The July CPI data was finally released, and Joe Biden was quick to say: Good news! While the Dow and S&P 500 hit new highs on the positive CPI data, the recent volatile vaccine stocks crashed on the News from the European Drug Agency, with Moderna down 15.64%, BioNTech down 13.76%, and Pfizer down 3.90%.
The latest holdings of asset management giant BlackRock also just announced that in the second quarter of this year, the institution liquidating its holdings of Alibaba shares, selling a total of 74.02 million shares.
On Wednesday eastern time, the closely watched U.S. Consumer price index for July finally came out. The CONSUMER price index rose 0.5% in July from the previous month and 5.4% from a year earlier, the Labor Department reported On Wednesday. Core CPI, which excludes food and energy costs, rose 0.3 per cent month-on-month and 4.3 per cent year-on-year. This means that the pace of consumer price increases in the United States moderated in July. Later in the day, U.S. President Joe Biden also spoke about the CPI data. Mr Biden said the latest consumer price report was “good news” on inflation. ‘We will be watching inflation closely and trust the Fed to take appropriate action if necessary,’ Mr. Biden added.
A senior White House official said the US CPI data for July was encouraging and that some areas driven by the coronavirus had “cooled down”. Fed’s Kaplan noted that the CPI data was consistent with the Fed’s outlook. According to Kim, Credit Agricole analyst Valentin Marinov, the CPI data is not expected to cause much change in the outlook for Fed policy and the dollar.
Wells Fargo believes the details from the July CPI inflation report support the view that recent inflation levels are not sustainable as prices in the categories most closely associated with economic reopening and supply constraints have begun to ease. However, Wells Fargo notes that the transition is far from over and price pressures have expanded, which should keep inflation significantly above the Fed’s target for some time. The increasing period of inflation above target has no doubt made some Fed officials increasingly uneasy about the current policy stance. However, others, including Chairman Powell, still believe that price growth will eventually cool. In addition to the fact that inflation expectations remain within their historical range, these officials were also relieved by the latest report.”
Cibc said used car prices appeared to fall back slightly in July as the impact of supply-side problems began to ease. This represents a slowdown in monthly US inflation, as used cars have been the main reason for the rapid rise in overall prices since the economy reopened. The slowdown in CPI growth also eased concerns about the Fed’s policy changes, sending the Dow and S&P 500 both higher.
At the close, the Dow Jones Industrial Average rose 0.62% to 35484.97 points, a new high; The S&P 500 rose 0.25% to a record 4447.70. But the Nasdaq ended lower, down 0.16% at 14,765.14.
The European Medicines Agency
According to Reuters, the European Medicines Agency said on Wednesday (local time) that it is investigating three new possible side effects from Pfizer and Moderna’s coronavirus vaccines, including erythema multiforme, glomerulonephritis and nephrotic syndrome. The European Drug Agency has asked Pfizer and Moderna for more data.
The European Drug Agency said in early July that there was a link between heart inflammation and the Pfizer and Modena vaccines. In very rare cases, myocarditis and pericarditis can occur following the Pfizer and Modena COVID-19 vaccines. The committee recommended adding myocarditis and pericarditis to the information on side effects of vaccine products, and warning health care workers and those preparing to receive the vaccine.
This news, a number of anti-epidemic concept stocks immediately fell. Moderna dropped 15.64%, losing $28.836 billion in market value; BioNTech fell 13.76%, wiping $13.9 billion off its market value; Pfizer fell 3.90%, wiping $10.5 billion off its market value.
Can Moderna fall another 70%?
Moderna’s shares also came under heavy pressure from bearish bank of America analysts amid the European Drug Agency investigation. Moderna is up more than 360% this year (Moderna’s year-long gain has fallen back to 268.84% after Wednesday’s drop), but could still see a big drop ahead, Bank of America said in a research note. Bofa analysts argue that Moderna’s market capitalization of nearly $200 billion doesn’t make sense on a fundamental basis. Bofa reiterated its $115 price target, meaning it believes Moderna has 70% further to fall based on Wednesday’s latest close.
Bofa analysts believe that to justify the nearly $200 billion market cap, two things must be assumed: 1. Moderna can produce 1 billion to 1.5 billion doses of COVID-19 vaccine per year between 2022 and 2038. 2. Moderna’s product line has a 100% success rate and total annual sales of $30 billion. Analysts at Bank of America say that is unlikely.
Moderna jumped more than 17% on Monday, pushing its market capitalization to $200 billion, overtaking Merck, the 130-year-old drugmaker. Moderna had a market cap of $155.537 billion as of Wednesday’s close.
Blackrock reduced its stake in Alibaba by selling more than 74 million shares.
On Wednesday local time, BlackRock released the latest 13F position report. In the second quarter, BlackRock’s top seller was Alibaba, according to the report. During the second quarter, BlackRock accumulated holdings of 74.02 million shares of Alibaba, remaining holdings of 9.82 million shares, a reduction of 86%. Alibaba holdings also fell to 0.06% of its total holdings from 0.56%.
It’s important to note that BlackRock’s 13F data is as of June 30 of this year, so the sale was made before that date. Alibaba’s latest information for the third quarter is not related to the sale. In addition to Alibaba, blackRock’s top five selloffs included two ETFs, Procter & Gamble and Linde Group. As of June 30, BlackRock’s top five holdings were all large U.S. tech stocks: Apple, Microsoft, Amazon, Facebook and Google.