Worse-than-expected retail sales data sparked economic downturn fears
Inflation data and the Federal Reserve's interest rate decision dictated much of this week's market movement. Investors were fiercely optimistic to start, though the U.S. budget deficit widened to $248.5 billion in November. Both the Dow Jones Industrial Average (DJI) and Nasdaq Composite (IXIC) saw back-to-back, triple-digit gains, while the S&P 500 Index (SPX) reclaimed the 4,000 level thanks to a cooler-than-expected consumer price index (CPI) reading for last month.
That optimism came crashing down, though, after the Fed announced a 50 basis-point rate hike, bringing its benchmark interest rate to its highest level in 15 years. Plus, Fed Chairman Jerome Powell hinted at more rate hikes in 2023 as the central bank's fight against inflation continues. That downward spiral continued after disappointing retail sales data sparked recession fears, which pushed the IXIC and SPX to their worst single-day percentage drop since Nov. 2. At the time of this writing, all three major benchmarks were on track to log a second-straight weekly loss.
Tech Stocks Making Moves
Several tech stocks made headlines this week. Coupa Software (COUP) entered into a definitive agreement to be acquired by Thoma Bravo for $8 billion, while Oracle (ORCL) brushed off a quarterly win. Meanwhile, struggling Advanced Micro Devices (AMD) has been getting blasted in the options pits, and fellow chip maker Western Digital (WDC) received a downgrade to "sell."
Over in the social media realm, Pinterest (PINS) surged after drawing analyst praise, and options bulls swarmed Snap (SNAP) despite a Jefferies bear note. In addition, a bear signal was threatening to push ridesharing name Lyft (LYFT) even lower, while Maxar Technologies (MAXR) more than doubled thanks to a $6.4 billion acquisition deal.
Major Biotech Sector Updates
The biotech sector was in focus as well. Amgen (AMGN) will reportedly buy Horizon Therapeutics (HZNP) for $26.4 billion, with the deal expected to close in early 2023. Moderna (MRNA) was under the spotlight, too, after a mid-stage trial of its experimental melanoma vaccine combined with Merck's (MRK) immunotherapy showed encouraging results. Avidity Biosciences (RNA) also released positive trial data demonstrating the first-ever successful targeted delivery of RNA into muscle, while Novavax (NVAX) announced concurrent stock and debt offerings, and BioNTech (BNTX) revealed plans for a clinical trial hub in Taiwan for its MRNA-based cancer immunotherapies.
Plenty of Data to Unpack Before Christmas
The week before Christmas will pack a punch in terms of economic indicators. Most notably, the latest personal consumption expenditures (PCE) price index, durable goods orders, consumer spending, and housing data are on tap. And while the earnings docket is quiet, Cintas (CTAS), General Mills (GIS), Nike (NIKE), Rite Aid (RAD) will still report. Before then, look back at several "known unknown" events that triggered selling this week, and see why the second half of December could bring tailwinds to Wall Street.