Stock futures traded lower on Monday morning as investors geared up for a week of key corporate earnings and a possible interest rate hike from the Federal Reserve.
Futures tied to the Dow Jones Industrial Average slipped 178 points, or about 0.52%. S&P 500 futures ticked down 0.76%, and Nasdaq 100 futures dropped by 1.1%.
Wall Street is coming off a winning week as the stock market’s January rally continued. The Nasdaq Composite gained 4.3% for the week, while the S&P 500 and Dow added 2.5% and 1.8%, respectively.
There are several tests this week for this 2023 rally. A busy stretch of corporate earnings season includes reports from McDonald’s and General Motors on Tuesday followed by tech giants Apple, Meta Platforms, Amazon and Alphabet later in the week.
The Federal Open Market Committee meets on Tuesday and Wednesday, when the Fed is expected to hike rates by one-quarter of a percentage point. Investors will be looking for clues about how much higher the central bank will take rates in the fight against inflation.
“Inflation has shocked the Fed to the upside; they need to be cautious not to inadvertently lower rates too early. Don’t buy into this gobbledygook about a couple of rate cuts being priced into December. For now, the Fed is only around to help in the very unlikely event of a crash landing,” David Zervos, chief market strategist at Jefferies, said in a note to clients.
CNBC’s Jim Cramer on Friday told investors to steer clear of stocks in the Nasdaq Composite and instead place their bets on names listed in the Dow Jones Industrial Average.
“Even though tech has started the new year strong, and it was crazy good today, the charts, as interpreted by Larry Williams, say you need to be a little bit wary of the show horses in the Nasdaq and bet on the work horses in the Dow,” he said.
Stocks rose on Friday to close out a positive week for all three major indexes. The Nasdaq has climbed 11% this year, as investors have bet on less aggressive interest rate hikes from the Federal Reserve.
To explain Williams’ analysis, Cramer examined the daily chart of the Nasdaq-100 dating back to November 2021.
While some technicians believe it’s a bullish sign that the index has broken above its 200-day moving average over the past two days, Williams points out that the Nasdaq-100 has come back down after breaching the level in the past, according to Cramer.
He then reviewed the daily chart of the Dow going back to February 2022.
Unlike the Nasdaq-100, which Williams believes is a “show horse” index due to how much interest it gets, the Dow is more representative of Main Street, Cramer said.
He added that the blue-chip index broke out above its 200-day moving average back in November and has stayed above it since.
“Williams finds this chart a lot more compelling,” he said.
For more analysis, watch Cramer’s full explanation below.
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CNBC’s Jim Cramer said that Thursday’s rally is thanks to a batch of strong company earnings.
“I’ve said over and over again that during earnings season, what matters is companies and the CEOs with the smarts to direct them,” he said.
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Stocks rose on Thursday as investors digested the latest batch of earnings and new gross domestic product data showing the U.S. economy grew by a higher-than-expected 2.9% in the fourth quarter.
Cramer said that contrary to what many might believe, the economic data didn’t drive the trading session’s rallies.
“That’s a classic misdirection play — just totally wrong. It’s stale. It doesn’t count. We’re in earnings season, for heaven’s sake,” he said, adding, “Stocks did well today because many of them delivered good numbers.”
He went over several examples of corporate news and earnings reports that fueled Thursday’s gains:
“It’s very confusing if you’re on permanent negative autopilot because you only pay attention to the [Federal Reserve]. If you watched the individual companies, these moves would be a lot less surprising,” Cramer said.
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CNBC’s Jim Cramer on Wednesday told investors that diversification remains key to keeping a successful portfolio.
“I can’t say a diversified portfolio is bulletproof. But I can say that it makes it easier to stay in the game when one particularly popular group gets put through the meat-grinder,” he said.
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The Nasdaq Composite and S&P 500 closed lower on Wednesday as investors digested the latest slew of corporate earnings. The Dow Jones Industrial Average rose slightly to end the trading session.
Tech stocks fell on concerns about Microsoft’s softer-than-expected guidance, continuing the Nasdaq’s losses for a second day.
The recent declines come after a solid start to the year for the tech-heavy index, as hopes that the Federal Reserve could ease the pace of interest rate hikes led investors back into growth stocks.
“Frankly, if you have too much tech exposure, when you get a day like today, you might just say that’s it, I’ve had enough, I’m getting out of this racket. Well, that’s why you’ve got to stay diversified,” Cramer said.
He added that he still doesn’t recommend that investors add to their tech positions, even after the recent declines. “I want to stay in the game. I don’t want to be blown out when the tech grim reaper strikes.”
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CNBC’s Jim Cramer on Monday said that several elements could help propel stocks higher, even during what could be an ugly earnings season.
Tuesday kicks off a new earnings season featuring some of the biggest companies in technology, retail and consumer goods. Companies like Microsoft, IBM and ServiceNow are slated to report their quarterly financial results this week.
Here are the six factors that could help stocks as companies report earnings, according to Cramer:
More firms are implementing layoffs. Companies including Microsoft, Salesforce and Wayfair recently announced head count cuts, and their stocks popped.
The U.S. dollar and interest rates peaked last fall. Cyclical, more economically sensitive stocks have since bounced, as many companies conduct a large portion of their business overseas.
The Federal Reserve could almost be done raising interest rates. That’s according to a Wall Street Journal report, and could mean that bad loan worries – and possible ensuing damage to banks – could be over.
China’s economy is reopening. The return of the world’s second-largest economy is great news for companies, particularly those in entertainment, travel and consumer goods.
The government is poised to spend big on infrastructure. Cash from the bipartisan infrastructure bill and the Inflation Reduction Act provide a “safety net” for companies that build roads, bridges or tunnels.
Analysts are upgrading chip stocks. Barclays on Monday upgraded Advanced Micro Devices and Qualcomm to overweight. “Remember, the [semiconductor chips] inventory glut included everything from cellphones to desktops to high-performance computers. This is a very big deal,” Cramer said.
Cramer cautioned that while earnings season may still not be smooth sailing, any dips in stock price aren’t necessarily unwelcome.
“At the moment of the first print, when we see the numbers, I still expect to see some vicious declines. The difference from 2022? Those declines, they might be buyable,” he said.
Disclaimer: Cramer’s Charitable Trust owns shares of Advanced Micro Devices, Qualcomm, Salesforce and Microsoft.
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Stocks rallied Monday as investors contemplated a potential slowdown in rate hikes from the Federal Reserve and braced for a busy week of earnings.
The Dow Jones Industrial Average jumped 318 points, or 0.9%, while the S&P 500 added 1.4%. The Nasdaq Composite surged 2.1%.
Semiconductor stocks and shares of Tesla and Apple gained on hopes that a reopening in China would boost their businesses. Both big tech names recently grappled with temporary shutdowns and blows to production as the country dealt with surging Covid-19 cases.
Investors have begun weighing the possibility that the Fed is preparing to slow the pace of its inflation-fighting rate hikes after months of aggressive tightening. Economic data released last week showed a decline in wholesale prices and retail sales, along with commentary from central bank officials, seemed to signal a slowdown.
Remarks from Fed Governor Christopher Waller Friday seeming to favor a quarter percentage point rate increase at the next meeting lifted investors’ hopes for a downshift. A Wall Street Journal report Sunday raised the possibility of a spring pause to rate increases — a sign that the Fed could be nearing the end of its rate hiking campaign.
“Bulls are running with the near-term momentum, the ‘soft landing’ narrative, and it’s hard to argue with recent price action,” wrote Jonathan Krinsky, BTIG’s chief market technician in a note Monday. “On the other hand, long term trends are still somewhat bearish, and we are always skeptical of such a widely watched ‘breakout’, especially after big run.”
Markets have priced in a nearly 100% chance of a 25-basis point hike, according to CME Group data, which would bring the interest rate to a targeted range of 4.5%-4.75%.
Earnings reports could keep the market on edge, with about 40% of the Dow scheduled to release their latest financial results and offer more insight into how companies are weathering inflation and interest rates. Some big names on deck include Microsoft, IBM, Tesla, Visa and Mastercard.
CNBC’s Jim Cramer on Friday offered investors a list of e-commerce plays he believes are worth buying, despite the group’s rough performance in 2022.
“There are still some e-commerce plays that I’m willing to get behind here, the ones that have truly prioritized profitability,” he said.
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Here is his list:
Etsy
Shopify
Pinterest
MercadoLibre
Chewy
Prologis
E-commerce stocks skyrocketed during the height of the Covid pandemic, as at-home consumers made purchases online rather than in-store. But when the economy reopened, consumers prioritized spending on travel and experiences over goods.
That shift, along with the Federal Reserve’s interest rate hikes, sent e-commerce stocks tumbling from their highs last year.
Cramer cautioned that while he believes the group’s struggles are temporary, it’s still too early to buy many of the names in the e-commerce space — including Amazon.
He said that one of his biggest concerns with the company is that it needs to cut more costs. Amazon said earlier this month that it plans to lay off over 18,000 employees.
While that might seem like a sizable cut, “this is a company with well over a million employees — to them, this is a drop in the bucket,” Cramer said.
But Amazon’s stock will eventually bottom, he said. “I think the business can eventually make a big comeback and there will come a point where the stock’s a screaming buy.”
Disclaimer: Cramer’s Charitable Trust owns shares of Amazon.
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Barry Silbert, Founder and CEO, Digital Currency Group
David A. Grogan | CNBC
Crypto lender Genesis filed for Chapter 11 bankruptcy protection late Thursday night in Manhattan federal court, the latest casualty in the industry contagion caused by the collapse of FTX and a crippling blow to a business once at the heart of Barry Silbert’s Digital Currency Group.
The company listed over 100,000 creditors in a “mega” bankruptcy filing, with aggregate liabilities ranging from $1.2 billion to $11 billion dollars, according to bankruptcy documents.
Three separate petitions were filed for Genesis’ holding companies. In a statement, the company noted that the companies were only involved in Genesis’ crypto lending business. The company’s derivatives and spot trading business will continue unhindered, as will Genesis Global Trading.
“We look forward to advancing our dialogue with DCG and our creditors’ advisors as we seek to implement a path to maximize value and provide the best opportunity for our business to emerge well-positioned for the future,” Genesis interim CEO Derar Islim said in a statement.
The filing follows months of speculation over whether Genesis would enter bankruptcy protection, and just days after the Securities and Exchange Commission filed suit against Genesis and its onetime partner, Gemini, over the unregistered offering and sale of securities.
Genesis listed a $765.9 million loan payable from Gemini in Thursday’s bankruptcy filing. Other sizeable claims included a $78 million loan payable from Donut, a high-yield, decentralized platform, and a VanEck fund, with a $53.1 million loan payable.
Gemini co-founder Cameron Winklevoss initially responded to the news on Twitter, writing that Silbert and DCG “continue to refuse to offer creditors a fair deal.”
“We have been preparing to take direct legal action against Barry, DCG, and others,” he continued.
“Sunlight is the best disinfectant,” Winklevoss concluded.
Genesis is in negotiations with creditors represented by law firms Kirkland & Ellis and Proskauer Rose, sources familiar with the matter told CNBC. The bankruptcy puts Genesis alongside other fallen crypto exchanges including BlockFi, FTX, Celsius, and Voyager.
FTX’s collapse in November put a freeze on the market and led customers across the crypto landscape to seek withdrawals. The Wall Street Journal reported that, following FTX’s meltdown, Genesis had sought an emergency bailout of $1 billion, but found no interested parties. Parent company DCG, which owes creditors a mounting debt of more than $3 billion, suspended dividends this week, CoinDesk reported.
The crypto contagion
Genesis provided loans to crypto hedge funds and over-the-counter firms, but a series of bad bets made last yearseverely damaged the lender and forced it to halt withdrawals on Nov. 16.
The New York-based firm had extended crypto loans to Three Arrows Capital (3AC) and Alameda Research, the hedge fund started by Sam Bankman-Fried and closely linked to his FTX exchange.
3AC filed for bankruptcy in July in the midst of the “crypto winter.” Genesis had loaned over $2.3 billion worth of assets to 3AC, according to court filings. 3AC creditors have been fighting in court to recover even a sliver of the billions of dollars that the hedge fund once controlled.
Meanwhile, Alameda was integral to FTX’s eventual demise. Bankman-Fried has repeatedly denied knowledge of fraudulent activity within his web of companies, but remains unable to provide a substantial explanation for the multibillion-dollar hole. He was arrested in December, and is released on a $250 million bond ahead of his trial, which is set to begin in October.
Genesis had a $2.5 billion exposure to Alameda, though that position was closed out in August.After FTX’s bankruptcy in November, Genesis said that about $175 million worth of Genesis assets were “locked” on FTX’s platform.
Genesis’ financial spiral has exposed Silbert’s broader DCG empire. The parent company was forced to take over Genesis’ $1 billion liability stemming from 3AC’s collapse. In a later letter to investors, Silbert disclosed an additional $575 million loan from Genesis to DCG for undisclosed investing purposes.
DCG pioneered publicly traded trusts, allowing investors to hold bitcoin and other currencies in their portfolio without direct exposure. Grayscale Bitcoin Trust’s discount to net asset value widened significantly last year as confidence in the conglomerate waned.
This is a developing story. Please check back for updates.
Binance is the world’s largest crypto exchange, handling billions of dollars in trading volumes on a daily basis.
STR | NurPhoto via Getty Images
Federal prosecutors unsealed an indictment against a little-known crypto exchange called Bitzlato on Wednesday, alleging that it facilitated the laundering of $700 million in tainted crypto tied to the now-shuttered dark-web market Hydra, and millions more in ransomware proceeds.
Blockchain data shows that tens of millions of dollars that passed through Bitzlato ultimately ended up in Binance deposit wallets, despite the stringent anti-money laundering standards that Binance says ithas implemented.
Binance, the largest crypto exchange in the world, has not been connected to any criminal activity, nor have regulators accused it of knowingly accepting illicit funds, although the exchange is reportedly under its own criminal probe by the Department of Justice in relation to its compliance with anti-money laundering, or AML, laws.
The movement of Bitzlato’s funds raises questions about the efficacy of Binance’s AML practices, especially given that Binance’s own outside AML vendor, Chainalysis, issued a report in February 2022 estimating that 48% of Bitzlato’s 2019-2021 cryptocurrency receipts were “illicit or risky.”
Bitzlato’s highest cryptobalance was valued ata mere $6.6 million, according to Arkham Intelligence. By comparison, Binance’s highest balance was valued at over $60 billion. But total flows in and out of Bitzlato were in the hundreds of millions of dollars, suggesting that Bitzlato was a way station for users looking to keep their crypto at more established exchanges.
On a larger exchange like Binance or Coinbase, for example, many customers opt to let the platform custody their crypto tokens. But smaller exchanges can often function as a sort of bridge between the entity looking to transfer their coins and the ultimate destination where the tokens will be custodied. Crypto might sit on one of these interim platforms for mere minutes.
How the money flowed
A FinCEN report from Wednesday noted that Binance was Bitzlato’s largest counterparty, but blockchain data reveals rudimentary efforts to conceal where funds came from before they arrived in Binance custody.
Much like in traditional finance, where money moves from bank to bank and between holding companies, moving crypto assets through multiple wallets is an elementary way to obscure the flow of money. But tracing assets through a blockchain is a relatively straightforward process, since every transaction is recorded on a publicly accessible ledger.
For all of 2022, and the brief weeks that Bitzlato operated in 2023, only $9.7 million moved directly from Bitzlato to Binance, according to data from Arkham Intelligence. In the four years that Bitzlato operated, only $52 million moved directly from the exchange to Binance, the same dataset shows.
But a cursory review of some of Bitzlato’s largest exchange partners indicates that tens of millions more flowed from Bitzlato through other crypto wallets to Binance, in an apparent effort to conceal the origin of the funds.
CNBC reviewed transaction data for the ten largest recipients of Bitzlato outflows, which collected over $45 million in Bitzlato-originated funds. Those wallets also received millions more in funds from other exchanges, including Huobi, FTX, Poloniex, Nexo, and WhiteBIT, a Ukrainian exchange.
One Bitzlato whale moved a little over $21 million worth of cryptocurrencies, including ether and tether, a dollar-pegged stablecoin, from Bitzlato to an intermediary wallet. From there, over the course of four years, that intermediary wallet deposited around $15 million worth of crypto onto Binance’s platform, according to data from Arkham Intelligence.
Overall, the five largest Bitzlato-connected wallets sent more than $30 million directly to Binance. Millions more in smaller transactions ultimately ended up in Binance’s wallets.
The on-chain data can’t account for any additional funds that moved to Binance from Bitzlato through mixers, services that allow users to obfuscate the origin and endpoint of their crypto. Nor does it offer any information on the kind of enforcement action that Binance might take to defend against nefarious deposits, including seizing those funds once they land in Binance’s wallets.
But Binance CEO Changpeng Zhao has often touted his exchange’s aggressive efforts to clamp down on illicit funds flowing on the platform. Earlier this week, Binance announced it had seized millions of dollars worth of crypto connected to a North Korean hacking group called Harmony.
CNBC reached out to Binance to ask that the platform share its approach to preventing tainted funds from landing on the platform. We also asked whether Binance was aware that Bitzlato was allegedly used to launder money and, if so, why funds from Bitzlato were custodied on its platform. We did not immediately hear back to our request for comment.
Still, Reuters reported in December that federal prosecutors were mulling bringing charges in a “long-running” criminal investigation regarding Binance and Zhao’s compliance with AML laws. The pace of enforcement actions suggests that U.S. regulators already have an eye on tracking the flow of illicit crypto, wherever it occurs.
“Operating offshore or moving your servers out of the continental U.S. will not shield you,” Deputy Attorney General Lisa Monaco noted on Wednesday. “Whether you break our laws from China or Europe or abuse our financial system from a tropical island—you can expect to answer for your crimes inside a United States courtroom.”
CNBC’s Jim Cramer on Wednesday warned investors that stocks could continue to fall — at least in the near future.
“I think we have a … period of consolidation, as we get rid of the weak-handed investors. And we certainly wash out those who got carried away and committed personal fouls, like buying bitcoin above $20,000 or fooling around in meme stocks,” he said.
Stocks tumbled on Wednesday after December retail sales data heightened fears of a recession and investors took profits on gains from earlier this month. The S&P 500 closed at its lowest level since Dec. 15, and the Nasdaq Composite fell, breaking a seven-day win streak.
“Right now, the market’s working off one of the most overbought conditions we’ve had in ages. In the last two weeks, we simply rallied too far, too fast. It’s not that everything’s horrible,” Cramer said.
He pointed out that while Microsoft said that it’s laying off 10,000 employees, other industries have stayed much more resilient. Many companies, including United Airlines recently, have reported great quarters so far this earnings season, he added.
“Vast swaths of the economy are holding up just fine. The problem lies in tech, as I’ve been telling you for months on end,” he said.
However, that won’t stop the market from enduring more pain, at least in the short term, Cramer warned. “The bears — they will be out in full force tomorrow.”
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