The “recovery trade” took a breather on Tuesday after a setback on the COVID vaccination front.
Both the U.S. Food and Drug Administration and the Centers for Disease Control and Prevention urged a pause in injections of Johnson & Johnson’s (JNJ, -1.3%) single-dose coronavirus vaccine so that the incidence of a blood clotting disorder in six Americans who have received the shot could be studied.
Also Tuesday, the U.S. Bureau of Labor Statistics reported that U.S. consumer prices jumped by 2.6% in March, up from 1.7% in February.
“This morning’s U.S. CPI data came in a touch above expectations but were no worse than feared,” says Michael Reinking, NYSE senior market strategist. “This, coupled with the potential to push out the vaccination process, has put a bid in Treasury markets.”
“That bid strengthened following a strong $24 billion 30-year auction at 1 p.m., with the auction pricing at 2.32% below the 2.338% when issued market. The 10-year yield is down 4.5 (basis points) to 1.63%.”
This easing in yields, combined with virus concerns, helped boost technology and tech-adjacent stocks – Nvidia (NVDA, +3.1%), Apple (AAPL, +2.4%) and Tesla (TSLA, +8.6%) contributed to a 1.1% gain in the Nasdaq Composite, to 13,996 – as well as utility stocks (+1.2%), which led all sectors Tuesday.
The S&P 500 gained 0.3% to set a new record close at 4,141, and the Dow Jones Industrial Average finished slightly lower, off 0.2% to 33,677.
Other action in the stock market today:
- The small-cap Russell 2000 slipped 0.2% to 2,228.
- U.S. crude oil futures improved by 0.6%, settling at $59.70 per barrel.
- Gold futures declined 0.9% to $1,747.60 per ounce.
- The CBOE Volatility Index (VIX) declined 1.5% to 16.65.
- Bitcoin prices hit an all-time high of $63,707 ahead of the Coinbase direct listing Wednesday. Bitcoin cooled to $63,023 by the afternoon, but that still represented a 4.9% improvement on Monday’s price. (Bitcoin trades 24 hours a day; prices reported here are as of 4 p.m. each trading day.)
Attack of the SPACs
One of Tuesday’s biggest market headlines centered on a company located 9,000 miles away – but it also continues a growing story here at home.
Grab Holdings, a multinational ride-hailing, food-delivery and payments-solutions technology firm based in Singapore, announced it would go public via a $39.6 billion deal that would see it merge with California-based special purpose acquisition company Altimeter Growth (AGC, +9.9%) – the largest such “SPAC” deal in history.
That extends what has been an explosive 2021 for SPACs – a method of bringing private companies public without them having to go directly through the initial public offering (IPO) process. After raising $13.6 billion in 2019, SPAC deals generated an incredible $73 billion in 2020 … only to be eclipsed in just the first three months of 2021, when nearly $88 billion was raised.
Investors need to exercise caution, as this newly red-hot corner of the market is garnering increasing scrutiny from regulators. But those looking for a potential growth booster should take a look at our new “SPAC list”: a regularly updated list of these acquisition-minded companies that are currently on the hunt for merger targets.
Kyle Woodley was long NVDA as of this writing.