The stock market took a bit of a beating today, as the Consumer Price Index revealed one of the largest jumps since 2008. Meanwhile, Elon Musk took the witness stand and answered some serious questioning about his dealings in the acquisition of SolarCity by Tesla (NASDAQ:TSLA), and banks posted some seriously impressive profits. So, what did the stock market do today?
- The S&P 500 closed down by 0.35%
- The Dow Jones Industrial Average closed down by 0.31%
- The Nasdaq Composite closed down by 0.38%
So what else did the stock market do today? Here are some of the top stories.
What Did the Stock Market Do Today? Stocks Fell Amid Inflation Report.
Stocks in general had a rough day, if you didn’t notice from the major indices all closing in the red. Another new report is rocking investors, as it comes to light that inflation continued to accelerate through the month of June.
The U.S. Labor Department said today that last month’s Consumer Price Index rose by 5.4% year-over-year. That’s the highest increase we’ve seen since summer of 2008. That increase was 0.9% month-over-month, the largest one-month jump in the CPI in over 10 years.
The evidence of vastly increasing prices is doing a number on stocks across the board today. Tech stocks’ gains were cut in half, with stocks like Facebook (NASDAQ:FB) and Tesla closing in the red. Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) and Microsoft (NASDAQ:MSFT) sported only measly gains to close the day.
The report comes at an interesting time for the U.S. government, which is still at odds with itself over whether or not this inflation is as severe as it looks, how long it will last and how bad it is for the economy. Federal Reserve Board Chair Jerome Powell will have the hot seat tomorrow in front of Congress as he addresses the state of the U.S. economy. It will be interesting to see how Powell will respond to these CPI figures, as the Fed contends that inflation will fizzle out without causing any significant damage.
Elon Musk Takes the Stand for Second Round of SolarCity Questioning
Elon Musk took the stand as a witness for the second day in a probe into the dealings of Tesla’s purchase of SolarCity. The solar power company was a provider of solar energy harvesting equipment for residential, commercial and industrial purposes. As the company began failing out in 2016, Musk’s Tesla bought it for $2.6 billion and absorbed it into the Tesla Energy subsidiary.
Musk, at the time of the deal, was chairman of both Tesla and SolarCity. The ongoing legal battle suggests that Musk and the Tesla board breached their responsibilities in pushing for the deal. The rest of the board settled in 2020 for $60 million, thus, Musk is the lone defendant.
Today, the billionaire is stepping out of the courtroom and wiping the sweat from his brow after taking on the last day of hard questioning. Notably, Musk says he had to buy SolarCity back in 2016.
His reasoning for this was simple: Tesla couldn’t afford for SolarCity to fail, as it plays too large a role in Tesla’s long-term goal of full sustainability. “If we have a whole bunch of third-party solar systems, it’s a messy situation. We needed solar within Tesla,” Musk said at the stand.
It remains to be seen what this questioning will turn into. If Musk is found on the losing end of this court case, the business magnate will have to reimburse Tesla for the cost of the acquisition. That might dig into his Starbase fund a bit.
Bank Stocks Impressed With Q2 Profits
It’s bank stock earnings season and JPMorgan Chase (NYSE:JPM) and Goldman Sachs (NYSE:GS) are kicking things off with a bang. The two banking giants are flexing some pretty impressive profits, and although the stocks’ values are decreasing thanks to the CPI’s bearish effect on the market, investors have reason to be invigorated.
JPMorgan Chase beat estimates today, much to the joy of shareholders. Earnings per share of $3.78 topped analyst’s estimates of $3.05. The company says it saw $9.6 billion in earnings this quarter, not counting its $3 billion in net reserve releases.
Goldman Sachs blew away estimates this morning as well; the company posted EPS of $15.02, a bit more than analysts’ estimates of around $9.90. Net earnings topped $5.49 billion, blowing Q1’s net earnings of $373 million out of the water.
Investors have the IPO madness to thank for this performance through the first half of 2021. The duo have stayed busy underwriting these public offerings, generating enough in fees to buoy the institutions through economic hardships. All in all, the two banks have advised and orchestrated hundreds of deals through the first six months of 2021.
You can expect more bank stock talk through the week, as well. JPM and GS kicked off what will be a busy week for bank earnings; Bank of America (NYSE:BAC), Citigroup (NYSE:C), BlackRock (NYSE:BLK) and Wells Fargo (NYSE:WFC) are just a few of the other big names sharing their earnings this week.
On the date of publication, Brenden Rearick did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
