It was another up and down week on Wall Street ahead of the Easter break with the main indices modestly lower by mid-afternoon on Thursday.
The return of blockbuster M&A, as Elon Musk revealed a takeover bid for Twitter, helped energise investors on Thursday after stocks had made progress on Wednesday when Delta Air Lines reported a surge in ticket sales.
The airline saw its shares in heavy demand amid signs people are prioritising spend on air travel despite cost-of-living pressures.
These pressures were made plain again as data revealed US consumer prices rose by the most in more than 15 years in March, up 1.2% month-on-month and 8.5% year-on-year.
There was some relief in the markets that this figure was at least no higher than had been forecast. The news is widely seen as solidifying the case for a 0.5% increase in interest rates at the Federal Reserve's next meeting in May.
Having initially joined the shareholder register at Twitter as a ‘passive’ investor, controversial entrepreneur Elon Musk has suddenly got about as active as you can get, launching a hostile takeover bid worth $41 billion or $54.20 per share.
This may represent a healthy premium to the current share price but is some way below the all-time highs of close to $80 achieved in 2021.
The CEO of electric vehicle outfit Tesla is promising to ‘unlock’ the ‘extraordinary potential’ of the social media platform which arguably has endured something of a vacuum at the top after the departure of its founder Jack Dorsey last year.
By taking the company private, Musk will have free rein to make changes which it is speculated could include moving to a lighter touch moderating policy and lifting the ban on former US president Donald Trump.
JPMORGAN CHASE
US bank JPMorgan Chase got the sector's quarterly reporting season off to a downbeat start. The figures themselves weren't much to write home about but was really striking was how long-standing chairman and chief executive Jamie Dimon was very cautious about the outlook. The shares extended their year-to-date losses to more than 20% in the wake of the news.
The company booked a $524 million hit from Russia's invasion of Ukraine and reported a 42% drop in net income to $8.28 billion in the first three months of 2022. Earnings per share of $2.63 missed analyst forecasts of $2.72.
These setbacks reflected a big slowdown in the investment banking business which this time last year was benefiting from bumper period for corporate deals and high-volume trading in the markets.
Dimon's pessimistic assessment of economic conditions was reflected in an increase in provisions against bad debt.
NETFLIX
Streaming giant Netflix is set to release its quarterly earnings on 19 April with profitability and subscriber numbers likely to be in focus.
The company will most likely take a financial hit after pulling out of Russia and this could make it tricky to hit forecasts - currently analysts expect subscriber additions of 2.5 million. The shares have fallen sharply since a disappointing set of numbers in January.
Investors may need some convincing over the future direction of the business after its recent setbacks, including its efforts to crackdown on password sharing and the company's expansion into gaming.
While it's understandable that Netflix would want to prevent several households sharing the same account, yet if it is too heavy handed it risks alienating users from the platform entirely. Any hopes of further increasing subscription charges may also be affected by the current pressure on household budgets.
