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Let 'em rip

Big stock swings are in the spotlight as trading exuberance resurfaces, with much excitement returning to the markets over the past few months. Things have been magnified on a broader scale, with the Dow (DJI) tumbling more than 500 points on Tuesday in response to slightly hotter inflation data (see below), while single stock names have also drawn outsized attention for a whole host of reasons. Robinhood (HOOD) was quick to comment on the rebound in trading activity in its latest earnings, referencing a jump in monthly active users and accelerating deposits.

The ARM army? Some are cueing the old meme days of yesteryear as Arm Holdings (ARM) goes on a rollercoaster ride that hasn't stopped yet. A blockbuster rally following earnings saw the stock skyrocket 100% in the past week alone, giving it a nearly 200% total return since its IPO in September. Trade with caution. After shares hit a new record high of $164, ARM tumbled nearly 20% to $120 on Tuesday before restarting the engines overnight to register a 7% premarket gain at the time of writing.

On a fundamental level, the latest catalysts for the British chip designer were a rosy outlook that boosted the entire semiconductor sector, as well as record revenues and a bottom line that exceeded expectations. AI was another magical word that helped trigger liftoff, with CEO Rene Haas noting, "it'll drive the need for more compute in a way that we've never seen before [and] we're just at the beginning." Note that there has also been significant short interest in ARM, creating the potential for squeezes, especially considering that Japan's SoftBank (OTCPK:SFTBY) owns 90% of the company and there are not as many tradable shares outstanding.

Not the only one: Another big mover in extended trading on Tuesday was ride-hailing company Lyft (LYFT). A typo surrounding earnings margins might typically impact shares, but in the current environment, it briefly sent the stock 60% higher. Chief Financial Officer Erin Brewer called out the "clerical error" on a conference call, adding that the firm had quickly corrected its materials, but a set of strong earnings and the first full year of free cash flow positivity were enough to keep LYFT shares up 16% in the after-hours session. (3 comments)

Bumpier road?

U.S. stocks fell on Tuesday after the latest consumer price index report took some steam out of a powerful Wall Street rally that has been in place since the end of October. The Dow (DJI) recorded its worst day in nearly a year and Treasury yields jumped after January's core CPI accelerated by its biggest margin since May 2023. It might be long overdue, with the selling taking away some market froth, but futures are higher again in premarket action. "We've been saying for several months that the disinflationary process has 'paused,'" Investing Group Leader James Kostohryz declared, adding that the Fed must shelve any rate cut plans for now. (77 comments)

Cashing in

Amazon (AMZN) founder Jeff Bezos has been cashing in on the e-commerce giant's rally this year, offloading nearly 24M shares worth more than $4B this month. The stock sales come nearly two weeks after Amazon disclosed Bezos’ trading plan that would let him sell as many as 50M shares, or about $8.6B, before January 31, 2025. Interestingly, Bezos adopted the trading plan on Nov. 8, just days after he announced that he was relocating from Seattle to Miami. While he said the move was to be closer to his parents and his spaceflight company Blue Origin's operations, it'll also likely save him hundreds of millions in taxes. (12 comments)

IRS vs. FDIC

The Internal Revenue Service has sued the Federal Deposit Insurance Corp., seeking to determine how much the independent agency should pay to cover around $1.45B in taxes owed by failed regional lender Silicon Valley Bank. The FDIC, which took control of SVB in March 2023 - in the biggest bank failure since the 2008 financial crisis - has denied the tax claim. See more on the dispute here. The FDIC is also locked in a battle with SVB Financial (OTC:SIVBQ), SVB's former parent firm, amid efforts to recoup its costs in rescuing the failed bank. (3 comments)

Today's Markets

In Asia, Japan -0.7%. Hong Kong +0.8%. China closed. India +0.4%.
In Europe, at midday, London +0.9%. Paris +0.6%. Frankfurt +0.4%.
Futures at 7:00, Dow +0.2%. S&P +0.4%. Nasdaq +0.6%. Crude -0.2% to $77.73. Gold -0.2% to $2,004.10. Bitcoin +3.2% to $51,574.
Ten-year Treasury Yield -3 bps to 4.29%.

Today's Economic Calendar

7:00 MBA Mortgage Applications
9:30 Fed's Goolsbee Speech
10:30 EIA Petroleum Inventories
4:00 PM Fed’s Barr Speech

Companies reporting earnings today »

What else is happening...

Paramount (PARA) to lay off about 800 employees to reduce costs.

Vizio (VZIO) surges with Walmart (WMT) in talks to buy for over $2B.

Coca-Cola (KO) sees stronger organic sales growth than PepsiCo.

Results from Molson Coors (TAP) top expectations, but not guidance.

At an inflection point: Volatile trade for Airbnb (ABNBafter earnings.

Venezuela accuses neighboring Guyana of granting illegal oil contracts.

Instacart (CART) shares rise on plan to cut 7% of global workforce.

AI-driven lending: Upstart (UPST) sinks on latest revenue guidance.

Boeing (BA) reports 29% decline in plane deliveries during January.

Not just companies: The Mag 7 are so big, they're 'effectively countries.'

More on today's WSB topics


Known to most as Uranium Pinto Beans, Jason has more than 15 years under his belt of trading stocks, options and currencies. His expertise primarily lies in chart analysis, and he has a strong eye for undervalued stock. Because he’s got the ability to identify great risk/reward trades he usually enjoys taking the path less traveled and reaping the benefits from the adventure.

He is a co-founder of Option Millionaires, and he is best known for his weekly webinars with Scott, as well as his high level training webinars and charts found in the forums.

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