While the S&P 500 and the Nasdaq closed at record highs Thursday, the Dow Jones industrials dipped following a disappointing outlook from Cisco Systems when it reported quarterly results Wednesday afternoon. Even a record-high close by Apple couldn’t push the Dow up. Friday’s premarket trading indicates a higher open for the Nasdaq, likely the result of Nvidia’s strong earnings report. Both the S&P and the Dow traded lower in the morning.
Crude oil spot prices were down about 2.5% to trade around $76.50. President Biden’s comments regarding opening the spigots on national reserves, combined with expected lower demand, weighed on crude prices. Bitcoin sank below $56,000 in overnight trading but recovered somewhat to trade at just under $57,000. U.S. Treasury 10-year yields traded lower by about seven basis points.
Meme stocks traded mostly lower Thursday, with electric vehicle stocks taking the biggest hit, partly due to profit-taking and partly to news about Apple’s car project. The biggest move we saw Friday morning came from UWM Holdings Corp. (NYSE: UWMC), the country’s largest wholesale mortgage lender. Late Thursday, UWM announced that it had terminated plans for a secondary stock offering and would immediately rev up its share buyback program. The secondary offering was intended to make the stock more attractive to institutional investors, but the price the big guys were willing to pay did not satisfy Mat Ishbia, UWM’s board chair, CEO and largest shareholder. The stock closed down more than 7% on Thursday and traded up more than 20% in Friday’s premarket.
Shares of Clover Health Investments Corp. (NASDAQ: CLOV) closed down about 12.8% on Thursday. Shares traded up about 2.5% early Friday after venture capitalist Chamath Palihapitiya announced that he had sold about 15% of his stake in SoFi Technologies Inc. (NASDAQ: SOFI) and would use some of the proceeds to boost his investment in Clover Health. Palihapitiya announced the moves on Twitter:
1/ Many of us are trying to make sense of what’s happening in the markets these days. Here are some observations and moves we’ve recently made to continue our work: pic.twitter.com/Z4yA7sS3N6
— Chamath Palihapitiya (@chamath) November 18, 2021
On Wednesday, Clover Health announced a secondary offering of around 60 million shares (including the underwriters’ overallotment) priced at $5.75 a share. Presumably, Palihapitiya will be buying some of those. SoFi shares dropped by about 2.6% Thursday and traded down another 1.5% in Friday’s premarket.
EV stocks weren’t the only ones that took a beating Thursday. Canadian marijuana growers also were hit hard thanks to a research report from Barclays. Tilray Inc. (NASDAQ: TLRY) was the biggest loser, closing down about 11.7% for the day at $110.90. Shares traded up about 3.4% in Friday’s premarket. Barclay’s analysts started coverage of Tilray with an Underweight rating and a price target of $10. Until the United States removes marijuana from its list of dangerous drugs and decriminalizes possession of small quantities for personal use, marijuana growers are mostly stuck with the much smaller Canadian market.
The incoming German government has reached an agreement that will legalize adult use of marijuana in the country. That will help some of these stocks, but the U.S. market is the big prize, and there are concerns that Canada’s growers may still be overvalued compared to potential American producers currently waiting for Congress to act.