Wall Street Breakfast: What Moved Markets

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Stocks mostly fell Friday but edged higher for the week, as traders examined the first batch of fourth-quarter earnings and a pair of closely-watched inflation reports. An unexpected downtick in producer price inflation provided a source of optimism on the session, although this was largely overshadowed by a jump in oil prices and a fall in shares of airline companies and health insurers. Bank stocks were also in focus amid a rush of earnings from the sector. Two-year Treasury yields tumbled to their lowest levels since May, dropping 24 basis points for the week, as an unexpected decline in producer prices reversed trader pessimism from a surprise bounce in consumer prices. For the week, the Dow Jones edged up 0.3%, while the S&P 500 gained 1.8% and the Nasdaq jumped 3.1%. Read a preview of next week’s major events in Seeking Alpha’s Catalyst Watch.

A plane accident that could have ended in tragedy put a spotlight on aerospace industry as a door plug on Alaska Airlines (ALK) Flight 1282 blew out and caused the cabin aboard the 737 Max 9 to rapidly depressurize. It was bad news for Boeing (BA) shareholders as the stock fell 9% premarket on Monday, while the door plug’s manufacturer Spirit AeroSystems (SPR), tumbled over 20%. During the week, United Airlines (UAL) also found loose bolts on multiple 737 Max 9 planes during inspections, as did Alaska Airlines, raising more concerns about the aircraft’s quality controls. SA analyst Tim Dunn sees schedule interruptions for several carriers, but Boeing and Spirit Aero will likely bear the brunt of investor concern. (34 comments)

On Tuesday, Hewlett Packard Enterprise (HPE) confirmed that it would acquire Juniper Networks (JNPR) for nearly $14B. The all-cash deal valued Juniper at $40 a share, a premium of roughly 32% to its closing price on Monday, when reports of a possible transaction pushed JNPR up 23% and HPE down almost 9%. The deal is expected to boost Hewlett Packard Enterprise’s artificial intelligence position via Juniper’s Mist AI, which optimizes wireless access. “HPE remains an undervalued company with the opportunity to accelerate the pace at which it is growing through the Juniper acquisition,” noted SA analyst Chetan Woodun. (21 comments)

A decades-long wait ended on Wednesday as the SEC finally approved 11 spot bitcoin (BTC-USD) ETFs after years of rejecting the applications. The move came a day after a fake tweet from the SEC’s account announced the approval, leading to bitcoin spiking to as high as $47,900. SEC commissioners had mixed reactions to the approval, but the first spot bitcoin ETFs debuted on U.S. exchanges with a roaring start as more than $4.6B worth of shares changed hands. Also see Bitcoin ETF Approval: What Does It Mean For Crypto Stocks by SA Investing Group Leader Bram de Haas. (194 comments)

Electric vehicle stocks were under pressure on Thursday after Hertz Global (HTZ) said it would cut its EV adoption losses by offloading a third of its global fleet to buy gasoline-powered cars. That’ll put 20,000 EVs up for sale, including those from Tesla (TSLA), in response to weak take-up and elevated repair costs. The decision adds to growing EV demand worries, which were already amplified by pullbacks on production targets. What about the rest of the fleet? Hertz plans to improve profitability by providing more charging stations and making it easier for customers to acclimate to an EV rental. (166 comments)

Oil prices responded to the U.S. and British airstrikes in Houthi-controlled areas of Yemen, with West Texas Intermediate (CL1:COM) climbing as high as 4% to $75/bbl on Friday. “These strikes are in direct response to Houthi attacks [that] jeopardized trade and threatened freedom of navigation,” President Biden declared, adding that he would “not hesitate to direct further measures” if necessary. The Houthis in response pledged to continue targeting ships around the Red Sea, while shipping rates continue to rise steeply as vessels face long delays. The average shipping cost for a 40-foot container nearly doubled since the attacks began, with $200B in cargo estimated to have been diverted since early December. (34 comments)

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