Before the Bell: Trump's Truth Social Drops, Guardant Health Plunges

Premarket action Friday morning had all three major U.S. indexes trading lower: the Dow Jones industrial average was down about 1.07%, the S&P 500 was down 1.04% and the Nasdaq was 0.69% lower.

All 11 market sectors closed lower Thursday, with communications services (−3.84%) and technology (−3.78%) leading the fall. The energy sector posted the smallest loss (−0.53%).

All three indexes closed lower on Thursday on concerns that the Federal Reserve will tighten too much, triggering a full-blown recession. Former Treasury Secretary and Harvard President Larry Summers had this to say to MSNBC’s Andrea Mitchell Thursday:

My guess is that the Fed will in the end have to suffer through a recession, if we’re going to bring inflation down. We’re not stopping inflation for the sake of stopping inflation or stopping inflation for the sake of higher incomes for people in terms of purchasing power. And we’re stopping inflation for the sake of avoiding worst recessions and worst economic instability, down the road.

Not all economists agree with Summers, but he does have a big megaphone. And many traders had no doubt already reached the same conclusion without Summers’s help.

Digital World Acquisition Corp. (NASDAQ: DWAC), the SPAC that is struggling to bring Donald Trump’s Truth Social public, reported Thursday that two of its board members and its chief financial officer, Luiz Philippe Braganza, have recently resigned from their positions with the company. All three issued that standard disclaimer that there was no disagreement with the company “concerning any matter relating to the Company’s operations, policies or practices.”

Shareholders last month approved a one-year extension of the company’s requirement to take Trump’s social media platform public. The new deadline is September 8, 2023. Whether an announced Trump run for another term in the White House is good news or bad news for investors in Digital World is not a settled issue. The stock dropped 6% on Thursday and traded down nearly 8% in Friday’s premarket session.

Electric vehicle maker Faraday Future Intelligent Electric Inc. (NASDAQ: FFIE) has told investors that it needs to raise an additional $150 million to $170 million in order to begin production of its FF 91 model in March and make deliveries to customers in April. How much that fresh capital will cost existing shareholders is the big issue, of course. Shares fell 5.9% Thursday and traded down 20% before Friday’s opening bell.

Exact Sciences Corp. (NASDAQ: EXAS) traded up by as much as 20% in Friday’s premarket after a disappointing report on a trial of its rival’s colon cancer test. Guardant Health Inc. (NASDAQ: GH) announced Thursday that its blood test for colon cancer did not match Exact’s stool test for accuracy. Guardant’s stock plunged 32% in Friday’s premarket trading.

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