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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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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

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

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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Business

Stock Market Today: Alibaba Gains, Novavax Drops, and the Dow Rises

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Macro concerns such as supply-chain issues appear to be on the back burner amid earnings season.


Brendan Smialowski/AFP via Getty Images

The stock market was higher Wednesday, as investors weighed the prospect of strong corporate earnings against broader concerns over the economy.

In midday trading, the


Dow Jones Industrial Average
added 160 points, or 0.5%, while the


S&P 500
—which marked its fifth consecutive session of gains Tuesday—rose 0.4%. The


Nasdaq Composite
was up 0.2%.

Earnings season continued apace Wednesday, with


Abbott Laboratories

(ticker: ABT),


Verizon

(VZ),


Biogen

reporting Wednesday morning—they all beat—following


Netflix

(NFLX) and


United Airlines

(UAL) results Tuesday evening. One thing that stands out: With 16% of S&P 500 market cap having reported, results are nowhere near as good as bank earnings suggested last week, according to Credit Suisse strategist Jonathan Golub. While earnings have topped estimates by 14.1% overall, financials have topped forecasts by 21.6%, while everyone else has surpassed expectations by just 6.3%. It’s something to keep an eye on as earnings season progresses.

Wider concerns around familiar themes—such as inflation, central bank stimulus, and supply-chain disruptions—appear to have been allayed for now, as profit margins continue to hold up.

“Whilst inflation concerns are still very much bubbling under the surface of markets, risk appetite strengthened further yesterday thanks in no small part to decent earnings reports,” said Jim Reid, a strategist at Deutsche Bank. “There are no signs of widespread erosion of margins at the moment. Perhaps there is so much money sloshing about that for now prices are broadly being passed on.”

Still, bond yields now sit above 1.6% after trading over 1.65% on Tuesday, and that could pressure stocks. Higher bond yields typically weigh on technology companies in particular, because they tend to discount the present value of future cash flows, and the valuations of many tech companies are grounded in profits expected years in the future.


Tesla

(TSLA) and


IBM

(IBM) are among the companies releasing financial results in the day ahead.

Meanwhile,


Bitcoin
prices touched an all-time high above $66,000. The leading cryptocurrency has been buoyed by the launch of the first exchange-traded fund tracking regulated Bitcoin futures—a landmark moment for the crypto industry. 

Trading in the ProShares


Bitcoin Strategy ETF
(BITO) began Tuesday and most of the substantial volume was driven by high-frequency traders and retail investors, according to analyst Jeffrey Halley of broker Oanda.

“Although a regulated ETF based on regulated futures does fit nicely into the mandates of many in the institutional space, I suspect they may wait a while before dipping their toes in the water,” Halley said.

Here are eight stocks on the move Wednesday:


Novavax

(NVAX) dropped 11% following a report alleging that manufacturing problems jeopardize billions of Covid-19 vaccine doses set to be delivered to low- and middle-income countries.

Verizon gained 2.6% after the company reported better-than-expected earnings.

Netflix stock fell 1.2% despite reporting better-than-expected earnings after Tuesday’s close. The stock was downgraded to Hold from Buy at Deutsche Bank.


Alibaba

(BABA) stock rose 0.5% one day after gaining 6.1% on reports that it would make its own chips and that Jack Ma would be traveling to Europe.

The U.S.-listed shares of Dutch semiconductor equipment manufacturer


ASML

(ASML) fell 4.3% after the company outlined revenue guidance for the next quarter below Wall Street’s estimates.


Nestlé

(NESN.Switzerland) rose 3.3% in Zurich, as the food and drinks giant raised its full-year sales outlook after posting revenue ahead of analyst expectations—citing strong retail spending.


Deliveroo

(ROO.U.K.) rose 3.2% in London, as the food delivery company upgraded its full-year forecast after reporting strong order growth in the third quarter.


Kering

(KER.France) fell 4% in Paris, as the luxury-goods group, which owns brands including Gucci, saw sales growth held back in the crucial Asian-Pacific region by rising Covid-19 cases over the summer. But the company as a whole posted sales ahead of expectations.

Write to editors@barrons.com

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Business

Stock Market Today: Dow Is Under Pressure, China Gaming Stocks Dive, Oil Higher

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Chinese gaming stocks have plunged over fears of a crackdown in Macau.


(Paul Yeung/Bloomberg)

September is historically a bad month for stocks, and this is a particularly bad September. Dating back to 1928, the average September return for the S&P 500 has been a loss of 0.99%, and, halfway through the month this year, the index already has fallen more than 1.7%.

Wall Street was poised for a mixed day on Wednesday after another miserable day of trading Tuesday. Equities in Europe and Asia were mixed as well amid fear of a stock-market correction.

Rising Covid-19 cases around the globe are denting sales for many companies. Weak economic data from August aren’t helping stocks either.

Futures for the

Dow Jones Industrial Average

pointed down 21 points after the index tumbled 292 points on Tuesday to close at 34,577. Futures for the

S&P 500

and

Nasdaq

were both up 0.1%.

Overseas, Hong Kong’s

Hang Seng Index

fell 1.8% as Asian investors focused on a sharp slowing in Chinese retail sales. The consensus expectation was for August retail sales to grow 7% year over year, but the reading came in at just 2.5%. Industrial production rose 5.3%, below expectations for 5.8%.

The poor data “weighed on risk assets overnight,” wrote Tom Essaye, founder of Sevens Report Research.

The pan-European

Stoxx 600

was down 0.4%, with the spotlight falling on U.K. inflation, which rose to 3.2% in August in the biggest-ever yearly leap.

Analysts have noted that investor sentiment more broadly is mixed as concerns continued to center on whether a broader market correction is coming.

“Yesterday, the S&P 500 closed -0.32% away from its 50-0day moving average, and the index has only closed below that trailing average on one occasion since March 8 (back on June 18),” noted Jim Reid, a strategist at Deutsche Bank. “Overall we haven’t seen a correction yet, as many expect, but we have seen a stalling.”

On Monday, Reid and his team published a monthly survey of more than 550 global finance professionals showing that 58% expect an equity correction of between 5% and 10% before the end of the year. Another 10% saw a market correction of more than 10% ahead.

In commodity markets, oil prices moved higher, continuing a rally. Futures for international benchmark Brent crude were up 1.3%, trading hands above $74.50 a barrel. U.S. oil futures rose similarly, with West Texas Intermediate trading above $71.40.

In the day ahead, U.S. economic data for markets to digest includes industrial production figures for August and New York’s Empire State manufacturing index for September.

Here are 15 stocks on the move Wednesday:

Gambling stocks exposed to Macau—the world’s largest gaming center—have plunged as Chinese regulators turned their attention to the sector.

Sands China

dove 33% and

Wynn Macau

tumbled 29% in Hong Kong, with their U.S. parents feeling the pressure as well:

Las Vegas Sands

(ticker: LVS) and

Wynn Resorts

(WYNN) were both down 5% in U.S. premarket trading.


Softbank

fell 6% in Hong Kong as concerns continued over regulatory scrutiny on the Chinese technology sector, including

Alibaba

(BABA)—to which Softbank is heavily exposed.

Cyber security specialist

Darktrace

rose 10% in London after posting upbeat quarterly results—its first since going public. The company raised forecasts for both revenue growth and profit margins next year.

The luxury-goods sector remains under pressure for a second day amid concerns over the spread of Covid-19 in Asia—the industry’s most critical market.

LVMH

fell 3.3% in Paris,

Burberry

was down 2.4% in London,

Richemont

slipped 2.7% in Zurich and

Kering

declined 3.9% in Paris.


Yum China Holdings

(YUMC) stock fell 4.4% after the company said its operating profit for the third quarter may fall 50% to 60% year over year, as Covid-19 outbreaks in China hit sales. 


Regeneron Pharmaceuticals

(REGN) stock gained 2.2% after the company said it is selling an additional 1.4 million doses of its monoclonal antibody treatment for Covid-19 to the U.S. government.


Sage Therapeutics

(SAGE) rose 3.3% after the Food and Drug Administration gave the company a fast-track designation for its Huntington’s Disease treatment.


Microsoft

(MSFT) stock gained 1.2% following news that the company is raising its dividend. 


Werner Enterprises

(WERN) stock gained 1.7% after getting upgraded to Outperform from Market Perform at Cowen. 

Write to editors@barrons.com

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Business

Alibaba Earnings Beat Expectations. Why the Stock Is Dropping.

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Alibaba’s earnings come after weeks of regulatory crackdowns for Chinese tech.


Greg Baker/AFP via Getty Images


Alibaba

earnings per share in the last quarter beat analyst expectations even as earnings missed estimates, with the Chinese e-commerce giant announcing on Tuesday that it would increase its share buyback program from $10 billion to $15 billion.

But that failed to woo investors: The stock fell 0.8% in U.S. premarket trading, after

Alibaba’s

Hong Kong-listed shares rose 0.83% before the earnings were released. Like U.S. peer Amazon, the Chinese e-commerce giant’s earnings show that revenue growth has begun to slow—from 64% year-over-year growth in the first three months of 2021 to 34% in the last quarter.

Alibaba notched revenue of 205.7 billion Chinese yuan ($31.8 billion) in the three months to the end of June, which the company reports as its first fiscal quarter of 2021. The revenue figures fell short of analyst estimates of closer to RMB 251 billion, according to the FactSet consensus. 

It was a brighter picture for the bottom line, as adjusted earnings before interest, taxes, depreciation, and amortization (Ebitda) came in at RMB 48.6 billion, a decrease of 5% year-over-year but ahead of the RMB 46.7 billion expected by Wall Street. Profit margins were another standout for the e-commerce giant, with an adjusted Ebitda margin of 24% beating estimates.

“For the June quarter, global annual active consumers across the Alibaba Ecosystem reached 1.18 billion, an increase of 45 million from the March quarter, which includes 912 million consumers in China,” said Daniel Zhang, Alibaba’s chair and chief executive. 

“We believe in the growth of the Chinese economy and long-term value creation of Alibaba,” Zhang added. “We will continue to strengthen our technology advantage in improving the consumer experience and helping our enterprise customers to accomplish successful digital transformations.”

Aliaba also announced that it would increase the size of its share buyback program by 50%, to the largest in its corporate history, from $10 billion to $15 billion.

Earnings growth continued at pace for Alibaba’s closely watched cloud computing segment, a stream of sales representing an alternative to its core e-commerce offerings and positioning it as a rival to the likes of

Amazon

and

Microsoft.

 

Revenue in the cloud division rose 29% year-over-year as adjusted Ebitda came in at RMB 340 million, with a profit margin of 2%, marking a stark improvement from a RMB 1.1 billion loss in the 2020 period. In the last quarter, adjusted Ebitda in cloud computing was RMB 308 million with a 2% margin.

Growth in cloud computing was primarily driven by robust growth in revenue from customers in the internet, financial services, and retail industries, Alibaba said.

The company’s earnings come at a tough time for China’s tech giants. The sector has been the subject of a regulatory crackdown that has intensified in recent weeks, and caused the largest monthly fall for U.S.-listed Chinese tech companies since the 2008-09 financial crisis.

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

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