Marketbites: Peloton Loses More Than Anticipated
Portfolio Manager Commentary:
Stocks fell on Thursday, building on Wednesday’s large losses following the Fed’s interest rate hike and rhetoric that rate cuts won’t happen anytime soon. Many people expect the market to continue to seesaw until it is clear that inflation has calmed down and the Fed will stop raising rates. Treasury yields spiked yesterday with the 2-year Treasury note hitting its highest level since 2007. Meanwhile, the benchmark 10-year Treasury yield jumped up to 4.14%.
October nonfarm payrolls will be released today. This information will be a good signal for future Federal Reserve decisions. A good jobs number and low unemployment would be good for the economy, but also indicate that the Fed will continue their hawkish stance.
Peloton shares tumbled 10% Thursday morning before mounting a big comeback in the afternoon. The reaction comes after posting losses much worse than expected due to a steep decline in connected fitness products revenue that heavily outweighed an increase in subscription revenue.
Chart of the Day:
Individual investors cannot seem to part ways with big tech corporations. During Wednesday's selloff after the interest rate hike, many of these individual investors jumped into the market to buy technology stocks. A few of the most popular equities include Amazon, Tesla, and Alphabet. Rising rates have hit technology stocks particularly hard which has led to one of the worst selloffs since the dot-com bubble burst. The FAANG stocks have collectively lost trillions of dollars in market value in 2022. Analysts at Vanda Research wrote this week that “the sell-off in mega caps was seen as a buy-the-dip opportunity rather than a capitulation moment.” The decision has not worked out well, up to this point, and those people buying tech shares at a discount in recent weeks are sitting on losses.