What a way to start the week! As we wait for earnings to kick off, investors had a lot of news to process from all corners of Wall Street. So what did the stock market do today? Dive in with InvestorPlace.
To start, the major indices all ended the day in the red. The S&P 500 shed 0.02%, while the Dow Jones Industrial Average lost 0.16%. The tech-heavy Nasdaq felt the pain of rising Treasury yields, losing 0.36%. GameStop (NYSE:GME) made waves with its CEO announcement, and the upcoming Coinbase IPO continues to drum up attention.
So what else did the stock market do today? Here is a look at the top three stories.
What Did the Stock Market Do Today? Prep for Earnings Season.
Investors are bracing themselves for the start of the first-quarter earnings season, and Wall Street is not entirely sure what to expect. As usual, bank stocks lead the way, with Citi (NYSE:C), JPMorgan Chase (NYSE:JPM), Goldman Sachs (NYSE:GS) and Wells Fargo (NYSE:WFC) kicking things off. Monday saw the major indices sell off in advance.
Why? Well, many analysts are still calling for year-over-year declines in earnings and revenue, thanks to ongoing impacts from Covid-19. In fact, the consensus estimate calls for an 8.8% drop in S&P 500 earnings this quarter. As InvestorPlace contributor Chris MacDonald wrote today, investors are reacting to this upcoming volatility. Fallout from the Archegos Capital Management situation is also weighing on bank stocks, with top names calling for Q1 losses. Plus, continued movement in the 10-year U.S. Treasury note has growth stocks on edge, creating other uneasiness in the stock market.
Does this uneasiness mean investors should panic ahead of earnings? MacDonald does not think so, highlighting how much has changed even since Q4 earnings. The Federal Reserve gave banks the green light to resume share buybacks and dividend hikes, two positives for investors. These restrictions could further loosen.
InvestorPlace contributor Chris Markoch agrees. He wrote today that investors have several reasons to believe in a continued rally among bank stocks. Markoch is watching seven bank stocks ahead of earnings, including Ally Bank (NYSE:ALLY) and Truist Financial (NYSE:TFC). You can check out his full list here.
The Battery Deal That Saved the Day
Investors should pay attention to a big story brewing in the world of electric vehicles.
Over the weekend, South Korean battery makers LG Energy Solution and SK Innovation reached a settlement, ending a battle over EV battery tech. Most importantly, President Joe Biden said that this settlement is a win for American workers — and for automakers like Ford (NYSE:F) and General Motors (NYSE:GM).
But what happened? And what was at stake for top EV stocks?
Over the last two years, LG and SK Innovation have been battling it out. LG initially lost a bid for Volkswagen (OTCMKTS:VWAGY) orders, and ultimately accused SK of stealing trade secrets. The companies filed complaints against each other and brought their case to the Biden administration. At stake in the ongoing fight was a disruption to EV supply chains, a key focus of the American Jobs Plan. Over the weekend, the two companies reached a settlement that will allow automakers to keep electrifying without delay. SK Innovation agreed to pay an LG subsidiary $1.8 billion, and both companies will drop all litigation in the U.S. and in South Korea.
What does this mean for investors? The bottom line is that as the U.S. looks to ramp up electric vehicle production, the settlement is a good thing. Ford, General Motors and Volkswagen are already struggling thanks to an ongoing chip shortage. With this battery tech dilemma in the rear-view mirror, EV stocks have one less thing to worry about.
What Happened With Alibaba?
Alibaba (NYSE:BABA) was one of the top tickers in the stock market today, gaining 10% in trading. However, market commentators were quick to point out that the reason for the rally was a bit unusual.
Investors learned over the weekend that China’s State Administration for Market Regulation (SAMR) levied a record $2.8 billion fine on the e-commerce giant. This comes as Alibaba has faced antitrust scrutiny in China, and after SAMR found it was guilty of abusing its dominant position. The regulatory agency also said that Alibaba would need to submit a self-examination compliance report in three years.
So why did investors send BABA stock climbing in response to a $2.8 billion fine? As Barbara Kollmeyer wrote for Barron’s, it appears that a weight has been lifted off the company. In other words, investors now know what the punishment is, and Alibaba can move forward. Plus, the company appeared to take the fine well, thanking the Chinese government for protecting the fair market.
Was this rally the right response? InvestorPlace analyst Matt McCall agrees, writing today that investors should jump into BABA stock before it is too late. Calling the fine a slap on the wrist, he recommends investors ignore the noise and focus on all of the rewards that come with Alibaba. Soon enough, he says the stock market is going to catch up.
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.