Twitter shares tumble after Elon Musk announces his buyout bid is on hold




  • In Business
  • 2022-05-14 10:01:07Z
  • By Detroit Free Press

The S&P 500 dropped to its lowest levels since March 2021, while another round of inflation data suggests aggressive Federal Reserve monetary policy tightening is likely to continue for the foreseeable future.

On Wednesday, the U.S. Labor Department reported the consumer price index gained 8.3% in April, exceeding economist estimates of 8.1% and increasing the likelihood that the Fed will continue raising interest rates in 0.5% increments for now. CPI inflation dropped slightly from its 8.5% pace in March, but it once again outpaced the 5.5% wage growth the Labor Department reported in April.

On Thursday, Federal Reserve Chairman Jerome Powell said it will be "quite challenging" to achieve a so-called soft landing for the economy as the Fed raises interest rates to combat inflation. The U.S. Senate confirmed Powell's nomination for a second term as chairman on Thursday.

On Wednesday, the Wall Street Journal reported the U.S. Securities and Exchange Commission is investigating Tesla CEO Elon Musk for waiting 10 days before disclosing an ownership stake of more than 5% in Twitter. Musk previously agreed to a fraud settlement with the SEC in 2018 after he tweeted that he had "funding secured" for a Tesla buyout that never occurred.

Elon Musk, Tesla CEO, attends the opening of the Tesla factory Berlin Brandenburg in Gruenheide, Germany, March 22, 2022.
Elon Musk, Tesla CEO, attends the opening of the Tesla factory Berlin Brandenburg in Gruenheide, Germany, March 22, 2022.  

Twitter shares dropped more than 10% on Friday when Musk announced his $44 billion buyout bid for Twitter is "temporarily on hold" until he receives more information about how many Twitter accounts are fake "spam bot" accounts.

Bitcoin prices briefly dropped below $27,000 on Thursday for the first time in 16 months, driven lower by concerns about stablecoins TetherUSD and TerraUSD breaking below their pegs to the U.S. dollar.

Cold wallets

Shares of cryptocurrency exchange Coinbase plummeted more than 30% last week after the company reported a 27% drop in revenue in the first quarter.

In the week ahead, investors will get more quarterly earnings reports from Walmart and Home Depot on Tuesday, Cisco on Wednesday and Applied Materials on Thursday.

The S&P 500's forward price-to-earnings ratio recently dropped below 18 for the first time since the second quarter of 2020, according to FactSet.

Economic numbers

Following the disappointing U.S. inflation numbers, Wall Street will get key economic updates on Tuesday when Eurostat releases its preliminary Eurozone first-quarter GDP growth estimate and the U.S. Census Bureau releases its April U.S. Retail Sales report.

Benzinga is a financial news and data company headquartered in Detroit.

This article originally appeared on Detroit Free Press: Twitter shares tumble after Musk announces his buyout bid is on hold

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