London Daily

Focus on the big picture.
Monday, Jul 07, 2025

Stocks had a wild start to the year. Investors should be careful

Stocks had a wild start to the year. Investors should be careful

Signs of market mania. Volatile tech stocks. Rising government bond yields.

Welcome to the second quarter, where Wall Street strategists say the trends that defined the first three months of the year will remain influential.

"The start of 2021 is indicating what we expect for the full year," said Jeffrey Sacks, head of investment strategy in Europe, the Middle East and Africa for Citi Private Bank.

Overall, the stock market performed well between January and March. The S&P 500 gained 5.8%, closing out Wednesday near a record high. The Dow Jones Industrial Average rose 7.8%, while the Nasdaq Composite climbed a more modest 2.8%.


But day-to-day, pockets of turbulence kept cropping up. Speculative behavior was on display across markets, as investors backed meme stocks like GameStop, pumped billions of dollars into "blank check" acquisition firms and snapped up digital art with non-fungible tokens, or NFTs.

Sacks expects more examples of this in the second quarter, given that investors will remain flush with cash as governments and central banks continue to provide stimulus.

"There's [a] lot of liquidity looking to be invested," Sacks told me. "That's likely to continue because we know central banks are intent on keeping rates low."

The clout of retail investors, he added, is "here to stay," given unprecedented access to trading platforms and the ability to coordinate online. That means the hype around GameStop (GME), which has seen shares leap 908% this year thanks in part to enthusiasm on social media, may not be an isolated incident.

Concerns about rising inflation — which have sparked a sell-off in government bonds, pushing up yields — are also expected to remain a feature on Wall Street, especially as lawmakers debate another massive spending package on jobs and infrastructure proposed by President Joe Biden.

Sacks said Citi expects the yield on the benchmark US 10-year yield, which started the year at roughly 0.9%, to reach 2.5% over the course of 2021. If it moves upward gradually, markets should have time to adjust. But a sharp jump could rattle investors, sparking another flight from high-growth tech stocks, which perform better when rates are lower.

"Investors need to be on guard," David Bianco, chief investment officer for the Americas at DWS, told me. "The risk is [yields] move up faster than our expectations."

Then, of course, there's Covid-19, which continues to hit economies around the world even as vaccination campaigns pick up in countries like the United States and the United Kingdom. France announced tougher restrictions on Wednesday, as President Emmanuel Macron warned that the country risked "losing control" over the virus.

Sacks said the threat of negative developments, including new coronavirus variants, needs to remain on investors' radars.

His message: There's still money to be made in the bull market. But heading into the second quarter, there's a "need for selectivity," Sacks said, with volatility ensuring that not every investment opportunity will be a winner.

Top businesses condemn Georgia election law


Companies based in Georgia are condemning a new election law in Georgia after coming under heavy pressure from activists.

The battle lines: Republican Gov. Brian Kemp recently signed a law that introduces new impediments to voting, reducing the number of ballot drop boxes in heavily African American areas, and allowing the state to intervene to assert control over the conduct of elections in Democratic counties.

It also shortens the time available for absentee votes and introduces new registration requirements that critics say are designed to target Black voters.

Huge employers in the Atlanta area, including Delta Air Lines and Coca-Cola, stand accused of not doing enough to defeat the bill and are now facing calls for boycotts, my CNN Business colleague Chris Isidore reports.

With pressure building, the companies are criticizing the law.

"I need to make it crystal clear that the final bill is unacceptable and does not match Delta's values," Delta CEO Ed Bastian told employees on Wednesday.

"After having time to now fully understand all that is in the bill, coupled with discussions with leaders and employees in the Black community, it's evident that the bill includes provisions that will make it harder for many underrepresented voters, particularly Black voters, to exercise their constitutional right to elect their representatives. That is wrong."

Coca-Cola, which had previously put out a statement saying it was "disappointed" in the legislation and that it would advocate for changes, ramped up its rhetoric Wednesday, when CEO James Quincey called it "unacceptable" and "a step backwards."

But the controversy isn't going away. Kemp quickly hit back at Bastian, claiming his statement "stands in stark contrast to our conversations with the company, ignores the content of the new law, and unfortunately continues to spread the same false attacks being repeated by partisan activists."

Big picture: Companies are increasingly being called upon to take a stand on political and social issues important to their customers and employees.

"These organizations are sensitive to their public relations," said Maurice Schweitzer, a business professor at the University of Pennsylvania. "They don't want to lose even a handful of customers for something that has nothing to do with their business."

Janet Yellen is cracking down on hedge funds


US financial regulators are intensifying their oversight of hedge funds as concern grows about their high levels of debt.

Treasury Secretary Janet Yellen just announced that the Financial Stability Oversight Council has relaunched a working group focused on hedge funds that will identify risks, share data and work to strengthen the financial system, my CNN Business colleague Matt Egan reports.

"The pandemic showed that leverage of some hedge funds can amplify stresses," Yellen said in prepared remarks during her first meeting at the helm of the FSOC.

The meeting comes just days after the implosion of Archegos Capital, a little-known hedge fund operating as a family office that caused shockwaves on Wall Street and sizable losses for some big banks. The fiasco boosted calls for regulators to apply more scrutiny to dark corners of the market.

"Regulators need to rely on more than luck to fend off risks to the financial system," Sen. Elizabeth Warren, a Democrat from Massachusetts, said in a statement to CNN Business. "We need transparency and strong oversight to ensure that the next hedge fund blowup doesn't take the economy down with it."

Yellen also signaled a new focus on the climate crisis, including market and credit risks from climate-related events and an accelerating transition to a net-zero economy.

"We cannot only look back and learn the lessons of last year. We must also look ahead, at emerging risks. Climate change is obviously the big one," Yellen said. "It is an existential threat to our environment, and it poses a tremendous risk to our country's financial stability."

Newsletter

Related Articles

0:00
0:00
Close
U.S. Enacts Sweeping Tax and Spending Legislation Amid Trade Policy Shifts
Football Mourns as Diogo Jota and Brother André Silva Laid to Rest in Portugal
Elon Musk Founds a Party Following a Poll on X: "You Wanted It – You Got It!"
London Stock Exchange Faces Historic Low in Initial Public Offerings
A new online platform has emerged in the United Kingdom, specifically targeting Muslim men seeking virgin brides
Trump Celebrates Independence Day with B-2 Flyover and Signs Controversial Legislation
Boris Johnson Urges Conservatives to Ignore Farage
SNP Ordered to Update Single-Sex Space Guidance Within Days
Starmer Set to Reject Calls for Wealth Taxes
Stolen Century-Old Rolls-Royce Recovered After Hotel Theft
Macron Presses Starmer to Recognise Palestinian State
Labour Delayed Palestine Action Ban Over Riot Concerns
Swinney’s Tax Comments ‘Offensive to Scots’, Say Tories
High Street Retailers to Enforce Bans on Serial Shoplifters
Music Banned by Henry VIII to Be Performed After 500 Years
Steve Coogan Says Working Class Is Being ‘Ethnically Cleansed’
Home Office Admits Uncertainty Over Visa Overstayer Numbers
JD Vance Questions Mandelson Over Reform Party’s Rising Popularity
Macron to Receive Windsor Carriage Ride in Royal Gesture
Labour Accused of ‘Hammering’ Scots During First Year in Power
BBC Head of Music Stood Down Amid Bob Vylan Controversy
Corbyn Eyes Hard-Left Challenge to Starmer’s Leadership
London Tube Trains Suspended After Major Fire Erupts Nearby
Richard Kemp: I Felt Safer in Israel Under Attack Than in the UK
Cyclist Says Police Cited Human Rights Act for Riding No-Handed
China’s Central Bank Consults European Peers on Low-Rate Strategies
AI Raises Alarms Over Long-Term Job Security
Saudi Arabia Maintains Ties with Iran Despite Israel Conflict
Musk Battles to Protect Tesla Amid Trump Policy Threats
Air France-KLM Acquires Majority Stake in Scandinavian Airlines
UK Educators Sound Alarm on Declining Child Literacy
Shein Fined €40 Million in France Over Misleading Discounts
Brazil’s Lula Visits Kirchner During Argentina House Arrest
Trump Scores Legislative Win as House Passes Tax Reform Bill
Keir Starmer Faces Criticism After Rocky First Year in Power
DJI Launches Heavy-Duty Coaxial Quadcopter with 80 kg Lift Capacity
U.S. Senate Approves Major Legislation Dubbed the 'Big Beautiful Bill'
Largest Healthcare Fraud Takedown in U.S. History Announced by DOJ
Poland Implements Border Checks Amid Growing Migration Tensions
Political Dispute Escalates Between Trump and Musk
Emirates Airline Expands Market Share with New $20 Million Campaign
Amazon Reaches Milestone with Deployment of One Millionth Robot
US Senate Votes to Remove AI Regulation Moratorium from Domestic Policy Bill
Yulia Putintseva Calls for Spectator Ejection at Wimbledon Over Safety Concerns
Jury Deliberations in Diddy Trial Yield Partial Verdict in Serious Criminal Charges
House Oversight Committee Subpoenas Former Jill Biden Aide Amid Investigation into Alleged Concealment of President Biden's Cognitive Health
King Charles Plans Significant Role for Prince Harry in Coronation
Two Chinese Nationals Arrested for Espionage Activities Against U.S. Navy
Amazon Reaches Major Automation Milestone with Over One Million Robots
Extreme Heat Wave Sweeps Across Europe, Hitting Record Temperatures
×