GameStop shares march higher on NFT plans, Cathy Wood's ARK Innovation fund gets slammed by tech's about-face, and Wall Street awaits December's jobs report.
Here are five things you must know for Friday January 7:
1. – Stocks Point to Higher Open Ahead of Jobs Report
U.S. stock futures were pointing to a slightly higher open early Friday morning ahead of a key U.S. employment report that is expected to show additional job growth in December, despite the surging omicron variant.
Futures contracts tied to the Dow Jones Industrial Average are indicating a 45-point opening gain, while those linked to the S&P 500 are priced for a 5.25-point gain. Futures tied to the tech-focused Nasdaq Composite are indicating a 4.5-point rise at the start of trading as benchmark 10-year Treasury note yields trading up slightly at 1.725%.
Global benchmark Brent crude was up 0.7% at $82.54 a barrel, its highest level in more than eight weeks amid expectations that oil supply could potentially be lower due to freezing conditions in the midwest and Canada, and if protests in oil-rich Kazakhstan continue.
Stocks finished lower on Thursday amid expectations that the Federal Reserve would pull back on economic stimulus sooner than expected to tamp down inflation.
Economists and investors have been recalibrating their expectations of how inflation, which is currently running well above the Fed’s 2% annual target, will be tamped down by the Fed, and what that will mean to companies that have relied on low interest rates through the pandemic.
Additional indications of whether wages are feeding into the inflation equation will come at 8:30 a.m. ET when the Labor Department releases its latest tally on job growth.
Economists polled by FactSet expect the U.S. economy added 422,000 new jobs last month, a more muted number than ADP's 807,000 tally released on Wednesday, though they also expect the unemployment rate ticked up a notch to 4.2% from 4.1% amid tight hiring.
Average hourly earnings, a key gauge of employers’ cost to keep workers on the job and a component of overall inflation, are expected to have ticked up to 0.4% in December on a month-over-month basis, and 4.2% year over year.
2. -- GameStop Shares Jump on NFT Plans
GameStop (GME) - Get GameStop Corp. Class A Report shares continued to trade higher in premarket trading on Friday after a report that the game retailer is launching a division to develop a marketplace for nonfungible tokens, or NFTs, making a foray into the world of cryptocurrencies and blockchain.
Shares of GameStop were up more than 30% in after-hours trading Thursday after The Wall Street reported that the video game retailer has hired nearly two dozen people to run an NFT platform, which is intended to be used for trading the virtual assets within videogames.
GameStop is reportedly creating partnerships with two crypto companies to "share technology and co-invest in the development of games that use blockchain and NFT technology, as well as other NFT-related projects", according to the Journal, citing people familiar with the plans.
The report said GameStop is asking select game developers and publishers to list NFTs on its marketplace when it plans to launch later this year.
GameStop’s retail trading “Apes” have been expecting news of an NFT marketplace and a crypto play for months, believing that it is a key part of company Chairman Ryan Cohen’s turnaround master plan, and they’ve been more than a year to hear it since Cohen, as an activist investor, took a large stake in the videogame retailer and sparked the short squeeze of January 2020.
At one point last year, shares of GameStop rose more than 500%, although it also fell to below $20. It ended the regular trading session Thursday at $131.03 a share. As of 6 a.m. ET Friday, GameStop shares were up 18.1% at $154.74 in premarket trading.
3 -- Sell-off in Cathie Wood’s ARK Innovation fund Hits 48%
Cathie Wood’s flagship fund ARK Innovation (ARKK) - Get ARK Innovation ETF Report remains caught in the epicenter of the tech selloff this week as some of its key holdings have pulled down the popular exchange-traded fund’s returns.
At its low of the day on Thursday, the innovation-focused ETF was down more than 48% from its February 2021 all-time intraday high. That is a drop worse than the one the fund saw in March of 2020 during the low of the pandemic market rout.
Of the 43 holdings in ARK Innovation, 36 are more than 40% off their 52-week highs. Tesla (TSLA) - Get Tesla Inc Report, Roku (ROKU) - Get Roku, Inc. Class A Report, Teladoc Health (TDOC) - Get Teladoc Health, Inc. Report and Zoom Video (ZM) - Get Zoom Video Communications, Inc. Class A Report are some of ARK Innovation’s top holdings.
“The performance of Cathie Woods ARKK is so atrocious that even though it is not a hedge fund and it can’t be shot against, it is a pall over every holding. Tempting to discuss opportunities but hard to find... It’s such a tough streak...,” CNBC’s Jim Cramer said on Twitter on Thursday.
Wood herself isn't letting the tech wreck stop her from scooping up what she feels are potential bargains. Wood has continued to buy the dip in her favorite stocks, including DraftKings (DKNG) - Get DraftKings Inc Class A Report, Veracyte (VCYT) - Get Veracyte Inc Report and Roblox (RBLX) - Get Roblox Corp. Class A Report.
ARK Innovation closed down 0.6% at $85.58 per share on Thursday.
4. -- Apple CEO Tim Cook’s 2021 Pay Package: $100 Million
Apple (AAPL ) - Get Apple Inc. ReportCEO Tim Cook received almost $100 million in compensation in 2021, a year in which he completed 10 years as the company’s CEO and led the iPhone maker to record profits during a global pandemic.
Cook's $98.7 million pay package rose more than 500% compared with the previous year’s $14.8 million, according to the tech giant’s annual proxy filing with the Securities and Exchange Commission. Cook’s base salary of $3 million remained unchanged.
Apple shares rose about 80% last year and have continued to rise in recent days, briefly taking the tech giant's market value past $3 trillion this week. Apple reached $3 trillion roughly 500 days after it first passed the $2 trillion level. In August 2018, Apple became the first American company ever to be worth $1 trillion.
Wedbush analyst Daniel Ives said earlier this week that while the supply chain shortages has dominated Wall Street conversation around Apple in the holiday quarter, he instead is focused on the robust consumer demand story shaping up for iPhone 13 into 2022.
Based on his supply chain checks over the last few weeks, Ives said he believes demand is outstripping supply for Apple by roughly 12 million units in the December quarter. That now will add to the tailwinds for the company in the March and June quarters, as the supply chain issues ease in the first half of 2022.
Apple’s profit and sales in the 2021 fiscal year exceeded the company’s past records, with sales topping $365 billion.
5. -- Google Loses to Sonos on Patent Infringement Case
Google (GOOGL) - Get Alphabet Inc. Class A Report infringed on audio patents held by Sonos (SONO) - Get Sonos, Inc. Report and is barred from importing some of its Nest audio speakers and other violating products, a U.S. trade agency ruled on Thursday.
The U.S. International Trade Commission found the Alphabet-owned search giant violated five of Sonos’s patents related to synchronizing audio, adjusting volume and connecting to Wi-Fi. The court determined that Google should stop importing products that used those patents.
Sonos Chief Legal Officer Eddie Lazarus told The Wall Street Journal that the decision was an “across the board win” for the company and called on Google to “pay a fair royalty for the technologies it has misappropriated.”
Google spokesman José Castañeda told the Journal that the tech giant would appeal the decision. “We will seek further review and continue to defend ourselves against Sonos’s frivolous claims about our partnership and intellectual property,” he said.
Analysts expect the ruling will have limited effect on Google’s product line because the company has revamped the design of some previously infringing products such as its Pixel smartphones and Nest speakers. The court vetted those changes and ruled that the overhauled products can be shipped without violating the import ban.
Shares of Sonos rose 5.65% in after-hours trading. Alphabet shares were up 0.3% after hours.