Stock Market Futures Slip Following Choppy Trading Session
U.S. stock futures are edging lower in the early morning Tuesday. The current movement in stocks could be due to investors taking a cautious approach to this trading week. Accordingly, this would be in line with the key incoming updates in the stock market now. Namely, there are earnings from the likes of Pfizer (NYSE: PFE), Enphase Energy (NASDAQ: ENPH), Peloton (NASDAQ: PTON), Lyft (NASDAQ: LYFT), and Digital Turbine (NASDAQ: APPS) on tap today. Aside from earnings, another major release on the economic front later this week would be the Consumer Price Index (CPI) reading for January. Commenting on this is Sam Bullard, senior economist at Wells Fargo (NYSE: WFC).
Bullard posits, “Following the stunning performance of the January employment report, the coming week’s key release is likely to be Thursday’s January CPI report as it will provide policymakers and market participants insight about inflation amid furthering signs of persistent, elevated price pressures that, in turn, support expectations for hawkish monetary policy actions initiating in March.” He continues, “Further increases in inflation expectations, particularly longer-term expectations, would only add more pressure on the Fed to act in March and uncertainty over the path of rate hikes.” Adding to all this, there is also no shortage of news to take note of in the stock market today. As of 6:52 a.m. ET, the Dow, S&P 500, and Nasdaq futures are trading lower by 0.02%, 0.17% and 0.28% respectively.
Velodyne Lidar Kicking Into High Gear After Amazon Team Up
Velodyne Lidar (NASDAQ: VLDR), an upcoming remote sensing radar tech firm, is making waves in the stock market now. The company’s shares are currently soaring by over 30% in pre-market trading today. For the most part, the movement in VLDR stock follows news of its latest dealings with Amazon (NASDAQ: AMZN). In detail, the current pact between the duo includes a warrant for Amazon to buy 39.6 million of Velodyne’s shares. This would be via its Amazon.com NV Investment Holdings subsidiary. According to the 8-K filing, the warrant is based on discretionary payments of up to $200 million made by Amazon. The likes of which are according to existing commercial agreements between the two.
Overall, the current deal could benefit both Velodyne and Amazon at the same time. On one hand, Velodyne would be getting much more attention, especially since its massive dips in stock prices over the past year. For the uninitiated, Velodyne is a pioneering name in the field of real-time light detection and ranging (lidar) tech. Through its breakthrough lidar portfolio, it would be a player to consider in the emerging autonomous vehicle (AV) industry. This is understandable as its lidar tech essentially serves as the ‘eyes’ for modern-day AVs. On the other hand, Amazon could be building on its existing AV tech through this partnership as well. This would, in theory, serve to bolster its push towards driverless trucks. Regardless, it would not surprise me to see VLDR stock being among the hottest stocks in the stock market today.
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Meta Platforms Slumps On News Of Europe Data-Sharing Issues; Peter Thiel Exits Board.
In other Big Tech-related news, Meta Platforms (NASDAQ: FB) seems to be extending its losses this week. The current activity in FB stock is likely thanks to the company’s latest warning regarding its operations in Europe. Namely, Meta notes that it may have to pull the plug on Facebook and Instagram in Europe. The reason for this rather aggressive move would be over user data collection disputes. This is likely due to new agreements on transatlantic data transfer affecting Meta’s data-related operations. In its latest annual report posted last week, Meta highlighted all of this. As a result, European regulators are working to reassess current legislation on the matter.
To quote Facebook, “If a new transatlantic data transfer framework is not adopted and we are unable to continue to rely on SCCs (standard contractual clauses) or rely upon other alternative means of data transfers from Europe to the United States, we will likely be unable to offer a number of our most significant products and services, including Facebook and Instagram, in Europe.” Furthermore, Meta also notes that restrictions on this front would “materially and adversely” impact its business in the region. Seeing as the company relies heavily on international data transfers between the E.U. and the U.S., the pushback is expected.
Amidst all of this, Jefferies (NYSE: JEF) analyst Brent Thill notes that long-term investors could be eyeing FB stock. As it stands, Thill still holds a Buy rating on the company with a price target of $350 a share. He argues that the contrast between FB stock and its FAANG stock peers could highlight this opportunity for some.
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Nvidia Seeks To Terminate Arm Holdings Acquisition
Meanwhile, there is another update on semiconductor chip giant Nvidia’s (NASDAQ: NVDA) turbulent Arm acquisition. According to a report by the Financial Times (FT), Nvidia is looking to drop its $40 billion purchase of Softbank-owned chipmaker. This is reportedly the current decision of the board as per its latest meeting yesterday. The FT also notes that Softbank will likely receive a termination fee of about $1.25 billion. Moreover, Softbank could also be looking to bring Arm public via an initial public offering (IPO) later this year. For one thing, this report would be in line with what Bloomberg reported on late last month as well.
After considering all the regulatory resistance it is facing, some would argue that this is a smart play by Nvidia. In fact, analysts over at the Bank of America (NYSE: BAC) note that such a move would be a “net positive” for Nvidia. Analyst Vivek Arya cites considerable regulatory pushbacks from the U.S., China, and the U.K. for this. Additionally, the bank also believes that Nvidia could reallocate the cash towards its key growth areas as well. As such, investors may be watching NVDA stock closely at today’s opening bell.
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DWAC Stock On The Decline Following TRUTH Social Platform Release Delay
Elsewhere, the Trump-linked SPAC Digital World Acquisition Corp (NASDAQ: DWAC) appears to be trending in the stock market yet again. This time, however, it appears to be for a less-than-ideal reason. Diving in, the launch of the former President’s upcoming social media platform, “TRUTH Social”, will be delayed. According to Trump Media and Technology CEO Devin Nunes, the app will launch at the end of March. This would be a month longer than the platform’s original launch date of February 21.
Furthermore, Nunes also highlights the challenges that TRUTH Social faces. He says that the firm “cannot use any of the Big Tech companies,” citing restrictive countermeasures regarding similar content in the past. Despite this minor setback, DWAC stock is still holding strong with year-to-date gains of more than 50%. While investors watch for the SPAC merger to conclude alongside the launch of TRUTH Social, DWAC stock remains in focus.
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