Phew, the first day of trading after the long weekend is over, and it sure was busy. Oil prices continue to climb thanks to OPEC+ delays, consumers are gearing up for big box office debuts and Jeff Bezos is celebrating his first day of pseudo retirement. So what else did the stock market do today?
- The S&P 500 closed down 0.2%
- The Dow Jones Industrial Average closed down 0.6%
- The Nasdaq Composite closed up 0.17%
So what else did the stock market do today? Here are some of the top stories.
What Did the Stock Market Do Today? A JEDI Fight.
Back in October 2019, Microsoft (NASDAQ:MSFT) won a giant trophy, courtesy of the U.S. Department of Defense. In a crucial move, the Pentagon awarded Microsoft its Joint Enterprise Defense Infrastructure (JEDI) contract. JEDI was a large-scale cloud computing contract, covering 10 years and promising as much as $10 billion to the winner. For Microsoft, this was a gold mine. For rival Amazon (NASDAQ:AMZN), this was a slap in the face that provoked years of litigation.
And the litigation really ensued. Amazon has continued to fight that its contract loss was unfair, stemming from politics including a dispute between former President Donald Trump and Bezos.
It seems that the Pentagon has had enough of this drama. Although it did not mention the litigation explicitly, it announced on Tuesday that it was walking away from the JEDI contract. Officials said the deal no longer served the needs of defense specialists. As such, they are moving to terminate the contract and abandon the deal with Microsoft.
Right on cue, Amazon stock rallied, gaining more than 4.5% in Tuesday trading. Microsoft closed flat, and its shares are up slightly in after-hours trading.
So what is the bottom line? The Pentagon still needs large-scale help with cloud computing, but this time, it knows it has to work with multiple vendors. It announced plans for the Joint Warfighter Cloud Capability contract, which will likely split work between Amazon and Microsoft. Officials also said they will consider working with companies like International Business Machines (NYSE:IBM) and Oracle (NYSE:ORCL).
Keep an eye on the news for updates. While this is a victory for Amazon, Microsoft bulls can take comfort in the fact the tech giant will still have some involvement in the cloud-computing contract.
Keep on Squeezing
As we kick off the third quarter, the newest data from S3 Partners show that short-sellers are not giving up. In fact, despite painful losses over the last 30-day period, short-sellers are pushing ahead with their bearish bets. For retail investors, this creates continuing opportunities in so-called short-squeeze stocks.
As InvestorPlace Assistant News Writer Brenden Rearick highlighted this afternoon, this is a key part of the Q3 thesis. With short-sellers still battling it out, stocks with high short interest ratios make good bets. This reality has kept social media platforms buzzing with research and new ideas — a whole class of stock market influencers has come about as a result.
So where should you look for some of the top picks?
It turns out that S3 already has a list ready for eager investors, and it shares a lot of overlap with r/WallStreetBets favorites. Top names like Workhorse (NASDAQ:WKHS) and Clover Health (NASDAQ:CLOV) make that list.
And, as Rearick highlighted, the other names should make a lot of sense. Electric vehicle startups and speculative biotech companies were top plays in 2020 and 2021. However, market sentiment is shifting. Investors are starting to pay attention to high levels of EV competition, and interest in the biotech space is at least temporarily waning. That is why many institutions are hanging on to their short positions.
With this in mind, some of the top short-squeeze stocks right now are in these sectors. S3 has identified names like Nikola (NASDAQ:NKLA), Canoo (NASDAQ:GOEV) and Fulgent Genetics (NASDAQ:FLGT) as top buys.
What Else We’re Watching
- Investors learned on Tuesday that Nextdoor will be coming public through Khosla Ventures (NASDAQ:KVSB). For those unfamiliar, Nextdoor is a hyper-local social media platform. It faced impressive growth during the pandemic as neighbors sought connection, although it does not come without controversy. You can read more about the Nextdoor SPAC and KVSB stock here.
- Shiba Inu (CCC:SHIB-USD) was in the spotlight today after developers finally launched their ShibaSwap exchange. This decentralized platform builds out the token ecosystem and gives SHIB greater use. It also comes with the official launch of Bone (CCC:BONE-USD), a governance token.
- Meta Materials (NASDAQ:MMAT), the newly merged company, saw its shares gain today. It seems the catalyst is an update on its non-invasive glucose monitoring system.
On the date of publication, Sarah Smith 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.
Sarah Smith is the Editor of Today’s Market with InvestorPlace.com.