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Stock Market Today: Stocks Rise on Encouraging Virus Studies

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Stock markets will be closed Friday because the Christmas Day holiday falls on a Saturday.


Spencer Platt/Getty Images

Stocks traded higher Thursday, as studies on the Omicron coronavirus variant revealed infected people were at less risk of being hospitalized. Stronger U.S. economic data also buoyed markets ahead of the Christmas holiday, and set major stock indexes on track to erase Monday’s steep drop and close the holiday-shortened week in the green.

The


Dow Jones Industrial Average
was up 222 points, or 0.6%, in midday trading Thursday. The


S&P 500
rose 0.7% to 4,729, above the index’s all-time closing high of 4,712, while the


Nasdaq Composite
gained 0.9%.

The latest Omicron headlines were net positive. A study from the University of Edinburgh and another from the Imperial College London found that while the Omicron variant was more infectious, it was less severe. Also, researchers at South Africa’s National Institute for Communicable Diseases found people were 70% to 80% less likely to be hospitalized if infected with Omicron.

Meanwhile, the Food and Drug Administration on Wednesday authorized the Covid-19 antiviral pill from 


Pfizer

(ticker: PFE), adding a new weapon against the pandemic. On Thursday morning, the agency gave a thumbs up to another oral treatment from


Merck

(MRK).

There’s still plenty to keep investors up at night, but a year-end rally has unfolded in the past few days nonetheless.

“If the U.S. was not battling the Omicron variant, U.S. stocks would be dancing higher as the Santa Claus rally would have kept the climb going into uncharted territory,” wrote Edward Moya, senior market analyst, the Americas, at currency brokerage Oanda. “It is too early to say for sure if we will get a Santa Claus rally, but given all the short-term risks of Fed tightening, Chinese weakness, fiscal support uncertainty and Covid, Wall Street is not complaining as the S&P 500 is [at record highs.]”

Thursday morning was a busy one for economic data releases, most of which were collected before the Omicron wave. U.S. jobless claims for the week ended Dec. 18 were 205,000, about equal to the prior week and the average over the past four weeks, according to the Labor Department.

The Bureau of Economic Analysis reported personal income and consumption expenditures for November on Thursday morning. Consumer earnings rose 0.4% and spending climbed 0.6%. Economists’ consensus had been for increases of 0.6% and 0.5%, respectively.

The Federal Reserve’s preferred measure of inflation, the core personal consumption expenditure (PCE) price index, rose 0.5% in November for a year-over-year increase of 4.7%. That compares with a 4.2% annual rise in October and economists’ 4.5% prediction for November.

The central bank’s next policy-making meeting is Jan. 25-26, meaning there will be another round of employment and inflation data for officials to parse through between now and then.

Finally on Thursday morning, the Census Bureau released the durable goods report for November, which helps to provide a window into investment spending in the economy. New orders rose 2.5%, to $268.3 billion last month, versus a 2.1% average forecast.

Oil prices rose on Thursday, reflecting the same economic optimism pushing stocks higher. The price of West Texas Intermediate crude oil ticked up 0.2%, to $72.90 a barrel.

U.S. Treasury yields also climbed on Thursday, with the closely watched 10-year Treasury note yield up to 1.49%. Yields rise when prices decline, signifying more risk appetite from investors.

Stocks rose Wednesday for a second straight session, getting a boost from rising U.S. consumer confidence. Also lifting sentiment were gains in home sales and data that showed the U.S. economy rose at a rate of 2.3% in the third quarter, higher than the previous estimate.

Stock markets will be closed Friday because the Christmas Day holiday falls on a Saturday.

Here are seven stocks on the move Thursday:  


JD.com

(JD) stock dropped 6% after


Tencent

(0700.HK) said it would distribute its stake in the Chinese e-commerce firm to shareholders. That will come in the form of a $16.4 billion dividend. Tencent’s Hong Kong-listed shares rose 4.2% Thursday.

U.S.-listed shares of


AstraZeneca

(AZN) fell 0.7% following a study at the University of Oxford that found a third dose of the company’s Covid-19vaccine was effective against the Omicron variant.


Novavax

(NVAX) fell 3% after early data showed its two-dose vaccine booster produced an immune response to the Omicron variant.

Macau gambling and casino operators rose, as investors expressed optimism about a regulatory review of the city’s gaming sector.


Las Vegas Sands

(LVS) stock climbed 2.8%,


Wynn Resorts

(WYNN) gained 2.6%, and


MGM Resorts International

(MGM) added 1.1%.

Write to Joe Woelfel at joseph.woelfel@barrons.com

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Business

What Happens When Stocks Delist? What to Know If You Own Didi.

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The regulatory environment is tough for Chinese stocks, but delisting doesn’t happen overnight.


Angela Weiss/AFP via Getty Images


Didi Global

‘s plans to delist from the New York Stock Exchange months after going public triggered concerns over the future of other U.S.-listed Chinese companies.

Chinese tech stocks have borne the brunt of this blow to market sentiment, with the


Hang Seng Tech Index
—which tracks the Hong Kong-listed shares of China’s largest technology companies—hitting an all-time low earlier this week.


Alibaba

(ticker: BABA) and


JD.com

(JD), which are listed in both Hong Kong and the U.S., have been some of the biggest losers. 

Didi’s delisting decision comes amid brewing regulatory pressures in both Washington and Beijing. The Securities and Exchange Commission finalized rules last week that would force foreign companies to open their books to U.S. auditors or be delisted from U.S. markets if they don’t comply for three years. Reports from China, beginning last week and continuing this week, indicate that the country’s market regulator is scrutinizing the corporate structure used by companies that list overseas.

Analysts are split on what will happen next for Alibaba, JD.com, and other U.S.-listed Chinese stocks. “The risk of eventual delisting is real,” Robin Zhu, a Bernstein analyst, told Barron’s. Needham analyst Vincent Yu doesn’t agree: “On the Chinese regulator’s side, there’s no intention to delist them.”

Mass delistings would be a chaotic and dramatic move. And as Barron’s has previously reported, experts think regulators could reach a compromise within the three-year window provided by the SEC’s rule that would prevent delisting. But concerns and regulatory pressure are unlikely to disappear soon.

Here’s what investors should consider if they own these stocks. 

What Are ADRs and How Do They Work?

Investors in U.S.-listed foreign companies own shares of an American depositary receipt, or ADR. Here’s how they work.

U.S. banks bundle shares of foreign-listed companies into ADRs, which are issued as stock that can be traded on U.S. exchanges in dollars. Foreign companies, in turn, gain access to U.S. capital.

But in the case of a U.S.-listed Chinese stock, investors own shares in an offshore holding company. These shell companies are called variable interest entities, or VIEs, and are a corporate structure used by Chinese companies to circumvent Beijing’s rules about foreign investment while still tapping U.S. capital. The offshore company has a contractual relationship with the operating company, which means investors don’t have a direct stake.

VIEs are under scrutiny in both the U.S. and China. SEC Chair Gary Gensler said earlier this year he worried investors didn’t realize how these companies work and pushed for more oversight and transparency. Based on recent reports from China, regulators in Beijing are also looking to crack down on VIEs, especially technology or data-heavy companies.

What Happens to Your Shares When a Company Delists?

If a U.S.-listed Chinese company like Didi delists, there are essentially three possible outcomes for investors: a share buyback, share transfer, or share limbo.

In a buyback scenario, the Chinese company could purchase its shares back from investors at a price agreed upon by shareholders—effectively going private. If the company wishes to go public again, it would do so in a separate listing in the likes of Hong Kong.

In a share transfer scenario, investors would swap their ADR for the Chinese company’s foreign stock. In the case of Didi, which doesn’t have a secondary listing, would need to first launch a listing—in Hong Kong or Shanghai, for instance— to establish both a home for its foreign stock and mechanism for the transfer of ADRs.

If Didi doesn’t buy back shares, but rather delists and doesn’t launch another listing, the ability to trade its shares would be in limbo. Investors would still own equity in the company, but they’d be unable to trade their stock on regulated exchanges. They could sell their shares in over-the-counter markets—with limited liquidity—or hold on to them until a suitable listing was launched.


China Mobile
,
which was blacklisted by the Trump administration because of its ties to China’s military, remains a cautionary tale. The widely held stock was forced to delist from the New York Stock Exchange, leaving many individual investors unable to execute trades or transfers at their U.S. broker.

What Choices Do Investors Have?

Concerned investors have a few options if they believe that they own stock that could be delisted and want to get ahead of the risk.

The first is to sell their stake in U.S.-listed Chinese companies. If investors still want to own shares of Chinese companies, they can try to buy a stake on a foreign exchange through a brokerage. That option isn’t available on every brokerage, though.

There are other options too, including converting an ADR into a stake. Explore those options at the links below:

• How to Buy Chinese Stocks Now That U.S.-Listed Shares Have Become Risky

• How Funds Can Help Investors Navigate China

Write to Jack Denton at jack.denton@dowjones.com

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Business

Stock Market Today: Dow Rose as Moderna Slumped Again

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The


Dow Jones Industrial Average
had one of its best days this year on Monday, as value and defensive stocks led a rebound from last week’s market declines.

The news Monday was relatively positive, with signs that the Omicron variant of Covid-19 might be less severe than earlier strains and reports that China is considering easing monetary policy. On the Federal Reserve policy front, the latest reporting suggested that the central bank could announce plans at its next meeting to more quickly pull back from its bond-buying program.

The Dow surged 647 points, or 1.9%, for its best one-day point gain since November 2020 and the largest percentage increase since last March. The


S&P 500
closed up 1.2% and the Nasdaq Composite rose 0.9%, while the small-cap


Russell 2000
gained 2.1%, for its fourth-straight daily move of 2% or more.

Post-pandemic reopening stocks were among the biggest gainers on Monday. The


U.S. Global Jets
exchange-traded fund (ticker: JETS) added 5.3%, as


American Airlines Group

(AAL) added 7.9% and


United Airlines Holdings

(UAL) jumped 8.3%. Cruise lines


Carnival

(CCL) and


Royal Caribbean Cruises

(RCL) surged 8.0% and 8.3%, respectively.


Marriott International

(MAR) added 4.5%,


Live Nation Entertainment

(LYV) rose 6.1%, and


Cinemark Holdings

(CNK) gained 7.7%.

S&P 500 value stocks as a group gained 1.4% on Monday, versus a 0.9% rise for growth stocks in the index.

Investor attention remains focused on the newly discovered Omicron variant of coronavirus, news of which recently brought about the Dow’s worst day of the year and saw volatility rock markets last week. The latest headline driving sentiment comes from South Africa, where data—though from a small sample size—suggest that symptoms caused by Omicron were milder than with other variants.

Investors aren’t out of the woods yet, however. The broad market will remain sensitive to daily headlines about Omicron—both good and bad.

“It still feels like we’re in the guesswork stage of working out what the impact of Omicron will be,” said Russ Mould, an analyst at broker AJ Bell. “It would be naive to rule out further volatility as markets attempt to work out exactly what’s going on.”

On Monday, the news was positive and investors bought the market. All 11 S&P 500 sectors closed in the green.

Fed policy has been pushing investor sentiment the other way. Chair Jerome Powell indicated last week that the central bank would consider speeding up its slowing, or tapering, of monthly asset purchases, which add liquidity to markets, amid higher inflation.

“We’re really at a fascinating crossroads in markets at the moment,” said Jim Reid, a strategist at Deutsche Bank. “The market sentiment on the virus and the policy makers at the Fed are moving in opposite directions.”

Those trends mean different things for different kinds of stocks and indexes.

If Omicron is less severe than feared, then the economy might hold up better than expected. That would be good for economically-sensitive cyclical stocks, like many of those in the Dow. Higher bond yields and interest rates, however, can put downward pressure on stock valuations, particularly those with nosebleed price-to-earnings ratios, many of which are found in the Nasdaq.

“Like Friday, how the Nasdaq trades will likely determine the day, as markets want to see the tech sector stabilize after intense weakness late last week,” wrote the Sevens Report’s Tom Essaye. “If the Nasdaq can stabilize, the broad market can bounce.”

The tech-heavy index bounced from a loss of about 1% shortly after Monday’s opening bell.

In the commodity space, oil prices rose Monday after Saudi Arabia raised its January prices for Asian and U.S. customers over the weekend by $0.60, in a sign of firmer demand expectations.

Futures contracts for the international oil benchmark Brent rose 4.6%, to above $73 a barrel, with U.S. futures for West Texas Intermediate crude up 4.9% to about $69.50 a barrel.

“Given that OPEC+ is proceeding with its planned 400,000 barrels per day increase this month, it appears that Saudi Arabia is taking a punt that Omicron is a virus in a teacup,” said Jeffrey Halley, an analyst at broker Oanda. “Saudi Arabia’s confidence, along with the South African Omicron article over the weekend, is a boost to markets looking for good news in any corner they can find it.”

Cryptocurrency markets remained depressed after digital assets took a tumble over the weekend.


Bitcoin
and


Ether,
the two leading cryptos, remained off their lows following the stark fall Saturday, but were slipping after steadying Sunday. Bitcoin was trading hands around $49,000—down from more than $57,000 as recently as Friday—with Ether holding above $4,000.

Here are several stocks on the move Monday:


Nvidia

(ticker: NVDA) was among the most actively traded stocks in the U.S. Monday, closing down about 2.1%. Shares of fellow semiconductor firm Advanced Micro Devices (AMD) lost 3.4%.


Lucid Group

(LCID) stock dropped 5.1% after the electric-vehicle startup revealed that it had received a subpoena from the Securities and Exchange Commission, without offering many details.


Kohl’s

(KSS) gained 5.4% after an activist investor said it should explore selling itself.


Moderna

(MRNA) fell 13.5% after its president said that the risk that vaccines don’t work as well against Omicron is high. Pfizer (PFE) stock slid more than 5%.

Alibaba Group Holding (BABA) stock closed up 10.4% after a management shakeup at the e-commerce giant.


Deutsche Bank

(DB) rose 3.6% after JPMorgan upgraded the bank to Overweight from Neutral, adding that the group shows positive revenue developments in key divisions.

Pharma giant


Roche

(ROG.Switzerland) rose 1.5% in Zurich after announcing that it would release rapid antigen tests for Covid-19 and flu viruses next month.

Food delivery group


Just Eat Takeaway.com

(JET.U.K.) fell 4.9% in London following a price target cut and downgrade to Market Perform from Outperform by Bernstein, which sees few positive catalysts in the pipeline for the company.

Write to Jack Denton at jack.denton@dowjones.com

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Business

Merck’s Covid Pill Gets an FDA Hearing. What’s at Stake for the Stock.

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Merck

is making the case on Tuesday that it still has a role to play in the Covid-19 treatment landscape.

The FDA is convening an advisory committee to consider the company’s antiviral pill, molnupiravir. But the discussion will highlight the drug’s limitations, including safety risks and limited efficacy, which could cut expectations for the drug’s long-term sales even more.

Analysts widely expect the agency to authorize molnupiravir, though authorization probably would be limited.

Shares of Merck (ticker: MRK) have fallen even as shares of Covid-19 vaccine makers soared Friday and Monday against the backdrop of the emergence of a worrying new Covid variant, Omicron.

Merck’s stock fell 3.8% Friday, and was down another 5.8% Monday, while the S&P 500 rose 1.5%. Merck was the S&P 500’s worst performer Monday.

The drop came as hopes dim for molnupiravir. Shares jumped 8.4% on Oct. 1, when Merck announced that early data showed the drug had cut the risk of hospitalization or death by around 50%; Covid-19 vaccine stocks had fallen. Since then, the shine has come off the antiviral pill.

First,


Pfizer

(PFE) announced what appears to be more positive data on its Covid-19 antiviral, known as Paxlovid. Then, on Friday, Merck said updated results on its Phase 3 study of molnupiravir are far less promising than the initial data had shown. The study, according to the company, showed that molnupiravir cut the risk of hospitalization or death by 30%—not the initial result of around 50%.

Early Monday, Citigroup analyst Andrew Baum downgraded his rating of Merck to Neutral from Buy, in part citing new risks to sales estimates for molnupiravir.

“The clinical profile of Lagevrio continues to deteriorate,” Baum wrote, referring to molnupiravir by the name under which it is being marketed in the U.K., where it already has regulatory approval.

A Merck spokesperson said the company doesn’t comment on analyst reports or recommendations.

In early October, Barron’s reported on concerns raised by some scientists that molnupiravir could increase the risk of cancer or birth defects. Those concerns persist, though Merck maintains that its preclinical studies show that the drug is safe.

The worries stem from the way molnupiravir inhibits the replication of the virus that causes Covid-19: First by incorporating itself into the virus’s genetic code, and then causing errors as the virus replicates. The worry is that it could also cause mutations if it inserts itself into the genetic code of a human who takes the pill. This mechanism of action is specific to molnupiravir; Pfizer’s Covid-19 pill works differently.

The FDA, for its part, dismissed those worries in documents posted Friday in advance of Tuesday’s advisory committee meeting on molnupiravir, writing that the “risk of genotoxicity following treatment” with molnupiravir “is low.”

The scientists who initially raised the concerns remain unconvinced. In public comments submitted to the advisory committee, Dr. Ronald Swanstrom, a professor of biochemistry and biophysics at the University of North Carolina at Chapel Hill, whose laboratory published a paper this past spring arguing that molnupiravir could cause mutations in mammalian cell cultures, wrote: “Molnupiravir is about to be sent around the world carrying a big genotoxic question mark with it, one that most people who are given the drug will not have the background to fully understand.”

Merck scientists have taken issue with the Swanstrom lab’s study, though Swanstrom stands by his lab’s methods.

The key questions for the advisory committee will be how broad an authorization for molnupiravir should be. The FDA will ask the advisors to discuss whether the drug should be allowed to be used during pregnancy. It will also ask advisors about the risk that the use of molnupiravir could effectively create new strains of the virus.

In its own briefing document, the agency wrote: “It remains unclear if the potential for [molnupiravir]-associated changes in the SARSCoV-2 spike protein presents a public health risk, considering anticipated widespread use of MOV.”

Finally, the agency will ask the committee members if the benefits of molnupiravir generally outweigh its risks for adult patients at high risk of severe Covid-19, and which risk factors should qualify a patient.

Importantly, the FDA’s briefing documents were written on the basis of the initial data from Merck, not the updated results announced Friday that cut its efficacy. In an addendum to its briefing document noting the new data, the FDA noted that the benefit/risk assessments that will be presented on Tuesday may differ from those in the original briefing documents.

Analysts widely expect the drug to receive an emergency use authorization, though possibly for a narrow population.

“After reading the briefing documents, and considering the macro-pandemic situation, we expect molnupiravir authorization for all patients with one or greater risk factor …and regardless of vaccination / previous infection status,” SVB Leerink analyst Daina Graybosch wrote in a note out Monday.

Graybosch wrote, however, that the discussion will highlight ways in which molnpuiravir appears to be inferior to Pfizer’s Covid-19 pill. “This includes risk of harm to fetuses and accelerated viral mutation rate that may drive emergence of new SARS-CoV-2 variants, in addition to relatively weaker efficacy,” Graybosch wrote.

The FDA’s advisers are scheduled to convene at 9 a.m. and adjourn at 5 p.m.

Write to Josh Nathan-Kazis at josh.nathan-kazis@barrons.com

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World

Stock Market Today: Dow Bounces Back as Covid Variant Fears Ease

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The Omicron variant has prompted new travel restrictions around the world.


Joe Raedle/Getty Images

Stocks were rebounding Monday following Friday’s rout as vaccine makers said that they can adjust their Covid-19 vaccines to adequately immunize against the Omicron variant. 

In afternoon trading, the


Dow Jones Industrial Average
was up 320 points, or 0.9%, after the blue-chip benchmark plunged 905 points Friday. The


S&P 500
was up 1.6%, and the


Nasdaq Composite
advanced 2.1%. All three indexes notched their worst Black Friday on record at the end of last week, with the Dow suffering its worst day of the year. The last time the Nasdaq moved at least 2% on back-to-back days was March 8 and March 9 of this year.

“Keep in mind, while COVID continues to be a serious threat, we’re in a very different place than we were at the start of the pandemic in terms of medical advances and the strength of our economy,” wrote Chris Larkin, managing director of trading at ETrade. 


Pfizer

(ticker: PFE) said over the weekend it can adapt its vaccine to address the new variant within 6 weeks.


Moderna

(MRNA) said it could potentially roll out a reformulated vaccine by early 2022. Moderna stock was up 11% Monday, while Pfizer was down 1.2%.

It wasn’t just stocks that were signaling investor optimism. The 10-year Treasury yield rose to 1.53% from 1.48% at Friday’s close, a sign that that investors are moving out of safer assets and into risky ones. The price of WTI crude oil rose more than 4% to above $70 a barrel after having dropped more than 10% Friday. 

These are all good signs, but markets are still monitoring the Covid-19 situation. Just this month, new lockdowns in Europe were announced and the Omicron variant seems to be spreading globally. 

“Expect markets to remain choppy near term as we wait for further details on the new variant,” wrote Keith Lerner, co-chief investment officer at Truist. 

Overseas, London’s


FTSE 100
climbed 0.9%, rebounding from its largest one-day drop of 2021. In Asia, where markets closed before Friday’s selloff steepened, Hong Kong’s


Hang Seng Index
was 1% lower.

Here are five stocks on the move Monday:

Sectors that were slammed Friday—like travel—were generally higher, but most remained below levels seen before news of Omicron broke. Cruise operator


Carnival

(CCL) rose 1.5% initially, before that gain moderated to 0.4%. “I also would be buying travel/leisure stocks as if there is a mega trend that keeps bouncing back in the face of Covid,” wrote Peter Boockvar, chief investment officer at Bleakley Advisory Group. 


Hyatt Hotels

(H) gained 4.2% after getting upgraded to Overweight from Neutral at JPMorgan.


TJX Cos.

(TJX) stock advanced 1.8% after getting upgraded to Buy from Neutral at Citigroup. 


Bumble

(BMBL) stock rose 3.5% after getting upgraded to Outperform from Market Perform at Raymond James. 


United Parcel Service

(UPS) stock dropped 0.4% after getting downgraded to Hold from Buy at Deutsche Bank. 

Write to Jacob Sonenshine at jacob.sonenshine@barrons.com and Jack Denton at jack.denton@dowjones.com

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Business

Stock Market Today: Dow and Oil Drop as Covid Fears Grip Europe While Tech Rises

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Current Chair Jerome Powell is viewed as likely to be renominated as leader of the Federal Reserve.


Justin Sullivan/Getty Images

Technology stocks popped on Friday, while the


Dow Jones Industrial Average
fell and bond yields dipped alongside a new surge in Covid-19 cases. 

In midday trading, the Dow slid 174 points, or 0.5%, after the index slipped 60 points Thursday to close at 35,870. The


S&P 500
was rising 0.2% after the index closed at an all-time high Thursday. The technology-heavy


Nasdaq Composite
rose 0.7%.

The 10-year Treasury yield fell to 1.53% from a Thursday close of 1.61%. That’s a steep drop for one day, bringing it farther below its second half 2021 peak of 1.7%, hit in late October. 

That bodes well for the tech trade. Lower bond yields make futures profits more valuable—and fast-growing companies in the sector are expecting a large share of their profits to come many years down the line. 

Consistent with that, the S&P 500 is outperforming the Dow because of its concentration in technology. Outside of tech, stocks were having a rough day; almost 60% of S&P 500 stocks were in the red, according to FactSet.

Ultimately, market participants are rushing into safety Friday. The drop in the yield means investors are buying up the bond, sending the price higher. This comes as new Covid-19 cases perk up in Europe, prompting Austria to announce lockdowns beginning next week. 

Also not helping investors’ appetite for risk was economic data out of Germany. The countries’ producer-price index gained 3.8% month-over-month, higher than the expected 1.9% and above the previous result of 2.3%. Such strong inflation could compel the European Central Bank to hike interest rates, which could choke off economic growth, ultimately lowering inflation. ECB President Christine Lagarde said Monday morning that the central bank is currently unlikely to raise rates in 2022. Still, economic data will help guide monetary policy.  

The price of oil also dropped. WTI crude oil fell 4.2% to $75.70 a barrel. It’s down 9% from its 2021 high of more than $84 a barrel hit on Nov. 9. 

Oil stocks slid, too. The 


Energy Select Sector SPDR
Fund (XLE) fell more than 3%. It’s down just over 7% since the end of October when it hit a 2021 high. 

Overseas, Hong Kong’s


Hang Seng
Index fell 1.1%, underperforming other bourses in Asia as it was weighed down by a stark fall in


Alibaba

(ticker: BABA and 9988.H.K.) stock following the Chinese e-commerce giant’s quarterly results Thursday that showed slowing growth. The pan-European


Stoxx 600
fell 0.3%.

Here are five stocks on the move Friday:


Intuit

(INTU) stock gained 9.5% after the company reported a profit of $1.53 a share, beating estimates of 97 cents a a share, on sales of $2 billion, above expectations for $1.8 billion. 


Williams-Sonoma

(WSM) stock rose 0.6% after the company reported a profit of $3.32 a share, beating estimates of $2.56 a share, on sales of $2.1 billion, above expectations for $1.8 billion. 


Foot Locker

(FL) stock dropped 12% even after the company reported a profit of $1.93 a share, beating estimates for $1.37 a share, on sales of $2.19 billion, above expectations for $2.15 billion. 


Nvidia

(NVDA), which has been on a tear this week—up around 7% over the last five days—was rising again, climbing 4%.


Workday

(WDAY) was sliding, down 3.1% despite posting better-than-expected earnings late Thursday.

Write to Jacob Sonenshine at jacob.sonenshine@barrons.com

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Business

Powell or Brainard? Biden’s Announcement on the Next Fed Chair Is ‘Imminent.’

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US Federal Reserve Chairman Jerome Powell


Al Drago/AFP via Getty Images

President Joe Biden’s announcement on who will lead the Federal Reserve is “imminent,” according to Senate Banking Committee Chairman Sherrod Brown.

“I hear it’s imminent,” Brown (D., Ohio) said to Bloomberg. “I’m not going to speculate who I think it might be now. I assume the decision’s been made and they haven’t announced it, but I don’t even know that.”

Brown, who chairs the committee responsible for initially vetting the nomination, said White House officials had alerted him to expect the announcement, without being more specific.

Biden is widely expected to make the choice before Thanksgiving, even though current Fed Chair Jerome Powell’s term expires in February. Concerns over rising inflation likely have hastened Biden’s timeline to pick leadership for the Fed.

“We’ll see,” said press secretary Jen Psaki in a daily briefing when asked about whether Biden would announce his pick this week. “I have nothing to preview for you quite yet. I understand the interest.”

Read more: Who Will Be the Next Fed Chair? Weighing the Odds for Brainard vs. Powell.

Powell’s four-year term expires in February, shortening Biden’s window for selecting a nominee and having them undergo the vetting and confirmation process.

“It probably raises the likelihood that either Powell gets reconfirmed or we have a candidate that’s been through the confirmation process before, such as Lael Brainard,” said Raymond James analyst Ed Mills. “The chances of a wildcard pick should be low.”

While Powell is the frontrunner for the nomination—he has wide bipartisan support—Brainard, a current Fed governor, has emerged as a possible candidate after meeting with Biden last week. Either nominee would imply a general continuation of current Fed policy, Mills said.

“We continue to expect that Chair Powell will be reappointed,” wrote Citigroup analysts in a note. “Governor Brainard is the most likely alternative choice in our view (and was reportedly the only other official interviewed by Biden) and would be more dovish.”

Political betting markets largely echo the prediction, with online betting site PredictIt forecasting a 67% chance that Powell wins the nomination and 34% that Brainard is nominated.

Write to Sabrina Escobar at sabrina.escobar@barrons.com

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Business

Stock Market Today: Dow Holds Near Records, the Fed Meets, Zillow Slumps

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Fed Chair Jerome Powell’s press conference Wednesday afternoon will be closely watched.


Kevin Dietsch/Getty Images

The


Dow Jones Industrial Average
was slightly lower Wednesday morning after closing at a record high Tuesday as markets await the Federal Reserve’s monetary policy decision.

In morning trading, the Dow was off 75 points, or 0.2%, after the blue-chip benchmark closed above 36,000 for the first time. The


S&P 500
fell 0.1%, while the


Nasdaq Composite
was essentially flat. All three indexes ended Tuesday at new all-time highs.

Today the spotlight is squarely on the Federal Open Market Committee (FOMC)—the Federal Reserve’s monetary-policy body. Its monthly meeting got under way Tuesday and will wrap up Wednesday with a statement from Fed Chair Jerome Powell.

“Stock futures are little changed near record highs as a sense of Fed paralysis grips the markets ahead of the FOMC announcement today,” wrote Tom Essaye, founder of Sevens Report Research before the market opened. 

It’s largely expected that the central bank will announce that it will start slowing, or tapering, its Covid-19 pandemic-era program of monthly asset purchases, which add liquidity to markets. The Fed has been buying $120 billion in bonds to keep their prices high and yields low since June 2020, when it settled into a steady pattern after more fervent bond-buying near the beginning of the pandemic.

Markets now largely expect that the Fed will begin slowing these purchases, which consist of Treasury securities and agency mortgage-backed securities, at a rate of about $15 billion a month, starting this month. If the central bank announces a faster pace, investors could react negatively, and it could put pressure on stocks.

The larger risk is that the Fed could indicate that it is considering short-term interest rate hikes sooner rather than later. With inflation running hot and economic growth slowing, an indication of a rate hike too soon could also cause a selloff in stocks.

“It is widely expected the central bank will commence tapering in November or perhaps December,” wrote Kent Engelke, chief economic strategist at Capitol Securities Management. “The question at hand is whether or not it will change its time line as to when it intends to increase the overnight rate.” 

As the Fed looms, not even solid economic data could move stocks higher. The ADP jobs report showed that the U.S. added 571,000 private-sector jobs in October, above the consensus forecast for 395,000. 

Also read: Is Inflation Here to Stay? The Data Are Cause for Worry. The Fed Will Have its Say Today

Overseas, Hong Kong’s


Hang Seng Index
slipped 0.3% as investors in Asia tread water ahead of the FOMC meeting. The pan-European


Stoxx 600
was up 0.1% as investors in Europe adopted a similar wait-and-see attitude.

In commodity markets, oil prices fell back amid indications that U.S. crude supply is higher than expected and pressure on the OPEC+ group of national producers to ramp up production.

U.S. futures for West Texas Intermediate crude were down 2.5% to around $81.80 after trading near $85 earlier in the week—the highest levels since late 2014.

Analysts cited data from the American Petroleum Institute Tuesday showing that U.S. crude inventories jumped by 3.6 million barrels last week—far more than the 1.5 million estimated—in a surprise to supply expectations. That puts the spotlight on official data Wednesday from the U.S. Energy Information Administration.

Here are six stocks on the move Wednesday:


Lyft (ticker: LYFT) stock gained 11% after the company’s earnings report showed a more than 50% rise in adjusted earnings before interest, tax and non-cash expenses. Sales were $864 million, above expectations for $863 million.

Lyft’s results helped rival


Uber (UBER) stock rise 5.6% ahead of its Thursday earnings report.


Bed Bath & Beyond (BBBY) stock gained 34% after the company announced a partnership with


Kroger (KR) to sell certain products at the grocer’s locations and through online channels. Still, the Bed Bath & Beyond stock is also benefiting from its status as a “meme stock,” so the initial buying has forced short-sellers to buy shares back.

Zillow Group (ZG) stock dropped 19% after seeing several analyst downgrades after the company said it will terminate its home buying and selling business. 


Shake Shack (SHAK) stock gained 3.8% after getting upgraded to Buy from Neutral at Northcoast.


CVS Health (CVS) stock rose 3.6% after the company reported a profit of $1.97 a share, beating estimates of $1.78 a share, on sales of $73.8 billion, above expectations for $70.5 billion.

Write to Jacob Sonenshine at jacob.sonenshine@barrons.com

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Business

Elon Musk’s Feud With Biden Administration Escalates

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Tesla CEO Elon Musk


Win McNamee/Getty Images


Tesla

‘s battle with the Biden administration escalated after CEO Elon Musk called President Joe Biden a “puppet” for the United Auto Workers in a Sunday tweet.

Musk was replying to a tweet outlining electric-vehicle purchase tax credits proposed in the president’s infrastructure bill. The bill includes an extra $4,500 for EVs assembled by unionized labor.

Purchase tax credits lower the cost of an EV by giving a buyer a tax deduction. Right now, Tesla vehicles no longer quality for federal tax credits.

Tesla’s plant in Fremont, Calif., isn’t unionized, so the proposal could give EVs from other auto makers—including


Ford Motor

(F) and


General Motors

(GM)—a pricing advantage depending on where the vehicles are assembled.

Tesla (ticker: TSLA) and the White House weren’t immediately available for comment Sunday evening.

The problems between Tesla and the Biden administration began when the president didn’t invite Tesla, the largest U.S. EV producer, to the White House when he announced his EV goals in early August. Biden wants 50% of the cars sold in the U.S. to be all-electric by 2030. GM, Ford, and the UAW attended the ceremony.

Musk called the decision odd in a tweet. He tweeted in late September that Biden was “still sleeping” after the president didn’t call to congratulate SpaceX and its civilian astronaut mission, which raised money for St. Jude’s Children’s Research Hospital.

After that, still in September, at the Code technology conference in California, Musk suggested that the Biden administration was biased against Tesla, adding the administration “seems to be controlled by unions.”

Musk also has a problem with a Biden appointment to the National Highway Transport Safety Administration. Missy Cummings, a Duke University professor who will be a safety advisor to the NHTSA, has questioned Tesla’s autonomous driving software on several occasions in the recent past. She is concerned that Tesla’s self-driving features could be misused by drivers . Musk called Cummings “extremely biased” in a tweet.

Tesla and Cummings didn’t respond to requests for comment at the time of Musk’s Twitter comment.

All of this matters to investors only if it impacts Tesla’s bottom line. The $4,500 tax credit could matter, although the bill isn’t law yet. And the NHTSA hasn’t yet made recommendations on how Tesla implements and tests its autonomous-driving features. All auto makers are offering driver-assistance features that are designed to improve safety and convenience.

The spat hasn’t hurt Tesla stock yet. Tesla shares rose more than 40% in October, while the


S&P 500
rose 7%. Strong deliveries and earnings and new fleet business helped push Tesla’s market capitalization north of $1 trillion for the first time in October.

Write to Al Root at allen.root@dowjones.com

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Business

Stock Market Today: S&P 500, Nasdaq Dip After Apple and Amazon Woes

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Oil companies Chevron and Exxon Mobil will be in the earnings spotlight at the end of a busy week.


David McNew/Getty Images

The stock market retreated from earlier gains Friday after


Apple

and


Amazon.com

reported disappointing quarterly results. Plus, signs of caution about the economy weighed on stocks across the board.

In afternoon trading, the


Dow Jones Industrial Average
was flat, after the index climbed 239 points Thursday to close at 35,780. The


S&P 500
and the


Nasdaq Composite
were both down 0.1% Both the Nasdaq and the S&P 500 hit record highs at the close Thursday.

Despite the weak finish, October has been a strong month for stocks. The S&P 500 has gained 5.5% for the month of October, which saw the market rebound from an early autumn drawdown. In September, concerns about supply chain constraints and rising bond yields pushed stocks lower.

Several factors enabled stocks to rebound this month. Bond yields have paused in their larger ascent. Companies have mostly beat earnings estimates. And while risks still remain—yields aren’t necessarily finished rising and supply chain constraints aren’t easing much—retail investors bought the dip.

“They [retail investors] saw the 5% [market decline] and so when they see the opportunity to buy down 5% they step in and they do that,” said John Ham, wealth advisor at New England Investments & Retirement Group.  

Big Tech earnings put the issue of shortages on center stage on Friday.


Apple

(ticker: AAPL) stock fell 2.1% after the company reported a profit of $1.24 a share, in line with estimates, on sales of $83.4 billion, below expectations for $84.9 billion. The company said supply-chain constraints due to chip shortages were worse than expected. iPhone sales were $38.9 billion, below expectations for $41.5 billion. 


Amazon

(AMZN) stock dropped 2.9% after the company reported a profit of $6.12 a share, missing estimates of $8.92 a share, on sales of $110.8 billion, below expectations for $111.6 billion. The company said labor shortages, higher shipping costs, and other rising expenses are eating into profits. Management also guided for current quarter sales of $135 billion at the midpoint of its range, below analysts’ expectations for $142 billion. 

Even if Apple and Amazon stocks were having a better day, the stock market would still look fairly weak. Just over half of S&P 500 stocks were in the red, according to FactSet. 

This comes as the yield curve—the difference in yield between long-dated and short-term debt—declined. The 10-Year Treasury yield slipped to 1.56% from hitting 1.61% earlier. The 2-Year yield held at 0.5%, where it has mostly sat since Tuesday. Higher short-term rates indicate markets anticipate a Federal Reserve rate hike sooner rather than later, which could lower long-term economic demand and inflation. Some on Wall Street have recently flagged the falling yield curve as a potential risk to monitor.

In cryptocurrency markets, Ethereum—the leading crypto asset after Bitcoin—hit an all-time high above $4,400, according to data from CoinDesk.

Here are six stocks on the move Friday:


Chevron

(CVX) gained 0.9% after the company reported a profit of $2.96 a share, beating estimates of $2.21 a share, on sales of $44.7 billion, above expectations for $40.5 billion. 


Starbucks

(SBUX) stock dropped 7.4% after the company reported a profit of $1, beating estimates of 99 cents, on sales of $8.1 billion, below expectations for $8.2 billion. 


Newell Brands

(NWL) stock rose 5.1% after the company reported a profit of 54 cents a share, beating estimates of 50 cents a share, on sales of $2.79 billion, above expectations for $2.78 billion. 


Caterpillar

(CAT) stock rose 0.3% after getting upgraded to Buy from Neutral at UBS. 


Synchrony Financial

(SYF) stock rose 0.3% after getting upgraded to Buy from Neutral at Citigroup. 


U.S. Steel

(X) soared 12% following third-quarter earnings Thursday that smashed expectations and an announcement that the company would raise its dividend.

Write to Jacob Sonenshine at jacob.sonenshine@barrons.com

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