Optimism is in the air. The mixed performance on Monday notwithstanding, equity indexes have done quite well since the beginning of May on hopes of interest rate cuts. Whether the bullish streak continues will depend, in part, on inflation data due out this week. The producer-price index and the consumer-price index will be published on Tuesday and Wednesday, respectively.
Speaking of bullish streaks: Meme-stock GameStop's shares soared 74% on Monday. All it seemingly took was a cryptic tweet from Keith Gill, a.k.a 'Roaring Kitty,' that suggested he might be back in action—though what that means is unclear. This was his first tweet since 2021, the year he helped fuel the GameStop rally. Other meme-stock favorites such as AMC Entertainment and Hertz Global Holdings were up 78% and 12%, respectively.
The Dow Jones Industrial Average was down 0.2%, or 81 points. The S&P 500 was roughly flat, while the Nasdaq Composite ended the day up 0.3%. Treasury yields slipped 0.024 percentage points to 4.479%.
Biopharmaceutical company Incyte was the top performer of the S&P 500, gaining 8.6%, after the company said it is buying back $2 billion worth of stock, or roughly 17% of its market capitalization before the announcement.
Here’s what else Heard on the Street was watching: Live Markets Snapshot Crude oil, Bitcoin USD and gold continuous contract data refresh every time you open this email.
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Repeating an exercise from 2018, Heard’s columnists took a cue from Burton Malkiel, author of the investing classic “A Random Walk Down Wall Street,” and threw 12 darts at stock-market listings a year ago (he suggested using blindfolded monkeys). We competed against the fund managers presenting their best ideas at last May’s Sohn Investment Conference in New York City. Both the stocks and the type of bet, long or short, were beyond our control. Once again, the pros got schooled by randomness. The first time around, they lagged behind the dart tosses by 22 percentage points. This time, it was 48 percentage points, though the way that was accomplished certainly isn’t for the faint of heart. The biggest takeaway from our picks is that, while there were a few other winners, a single stock, insurer Root Inc., was responsible for all our net gains. That hews to reality. A long-term study of U.S. stock returns by Hendrik Bessembinder shows that half of all excess returns came from just 83 companies.
The Wall Street Journal’s Evan Gershkovich is being wrongfully detained in Russia after he was arrested while on a reporting trip and accused of spying—a charge the Journal and the U.S. government vehemently deny. Follow the latest coverage, sign up for an email alert, and learn how you can use social media to support Evan.
When investment banks were pulling back from the market for risky loans, private credit was ready to step up and make bigger loans. That attracted a lot of attention, and a lot of new funding. But now these banks are venturing back into the leveraged lending market, even as borrower demand for new loans has been tepid, threatening to throw the market out of balance. How private credit responds will be one of the truest tests yet of its riskiness.
For Apple’s investors, the next month is going to be interesting—if excruciating, writes Dan Gallagher. Antitrust laws prohibit collusion, and mostly for good reason. Yet oil is a commodity for which that neat equation—more competition, less harm—is frequently complicated, writes Jinjoo Lee. Analysts relate the market’s gyrations to economic data and the Federal Reserve’s policy, but valuations may be playing big role too, writes Jon Sindreu.
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RBC Reorganizes Investment Banking in a Play for More Deals. Investors Crowd Into Soft-Landing Trade Ahead of Crucial Inflation Data. As Silicon Valley Pivots to Patriotic Capital, China Ties Linger.
Tuesday will bring the latest release of the Producer Price Index. Home Depot will hold its earnings call that morning.
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