U.S. equity markets closed lower Thursday and, in the case of the Nasdaq, a lot lower. The Nasdaq dropped 2.5% on Thursday after picking up solid gains following Wednesday’s Federal Reserve announcement. Some chatter on Wall Street suggested that short covering on Wednesday drove prices up for the big caps and that Thursday’s retreat was only to be expected. All three major indexes were trading lower in Friday’s premarket, with the Nasdaq down more than 1% at last look.
Crude oil traded near $71 a barrel Friday morning, down nearly 2% from the prior settlement. Bitcoin traded down by 2% at around $47,200. Yields on the 10-year Treasury note were down about two basis points while the two-year note traded up by about one basis point. The 10-year/two-year spread was around 0.78% in early trading Friday.
Among meme stocks, the story was similar. Losers far outnumbered winners on our watch list, with Bakkt Holdings Inc. (NYSE: BKKT) posting the biggest loss of the day, down 34%. As we noted in our midday report on Thursday, Bakkt recently filed a prospectus registering nearly 191 million shares that may or may not be sold by selling shareholders. The company gets no proceeds from the sale, and the dilution is not making investors happy. Shares traded up about 2.6% in Friday’s premarket session.
While Affirm Holdings Inc. (NASDAQ: AFRM) is not among the stocks we usually track, what happened to the stock Thursday is instructive. Shares dropped more than 10% on heavier than normal volume following an announcement by the federal Consumer Financial Protection Bureau (CFPB) that the agency has ordered five companies (Affirm, Afterpay, Klarna, PayPal and Zip) offering “buy now, pay later” credit to collect information on the risks and benefits of these loans.
The CFPB noted three primary areas of concern: how much debt consumers are accumulating, regulatory arbitrage and data harvesting. Affirm’s stock traded down another 3.8% in Friday’s premarket.
Robinhood Markets Inc. (NASDAQ: HOOD) dropped 7% on Thursday and traded down more than 1% more in Friday’s premarket. BofA Securities analyst Craig Siegenthaler initiated coverage of the company on Thursday with an Underperform rating and a 12-month price target of $22. That’s well short of the median target of $38 but still above the stock’s closing price Thursday of $18.14. One believer in the company is Cathie Wood and her ARK Innovation Fund. Since the end of the September quarter, the fund has added about 2 million shares of Robinhood to its holdings.
Electric pickup truck and sport utility vehicle maker Rivian Automotive Inc. (NASDAQ: RIVN) reported fiscal third-quarter earnings after markets closed Thursday and missed consensus estimates on both revenue and net losses. The stock closed down more than 5% on Thursday and traded down by about 8.5% in Friday’s premarket at $99.74. These are pretty much “who cares” issues, though.
Rivian needs to build more vehicles. As of December 15, the company has built just 652 vehicles at its Illinois plant and delivered just 386 of those. In some of Rivian’s pre-IPO materials, the company touted production of around 1,200 vehicles this year.
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