Good morning and welcome to the stock market today! All eyes are on consumer prices, meme cryptos and gas stations, as Americans line up to fill up their tanks. In the midst of all this, what will the stock market do today?
- The S&P 500 is down 0.86%
- The Dow Jones Industrial Average is down 0.6%
- The Nasdaq Composite is down 1.49%
So what else will the stock market do today? Here are the top stories.
What Will the Stock Market Do Today? Panic Buy.
Investors are afraid of inflation, and a new report out this morning only adds to this dilemma.
An update to the Consumer Price Index (CPI) showed that consumer prices rose 4.2% year-over-year in April, the fastest growth since September 2008. Prices rose 2.6% in March. Consumers are already shifting their spending in anticipation of a greater pocketbook pinch.
However, as Hope King wrote for Axios today, it may not be time to panic. Many economists and the Federal Reserve maintain that this is just a short-term bump — a step toward the target inflation rate that will ease as recovery takes hold. Used car prices are rising, turning pre-owned vehicles into appreciating assets. This is a result of the chip shortage and consumer behaviors, such as households holding onto cars for longer than normal at the start of the pandemic. King highlights that without the impact of used car prices in the CPI report, things are less jarring.
But still, there is a sense of panic on Wall Street.
Adding into the inflation narrative is a series of supply-chain disruptions triggering shortages and talk of rising prices. Just this week, a cyber attack on the Colonial Pipeline has prompted a rush of panic-buying at gas stations. In anticipation of lower supply (as a result of shutdown operations), many consumers headed out to fill up. Factor in the ongoing truck driver shortage, and pumps around the country are running dry.
What to watch? As CNN reported, the panic-buying is exacerbating the supply crunch from the attack. This narrative is one to watch as reports of chicken, coffee, ketchup and chlorine shortages take hold.
Barking Up the Wrong Tree?
As we wrote yesterday, transactions on the Ethereum (CCC:ETH-USD) blockchain are surging as ETH sets new all-time highs. These rising fees have long been a concern, thanks to bouts of interest in decentralized finance and smart contract applications. However, this time around, the source of the spike comes from puppy tokens like Shiba Inu (CCC:SHIB-USD) and Kishu Inu (CCC:KISHU-INU).
Although many investors are wagging for these tokens to succeed and Ethereum miners are posting record revenue, not everyone is happy. Some are worried that exchange listings are setting a bad precedent — a decision by Binance to list SHIB caused the exchange to run out of deposit addresses.
In the short term at least, this is making Ethereum alternatives extra appealing, especially as the dog tokens continue their reign.
Polygon (CCC:MATIC-USD) hit an all-time high of its own today, promising a lower-cost solution to Ethereum. BinanceCoin (CCC:BNB-USD), although only up 2% over the past week, could start to see a boost. Other alternatives like Avalanche (CCC:AVAX-USD) are also gaining.
But a look at the long term explains some of the frustration. Not all of these meme-based cryptocurrencies will survive, despite the current strong interest. Just look at the Coinopsy graveyard for further proof!
Shiba, Kishu and their puppy pals are a whole lot of fun. But in the midst of a crypto market frenzy, their rapid rises may have bigger implications.
Clean Energy Stocks Need a Burst of Sun
Array Technologies (NASDAQ:ARRY) was one of the hottest initial public offerings at the end of 2020. The solar company was already profitable, and hit Wall Street with a $2.5 billion valuation. Array promised to leverage Democratic interests in clean energy investments, and to capitalize on a changing narrative for solar power. Tech was getting cheaper, demand was climbing, and government spending was up… in a big way.
This morning, ARRY stock is off more than 30% after sharing first-quarter results.
The company shared that its revenues decreased 44% year over year. Gross profit tanked 63%, and gross margins dipped from 27% to 18%. Most importantly, the company was not able to confirm or update its full-year guidance for 2021. To the disappointment of investors, CFO Nipul Patel said Array was simply looking at too much uncertainty.
So where is this plunge coming from? Rising steel and freight costs are hitting Array and other solar energy companies. Supply-chain disruptions, including the weather crisis in Texas, shifted the company off track. Now, looking to the future, Array says it does not know how much of these rising costs it will have to pass off to consumers.
Unfortunately for investors, Array is not alone. Other clean energy investments are suffering from sector rotation, supply crunches and broader economic concerns. Although all may not stumble as much as ARRY, this is a story to watch.
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.