The past week in markets summarized in three short headlines.
1. Rebounding
The markets opened and closed the week on a high note, with both rallies resulting in considerable gains for all three major U.S. Indexes. The Dow Jones finished up 4.9%, the NASDAQ 5.2%, and the S&P 500 4.8% as investors rallied hard following promising quarterly earning’s news and chances for increased interest rates. The second week of earnings results showed surprising growth, beating analysts’ expectations. Third-quarter net income is now projected to rise 1.5% from this time last year, a mark above the 1.3% expected by investors.
However, Treasury yields continued to rise this week, recording a high of 4.60% mid-week, the highest it’s been since 2007. This increase in yield rates signifies investors taking money out of the market — not a good sign for traders looking to see a consistent move upward for the market. Despite inflation and recession concerns, the labor market continues to hold firm, with unemployment claims down from the previous month. This key metric demonstrates that the labor market continues to stay strong amidst concerns about an economic downturn.
2. The Bigger They Are…
Tech giants across the board have started to fall recently. The expression “the bigger you are, the harder you fall” is clearly shown by the leading tech companies, as the effects of the pandemic are seeming to hit companies like Google and Microsoft 2 years after its original effects. With Amazon down 32% and Google down 28% in the 12 months, investors fear that the downturn could be a delayed result of the pandemic.
Tech companies, expecting their unexpected pandemic growth to continue, overhired and overproduced supplies. Now forced to lay off employees, many analysts believe that the companies are simply succumbing to the opinions of their shareholders, trying to minimize losses and maximize their on-paper profitability.
3. FedEx Origin Story
The household delivery name, FedEx, is synonymous with overnight delivery in the present. However, in its early days, FedEx wasn’t as successful as you would imagine. Millions of dollars in debt, with their funds dwindling and not enough money to buy fuel for their planes, the owner of FedEx, Frederick Smith, took a ridiculous risk. Taking the last $5,000 in FedEx’s coffers, he impulsively traveled to Las Vegas and gambled it on a game of Blackjack. Walking out of the casino with $27,000, Smith was able to continue operations and took the win as a sign of things to come. Fast forward a couple of years, FedEx became a public company and its success continued. The company now delivers over 1.2 billion packages across 220 countries around the globe, and it is now worth $39.37 billion.
Summary
Off strong earnings results, the market rebounded to recoup some of the recent losses it has endured. Contributing to these losses is the downfall of the market’s tech companies due to the delayed effect of COVID. FedEx, a household shipping company name, was once down to its last $5,000 when its owner decided to risk it all.
