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Most Indexes End Shortened Week Lower; Twitter Board Meets

·3 min read
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There were signs at various times during this holiday-shortened week (both trading floors and Zacks.com will be closed for Good Friday) that indexes were going to burst higher, despite record and near-record inflation numbers in March CPI and PPI data, among other things. Ultimately, however, the Dow wound up with its third straight weekly loss, -113 points on the day, or -0.33%.

The other major indexes performed even worse in Thursday’s regular session: the S&P 500 was -1.21% and the Nasdaq shed -292 points, or -2.14%. Even the Russell 2000 — the only one of these major indexes to close higher for this week — slid -0.89% on the day.

Q1 earnings season is upon us, and, as expected, the big banks are having a relatively tough time producing attractive numbers amid a quarter which began a lingering Omicron variant of Covid-19 and concluded with Russia still dropping bombs throughout Ukraine. JPMorgan JPM yesterday posted its first earnings miss in two full years and is down -6.6% from its late Tuesday high, and while Citi C, Goldman Sachs GS and Morgan Stanley MS were all up in Thursday’s regular trading, Wells Fargo WFC disappointed, falling -4.15% today.

Nike NKE led the way on the Dow today, +5% on analyst notes anticipating gains in China as that country’s economy reopens from its latest wave of Covid in Shanghai and elsewhere. The global shoe and accessories company is still more than 20% off its November ’21 highs, and the company does not report fiscal Q4 earnings until late June.

Otherwise, stock market news remains in the orbit of the latest melodrama between Tesla TSLA and SpaceX CEO Elon Musk in his bid this morning to obtain 100% of Twitter TWTR for $43 billion, or $54.20 per share. While this is around a 20% premium to the current stock price (which fell on the day after spiking higher on this morning’s news), it’s still well off the valuation Twitter enjoyed in spring of last year, when it traded over $70 per share.

The Twitter board will soon be holding an “all hands” meeting to decide the company’s next move. While it’s quite certain the financing for Musk’s venture is not yet in place — he’s said as much in his otherwise vaguely worded proposal — simply rejecting his offer outright might cause Musk to pull his 9.2% stake he just purchased in the social media staple last week, which could then potentially send Twitter shares back toward its multi-year lows from a couple years ago.

Perhaps making incremental, bureaucratic steps with the board and getting into Musk’s financial details and plans for the company would be a possible strategic way to go: rather than let the brilliant (but mercurial) CEO businessman paint in broad strokes on dollar amounts and ideology, dragging him slowly through the process of what his specific plans are for financing and enhancing the product may expose a weak link somewhere in Musk’s
thinking, and/or may bore him to death with the minutiae of legal ramifications pertaining to a hostile takeover.

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