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Stocks Surge as Powell Signals Rate Peak; Shein Eyes Mega IPO
December 2, 2023
Equity Markets Climb on Positive Economic Outlook
Equity markets finished the week strong, with both the S&P 500 and the Dow Jones Industrial Average reaching new highs not seen in over a year. The catalyst for this uptick was comments from Federal Reserve Chair Jerome Powell, hinting that the central bank may be ending its cycle of interest rate hikes.
Powell’s mention of a slowing economy due to “tight monetary policy” was interpreted by investors as a signal that the period of aggressive rate increases might be winding down, although this was not explicitly confirmed. Supporting the robust market rally that began in early November are several key elements: easing inflation rates, a decline in long-term U.S. Treasury yields, and predictions of potential rate cuts next year.
The benchmark 10-year Treasury yield fell sharply this week, dropping 24 basis points to end at 4.225%—a level last seen in early September. These developments encouraged the three major stock market indices to end the week with five consecutive weeks of gains, with the Dow Jones rising 2.4%, the S&P 500 increasing 0.7%, and the Nasdaq Composite edging up 0.4%.
Excitement Builds for Upcoming IPOs
In the world of initial public offerings (IPOs), fashion giant Shein made headlines with its confidential filing for a U.S. IPO, targeting an impressive valuation between $80 billion and $90 billion. If achieved, this could make Shein’s IPO the largest U.S. listing by a Chinese company.
The retailer, known for its explosive growth and “real-time retail” model that requires suppliers to deliver new designs in just three days, has not been without controversy due to worker exploitation allegations, which could complicate its market debut. As a Luckbox Magazine analyst suggested, investors should “continue to collect information about this promising – but potentially complicated – listing.”
Adding to the buzz are expectations of other high-profile potential IPOs, such as Panera Bread, Kim Kardashian’s shapewear brand Skims, and the social media giant Reddit.
Tesla’s Cybertruck Debut Met with Investor Caution
Tesla’s (TSLA) much-awaited unveiling of the Cybertruck at its Austin Gigafactory was met with tepid investor enthusiasm. Tesla’s stock experienced a slight decline, with shares dropping 1.7% during regular trading on Thursday and a further 2.1% after hours.
The electric pickup truck, now starting at $60,990, surprised consumers with a price increase of over 50% from its initial announcement in 2019. Potential buyers will also have to wait until 2025 for the base model, while the high-performance “Cyberbeast” model will boast impressive features such as 0 to 60 acceleration in 2.6 seconds, a top speed of 130 MPH, and substantial torque and horsepower.
Additionally, concerns have been raised about the truck’s driving range, which falls short of the originally promised 500 miles. It turns out the full range will be achievable only with a range extender, which significantly encroaches on the vehicle’s bed space.