Stocks dip as Archegos margin call ricochets across markets; Suez ship freed

Wall Street ended a volatile session on a mixed note, with the broader market lagging but blue-chip stocks edging to a new record, as the sudden unwinding of a hedge fund ricocheted across markets.

On Friday, the S&P 500, Dow and Nasdaq closed higher by more than 1%, with the broader market posting its best in three weeks. However, traders were watching several big stocks like Viacom (VIA) and Discovery (DISC), after a volatile session on Friday saw several names take a hit linked to liquidation by Bill Hwang, a fund manager and the ex-head of Tiger Management’s family office.

Bloomberg News reported that Hwang’s firm, Archegos Capital Management, was forced by its banks to sell more than $20 billion worth of shares after some positions moved against him. In a related move, Swiss banking giant Credit Suisse (CS) warned that the volatility stemming from the firm’s liquidation would force the bank to take a “highly significant” hit to its first quarter results.

In spite of contagion fears stemming from Archegos’ margin call, however, the Dow crept to a fresh closing high. The week will be mostly quiet until Friday, when the March jobs report is released. The data are expected to show the economy created a whopping 630,00 jobs — the most since October 2019 and the best the onset of the COVID-19 pandemic.

Markets were largely calm amid news that the massive ship marooned in the Suez Canal was finally dislodged after nearly a week, which should pave the way for ending the blockage that’s created a shipping traffic jam in one of the world’s most important shipping lanes. Efforts there had put upward pressure on oil and natural gas prices, given that the canal is a busy thoroughfare for energy exports.

The past couple weeks have been marked by choppy equity trading, especially heading into some of the final sessions of the first quarter. But overall, the cyclical energy, financials and industrials sectors – or the biggest under-performers of 2020 – have outperformed strongly for the year-to-date, while last year’s leading technology companies have lagged. Signs of improving economic growth have trickled in, with Thursday’s bigger-than-expected drop in new unemployment claims to a pandemic-era low among the latest positive reports.

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A prevailing concern for many investors, however, has in fact been centered on the pace of economic expansion, and whether the stimulus-aided post-pandemic recovery might barrel forward even more vigorously than expected and stir up rapid inflation. In the wake of passing a $2 trillion stimulus package, the Biden administration is gearing up for even more spending — and the likelihood of higher taxes.

“You can be sure the spending with have a multiplier less than zero and tax increases are always an economic drag with the extent the only difference,” noted Peter Boockvar, Chief Investment Officer at Bleakley Advisory Group.

Still, Federal Reserve policymakers have recently tried to assuage market participants’ fears over a sharp rise in inflation. On NPR’s Morning Edition Thursday, Fed Chair Jerome Powell reaffirmed that the Fed remained strongly committed to targeting 2% average inflation over time, and said that any eventual pullback in Fed support would be done “gradually, over time, and with great transparency.”

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4:05 p.m. ET: Stocks end mixed as traders digest Archegos blow-up; Dow notches new high

Here were the main moves in markets as of 4:05 p.m. ET:

• S&P 500 (^GSPC): -3.44 (-0.09%) to 3,971.10

• Dow (^DJI): +98.49 (+0.30%) to 33,171.37

• Nasdaq (^IXIC): -79.08 (-0.60%) to 13,059.65

• Crude (CL=F): +$0.59 (+0.97%) to $61.56 a barrel

• Gold (GC=F): -$22.50 (-1.30%) to $1,709.80 per ounce

• 10-year Treasury (^TNX): +6.1 bps to yield 1.7210%

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2:25 a.m. ET: Ackman: Bet on the environment, and capitalism

Billionaire activist investor Bill Ackman, the CEO of the $13 billion hedge fund Pershing Square Capital, made a case that capitalism is “the most powerful potential source” for solving society’s biggest challenges — and environmentally sustainable investing is ushering in that change.

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2:40 p.m. Um…Voltswagen?

If an accidentally-disseminated press release is to be believed, then that’s the new name of Volkswagen’s U.S. operation, according to CNBC:

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2:10 p.m. ET: Archegos, margin calls, and the conundrum of the ‘family office’

Archegos Capital, the hedge fund that’s given investors indigestion amid a series of margin calls roiling big name stocks, has raised questions about who else might be exposed. Reuters on Monday broke down why this particular brouhaha is compelling. From the story:

Readers might asK: What on earth is a family office? As Reuters explains:

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12:15 p.m. ET: Stocks sag as fund’s margin call, profit-taking weigh

• S&P 500 (^GSPC): 3,951.41, -23.13 (-0.58%)

• Dow (^DJI): 32,966.84, -106.04 (-0.32%)

• Nasdaq (^IXIC): 12,997.42 -141.30(-1.08%)

• Crude (CL=F): $61.29, +$0.32 (+0.52%)

• Gold (GC=F): $1,709.90, -$22.40 (-1.29%)

• 10-year Treasury (^TNX): flat, yielding 1.658%

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11:00 a.m. ET: CDC: Pfizer, Moderna COVID shots highly effective

A new study shows that the two leading COVID-19 vaccines are highly effective against blocking the coronavirus after one shot — and are even more so after the booster. The CDC report of vaccinated health care workers showed that two doses are better than one — with the efficacy rate jumping from 80% to 90% two weeks after the 2nd dose.

Pfizer’s stock (PFE) was modestly higher in Monday morning trade, with Moderna’s shares (MRNA) edging lower.

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10:45 a.m. ET: Will the housing market suffer a rate shock? It depends

The team over at Bankrate is mulling whether the run-up in benchmark Treasury rates will spell the end of the housing boom. The answer, like a Facebook relationship status update, is complicated:

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10:15 a.m. ET: Suez canal traffic resumes, Reuters reports

Per Reuters, the dislodging of the Ever Given — the hapless ship that was beached in the Suez Canal for nearly a week — has allowed the resulting traffic jam to clear, the canal authority said in a statement on Monday:

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9:30 a.m. ET: Stocks open to the downside as margin call bites

• S&P 500 (^GSPC): 3,969.73, -4.81 (-0.12%)

• Dow (^DJI): 33,058.66, -14.22 (-0.04%)

• Nasdaq (^IXIC): 13,137.48, -1.24 (-0.01%)

• Crude (CL=F): $60.47 per barrel, -$0.50 (-0.82%)

• Gold (GC=F): $1,722.40 per barrel, -$9.90( -0.57%)

• 10-year Treasury (^TNX): flat, yielding 1.658%

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8 a.m. ET: Stocks dip ahead of quiet week, jobs data

Here’s where markets were trading ahead of the opening bell Monday morning:

• S&P 500 futures (ES=F): 3,950.25, -14.50 (-0.37%)

• Dow futures (YM=F): 32,812.00,-142.00 (-0.43%)

• Nasdaq futures (NQ=F): 12,954.50, -12.25 (-0.09%)

• Crude (CL=F): $61.40 per barrel, +$0.43 (+0.71%)

• Gold (GC=F): $1,724.70 per ounce, -$7.60, (-0.44%)

10-year Treasury (^TNX): flat yielding 1.6600