S&P 500 Logs Worst First Half Since 1970

Last week’s market summary (June 27-July 1, 2022):

• S&P 500: -2.43%
• Dow: -1.38%
• Nasdaq: -4.57%
• Bitcoin: -6.92%

Happy July 4th, everyone! I hope you’re all enjoying some quality time with your loved ones.

I wish I had a lot of positive news for you to read today while you’re grilling your burgers and hot dogs, but unfortunately last week was another rough one for the stock market. If it feels like I’ve said that a lot lately, it’s because I have. In fact, this has been the worst first half-year for the stock market in 50 years (long before yours truly was born).

One of the companies hit worst by this stock market downturn has been Netflix. The streaming giant is looking for ways to boost revenue, but how do you do that when your subscriber growth is stalling? You start showing ads. Netflix confirmed this week that it will start doing just that (on a separate ad-supported plan) and many expect it to happen by the end of the year.

Continue reading to get the full scoop on the stock market’s historic collapse, Netflix’s pivot to ads, and other top news stories from the past week.

Clint, Editor-in-Chief

What Everyone’s Been Buzzing About

The S&P 500 just had its worst first half in 50 years. It ended down approximately 21% for the 6-month period. The Nasdaq fared even worse, falling nearly 30%, while the DOW was down more than 15%. There is some hope for the second half of the year, however. After falling 21% in the first half of 1970, the S&P 500 recovered and gained 26.5% in the second half. We’re all hoping for a similar rebound in the months ahead.

Netflix to introduce ad-supported tier. Co-CEO Ted Sarandos confirmed the rumors in an interview at the Cannes Lions festival. In May, the New York Times reported that the new tier was expected to be rolled out by the end of 2022. This would mark a major shift for Netflix, which has famously eschewed ads in favor of a subscription-only model. An ad-supported tier could help Netflix keep its prices low and attract more users, but it remains to be seen how Netflix will balance the needs of its subscribers and advertisers.

Twitter and Shopify team up. Shopify and Twitter have announced a new partnership that will help Shopify store owners drive traffic to their sites from the popular social media platform. Through the new Twitter add-on, Shopify users will be able to display up to 50 products in a carousel on their Twitter profiles. This is a great opportunity for Shopify store owners to get their products in front of a large audience and increase sales.

Binance.US to offer zero-fee Bitcoin trading amidst market decline. Binance.US, the American arm of popular cryptocurrency exchange Binance, has announced that it will offer zero-fee trading on Bitcoin. This is in contrast to other firms like Robinhood, which offer commission-free trades but make money through earning spreads. While many of its competitors are struggling, Binance is ready to start a price war. I guess that's the kind of thing you can do after you raise $200 million in your first seed round.

Three Arrows Capital falls into liquidation after defaulting on loan. Three Arrows Capital, a major cryptocurrency hedge fund, has defaulted on a loan from Voyager Digital and is now in liquidation. The loan was made up of $350 million in USDC stablecoins and 15,250 bitcoins. 3AC's liquidity crisis was brought on by the rapid depreciation in cryptocurrency values. To put the severity of the crash in perspective, Bitcoin just ended its worst month since 2011.

What To Keep Your Eye on This Week

Factory orders report for May. The manufacturing sector is an important part of U.S. economic output. It accounts for about 12% of the United States GDP. The factory orders report provides insight into future production activity. At 10 AM tomorrow, we’ll get our first peek at May’s report. Last month, growth slowed to 0.3%.

June unemployment rate. The rate of unemployment for June will be released on Friday at 8:30 AM. May’s unemployment rate held steady at 3.6%. Even a slight increase for June could alarm analysts, many of whom have already been predicting a recession in 2023.

Staff Favorites

Here are two stories and a podcast episode from around the web that our team found interesting:

• Does the Crypto Crash Mean the Blockchain Is Over? (Freakonomics Radio)
• Average Investors Should Try and Time Markets (Washington Post)
• Netflix Says It’s Business as Usual. Is That Good Enough? (New York Times)

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