Slack Stock – The Stock Market Is Climbing Today. Is the Great Inflation Reset Over?
A difficult week for the stock market looks set for an upbeat ending Friday.
Stocks are up, tech is gaining, bond yields are lower, and investors can hope the great inflation reset is over.
There don’t appear to be any inflation fears Friday morning. S&P 500 futures are up 0.5%, while futures on the tech-heavy Nasdaq futures are up more than 1%. Overseas stock indexes are awash in a sea of green.
Bonds are helping out. The 10-year Treasury yield has slipped 0.023 percentage point to 1.645%, up about 0.08 percentage point on the week, but still within its recent range. Lower bond yields tend to push up stock valuations and, in turn, stock prices.
Looking back, it’s been a painful week, but if that’s it for the market’s pullback, investors shouldn’t complain. With the Nasdaq off 7.6% from its all-time high, and the S&P down just 3% from its record, it was about as mild as a correction can be.
The fear was real though. It’s a reminder that losses always hurt more than gains feel good.
*** Once derided SPACs have taken over the IPO world. But can it last? Find out in the latest episode of The Readback podcast. Listen here.
Fully Vaccinated Americans Can Stop Wearing Masks, CDC Says
Fully vaccinated people can stop wearing masks and social distancing in almost all circumstances inside and outside, under new recommendations the Centers for Disease Control and Prevention announced Thursday. “Two weeks after your last dose, you can shed your mask,” CDC Director Dr. Rochelle Walensky said Thursday.
- Settings like hospitals and nursing homes and businesses that require masks are exceptions. The CDC still recommends wearing masks on buses, trains, airplanes and other public transportation. Walensky said the CDC will review travel recommendations.
- The new guidelines are based on recent scientific evidence that fully vaccinated people are unlikely to catch or transmit the virus, that vaccines are effective against Covid-19 variants, and that the weekly averages of infections, hospitalizations and deaths are falling.
- Unvaccinated people should continue to wear masks because they remain at risk of getting ill, dying, and spreading the virus to others, Walensky said.
- This week, eight New York Yankees players and staff members who had been vaccinated tested positive for Covid-19, prompting an investigation by the New York State Department of Health.
What’s Next: While the U.S. moves ahead with reopening, a rise in the number of cases in Singapore has caused the country to ban indoor dining, limiting social gatherings from five to two people, and work from home. The country has been successful at containing the virus throughout the pandemic.
—Janet H. Cho, Barron’s staff
McDonald’s and Amazon Join the Companies Raising Wages to Attract Workers
As the competition for new workers intensifies amid a record 8.1 million in job openings and declining new unemployment claims,
are the latest companies to offer higher wages and other benefits to attract job seekers.
- Amazon is offering $1,000 signing bonuses as it tries to hire 75,000 warehouse workers for jobs that pay an average of $17 an hour. The company, which hired 500,000 workers during the pandemic, plans to expand its one-day shopping service ahead of Prime Day next month.
- McDonald’s is raising wages to $11 to $17 an hour for crew members at 660 company-owned restaurants. Shift managers’ starting pay would go up to $15 to $20 an hour. McDonald’s is looking to hire 10,000 workers before the summer.
- The National Owners Association, which represents thousands of McDonald’s franchisees, told members that if they decide to raise wages, strong sales and higher menu prices would compensate for those costs, The Wall Street Journal reported. “We need to do whatever it takes to staff our restaurants and then charge for it,” it said.
is raising wages to an average of $15 an hour by the end of June and offering employees up to $750 for referring other workers.
owner of Olive Garden, raised pay to at least $10 an hour for 20% of its hourly workers.
What’s Next: At least 11 states are ending the federal government’s $300 weekly extra unemployment benefits starting next month, saying they incentivize people to collect unemployment instead of working. States are tightening requirements that jobless residents who collect benefits must actively look for work.
—Janet H. Cho
Biden Urges Patience as Colonial Pipeline Resumes; Vows to Boost Cybersecurity
The 5,500-mile Colonial Pipeline will gradually come back to full strength, but President Joe Biden on Thursday urged patience for those facing gas shortages in the South, saying the restart is “not like flicking on a light switch.” He also urged governors in affected states to stop price gouging as supply returns.
- Colonial Pipeline paid nearly $5 million to recover stolen data after a ransomware attack that shut it down last weekend, according to multiple media reports. Bloomberg earlier reported a payment was made.
- Biden said Thursday federal agents do not believe Russian President Vladimir Putin was involved in the cyberattack, though he said the people involved live in Russia.
- House Speaker Nancy Pelosi said earlier Thursday companies should not pay ransom after cyberattacks. “We don’t want people to think there’s money in it to threaten the security of a critical infrastructure in our country,” Reuters reported.
What’s Next: The Justice Department has a new task force to prosecute ransomware hackers, Biden said, and the government is working to boost cybersecurity for natural gas, pipelines, and water systems. Colonial’s saga is an “urgent reminder of why we need to harden our infrastructure and make it more resilient against all threats, natural and man-made.”
Disney Adds Fewer Streaming Subscribers Than Expected
- Disney+ added 9 million subscribers, short of analysts’ expectations of 14.4 million. The company ended the March quarter with 109 million subscribers globally. That was enough to send the stock falling more than 3% in after-hours trading.
- Disney’s adjusted earnings of 79 cents a share beat consensus estimates at 26 cents a share, according to FactSet. Sales of $15.61 billion clocked in below expectations at $15.86 billion.
- It’s no surprise that investors homed in on streaming numbers. Pandemic-fueled growth for Disney+ helped propel the stock’s run in 2020, despite Covid-19 headwinds to the parks and film businesses.
What’s Next: The vaccine rollout is likely to provide a boost for Disney’s parks business, which reported an operating loss of $406 million during the quarter.
Lab Accident Theory on Covid-19 Origin Must Be Investigated Seriously, Scientists Say
The theory that the coronavirus pandemic was triggered by a laboratory leak “remains viable” and “more investigation is still needed to determine [its] origin,” a group of scientists wrote Thursday in the journal Science, throwing doubt on a recent World Health Organization report about the origin of the virus.
- The scientists write that “theories of accidental release from a lab and zoonotic spillover [i.e. the transmission from animal to human] both remain viable,” but that the two theories “were not given balanced consideration” in the WHO report that deemed the spillover from a bat “likely to be very likely.”
- The signatories include Ravindra Gupta, a clinical microbiologist at the University of Cambridge, Jesse Bloom, a researcher on the evolution of viruses at the Seattle-based Fred Hutchinson Cancer Research Center, and David Relman, professor of microbiology at Stanford.
- The authors note that the “information, data, and samples for the [WHO] study’s first phase were collected and summarized by the Chinese half of the team.” The WHO-led team had spent four weeks in January and February in and around Wuhan, China, where the virus was first detected.
- A proper investigation should be “transparent, objective, data-driven, inclusive of broad expertise, subject to independent oversight, and responsibly managed to minimize the impact of conflicts of interest,” the letter concludes.
What’s Next: The letter signed by world-renowned scientists will rekindle debates about the Chinese influence in the WHO, which critics allege risk compromising the organization’s scientific integrity on matters deemed sensitive by Beijing.
Honoring Education Leaders
Barron’s is celebrating three organizations that helped bridge learning gaps, including those worsened in the pandemic. Independent judges selected the winners.
PCs for People refurbishes computers for needy families. The nonprofit saw a surge in 2020 and distributed nearly 48,000 computers. “Even with that, the demand for computers is 10 times greater than the supply,” said Bryan Mauk, chief innovation officer.
The Last Mile teaches coding to incarcerated people, who must learn without their own computers. Sydney Heller, chief program officer, said he’s seen students “return to class with dozens of pages of handwritten code.” Graduates boast an 85% employment rate at companies such as Slack and Zoom.
T-Mobile’s Project 10Million has connected 2.2 million students to the internet since September. It aims for 10 million. The initiative works with school districts to provide free high-speed data.
A June 8 ceremony will honor the three organizations. Tickets benefit Junior Achievement, a nonprofit organization focused on preparing young people for the modern economy.
—Janet H. Cho
Do you remember this week’s news? Take our quiz below about this week’s news. Tell us how you did in an email to [email protected]
1. Analysis of LinkedIn data suggests that the pandemic has shifted where workers in software and IT are choosing to live. Which city has become the hot spot for engineers and recent grads?
a. Miami-Ft. Lauderdale
2. Facebook is planning to launch a version of Instagram for children aged 13 and younger which has raised concerns by many attorneys general. In a letter sent to the social-media giant they cite that “research increasingly demonstrates that social media can be harmful to the physical, emotional, and mental well-being of children.” How many states attorneys general have written to Facebook CEO Mark Zuckerberg urging him to drop company plans for the new site?
3. Which business unit is women’s retailer L Brands planning to spin off, rather than sell, in a move to improve its brands’ momentum as pandemic restrictions are lifted?
b. Bath & Body Works
c. Victoria’s Secret
d. None of the above
4. In the latest blow to the European Union’s efforts to collect more taxes from Big Tech, an EU court overturned a 2017 European Commission tax decision levied against this tech giant siding with the company over a 250 million euro bill. Which company was it?
5. The Federal Reserve wants to keep inflation around 2% and maintains that any price swings are “transitory” and that policy should remain stimulative as the economy emerges from the pandemic. This week the consumer-price index jumped 4.2% from a year ago in April which sparked inflation fears, rattled stock markets, and marked the highest rise in the CPI since:
Answers: 1(a); 2(d); 3(c); 4(c); 5(b)
—Newsletter edited by Liz Moyer, Stacy Ozol, Mary Romano, Matt Bemer, Ben Levisohn