Ever since the benchmark S&P 500 recovered from the slump it went into at the onset of the coronavirus pandemic in March last year, it has regained all the losses and gone on to rise to record highs- a feat it maintained throughout this week. On Tuesday, August 3, 2021, the S&P closed at a record high after capitalising on gains in Apple Inc. (ticker: AAPL) and healthcare stocks like Moderna, which keep rising due to their COVID-19 vaccine and other medicines, despite growing concerns over a surge in the Delta variant of the coronavirus around the globe.
Ten of the 11 companies that make up part of the S&P index closed Tuesday’s trading session with gains, and this was the same with the S&P Energy Sector (SPNY) recovering from the dives following a dip in oil prices in the previous few days.
According to Reuters Business, Jamie Cox, the Managing Partner at Harris Financial Group, said that total shutdowns of the global economy will probably not happen again, even though the COVID-19 pandemic is still ravaging through some countries and causing all forms of fluctuations in their economies. Cox noted that as the economies continue to reopen and recover, more people now have more to spend, driving up consumption levels. It is common knowledge that the more people consume, the better markets perform.
Apple, the largest company in the world by market capitalisation, rose 1.26% yesterday after dropping a few percentage points last week after releasing its Q2 FY2021 earnings report that beat expectations. However, other tech giants like automaker Tesla (ticker: TSLA), social media giant Facebook (ticker: FB), and video streaming service Netflix (ticker: NFLX) all traded slightly lower, affecting tech-heavy Nasdaq gains.
Apple is not the only company that released a glittering earnings report but saw its shares drop in the following hours or few days of trading. Companies like industrial materials maker DuPont de Nemours Inc. (ticker: DD) and mass media factual television company Discovery Inc. (ticker: DISCA) had quarterly earnings reports that beat analysts’ expectations. Still, their shares fell after the release of their reports. DuPont and Discovery shares are currently trading at $74.39 and $27.87, respectively.
China regulations having a toll on the global technology sector
In the past few months, we have seen Chinese regulators stepping up their regulatory actions, mainly targeting technology companies. Radical policies like banning financial institutions from accepting and processing bitcoin transactions, to clamping down on ride-hailing company Didi only days after going public on the New York Securities Exchange. The regulators in Beijing are not here to play, and their actions are affecting investors around the globe with Chinese tech firms in their portfolios.
Yesterday, shares in Chinese tech firms that are publicly listed in the US and Europe, specifically those in video games, fell after a steep sell-off in China’s social media and video games group Tencent Holdings Ltd (ticker: TCEHY). The company saw its stock drop 10% after a Chinese news outlet called it “opium”. The company, one of the largest tech companies in China by market value, is being pushed into significantly reducing the amount of time children can spend playing its video games. The move could be welcomed by parents and guardians alike, but certainly not Tencent and its shareholders.
Another company in the business of video games that saw its shares drop is Take-Two Interactive Software Inc. (ticker: TTWO). The company, which owns Rockstar, the makers of the ever-popular videogame called Grand Theft Auto, saw its stock drop 7.71% in the extended session on Monday, August 2, 2021. This was because Take-Two announced during the earnings call that it was delaying the release of some videogames, on top of releasing a weaker-than-expected earnings forecast for the next quarter, even though its Q2 FY2021 earnings beat expectations.
The benchmark S&P 500 hit record highs of 4,423.15 after adding 35.99 (0.82%) points on Tuesday, up from its previous record high of 4,422.30 points. Other indices like the Dow Jones Industrial Average (DJIA) and the tech-heavy Nasdaq Composite Index gained 278.24 (0.8%) points to 35,116.4 and 80.23 (0.55%) points to 14,761.30, respectively.
Later this week, investors and analysts are waiting to see the results of the US job report that the US Labour Department will release. It is worth noting that US employers have been adding more jobs since the reopening of the economy, and unemployment benefits claims have been dropping every other month.
In other stock news, Robinhood is surging
Last week on Wednesday, July 28, 2021, stockbroker Robinhood Inc. went public in the after-hours under the ticker symbol HOOD on Nasdaq. The company raised over $2 billion on its IPO after pricing its stock at $38 a share. The company had set aside 20% to 30% of its stock for its users on its trading platform, and it has since announced that over 310,000 of them bought the company’s stock.
The following few days were not rosy for the company; it saw its shares drop way below their IPO value, raising eyebrows and leaving investors questioning whether its IPO was timely; and, if so, whether it is even a good buy altogether.
However, these questions have ceased to exist and what is currently the talk on Wall Street is whether Robinhood is a meme stock or not. This is because since the dip a few days ago, the company’s stock has surged more than 40% in the previous few days, and it is currently trading at $64.35 a share, representing a gain of 37.50% today alone. At some point in today’s session, Robinhood traded as high as $85 a share. Even without the company releasing any major news bulletins that would spark this increased volatility, this rise has made Robinhood the most talked-about company name on Reddit’s Wallstreetbets forum over the past 24 hours.
Vladimir Tenev, the CEO of Robinhood, is happy with whatever is going on at Robinhood, just like any other CEO would be if his company is performing well in the markets. The company’s co-founder, who has been at the centre of scrutiny by regulators in the past few months, defended individual investors buying into stocks (otherwise referred to as meme stocks), saying that it helps companies who are dipping to access the capital they otherwise wouldn’t have.