What a busy day on Wall Street! The Federal Reserve caused a stir, the Girl Scouts announced a new cookie, and shoppers can brace themselves for pumpkin-flavored hard seltzer. If that is not enough, what else did the stock market do today?
- The S&P 500 closed down 1.07%
- The Dow Jones Industrial Average closed down 1.08%
- The Nasdaq Composite closed down 0.89%
So what did the stock market do today? Here are some of the top stories.
What Did the Stock Market Do Today? Taper Talk.
One tale that feels as old as time (or at least as old as the Covid-19 pandemic) is that the Federal Reserve holds a lot of sway. During an unprecedented moment in the U.S. economy, the Fed began a massive bond-buying program and took interest rates to near-zero levels. The central bank has maintained this strategy through the summer despite signs of recovery, citing needed improvements in the labor market, among other things. But top of mind this whole time has been tapering, a reduction in asset buying.
Now, it seems that tapering is just around the corner. Today investors got access to the July minutes from the Fed and its Federal Open Market Committee. Those minutes reveal that some Fed members are on board to start tapering by the end of 2021, or early 2022.
So what does this mean? And why did the major indices once again close in the red? This tapering could assuage inflation fears; investors have been closely watching rising inflation levels in fear of higher consumer prices. Fed Board Chair Jerome Powell has maintained that this inflation is transitory, but not everyone is convinced. Plus, tapering could address concerns of unhealthy valuations across asset classes.
However, there is some fear that a tapering in asset purchases will directly coincide with an interest rate hike. The minutes do not immediately suggest that. As Jeff Cox wrote for CNBC, central bank officials said that there is no link, and that interest rates may remain at near-zero levels through November 2022.
The bottom line is that Fed officials and investors are not sure what comes next (although tapering seems closer than before), and the delta variant certainly does not help.
One more story to watch: According to CoinDesk, another noteworthy element of the FOMC minutes is the discussion of cryptocurrencies. During the July meeting, officials discussed if rising crypto adoption posed a risk to the financial system.
SGOCO Captivates Investors… and Short-Sellers
SGOCO Group (NASDAQ:SGOC) was a top stock to watch on Wednesday, although it is not entirely clear where the hype came from. The Hong Kong-based company specializes in money lending, such as mortgages and personal loans. It also has operations in Australia.
While that puts SGOCO in an interesting business, no apparent news was out today. That did not stop SGOC stock from closing higher by more than 67%. Plus, trading volume was heavily elevated on Wednesday. Typically, 8.4 million shares trade hands each day. By the closing bell, 58 million shares had traded hands.
According to the Motley Fool, an obvious explanation for this is retail investor interest. We have certainly seen stock moves like this when Reddit, Discord or Twitch investors get involved. Plus, SGOCO has previously been identified as a short-squeeze play, adding to the appeal.
But retail investors are not the only ones taking aim at SGOC stock.
As Chris MacDonald wrote today, the company also found itself the target of a new short report from Wolfpack Research. The report is titled “SGOC: Multiple Arrests, Financial Fraud and Money Laundering” and levies some serious allegations.
For instance, it outlines how Hong Kong police arrested SGOCO stakeholders as part of an international fund fraud scheme. Additionally, Wolfpack alleges that SGOCO insiders are engaged in money laundering and other fraudulent activities.
So what is the bottom line? The Wolfpack report did little it seems to shake confidence in SGOC stock, at least on Wednesday. However, as investors dive into the allegations, it will be interesting to see if the power of the squeeze can outweigh hefty claims.
What Else We’re Watching
- Shares of Cboe Global Markets (BATS:CBOE) soared on Wednesday following a report CME Group (NASDAQ:CME) was looking to acquire it in a $16 billion bid. However, CME promptly denied the rumors, sending CBOE stock down 1.6% to close out the trading day.
- The lawsuit between Ripple and the U.S. Securities and Exchange Commission is heating up and the future of XRP (CCC:XRP-USD) is on the line. In the latest exchanges, the SEC has asked Ripple to produce more than 1 million employee Slack messages related to XRP. A court transcript also suggests that the SEC has erased or deleted relevant documents on its end.
- A back-to-school shopping boom may be underway right now, but it is already time to think about winter holiday shopping. Analysts at Raymond James warn that ongoing supply-chain issues will weigh on the holiday shopping season and make certain in-demand products hard to find.
- Secretive Palantir (NYSE:PLTR) remains in the news, and today, things are looking good. Investors were lifting PLTR stock on news that Cathie Wood purchased another $11.4 million in shares.
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