Nasdaq Green While Dow and S&P Mixed, AMZN Hit Hard, Brazilian Soybean Yield at Multi-Year Low

Despite the early relative calm, by mid-week stocks fell led by the tech sector and in particular Amazon. While it saw early weakness, the Nasdaq ended up on the week just under 1% while the other indexes were mixed.  

In the first week of January, the number of Americans submitting new jobless claims reached an eight-week high, owing to raging COVID-19 infections, but remained at a level consistent with a quickly tightening labor market.

The Labor Department's weekly unemployment claims data provided additional evidence that the labor market was at or near full employment. At the start of the year, state unemployment compensation rolls were at their lowest level since 1973. In December, producer prices had their smallest growth in 13 months, indicating that the worst of rising inflation is likely over. 

Meanwhile, the producer pricing index (PPI) revealed a 9.7% year-on-year increase in wholesale prices for the end of 2021, the largest gain since data began in 2010.

Investors are changing their expectations for interest rates in the coming year as the Federal Reserve seeks to bring inflation under control while reducing its support for the economy.

Investors have shifted away from growth stocks such as 5G and tech stocks and toward value stocks due to rising rate fears;  making future profits — including those from growth companies — less appealing. Big Tech companies are plummeting because of rising interest rates in the United States, as well as investors shifting to value and cyclical trades.

Amazon (NASDAQ: AMZN) Down

Amazon's (NASDAQ: AMZN) stock dropped by as much as 2.2% on Thursday. A bullish Wall Street analyst's comment about a competitor – Microsoft – was the impetus that pushed the e-commerce and cloud computing giant lower.

Daniel Ives, the Wedbush analyst, released the results of his quarterly cloud computing channel checks. Ives was bullish on Microsoft's (NASDAQ: MSFT) prospects. He said that Azure's “big transformational cloud transactions at [Microsoft] are up north of 50% with definite momentum heading into 2022,” and that the firm had “proven incremental strength again.”

Furthermore, Ives claims that Azure may have gained incremental market share from Amazon Web Services (AWS), which may be terrible news for Amazon if accurate. According to Ives, Microsoft is also “well-positioned to gain further cloud share” from AWS.

Dave Inc. (NASDAQ: DAVE) Up

As a result of the SPAC merger with VPC Impact Acquisition Holdings III Inc. last week, Dave Inc. (NASDAQ: DAVE) shares rocketed more than 40% to session highs by Wednesday as the trading activity for the newly public financial technology business soared.

According to Bloomberg data, more than 4 million shares changed hands intraday on Tuesday, an increase of more than 11 times over the previous two weeks. Both Mark Cuban and Capital One have invested in the Los Angeles-based banking app.

Dave has a personal finance tool that helps users budget for their monthly spending, as well as a Side Hustle function that allows users to apply for part-time jobs with firms like Uber and DoorDash. Dave also provides a cash management tool, which is essentially a bank account, which has attracted 1.3 million members.

US Commodity Market

Soybeans

Soybean futures in Chicago lost more ground, with the market expected to close lower due to rain projections in drought-stricken South American growing regions. The front-month futures contract was down 0.8% to $13.66-1/2 a bushel by Thursday, bringing the loss to more than 3%. According to traders, weather forecasts show that parched portions of Argentina, the world's largest supplier of processed soy, may have significant rainfall starting late this week.

In a crop assessment released on Wednesday, the United States Department of Agriculture (USDA) cut its soybean and corn production predictions for Brazil and Argentina. Some private analysts have slashed their forecasts even more.

Brazil is expected to harvest just over 134 million tonnes of soybeans this season, down 7% from the previous November projection by agribusiness consultancy Agroconsult, as the country's average yields may fall to a six-year low due to a drought.

The prediction also indicates a 2% decrease from the 137.1 million tonnes produced in 2021, according to a presentation.

Livestock

Lean hog futures on the Chicago Mercantile Exchange dipped on Thursday due to concerns that a slower pace of slaughtering is reducing demand for larger pigs.

Slow slaughtering has hurt on hog and cattle futures, according to brokers, because livestock backs up on farms when they can't be processed. Slaughtering has decreased as a result of staffing difficulties caused by an increase in COVID-19 cases, notably of the Omicron variant, they stated.

According to the US Department of Agriculture, meat processors slaughtered 456000 pigs on Thursday, down 2% from a week earlier and 6% from last year. Slaughtering plummeted to its lowest level since August on Wednesday.

The USDA said that the average weight of hogs in Iowa, southern Minnesota, and South Dakota in the week ending Jan. 8 was 292.2 pounds, up from 291.4 pounds the week before.

CME February lean hogs LHG2 finished 1 cent down at 77.850 cents per pound, reversing Wednesday's gains.

Nonetheless, the USDA reported largely higher wholesale pork cutout values in the United States, with the carcass value increasing by $10.82 per hundredweight (cwt).

Pork processors earned roughly $19.95 per hog slaughtered on Thursday, up from $13.40 on Wednesday. Margins were $20.30 per hog a week ago.

Tim Thomas has no positions in the stocks or commodities mentioned. YMG, Wealth of Geeks have no positions in the stocks or commodities mentioned. YMG has a disclosure policy.

This post was produced by Timothy Thomas Limited and was syndicated by Wealth of Geeks.

Featured Image Credit: Shutterstock

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Tim Thomas was born in Guildford and now lives near Southampton, the UK with his family. Tim started his career in the financial markets and has traded and invested in stocks, options, forex, futures, crypto, and real estate for over 20 years. His website, https://timthomas.co/, is dedicated to teaching swing trading strategies for profits, helping traders reach their wealth and financial freedom goals.