Stocks traded mixed on Tuesday after U.S. federal health officials called for a pause in the rollout of Johnson & Johnson’s (JNJ) COVID-19 vaccine amid concerns over rare blood clots in some individuals who received the inoculation.
The Dow opened lower, extending losses from the pre-market session following the joint announcement between the U.S. Food and Drug Administration and Centers for Disease Control and Prevention, which could complicate the vaccine distribution process as the country paces toward achieving herd immunity. The Nasdaq gained as technology shares advanced, while the S&P 500 was little changed.
Shares of Dow component Johnson & Johnson also dipped following the report. According to the health agencies, more than 6.8 million doses of the single-dose vaccine had been administered in the U.S. so far. The agencies are reviewing data over six reported U.S. cases of a severe blood clot in individuals after receiving the vaccine, and have recommended the pause “out of an abundance of caution,” the FDA said in a Twitter post.
In a subsequent statement, Johnson & Johnson said it has been “working closely with medical experts and health authorities, and we strongly support the open communication of this information to healthcare professionals and the public.”
Investors also eyed a print on consumer price inflation, with prices beginning to jump off of last year’s pandemic-pressured levels. The headline consumer price index (CPI) from the Bureau of Labor Statistics rose 2.6% in March over last year, or faster than the 2.5% increase expected. However, the rise was less pronounced when excluding volatile food and energy prices, with core consumer prices rising 1.6% after a 1.3% gain in February.
Traders have been looking ahead to more action later this week, with a host of big bank earnings slated for release later this week. Banks are likely to be the first industry to report a strong rise in profits to coincide with the recovering economy, with earnings results from companies across the S&P 500 to follow in the coming weeks.
“We’ve still got a lot of fuel in the tank as far as the economy is concerned,” James Bruderman, 1879 Advisors Vice Chairman, told Yahoo Finance. “We’re still poised, I think, in the early stages of the recovery, maybe getting a little bit into the growth stage. But I think we’ve got a lot of runway – especially with all the stimulus that’s yet to be spent – to let earnings continue to support and maybe even provide some more upside.”
“Where we are in the economic cycle, I’m feeling rather confidence about the prospects for equities,” Bruderman added. “That being said … the risk of any shock can certainly have a little bit more of a multiplicative effect given those higher valuations.”
12:00 p.m. ET: This is just a ‘minor pullback’ for the cyclical and value stocks: strategist
Technology stocks outperformed Tuesday afternoon while cyclical and value stocks in the leisure space especially pulled back after U.S. federal agencies recommended a pause of Johnson & Johnson’s vaccine rollout. However, this quick switch back to tech leadership at the expense of reopening stocks could prove short-lived, according to some strategists.
“When you look at what’s happening in the market, your ‘out to play stocks’ – your airlines, your brick and mortar retailers – versus your ‘work from home stocks,’ you’re seeing a bit of a pullback for the ‘out to play’ stocks,” Jason Hsu, Rayliant Global Advisors chief investment officer, told Yahoo Finance.
“But I think that’s a bit of an overreaction given that J&J really is a tiny part of our overall rollout strategy. I think the market’s a little fragile and it’s also responding to a phenomenal rally for the ‘out to play,’ or the more value-oriented stocks for the year-to-date,” he added. “So I think this is just a minor pullback, I think the thesis of the economy opening up, global trades going back online, I think that thesis remains unchanged.”
10:52 a.m. ET: CoinBase could ‘be worth more than Goldman Sachs’ within a week after direct listing: CoinShares’ chief strategy officer
Crypto exchange platform CoinBase is poised to go public on Tuesday, marking one of the most highly anticipated direct listings this year amid a surge in bitcoin prices.
According to at least one strategist, the firm is set to command an even greater valuation than some of the biggest legacy banks, as interest in cryptocurrencies continues to climb.
“When CoinBase lists tomorrow, I firmly believe within the week it will be worth more than Goldman Sachs. Goldman Sachs, $120 billion market cap – CoinBase is pricing in prediction markets at $150 billion. Crypto is disrupting every aspect of legacy finance,” Meltem Demirors, CoinShares chief strategy officer, told Yahoo Finance on Tuesday. “Goldman today employs 40,000 people. It was founded in 1869, $120 billion market cap. CoinBase, founded in 2013, employs less than 4,000 people, and is going to have a bigger market cap. So again, what I think we’re watching here is a new guard coming in. And frankly, if financial institutions don’t start to pay attention to this and take notice and build things that their clients want, their clients are going to leave.”
However, some risks still remain for CoinBase, she added, noting that 90% of CoinBase’s revenue is still tied to retail trading volume.
“That retail trading activity is directly tied to crypto asset prices. The correlation between CoinBase’s public market valuation and their revenues and the overall crypto market cycle is something to watch for. Historically, bitcoin in particular has gone through these two to three year cycles where we see a period of tremendous expansion and growth and then we see a 30-40% correction, sometimes even greater. So the risk here is CoinBase could have some of that same volatility that bitcoin and other digital assets have historically had.”
9:30 a.m. ET: Stocks open mixed after officials recommend pause to Johnson & Johnson rollout
Here’s where markets were trading shortly after the opening bell:
S&P 500 (^GSPC): -0.65 points (-0.02%) to 4,127.34
Dow (^DJI): -72.08 points (-0.21%) to 33,673.32
Nasdaq (^IXIC): +62.32 points (+0.46%) to 13,912.36
Crude (CL=F): +$0.68 (+1.14%) to $60.34 a barrel
Gold (GC=F): +$9.40 (+0.54%) to $1,742.10 per ounce
10-year Treasury (^TNX): -0.7 bps to yield 1.669%
8:32 a.m. ET: Consumer prices rise 2.6% year-over-year in biggest jump since 2018
Consumer prices increased more than expected in March as prices began to bounce above last year’s pandemic-pressured levels, showing early signs of upward price pressure during the COVID-19 recovery.
The consumer price index (CPI) from the U.S. Bureau of Labor Statistics rose 0.6% in March over February, following a 0.4% rise the month earlier. Consensus economists were looking for just a 0.5% monthly rise in March. Excluding volatile food and energy prices, the CPI was up 0.3%, also outpacing expectations for a 0.2% gain.
Over last year, the headline CPI jumped 2.6%, or the most since mid-2018. This was faster than the rise of 2.5% expected, and February’s 1.7% year-over-year rise. Excluding food and energy prices, the CPI was up 1.6% over last year versus the 1.5% rise expected. Energy prices were a big contributor to both the monthly and yearly gain for the CPI, and gasoline prices specifically were up more than 9% over last month and 22.5% over last year.
7:27 a.m. ET: Stock futures sink after officials recommend pausing J&J vaccine rollout
Here’s where markets were trading Tuesday morning:
S&P 500 futures (ES=F): 4,108.00, down 12.25 points or 0.3%
Dow futures (YM=F): 33,506.00, down 125 points or 0.37%
Nasdaq futures (NQ=F): 13,799.75, down 9 points or 0.07%
Crude (CL=F): +$0.30 (+0.50%) to $60.00 a barrel
Gold (GC=F): -$3.40 (-0.2%) to $1,729.30 per ounce
10-year Treasury (^TNX): +0.4 bps to yield 1.676%
6:10 p.m. ET: Stock futures open slightly higher
Here’s where markets were trading Monday evening:
S&P 500 futures (ES=F): 4,123.25, up 3 points or 0.07%
Dow futures (YM=F): 33,642.00, up 11 points or 0.03%
Nasdaq futures (NQ=F): 13,838.00, up 19.25 points or 0.14%
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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