Good morning and welcome to the stock market today! Investors are likely dealing with nerves ahead of a Federal Reserve meeting, and everyone on Wall Street is trying to figure out what is up with MoviePass. Once you appreciate the latest social media speculation, what else should you know? And what will the stock market do today? Dive in with InvestorPlace.
To start, the top movers this morning are an odd bunch. Plug Power (NASDAQ:PLUG) is slipping after announcing it will need to reissue financial statements. Helios and Matheson (OTCMKTS:HMNY) is up on Movie Pass speculation. Lastly, Cardano (CCC:ADA) is spiking thanks to news investors will soon be able to access it on Coinbase Pro.
So what else will the stock market do today? Here is a look at the top three stories.
What Will the Stock Market Do Today? Watch the Fed (Again).
Here we go again. This afternoon, investors will be closely tuned into Federal Reserve Chair Jerome Powell after the Fed concludes its two-day meeting. Although no one really anticipates rate changes or a shift in Covid-19 response, what Powell says is important.
As CNBC put it, investors need Powell to calm fears of inflation, especially with the American Rescue Plan now making its way into the economy. He needs to convince investors that these “extraordinary” actions by the central bank are necessary to help the economy grow. He also needs to balance that with fears that these actions will “overheat” the economy.
Why does it matter? At this point, inflation is what keeps investors up at night.
A recent survey from Bank of America found that global asset managers consider inflation the No. 1 risk facing the market right now. Importantly, this is the first time since February 2020 that Covid-19 did not nab the top spot. It also comes with changing expectations for inflation in coming months. The survey found that 93% of investors think inflation will rise in the next 12 months. This is the highest reading in the history of the survey. Additionally, 53% of fund managers are calling for above-trend inflation.
Although experts have been urging retail investors to stay calm and stop sweating inflation concerns, we are definitely seeing an impact ahead of Powell’s comments. Stocks are mixed on Wednesday morning, and cryptocurrencies are also feeling the pressure.
What should you do? InvestorPlace analyst Luke Lango understands the jitters. However, he says the unchanged commitment to accommodative policy is a good thing for the stock market. Consider his words if you feel panic setting in.
Retail Sales Need Some Retail Therapy
Yesterday investors learned that retail sales fell 3% in February, coming in much worse than estimates for a 0.5% decline. Beyond that, Bespoke Investment Group says the month-over-month drop was the fifth-largest since 1992. Now that the initial shock has subsided, what does this mean for the economy?
According to experts, the retail sales miss is nothing to worry about. Here is how Myles Udland and Sam Ro put it for Yahoo Finance this morning:
“But if we take a half step back, this sharp drop in retail sales last month is both explicable and changes little about the anticipated course of the U.S. economic recovery.”
In other words, the February sales figures were not ideal, but they do not necessarily have any weight on March sales or the recovery story we are watching unfold. The February numbers were also a result of one-time events. For instance, the Texas weather crisis left millions of residents without power and wiped out economic activity. We also saw the aftermath of $600 stimulus checks in January. With both of these factors in the rear-view mirror, economists think March should look a whole lot more normal.
Plus, March will also bring American households another round of stimulus checks.
In anticipation for a big surge in consumer spending, some analysts are turning to retail stocks. One potential winner is Garmin (NASDAQ:GMRN), which Wall Street thinks could benefit from a new focus on fitness. InvestorPlace analyst Matt McCall did some research of his own and is eyeing retail stocks for the a big recovery. Here are some of his top picks now.
Puppies Take Wall Street
One of the top movers in the stock market this morning is FSD Pharma (NASDAQ:HUGE), a little-known drug manufacturer. It turns out that HUGE stock is rallying on news of its move into the pet care market through a licensing agreement with Innovet Italia. FSD Pharma will use its tech to produce FDA-approved treatments for gastrointestinal conditions in dogs and cats. Shares were up as much as 50% in pre-market trading.
As InvestorPlace contributor Robert Lakin highlighted, this story is similar to that of Zomedica (NYSEMKT:ZOM). The popular company is just about to commercially launch its Truforma platform, and investors have been bidding up ZOM stock for months as a result. Everyone wants the best treatment for Spot and Fido, and Zomedica and FSD Pharma are promising to provide it.
What does this mean for investors? Importantly, the pet care story is not new news. Since the early days of the pandemic, households have been adopting dogs and cats to get through months at home. As a result, spending on pet food and veterinary treatments has rapidly grown, creating opportunities for astute investors. What is relevant today is the continued success of plays like HUGE and ZOM. Perhaps that is because unlike my purchases of super niche products to pass time at home, my recently adopted puppy is with me for his lifetime. That means even once the pandemic is over, I’ll still be spending big bucks to give him care.
Keep these plays on your radar — I have to go pet my dog.
On the date of publication, Sarah Smith did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Sarah Smith is a Web Content Producer with InvestorPlace.com.