Good Week

QABSY (Quantus Airways Limited) +3.83 International travel is back, and operators are cashing in on years of pent-up demand.  After two years of putting off travel due to the COVID-19 pandemic, the number of passengers going through a Transportation Security Administration (TSA) checkpoint is almost near pre-pandemic levels at nearly 2 million on average over the past week.  Eager to capitalize on this explosion of demand, international airlines are scrambling to not only restore pre-pandemic routes, but to also build up new routes. For instance, Qantas (QABSY) recently announced ultra-long-haul flights between Sydney and Melbourne to London and New York by the end of 2025.

Bad Week

Twitter Inc. (TWTR $42) was the focus after Elon Musk tweeted that his $44.0 billion deal to acquire the social media company is temporarily on hold pending details supporting the calculation that spam/fake accounts do indeed represent less than 5.0% of users. Shares fell -9.67% following this announcement. Musk followed this statement by tweeting that he is still committed to an acquisition.

Affirm Holdings Inc. (AFRM $24) reported earnings-per-share (EPS) loss of $0.19 per share, smaller than the FactSet estimate calling for a $1.23 per share shortfall, as revenues rose 54.0% year-over-year (y/y) to $355 million, above the Street's forecast of $344 million.  Affirm is a publicly traded financial technology company headquartered in San Francisco, United States. Founded in 2012, the company operates as a financial lender of installment loans for consumers to use at the point of sale to finance a purchase. 

What Else Happened?

U.S. stocks logged another down week with the S&P 500 and Nasdaq posting six straight weeks of declines, while the Dow registered a seventh-consecutive weekly loss. The markets continued to contend with the bearish backdrop of aggressive monetary policy tightening, persistent inflation, rising interest rates, and a strong U.S. dollar.

The major U.S. indexes fell for the fifth week in a row after a rapid shift in sentiment sent stocks reeling on Thursday. An employment report on Friday showed that the economy generated 428,000 jobs in April, and the major indexes ended up with relatively modest weekly declines: –1.5% for the NASDAQ and about –0.2% for the S&P 500 and Dow. 

Prices of government bonds fell, sending the yield of the 10-year U.S. Treasury Bond surging late in the week. The yield jumped from 2.92% to 3.07% on Thursday before climbing to 3.13% on Friday, the highest level since November 2018. As recently as mid-2020, the yield was around 0.50%.

Earnings performance continued to improve, as first-quarter profits at companies in the S&P 500 were expected to increase about 9%, based on companies that have reported so far and forecasts for firms that haven’t yet released earnings, according to FactSet. That’s up from the 7% rise that had been projected at the end of the previous week. About 87% of companies had reported results as of Friday.

With China’s COVID-19 lockdowns and the war in Ukraine continuing to fuel inflation, several of the world’s biggest central banks joined the U.S. Federal Reserve in lifting interest rates. Among them was the Bank of England, which said it expects U.K. inflation to climb to a 10% annual rate.

GOOD WEEK

Shares in Cisco Systems (CSCO) posted a good run in 2021 amid the market's rotation to "value" stocks tied to the U.S. economy reopening. The outlook for CSCO stock this year depends on spending trends for cloud computing infrastructure as well as corporate and telecom networks.  Cisco stock jumped 41% in 2021 amid volatility in the tech-heavy Nasdaq.  Cisco's January-quarter earnings were higher considering component shortages and supply-chain issues.  Product orders increased 33% year-over-year, marking the third straight quarter of 30%-plus order growth. Demand in the enterprise market has been a bright spot.  Cisco continues to hike prices amid supply chain issues.

BAD WEEK

Shopify (SHOP) earnings fell 14% while revenue rose 41% to $1.38 billion, both beating Q4 views. But management said capital spending and marketing investments would climb as the coronavirus pandemic fades and e-commerce growth normalizes. Shopify said it plans to spend $1 billion annually on a U.S. distribution network to store and ship products for its merchant customers. For full-year 2022, Shopify expects "Year-over-year revenue growth to be lower in the first quarter of 2022 and highest in the fourth quarter of 2022." SHOP stock plunged to its lowest level since May 2020.

WHAT ELSE HAPPENED?

Tesla (TSLA) sold 59,845 made-in-China Model 3 sedans and Model Y SUVs last month. Most of those, 40,499, were exported mainly to Europe. Only 19,346 were sold locally, vs. 70,602 in December. Meanwhile, the National Highway Traffic Safety Administration confirmed it is investigating claims that a Tesla Autopilot system glitch causes phantom braking. And Consumer Reports crowned Ford's Mustang Mach-E its top EV of 2022, dethroning Tesla's Model 3. Tesla stock fell about 1.5% for the week.