube channel The Trading Fraternity as well as The Stock Market Live, where he streams live content seven hours a day covering the stock market and finance markets. 

“The cold fact of the matter is that nobody really knows how the market is going to respond,” Josh says. “This is why a lot of people — myself included — flip back through history books to see what happened the last time anything like this occurred. Looking back at the track record of the 1970s, you find a lot of features that are similar to today. I would say the 70s provide us with a perspective to help navigate through this inflationary period.”

As Josh explains, inflation in the US in the late 1970s rose from 2.7 percent to 12.3 percent in less than 24 months. It then declined slightly for a year before jumping back up to 14.7 percent. During that cycle, which took almost a full decade to complete, inflation rates experienced numerous spikes and drops.

“Inflation doesn’t just surge up overnight,” Josh explains. “The spikes that we see are essentially the process through which inflation builds up or sheds down. Spikes in inflation in the 1970s pretty much came in two year blocks, and that seems to be the same trajectory we are on today.”

In April of 2021, The White House announced that inflation, which it identified as a possible effect of the COVID-19 pandemic, was a risk that it was “monitoring closely.” As inflation rose throughout the summer of 2021, the US Federal Reserve labeled it transitory, believing that the factors causing the increase would correct themselves. By January 2022, however, inflation in the US had hit a 40-year high and was continuing to climb. In recent months, experts have proclaimed that protracted, not transitory, is the correct terminology for describing this period of inflation.

“It’s hard to anticipate anything in this environment, but it is certain that volatility will plague us until we gain more certainty on where the economy and policy are going,” Josh says. “With that in mind, you shouldn’t be afraid of volatility, but you should be prepared.”

One approach that experts advise in the current market is maintaining a balanced portfolio and keeping a keen eye on cash balances. Although buying is not something that investors should fear during times of inflation, they should avoid positioning themselves too heavily in any one sector.

“At the later end of the inflationary cycles — the final spike — stocks tend to outperform, so there is nothing wrong with holding on to some growth stocks,” Josh explains. “Still, in an inflationary environment, dividend stocks are some of the best hedges as they provide stable income that usually increases on a yearly basis. The dividend yields can compound and help pad the stats if the volatility lasts longer than expected.”

Another lesson to learn from the inflation in the 1970s is that inflationary spikes do not last forever. Navigating the current market may be like sailing through a storm, but the storm will eventually pass.

“Any investor can outlast any storm with enough time and money,” Josh says. “There may be some economic pain with the market paying the price, but history tells us they always climb back. I preach the long-term portfolio and waiting it out. In some cases, investors are better off smashing their computer after buying a stock and not looking at its performance for years. If you are on the younger side, and have time on your side, a long-term approach and focus is the way to go.”

Heavy Recession One of the Solutions to Combat Inflation, According to Analysts

The United States is currently experiencing the worst inflation in history. As a result, the Federal Reserve was forced to take extreme measures to tame the prices that politicians deliberately dragged the economy into a deep recession.

On Friday, Bank of America strategists said market prices indicate inflation will fall to or below the Fed’s 2% target over the next two years. However, this will require a severe economic downturn.

“What seems to be forgotten here is that inflation is a sticky, slow moving variable,” analysts wrote. “Spikes can reverse quickly, but underlying inflation tends to move in a gradual legged fashion with respect to the economy. It is going to take time to cool off the labor market and even more time to lower labor cost-driven inflation.”

Research from the New York Federal Reserve shows that inflation expectations hit an 11-year high on Monday, which analysts say will take time to moderate.

Meanwhile, a sharp rise in inflation expectations last May prompted Fed officials to approve a 75-basis point rate hike, the first since 1994.

“The market is not a good gauge of inflation expectations for ‘real people’ and investors have an oversimplified view of the link between growth and inflation,” wrote Ethan Harris. “In our view, it is going to be extremely hard for the Fed to get inflation back to target in a two-year time span.”

The note from the Bank of America analyst came just days before the release of the new CPI data, which they believe will be complicated. Economists interviewed Refinitiv, which predicts inflation will rise 8.8% year-on-year in June, the highest point in 41 years.

At the same time, fear is growing on Wall Street that the Fed may cause a dip as it raises interest rates to the fastest rate in more than three decades to catch up with runaway inflation.

Last month, Fed policymakers approved a 75 basis point rate hike, extending the federal funds target range from 1.5% to 1.75%.

Chairman Jerome Powell told reporters that a similar hike is scheduled for July as inflation remains stubbornly high. However, the announcement prompted investors to re-evaluate the economic outlook. Officials also revealed an aggressive path of rate hikes for the remainder of 2022.

New economic projections released after the meeting indicate that politicians expect interest rates to hit 3.4% by the end of the year, a level last seen in 2008.

Ethan Harris previously estimated the probability of a recession in 2023 at around 40%.

“Our worst fears around the Fed have been confirmed: they fell way behind the curve and are now playing a dangerous game of catch up,” Harris wrote in June. “We look for GDP growth to slow to almost zero, inflation to settle at around 3%, and the Fed to hike rates above 4%.”

5 of the best-selling stocks of September

A potential economic recovery, coupled with the federal government’s unprecedented fiscal stimulus, causes the S&P 500 to record all-time highs. But the unemployment rate in the United States, around 10%, has many investors skeptical of the market’s strong recovery.

Investors often use short selling to measure market sentiment. Short sellers place bets on individual stocks. Many times, short-sellers see a critical flaw in the underlying activities of a business. Other times they think that an otherwise high-quality stock has risen too high too quickly.

But while a sizeable short position can be a red flag for some companies, stocks with a high percentage of the short float are often vulnerable to temporary pressures. Short-term pressures are large, short-term spikes in the stock price triggered when short sellers are forced to close their positions at the same time.

S3 Partners analyst Ihor Dusaniwsky says these five best-selling stocks are getting the most attention from direct short sellers in September:

Apple (AAPL)

Apple was one of the best performers in the market in 2020 and is up over 80% since the start of the year. In August, Apple made history when it became the first megapack tech stock to reach a market cap of $ 2 trillion, and the stock showed no sign of slowing towards what could be a massive iPhone 5G upgrade cycle. Apple also recently completed a 4-to-1 stock split after a multi-year run to record highs.

Apple’s short sellers can bet that the 5G iPhone launch will be a top for the stock, or they can use Apple as a hedge against long positions in other stocks. Whatever the reason, Dusaniwsky claims Apple has $ 14.3 billion in short-term interest, more than any other stock in the world except Tesla (TSLA). With Apple stocks soaring, short-sellers are stepping into their shoes.

GSX Techedu (GSX)

GSX Techedu is a Chinese online training and mentoring company. The stock skyrocketed over 330% in 2020, but some high profile short-sellers are taking this up. In the last quarter, GSX saw 382% revenue growth and 336% net profit growth, but overdraft companies Citron Research, Muddy Waters Research, and Grizzly Research all accused financial fraud.

In early August, Citron compared GSX to the fraudulent German payment processor Wirecard. Dusaniwsky says short sales in GSX started to ramp up in late March. But many of those short-sellers have suffered heavy losses due to gains since the beginning of the year.

GSX short sellers may be encouraged by other recent Chinese frauds, most notably education company TAL Education Group (TAL). GSX Techedu has $ 2.61 billion in short-term interest, up to $ 336.6 million in the past three weeks alone.

Sea (SE)

Sea is a mobile and PC gaming platform, e-commerce developer, and marketplace operator headquartered in Singapore. Sea shares have risen about 298% year to date and 1,040% since August 2018 as the global health crisis has given a significant boost to the gaming industry.

Sea went public in 2017, and it is a Free Fire mobile game amassed up to 80 million daily active users. At the end of August, Sea reported nearly 188% annual revenue growth from e-commerce and almost 62% yearly revenue growth from digital entertainment.

While investors in the Sea see a company generating massive growth in a fast-growing technology field, short-sellers may see a stock that can overheat and a company that is not yet to report a profit. The earnings report didn’t deter short sellers. They added $ 185.8 million to their position over the past three weeks, bringing Sea’s total short interest to $ 4.14 billion.

Teladoc Health (TDOC)

Teladoc Health offers virtual access to healthcare providers. In early August, the company announced an $ 18.5 billion merger with Livongo Health (LVGO), a software company developing products to monitor and manage chronic disease.

Some investors have hailed the merger deal as a timely investment to expand Teladoc’s digital and remote healthcare services. But short-sellers may be interested in its debt and its high valuation relative to its historical reach. Teladoc will also take over Livongo’s $ 550 million deficit.

In the second quarter, which ended June 30, Teladoc recorded a 92% increase in paid members. Its stocks increased by around 150% in 2020.

Teladoc’s short sellers added $ 159.3 million to their positions over the past three weeks, bringing the stock’s total short interest to $ 1.69 billion.

Workhorse Group (WKHS)

Tesla received a lot of attention in 2020 because of its share price rise, but it’s not the only fleet of electric vehicles raising some eyebrows. Workhorse’s stock rose more than 480% in 2020, even surpassing Tesla.

Workhorse aims to replace gasoline and diesel delivery vehicles with its electric vehicle vans. Investors see an essential long-term opportunity for the company, but the massive rally in stock has set its bar high. Workhorse now has a market cap of around $ 1.9 billion despite only reporting $ 92,000 in second-quarter revenue.

A growing number of short sellers are starting to see the madness of seemingly random buying EV stock in 2020 as a potential bubble, and Workhorse’s early status could place it among the most vulnerable stocks if the bubble burst. Workhorse has a total of $ 435 million in short-term interest, up from $ 137.9 million in the past three weeks alone. Its selling interest also represents 30.7% of its free float, by far the highest percentage of all five stocks listed.

Restaurants That are Worth the Risk to Invest

While some shares of restaurants like Domino’s Pizza (ticker: DPZ) have done well during the pandemic, many others have not done so well. This can be an opportunity for investors. Here’s a look at seven budget restaurant stocks that have been defeated but seem to be able to weather the rest of the pandemic and end up rewarding investors willing to take the risk. In this list, you will find that multi-brand restaurant companies have performed better than those with only one name. That said, those stocks are all in negative territory for the year, and an economic recovery that includes a vaccine could potentially substantially boost all of these names.

Dave & Buster Entertainment (PLAY)

Right now, Dave & Buster “looks like a pretty cheap stock,” says Andy Barish, an analyst at Jefferies. He expects some recovery next year, but not to 2019 levels. After shutting down all of its sites temporarily due to the pandemic, the company had reopened 89 locations on September 9 – but all were operating under reduced hours and capacity limits as dictated by each site, new seating, and gaming configurations for promoting social networks. Distancing, a temporarily condensed food and drink menu, and extended cleaning and hygiene procedures. Dave & Buster’s is one of those companies that should be reborn once a vaccine is developed, and the economy is more substantial in 2021, said TG Watkins, director of equities at Simpler Trading. The stock fell more than 54% from the start of the year until mid-September.

Ruth’s Hospitality Group (RUTH)

Upscale steakhouses like Ruth’s Chris often don’t top people’s lists for to-go orders, and during tough economic times, many people may choose not to indulge inexpensive meals. In the month to date through July 28, comparable store sales at own restaurants declined 47% year-on-year. Shares of the company have fallen almost 43% since the start of the year through September 16. As the market leader in the premium food category, Ruth is a better-capitalized chain than many private companies. As some of them are closing, Ruth’s is expected to increase its market share over time, says Barish. “As we work through 2021, the number of competitive concepts out there,” he adds.

Denny’s Corp. (DENN)

Watkins uses Denny’s as an example of an investment case in which stock would not have to skyrocket beyond pre-pandemic levels to have the potential to make money for investors. The stock was trading at around $ 21 before the pandemic. At the closing price on September 16 of approximately $ 11, even just getting back to those levels would represent a gain of almost 100%. The recovery of the business is heavily dependent on the regulation of local restaurant dining rooms, which in turn is linked to the number of virus cases. In his latest report, for the quarter ended June 24, Denny’s said national sales at the system level and in the same store dropped dramatically from the same period last year. Although sales in the same store were negative, the pace of the decline slowed for most weeks of the quarter. But preliminary results showed that during fiscal July, the weekly decline picked up as several states resumed their dining room closures.

Restaurants in Darden (DRI)

Charles Lieberman, chief investment officer of Advisors Capital Management, believes the owner of the Olive Garden and LongHorn Steakhouse brands will survive the pandemic and end with less competition. While there is a risk of a spike again this fall, think that in six months, there will be at least one vaccine out. “Once we have a vaccine, all of these restaurants will have a higher price,” he says. Even though casual dining has been hit hard, Darden has done an excellent job with his business’s takeaway side, says R.J., analyst at Morningstar. Hottovy. And the company’s restaurants are affordable even with the economic downturn, he adds. Shares of Darden were down nearly 14% year-to-date through September 16.

Bloomin’ Brands (BLMN)

Like Darden, Bloomin ‘has several brands. Owning the Bonefish Grill, Outback Steakhouse, and Carrabba’s Italian Grill brands means this restaurant has more in stock than one-brand restaurant businesses in case a brand struggles, Watkins says. However, the company’s shares fell more than 25% from the start of the year through September 16. During the second quarter, the company’s sales fell by more than 43%. But BLMN has managed to keep all of its locations substantially open thanks to rapid growth in off-premises sales. “The investments made over the past several years to enhance the customer experience and rapidly pursue the emerging delivery opportunity have been critical to our success in tackling this pandemic,” CEO David Deno in a press release in July. “With the outbreak of this pandemic in March, we were able to quickly switch to a business model that was only outside the buildings, as dining rooms were forced to close.”

Restaurant Brands International (QSR)

Shares of Restaurant Brands International, owner of the Burger King, Tim Hortons, and Popeyes Louisiana Kitchen brands, are down more than 11% since the start of the year through September 16. The company sought to transform the struggling Tim Hortons brand even before the pandemic. But the Popeyes brand is a breakthrough in the restaurant business and has potential for international growth, says Hottovy. He says the company has recruited more aggressive franchisees for Burger King, who will open more restaurants or refurbish existing ones. In the second quarter, while comparable-store sales at Tim Hortons and Burger King declined 29.3% and 13.4%, respectively, comparable store sales for Popeye’s were up nearly 25%.

Yum Brands (YUM)

Yum Brands, which owns domestic brands Kentucky Fried Chicken, Pizza Hut, and Taco Bell household brands – is the best-performing title in this group. But it’s still down nearly 6% from the start of the year through September 16, potentially offering an excellent deal to patient investors. NPC International, Pizza Hut’s largest franchisee, went bankrupt earlier this summer. But this business was in trouble even before the pandemic, says Hottovy, and he thinks Yum!, on the other hand, can come out stronger on the other side by putting Pizza Huts in the hands of more vital franchisees or removing less performing locations. Meanwhile, Taco Bell is growing and has potential for global growth, while KFC has done well by positioning itself as a value-for-money family restaurant, he says.

Investors Warned to Prepare as S&P 500 Enters Bear Market Territory

The Bank of America has announced on Monday that the S&P 500 is now in a bear market, warning investors that they will be in misery for a while.

The Federal Reserve has raised interest rates again, increasing the risk of volatility in stock prices. The Fed is expected to hike 75 points on Wednesday, which is significantly higher than the expected 50 points hike.

CPI’s inflation report on Friday indicated no signs of slowing down, and today’s hot numbers are only making things worse.

Read also: Americans’ Wealth Afflicted By the Stock Market Crash

The Bank of America isn’t alone in thinking that we’re close to the bottom for stocks. Others shared similar sentiments with them, and say it may not be until inflation prints its highest price yet again before things start improving.

“Wall Street sentiment is dire but no big low in stocks before big high in yields and inflation,” said the Bank of America. “The latter requires uber-hawkish Fed hikes in June and July.”

Global growth optimism is at its lowest point in 14 years, and corporate profit outlooks are the worst since 2008. This can be attributed to a decline of global economic activity which has been caused by inflation reaching unprecedented levels, causing ripples of ominous sentiments on Wall Street.

The bear markets of the past have shown a V-shaped recovery, with prices dropping steeply in late summer and then making their way back up. The indicator that is being used here seems to indicate there could be more pain ahead for investors who buy stocks when they’re at low points like this one right now.

Data was analyzed by Chris Murphy from Susquehanna International Group, who found some interesting statistics about 12 bear market sell-offs since 1945.

Chris Murphy of Susquehanna International Group analyzed all 12 bear market sell-offs that occurred through the decades.

“Looking at the other 12 bear markets, we see that on average, after the SPX enter bear market territory, it continues to fall another 14%, taking 103 trading days before reaching a bottom,” said Murphy.

The S&P 500 is still far from its all-time high, and a similar decline could send it down to 3,250.

Read also: Stock Future Takes a Dip While Wall Street’s Momentum Shows Irregularities

Americans’ Wealth Afflicted By the Stock Market Crash

The market had been volatile for months before it finally took a turn to the downside. America’s wealth is now at risk due to the plummeting of the stock market.

The Federal Reserve Bank’s data on Thursday revealed that the net worth of households and non-profit organizations dropped in Q1, from $0.5 trillion to just under $149.3 trillion dollars. This is a notable turnaround compared with gains started in mid-2020 when house prices and equities rose quite steeply.

The stock market movement early this year reflects the decline, losing $3 trillion from the value of directly and indirectly held corporate equities, pushing the holdings to a total value of $43.6 trillion.

The market had its worst quarterly performance in over five years. The Dow Jones Industrial Average and S&P 500 dipped by 5%, while the Nasdaq Composite intensified a plunge at 9%, making it one of most alarming periods for equity markets since 2020 when the COVID-19 pandemic occurred.

Read also: Stock Future Takes a Dip While Wall Street’s Momentum Shows Irregularities

While the COVID-19 pandemic is surely to blame, it’s not the sole factor to the declining market. The high oil prices have also caused people’s disposable income to grow less, which in turn leads them into debt more easily than before because they need gas for work or transportation. Inflation and the Federal Reserve’s interest rate hikes also added to the market’s decline, along with the Russian invasion.

The Fed pointed out that a high rate of personal savings played an important role in the decline. Additionally, real estate values rose $1.7 trillion leading up to this point, which may have had some effect as well.

The ratio of household net worth to disposable income is near its record high, and it continues to be above the pre-pandemic level from 2019.

The Federal Reserve reported that household debt grew by 8.3%, an indication of the strong growth seen within home mortgages and consumer credit.

Home prices continue to rise, and people are borrowing more than ever before in order to keep up. Mortgage debt increased by 8.6% revealing that many Americans have been taking out additional loans on their credit cards as well as auto lending, jumping by 8.7%.

Read also: Monday Showed No Improves as Stock Futures Dipped


Stock Market Among Other Factors to a Wealth Decline in Early 2022

Monday Showed No Improves as Stock Futures Dipped

The stock market has been in a fragile state as of late. Monday evening showed no improvements as stock futures took another dip following a sleepy day of trading with investors waiting for crucial inflation data that will come out later this week.

It was found that futures tied to the Dow Jones Industrial Average fell by 0.1% along with S&P 500 futures and Nasdaq 100 futures, each taking a 0.1% dip.

During regular trading, the three stock market indexes managed to finish a little higher yesterday. Dow Jones Industrial Average finished the day with 16 points, which equals less than 0.1%, jumping more than 300 points earlier that day. Meanwhile, the tech-heavy Nasdaq Composite progressed to 0.4%, while the S&P 500 added 0.3%.

The indexes returned most of their gains from earlier that day as the 10-Year Treasury yield spiked to 3%, hitting its highest level in over a month.

There were no U.S. economic data releases on Monday, while the Federal Reserve had no earnings reports for major companies during the blackout period. Investors are still contemplating the recent bounce in stocks, wondering if the event is a bear market rally or if the market hit rock bottom from this year’s sell-off. 

Ed Yardeni, president at Yardeni Research, a sell-side consultancy that provides global investment and business strategy services, spoke on CNBC’s Closing Bell: Overtime and said:

“Since the beginning of the year, we’re seeing an altitude sickness when you look at the valuation multiple,” he shared. “To a large extent, clearly, with the benefit of hindsight, the market was overvalued. A lot of that was in the negative cap seat, big-cap names, related companies. I think we’ve seen a tremendous correction in that area. And now the question is whether the market can accept the kind of earnings expectations that analysts are delivering and whether those expectations will be correct.”

Regardless, investors are still tracking a lighter week in company earnings. For example, Cracker Barrel, J.M. Smucker, and United Natural Foods are all slated to report on Tuesday.

In economic data, last month’s consumer price index reading is the primary focus for investors, which is due on Friday. Comparing the readings to April’s numbers, some expect it could be a sign that inflation peaked.

Upstart Shares Dropped 40% after Slashing Its Predication for the Whole Year

Shares of Upstart Holdings Inc. dropped more than 40 percent in after-hours trading Monday after the firm slashed its prediction for the whole year, saying that the current macroeconomic backdrop is projected to weigh on loan volume.

The company, which makes loan decisions with the help of artificial intelligence, now anticipates revenue of over $1.25 billion in 2022. The company had previously predicted revenue of $1.4 billion.

“On the margin, a whole lot of folks that would have been approved are no longer approved,” Chief Executive Dave Girouard said on Upstart’s UPST, -8.06 percent earnings call, due to the spike in consumer interest rates.

Many people have been denied loans, while others have been approved, but the interest rate is a few percentage points higher. “So there’s a whole bunch of loans that just never happened, and there are people who are still approved, but the interest rate is a few percentage points higher, and a certain fraction of them are going to decide that that’s not the product that they want,” said the economist.

The absence of government stimulus activities has caused delinquencies to rise, according to Chief Financial Officer Sanjay Datta, despite the fact that they had been “unnaturally low” for the previous 18 months.

Upstart has witnessed a stability in delinquency patterns over the last 60 days, but the characteristics of delinquency also contribute to higher interest rates quoted to consumers, he said.

As a result of the uncertainty in the macroeconomic environment and the potential for a recession later this year, we have decided to be more cautious in our forecasts,” Datta said on Upstart’s earnings call.

Upstart expects revenue of $295 million to $305 million in the second quarter, but experts had predicted $335 million.

Analysts had predicted $300 million in revenue for the most recent quarter, but Upstart’s revenue rose to $310 million from $121 million.

While FactSet predicted $287 million in fee income, the company collected $314 million in fee revenue, an increase of 170 percent.

At 34 cents per share, first-quarter net income for Upstart was $32.7 million, up from $10.1 million (or 11 cents per share) a year earlier. Stock-based compensation and other costs were factored into the results, and Upstart ended the quarter with earnings per share of 61 cents, compared to 22 cents a year earlier and ahead of the FactSet average estimate of 53 cents.

On the earnings call, Girouard commented, “We are actually extremely pleased and quite thrilled with the results.” Even though 2022 is “a tough year in the economy,” he stated that he is “exceptionally confident in the strength of the business and bullish about our future, as we have been.”

It has lost 31 percent of its value in the last three months as the S&P 500 has dropped 13 percent.