SUPERNEWS

Macro

Stocks Wobble, Novavax Soars 122%, Bitcoin Drops Amid Inflation Woes

Consumer sentiment hits six-month low at 67.4, driving mixed market reactions and highlighting inflation concerns.

By Barry Stearns

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5/10, 12:53 EDT
S&P 500
iShares 20+ Year Treasury Bond ETF
iShares 7-10 Year Treasury Bond ETF
Akamai Technologies, Inc.
Charter Communications, Inc.
Moderna, Inc.
Mettler-Toledo International, Inc.
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Key Takeaway

  • Dismal May consumer confidence report halts stock gains, raises stagflation risks with inflation expectations surging.
  • Novavax Inc. soared 122% on a Covid-19 vaccine licensing deal; MacroGenics Inc. plunged 77% after a negative drug study update.
  • Treasury yields and the dollar rose, while Bitcoin and tech stocks struggled amidst growing economic concerns.

Consumer Sentiment Hits Six-Month Low

The University of Michigan's May consumer report revealed a significant drop in consumer sentiment, reaching its lowest level in six months. This decline was driven by heightened near-term and long-term inflation expectations, surpassing analysts' forecasts. The sentiment index plummeted to 67.4 from 77.2, with consumers now expecting prices to climb at an annual rate of 3.5% over the next year, the highest in six months. This shift reflects growing concerns about high interest rates and the potential impact on the labor market and consumer spending. Joanne Hsu, director of the survey, highlighted the broad decline across various demographic groups and noted the potential implications for consumer spending and economic growth.

Market Reactions to Inflation Worries

Following the release of the consumer sentiment report, the financial markets exhibited mixed reactions. The S&P 500 slightly dipped by 0.1%, interrupting its weekly gain streak, while the Dow Jones Industrial Average managed a marginal increase, aiming for its eighth consecutive session of gains. Conversely, the rising inflation expectations bolstered the dollar, setting it on course for a positive weekly close. Treasury yields saw an uptick across all maturities, with the 10-year benchmark reaching 4.50%. Gold prices surged to $2,385/oz, reflecting investors' search for safe-haven assets amid growing inflation concerns.

Sector and Stock Movements

The report's implications extended to various sectors and individual stocks. The Financials Select Sector SPDR Fund experienced movements, while Novavax Inc. saw a remarkable surge of 122% following a Covid-19 vaccine licensing deal with Sanofi. On the downside, MacroGenics Inc. plummeted by 77% after reporting several deaths in a mid-stage study of a cancer drug candidate. Other notable movements included Charter Communications Inc., which rose 0.6% after announcing a tender offer, and Moderna Inc., which fell by 4% due to a delay in the FDA's review of its RSV vaccine. Earnings reactions also led to significant price changes for companies like Gen Digital Inc., Mettler-Toledo International Inc., and Akamai Technologies Inc.

Street Views

  • Chris Zaccarelli, Independent Advisor Alliance (Neutral on the market):

    "If spending slows down and inflation increases, we'll get the opposite of the Goldilocks scenario that many were hoping for, and the Fed will be in an especially difficult position of choosing between accommodating a slowing economy and fighting increasing inflation expectations."

  • Jeffrey Roach, LPL Financial (Bearish on the market):

    "Sees rising risks of stagflation, a concern that could unsettle markets."