Good morning and welcome to the stock market today! With fallout from the Colonial Pipeline cyber attack still top of mind, what will the stock market do today?
- The S&P 500 is down 1.7%
- The Dow Jones Industrial Average is down 1.73%
- The Nasdaq Composite is down 1.55%
So what else will the stock market do today? Here are some of the top stories.
What Will the Stock Market Do Today? Prep for the Next Pandemic…
Today, many on Wall Street are preparing for the next pandemic.
But instead of looking at biotech startups, they are looking at cybersecurity firms. That is because the recent cyber attack on the Colonial Pipeline highlighted a serious risk. Hackers were able to shut down pipeline operations, triggering a gas shortage on the East Coast and injecting huge uncertainty into the energy market.
Although Colonial Pipeline says it will begin reopening this week, and the attack received national attention and action. DarkSide, the group responsible for the attack, even issued a half apology.
As Axios writes, not every attack will receive this attention and response. And no single company has all the resources necessary to defeat the incoming ransomware pandemic. In fact, to adequately respond to growing cybersecurity risks, Axios says it could take a coalition of hundreds of countries. Other pipelines and energy infrastructure operators are on watch, as are utility operators in general.
So what is the bottom line? This ransomware pandemic, as Axios dubs it, is not slowing down or going away. In order to have a chance against it, the United States will need to work with its allies and lean into cybersecurity spending. For investors, leveraging the growing need for security solutions sounds like a smart bet. Consider these seven growth-focused cybersecurity stocks now.
Who Will Be the Next Cathie Wood?
Just a few months ago, Cathie Wood was being heralded as the next Warren Buffett. Her Ark Invest exchange-traded funds, like the flagship ARK Innovation ETF (NYSEARCA:ARKK), were soaring. Buffett seemed entirely too old-school, while bets like Tesla (NASDAQ:TSLA), Palantir (NYSE:PLTR), DraftKings (NASDAQ:DKNG), Skillz (NYSE:SKLZ) and Roku (NASDAQ:ROKU) were market winners.
Now, investors are leaving ARKK and Cathie Wood in search of the next best thing.
Today, Bloomberg reported that ARKK assets dipped below $20 billion for the first time since January, sinking on a broader tech selloff. Some top holdings, like Tesla, face specific challenges. The electric vehicle leader is facing pressure in China. Others are struggling to imagine post-pandemic life, when consumers are less online and more out and about. Still, other tech stocks are victims of interest rate fears and earnings expectations. Even Big Tech giants like Facebook (NASDAQ:FB) and Apple (NASDAQ:AAPL) are hurting.
So what does this mean? The first takeaway is that with tech stocks struggling, ARKK will face continued pain. The iconic fund just sold off a third of its Apple holdings, although Wood says she loves the current market setup.
The second takeaway is that investors are already changing up their strategies. Reports highlight retail money leaving individual stocks for ETFs… but not the ones from Wood. As ARKK struggles in the ongoing tech rout, looking for the new Cathie Wood to emerge out of the defensive shadows.
I Really Miss Concerts
… and many other consumers feel the same way. Live Nation (NYSE:LYV), an event promoter and venue operator, may miss live events more than anyone else.
At this point, investors know the story. Covid-19 brought concerts, sporting events, and festivals to an abrupt halt. To fill a gap, Live Nation caught onto the virtual trend. It took a majority stake in Veeps, and rolled out a series of livestreamed concerts. But investors in LYV stock are looking for the real thing.
More than a year into the pandemic, those investors are still waiting. Live Nation just reported that first-quarter sales were still down 79% in the absence of live events.
However, as the team at Robinhood Snacks highlights, there is a silver lining to this story. LYV stock actually rallied, because Jefferies analysts see serious post-pandemic potential in the live events space. In fact, Robinhood said that Live Nation has slingshot potential. Not only will it recover, they argue, but it will beat even its 2019 figures. Pent-up demand, revenge spending, overcompensation, you name it. These factors could lead consumers and artists to music venues in crowds never seen before.
For investors, this is an interesting theory. It is also a chance to look at other slingshot stocks, consumer discretionary names that could rocket ahead after the pandemic. Look to Carnival (NYSE:CCL), Disney (NYSE:DIS) and more. For instance, Royal Caribbean (NYSE:RCL) says bookings are already up 30% since the start of the year.
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 the Editor of Today’s Market with InvestorPlace.com.