Amazon stock sinks in the after-market on weak fourth-quarter guidance (3 min read)
Amazon’s Q3 results fell short of expectation and gave a gloomy sales forecast which sent their stocks dropping in the after-market. Similar to its big tech peers, Amazon is experiencing a slowdown in their core retail business due to high inflation and rising interest rates. Amazon also expects weaker sales for the holiday season which was disappointing to investors. However, their advertising business was better than estimated and did not suffer from fewer advertisers or Apple’s iOS privacy change like Meta, Google, and Snap experienced.
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Shopify shares pop 17% on smaller-than-expected loss (2 min read)
Shopify stocks jumped more than 17% after reporting a smaller-than-expected loss and a strong revenue for the third quarter. Their revenue was 22% higher than the same time last year but was mainly driven by the strong US dollar according to Shopify. The company also forecast that its operating expense growth rate will be lower in Q4. This was the first quarter to include the results after acquiring Deliverr, an e-commerce shipping company. Even with the surge in their stock price on Thursday, it is still down nearly 75% this year.
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Meta shares plunge 24% to the lowest price since 2016 (2 min read)
Shares of Meta plunged more than 24% on Thursday as investors digested the disappointing revenue and weak Q4 forecast from the previous day. Meta stocks traded less than $100 at market open which is the lowest price since 2016. CEO Mark Zuckerberg reiterated his commitment to continue the spending on developing the metaverse, but so far this year it has lost more than $9 billion. Morgan Stanley, Cowen and KeyBanc have downgraded Meta’s stock due to the company’s rising costs and expects their challenges to remain in the near future.
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U.S. Economy Grew 2.6% in Third Quarter, GDP Report Shows (5 min read)
The US economy grew by 2.6% in the third quarter after declining in the first half of the year. The gain was mainly driven by the shrinking trade deficit. Consumer and business spending started to cool off from the previous quarter as high inflation and rising interest rates began to weigh in. This might be a sign of a broad economic slowdown. Economists are concerned about the possibility of a recession in the next 12 months as the Fed continues to hike rates to combat high inflation. More details on the GDP report are available in the article.
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ECB hikes rates by 75 basis points and scales back support for European banks (4 min read)
The European Central Bank announced another 0.75% rate hike, bringing the key rate from 0.75% to 1.5%. It is the third consecutive rate increase this year. ECB also said they will be scaling back support for European banks by changing TLTRO, which was designed to provide banks with attractive borrowing conditions to incentivize lending. It will be adjusted to match the main benchmark rate of the ECB and should increase the cost of lending for banks significantly. It was also confirmed that rate hikes are not over as inflation remains far too high.
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Senior loan ETFs are seeing strong inflows as investors search for yield (2 min read)
Investors searching for yield are turning to the senior bank loan ETFs. An example is the Invesco Senior Loan ETF (BKLN) which is a passive ETF in the senior bank loan space. BKLN’s assets have gone from steady outflows to strong inflows in the past year as concerns for high inflation and rising rates have grown. Many investors have turned to short-term bond funds like BKLN as they seek cash alternatives. Senior loans have a variable interest rate that adjusts as the market moves which makes it typically favorable in a rising rate environment.
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IndexIQ Adds Pair of ESG-Focused ETFs (2 min read)
IndexIQ launched two new ESG ETFs that focus on high yield and US mid-cap equities. They are IQ MacKay ESG High Income ETF (IQHI) and IQ Candriam ESG U.S. Mid Cap Equity ETF (IQSM). Despite the recent backlash on ESG investments, demand continues to soar. According to PwC, assets in ESG investment products are expected to reach $33.9 billion by 2026 from $18.4 billion last year. IndexIQ said ESG strategies are growing in popularity and their new ETFs were launched to satisfy investor demand.
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That's it for today! You can reply to this email if you have any comments or feedback.
Thanks,
Thomas
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