Netflix, Peloton, and other Wall Street winners of the pandemic economy are running out of steam, explains KevinTDugan
Now with a little less shine. Photo: Cedric Ribeiro/Getty Images for Netflix Much of what made investors rich during the pandemic is crumbling. The value of Netflix dropped by $45 billion in one day. Peloton has halted production on some of its exercise equipment. Bitcoin has lost almost half its value since its November peak. The pandemic isn’t over, but the Leave Home market has begun.
Even before the Omicron variant started spreading with a vengeance throughout the U.S., Wall Street has been betting that pandemic-era economy is in its end of days. Since the market crashed in March of 2020, the Dow Jones has doubled in value, pumped up by companies that made more money as people spent more of their lives at home. But as lockdowns eased and vaccines became more widespread, the writing has been on the wall.
Again, this is not to say that the pandemic is over. “If you think about 150,000 hospitalized because of Omicron, 750,000 cases a day, that would have shut us down 18 months ago,” John Lynch, the chief investment officer at Comerica Wealth Management told Intelligencer. The reality is that when COVID-19 first came to U.S. shores in early 2020, the economy shifted along with it.
Crucial to all this is the Fed. The central bank is expected to start ratcheting up interest rates as soon as this March in a bid to keep inflation from spiraling out of control. This also means that businesses — which rely on borrowed money to keep operating — are going to spend more on interest payments than, say, employee salaries or goods. Next week, the Fed’s Chair, Jerome Powell, is expected to give a press conference that will give some hints as to how high and how fast rates will rise.
Meanwhile, many winners of the pandemic economy are running out of steam. The Nasdaq Composite, a stock index of technology companies, just had its worst week since 2020, dragged down by giants like Amazon. Even Bitcoin is at its lowest point since July, as it increasingly moves in the same general direction as the stock market. With the Omicron wave now possibly past-peak in the U.S.
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