Markets
Luke Kawa

US stocks sink on momentum unwind, mounting growth fears

It was a risk-off day, with stocks slumping while bonds rallied briskly amid data pointing to an unexpected cooling in the US services sector in February and deteriorating consumer confidence.

The S&P 500 tumbled all the way down to its 50-day moving average, closing 1.7% lower.

The Nasdaq 100 declined 2.1% while the Russell 2000 gave back 2.9%.

There was a decidedly defensive tenor to the S&P 500 sector ETF price action: consumer staples were the best-performing sector, up more than 1%, utilities were flat, and all other sectors declined. Tech, consumer discretionary, industrials, and energy were all off more than 2%.

The brisk retreat in the benchmark index over the past two sessions has the hallmarks of a momentum unwind catalyzed by Walmart’s lackluster outlook: the iShares MSCI USA Momentum Factor ETF fell nearly twice as much as the S&P 500 in the final couple trading days of the week. Walmart, for its part, extended yesterday’s losses to close below its 50-day moving average for the first time since August.

Flows related to this month’s options expiry may have played a role in the magnitude of the downdraft.

Nvidia, for instance, had a significant amount of open interest in calls expiring on Friday with a strike price of $140. While the stock opened around that level, the value of those contracts plummeted as shares dipped lower, likely exacerbating the selling pressure on the stock.

A few bright spots on the tape: Celsius spiked after announcing a deal to buy Alani Nu, which is popular among Gen Z. It’s a day ending in y, so Alibaba rallied strongly, this time on reports that GameStop CEO Ryan Cohen upped his stake in the Chinese e-commerce and cloud giant to about $1 billion.

Hims & Hers cratered after the FDA said weight-loss drugs Ozempic and Wegovy are no longer in a shortage, which curbs its ability to sell copycat editions. The news was a boon for Novo Nordisk, however.

Luxury reseller The RealReal also plummeted after issuing full-year forecasts for revenues and adjusted EBITDA that came in light relative to analysts’ expectations.

Probes also weighed on certain companies’ shares to end the week. UnitedHealth sold off on a report that the DOJ is investigating its Medicare billing practices. Meanwhile, CrowdStrike is reportedly under scrutiny by both the DOJ and SEC.

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Toby Bochan, Luke Kawa
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Double dose of long-delayed jobs data weighs on US stocks

The markets continued to slide on Tuesday, with the S&P 500 and Russell 2000 finishing lower, while the Nasdaq 100 managed a last-hour rally to finish slightly up.

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Luke Kawa

IonQ and D-Wave Quantum spike as Jefferies initiates coverage with “buy” ratings

Shares of IonQ and D-Wave Quantum are soaring on Tuesday after Jefferies initated coverage on the stocks with “buy” ratings and price targets of $100 and $45, respectively.

Rigetti Computing, which Jefferies started with a “hold” rating and $30 price target, is modestly lower. These three quantum computing companies are all down between 40% and 60% from their October all-time highs.

All 13 analysts who cover D-Wave have a “buy” (or equivalent) rating, while 75% of the dozen on Wall Street who have a rating on IonQ recommend the stock.

While the speculative AI-linked stocks continue to largely get crushed, this pocket of the market also favored by retail traders is showing some signs of life.

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Luke Kawa
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RadNet tumbles after Hunterbrook Media calls it “the AI story that doesn’t add up” and investment arm announces short position

In investigating the company, “what emerged was a gap between story and substance: a Digital Health business that generates much of its growth by invoicing a different RadNet business line; a same-center sales metric seemingly juiced by undisclosed consolidations; financial disclosures that don’t add up; and insiders using the stock run-up to cash out,” wrote Hunterbrook authors led by Bethany McLean.

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Max Knoblauch

Frontier sinks as longtime CEO, who regularly feuded with United, suddenly departs

Shares of ultra-budget airline Frontier are down more than 10% on Tuesday morning following the carrier’s announcement that it would replace its longtime CEO, Barry Biffle. Frontier President James Dempsey will fill in as interim CEO.

Biffle, who has been Frontier’s CEO since early 2016, will remain at the airline in an “advisory capacity” until December 31. The move is “not the result of any disagreement with the Company on any matter relating to the Company’s operations, policies or practices,” per a company filing.

Under Biffle, Frontier attempted to acquire rival Spirit twice since 2022 — both unsuccessful. Last week, the carrier’s shares dropped after Spirit’s pilots ratified a lower-paying contract in an effort to keep it afloat through its latest bankruptcy.

Biffle was a staunch defender of the ultra-budget model, which has been falling out of fashion in the US market in recent years. He’s regularly feuded with United Airlines CEO Scott Kirby over comments about budget airlines.

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