Traders work on the floor of the New York Stock Exchange.
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Stock futures traded lower Tuesday as investors attempted to keep building on early 2023 momentum and weighed the latest earnings results.
Futures tied to the Dow Jones Industrial Average lost 81 points, or 0.2%. S&P 500 futures dropped 0.1%, while Nasdaq-100 futures slid 0.2%.
Goldman Sachs reported a smaller-than-expected profit for the fourth quarter, sending the stock down more than 2% in the premarket. The bank’s results were pressured by declines in investment banking and asset management revenues. Meanwhile, rival Morgan Stanley posted better-than-expected numbers thank in part to record wealth management revenue.
Those results come after other major banks such as JPMorgan and Citigroup reported mixed quarterly results.
Wall Street is coming off positive back-to-back weeks to start the new year. The Nasdaq Composite is leading the way up 5.9%, as investors bought beat-up technology shares amid rising hopes of an improving landscape for growth stocks. The S&P 500 and Dow have advanced 4.2% and 3.5%, respectively, since the start of the year.
Gains have come on the back of the first crop of inflation-related data that investors saw as indicating a contracting economy, with hopes that will give the Federal Reserve justification to slow interest rate hikes once again. Last week, the consumer price index for December showed prices cooled 0.1% from the prior month, but prices were still 6.5% higher than the same month a year ago.
Traders work on the floor of the New York Stock Exchange.
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Stock futures were down slightly Monday night as investors attempted to keep building on early 2023 momentum and looked ahead to more corporate earnings.
Futures tied to the Dow Jones Industrial Average lost 15 points, near flat. S&P 500 futures dropped 0.1%, while Nasdaq-100 futures slid 0.2%.
All three of the major indexes are up coming off a positive first two weeks of trading in the new year. The Nasdaq Composite is leading the way up 5.9%, as investors bought beat-up technology shares amid rising hopes of an improving landscape for growth stocks. The S&P 500 and Dow have advanced 4.2% and 3.5%, respectively, since the start of the year.
Gains have come on the back of the first crop of inflation-related data that investors saw as indicating a contracting economy, with hopes that will give the Federal Reserve justification to slow interest rate hikes once again. Last week, the consumer price index for December showed prices cooled 0.1% from the prior month, but prices were still 6.5% higher than the same month a year ago.
Investor focus now turns to corporate financials as earnings season kicks off. Banks took center stage Friday as investors digested comments about the likelihood of a recession. Goldman Sachs and Morgan Stanley are set to report before the bell Tuesday, followed by United Airlines after the market close.
“The economic data has been kind, to say the least, which is not something we were afforded for the vast majority of the year just gone,” said Craig Erlam, senior market analyst at OANDA. “The question now is whether earnings season will enhance that new sense of hope or spoil the party before it really gets going.”
Investors will also be closely watching for news out of the World Economic Forum’s summit in Davos taking place this week.
CNBC’s Jim Cramer on Friday warned investors not to make trading decisions fresh off a company’s earnings report.
Stocks made a comeback on Friday after falling initially on quarterly earnings reports and recession warnings from major banks. All three major indexes ended the week up, as investors digested a slate of earnings reports and economic data that suggested inflation is cooling.
Cramer, who earlier this week offered investors a set of guidelines for earnings season, called Friday’s trading session an example of why investors should be disciplined with their portfolios.
“Every quarter I make the same argument about how you should wait and do more work before you pull the trigger, but a lot of people remain unconvinced,” he said.
He also went over next week’s slate of quarterly reports. All estimates for earnings, revenue and economic data are courtesy of FactSet.
Tuesday: Goldman Sachs, Morgan Stanley, United Airlines
Goldman Sachs
Q4 2022 earnings release at 7:30 a.m. ET; conference call at 9:30 a.m. ET
Projected EPS: $5.56
Projected revenue: $10.76 billion
The company’s stock could soar higher if the earnings report beats expectations, he said.
Morgan Stanley
Q4 2022 earnings release at 7:30 a.m. ET; conference call at 8:30 a.m. ET
Projected EPS: $1.29
Projected revenue: $12.54 billion
Cramer said he expects a “terrific”reportfrom the bank.
United Airlines
Q4 2022 earnings release at 4:30 p.m. ET; conference call on Wednesday at 10:30 a.m. ET
Projected EPS: $2.11
Projected revenue: $12.23 billion
The company will put up great numbers, since consumers are still spending on travel, he predicted.
Wednesday: J.B. Hunt Transport, Alcoa
J.B. Hunt Transport
Q4 2022 earnings release before the bell; conference call at 9 a.m. ET
Projected EPS: $2.45
Projected revenue: $3.83 billion
Cramer said he’ll be watching for any sign that there’s a slowdown in commerce.
Alcoa
Q4 2022 earnings release at 4:10 p.m. ET; conference call at 5 p.m. ET
Projected loss: 69 cents per share
Projected revenue: $2.65 billion
The metals “have become insane stock growers. … The aluminum company knows if the metals move is merely a squeeze or the real deal with actual demand,” he said.
Thursday: Procter & Gamble, Netflix
Procter & Gamble
Q2 2023 earnings release at 6:55 a.m. ET; conference call at 8:30 a.m. ET
Projected EPS: $1.58
Projected revenue: $20.70 billion
He said he expects the company to report a solid quarter as raw costs come down and foreign exchange headwinds abated.
Netflix
Q4 2022 earnings release at 4 p.m. ET; conference call at 6 p.m. ET
Projected EPS: 58 cents
Projected revenue: $7.84 billion
“I think Netflix could be one of the strongest stories out there,” he said.
Friday: SLB
Q4 2022 earnings release at 7 a.m. ET; conference call at 9:30 a.m. ET
Projected EPS: 68 cents
Projected revenue: $7.78 billion
“SLB will tell us where the new finds are. They will play with an open hand. I bet you they give you a little update on Russia, too,” he said.
Disclaimer: Cramer’s Charitable Trust owns shares of Morgan Stanley and Procter & Gamble.
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The U.S. labor market is losing momentum as hiring and wage growth cooled in December, showing the effects of slower economic growth and the Federal Reserve’s interest-rate increases.
After two straight years of record-setting payroll growth following the pandemic-related disruptions, the labor market is starting to show signs of stress. That suggests 2023 could bring slower hiring or outright job declines as the overall economy slows or tips into recession.
Employers added 223,000 jobs in December, the smallest gain in two years, the Labor Department said Friday. Average hourly earnings were up 4.6% in December from the previous year, the narrowest increase since mid-2021, and down from a March peak of 5.6%.
All told, employers added 4.5 million jobs in 2022, the second-best year of job creation after 2021, when the labor market rebounded from Covid-19 shutdowns and added 6.7 million jobs. Last year’s gains were concentrated in the first seven months of the year. More recent data and a wave of tech and finance-industry layoffs suggest the labor market, while still vibrant, is cooling.
“I do expect the economy to slow noticeably by June, and in the second half of the year we’ll see a greater pace of slowing if not outright contraction,” said
Joe Brusuelas,
chief economist at RSM U.S.
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Friday’s report sent markets rallying as investors anticipated it would cause the Fed to slow its pace of rate increases. The central bank’s next policy meeting starts Jan. 31. The Fed’s aggressive rate increases aimed at combating inflation didn’t significantly cool 2022 hiring, but revisions to wage growth showed recent gains weren’t as brisk as previously thought.
The Dow Jones Industrial Average rose 700.53 points, or 2.13%, on Friday. The S&P 500 Index was up 2.28% and NASDAQ Composite Index advanced 2.56%. The benchmark 10-year Treasury yield declined 0.15 percentage point to 3.57%. Yields fall as bond prices rise.
The unemployment rate fell to 3.5% in December from 3.6% in November, matching readings earlier in 2022 and just before the pandemic began as a half-century low. Fed officials said last month the jobless rate would rise in 2023. December job gains were led by leisure and hospitality, healthcare and construction.
Historically low unemployment and solid hiring, however, might mask some signs of weakness. The labor force participation rate, which measures the share of adults working or looking for work, rose slightly to 62.3% in December but is still well below prepandemic levels, one possible factor that could make it harder for employers to fill open positions.
The average workweek has declined over the past two years and in December stood at 34.3 hours, the lowest since early 2020.
Hiring in temporary help services has fallen by 111,000 over the past five months, with job losses accelerating. That could be a sign that employers, faced with slowing demand, are reducing their employees’ hours and pulling back from temporary labor to avoid laying off workers.
The tech-heavy information sector lost 5,000 jobs in December, the Labor Department report showed. Retail saw a 9,000 rise in payrolls, snapping three straight months of declines.
Tech companies cut more jobs in 2022 than they did at the height of the Covid-19 pandemic, according to layoffs.fyi, which tracks industry job cuts. On Wednesday,
Salesforce Inc.
said it would cut 10% of its workforce, unwinding a hiring spree during the pandemic. The Wall Street Journal reported that
Amazon.com Inc.
would lay off 18,000 people, roughly 1.2% of its total workforce. Other companies, such as
Facebook
parent
Meta Platforms Inc.,
DoorDash Inc.
and
Snap Inc.,
have also recently cut positions.
Companies in the interest-rate-sensitive housing and finance sectors, including
Redfin Corp.
,
Morgan Stanley
and
Goldman Sachs Group Inc.,
have also moved to reduce staff.
Months where overall jobs gained
Months where overall jobs declined
By the end of 2022, the U.S. had added nearly 2 million jobs since the end of 2019
More than 20 million jobs were lost near the start of the pandemic
Employment returns to prepandemic level
A monthly gain of more than 4 million jobs
Months where
overall jobs gained
Months where
overall jobs declined
By the end of 2022, the U.S. had added nearly 2 million jobs since the end of 2019
More than 20 million jobs were lost near the start of the pandemic
Employment returns to prepandemic level
A monthly gain of more than 4 million jobs
Months where
overall jobs gained
Months where
overall jobs declined
By the end of 2022, the U.S. had added nearly 2 million jobs since the end of 2019
More than 20 million jobs were lost near the start of the pandemic
Employment returns to prepandemic level
A monthly gain of more than 4 million jobs
Months where
overall jobs gained
Months where
overall jobs declined
By the end of 2022, the U.S. had added nearly 2 million jobs since the end of 2019
More than 20 million jobs were lost near the start of the pandemic
Employment returns to prepandemic level
A monthly gain of more than 4 million jobs
Months where
overall jobs gained
Months where
overall jobs declined
By the end of 2022, the U.S. had added nearly 2 million jobs since the end of 2019
More than 20 million jobs were lost near the start of the pandemic
Employment returns to prepandemic level
A monthly gain of more than 4 million jobs
Other data released this week point to a slowing U.S. economy. New orders for manufactured goods fell a seasonally adjusted 1.8% in November, the Commerce Department said Friday. Business surveys showed a contraction in economic activity in December, according to the Institute for Supply Management. Manufacturing firms posted the second-straight contraction following 29 months of expansion, and services firms snapped 30 straight months of growth in December.
Economists surveyed by The Wall Street Journal last fall saw a 63% probability of a U.S. recession in 2023. They saw the unemployment rate rising to 4.7% by December 2023.
“We’ve obviously been in a situation over the past few months where employment growth has been holding up surprisingly well and is slowing very gradually,” said
Andrew Hunter,
senior U.S. economist at Capital Economics. “There are starting to be a few signs that we’re maybe starting to see a bit more of a sharp deterioration.”
Max Rottersman, a 61-year-old independent software developer, said he had been very busy with consulting jobs during much of the pandemic. But that changed over the summer when work suddenly dried up.
“I’m very curious to see whether I’m in high demand in the next few months or whether—what I sort of expect will happen—there will be tons of firing,” he said.
Despite some signs of cooling, the labor market remains exceptionally strong. On Wednesday, the Labor Department reported that there were 10.5 million job openings at the end of November, unchanged from October, well more than the number of unemployed Americans seeking work.
Some of those open jobs are at Caleb Rice’s home-renovation business in Calhoun, Tenn., which has been consistently busy since the start of the pandemic. The small company has raised pay and gone to a four-day week in an effort to hold on to workers.
“If I could get three more skilled hands right now, I’d be comfortable,” Mr. Rice said. “The way it goes is I’ll hire five, two will show up and of those two one won’t be worth a flip.”
Fed officials have been trying to engineer a gradual cooling of the labor market by raising interest rates. Officials are worried that a too-strong labor market could lead to more rapid wage increases, which in turn could put upward pressure on inflation as firms raise prices to offset higher labor costs.
The central bank raised rates at each of its past seven meetings and has signaled more rate increases this year to bring inflation down from near 40-year highs. Fed officials will likely take comfort in the slowdown in wage gains, which could prompt them to raise rates at a slower pace, Mr. Brusuelas, the economist, said.
“We’re closer to the peak in the Fed policy rate than we were prior to the report, and the Fed can strongly consider a further slowing in the pace of its hikes,” he said. “We could plausibly see a 25-basis-point hike versus a 50-basis-point hike at the Feb. 1 meeting.”
Write to David Harrison at david.harrison@wsj.com
Corrections & Amplifications A graphic in an earlier version of this article showing the change in nonfarm payrolls since the end of 2019 was incorrectly labeled as change since January 2020. (Corrected on Jan. 6)
Tesla’s stock is finishing out its tumultuous year with yet more turbulence: It’s up almost 6% Thursday, but still down more than 10% since last week. And a new cut to its price target from Morgan Stanley isn’t helping.
Year-to-date, the stock is down about 70%. Morgan Stanley analysts on Thursday said that the company’s sliding stock price represents a buying opportunity, but they cut its price target from $330 per share to $250. Tesla shares are trading at $122, with the stock up about 8% Thursday.
Morgan Stanley still believes the company is somewhat undervalued as a result of the big recent sell-offs, citing its head start over the electric car competition, and potential tax advantages as a result of the Inflation Reduction Act passed earlier this year.
The losses, however, have further put a dent in the fortunes of one of the world’s richest people. According to the Bloomberg Billionaires Index, CEO Elon Musk is now worth $132 billion — less than half what he was worth at the beginning of the year. He lost the world’s richest person title two weeks ago to Bernard Arnault, the chairman of French luxury goods giant LVMH
(LVMHF).
A popular misconception has emerged about Elon Musk and Tesla: The megabillionaire’s love affair with Twitter is the main reason Tesla shares have lost so much value this year.
Even as Musk signals he may give up his CEO title at Twitter, investors became concerned that the outlook for Tesla’s sales and profit is taking a turn for the worse. A sign of the weakening demand: Tesla has announced a rare sale. The company offered two rebates for buyers who take delivery of a vehicle before the end of the year, initially offering a $3,750 discount earlier this month. Tesla then doubled that rebate to $7,500 last Thursday.
“Tesla clearly is starting to see demand cracks in China and in the US at a time that EV competition is increasing across the board,” said Dan Ives, tech analyst with Wedbush Securities and a Tesla bull who cut his price target for the stock last Friday from $250 to $175. “The price cuts that Tesla enacted was the straw that broke the camel’s back on the stock.”
Another reason Tesla’s stock is sinking: The US economy could tip into recession next year, hurting car sales. Musk said on a Twitter Spaces call two weeks ago that he foresees the economy will be in a “serious recession” in 2023.
“I think there is going to be some macro drama that’s higher than people currently think,” he said, according to Reuters, adding that homes and cars will get “disproportionately impacted” by economic conditions.
Part of the problem with Tesla’s stock price is that critics question whether it was ever worth the trillion-dollar valuation it had at the start of the year. At its peak, Tesla was worth more than the 12 largest automakers on the planet combined, despite having a fraction of the sales of any of them. Today it is worth $399 billion.
“It got ahead of itself in the near-term,” said Gene Munster of Loup Ventures, another Tesla fan. “I still believe this can be a much bigger company. I think it will see those kinds of numbers again. But it could take a long, long time to get there.”
Tesla’s growth prospects – a target of 50% sales growth annually, helped drive that valuation. It conceded in October that it will miss that sales target for this year.
The stock’s climb to dizzying heights – rising 743% in 2020 alone – was driven by Musk’s reputation as a genius who would disrupt the massive global auto industry.
“Tesla was viewed as a disruptive technology company, not as an automaker, and a large part of that premium is related to Musk,” said Ives.
Critics of Tesla said much of its sky-high valuation was based on promises that Musk made about future products, many of which came years after they were originally promised.
A prime example is the Cybertruck, the Tesla pickup truck, first unveiled three years ago with promises that production would start in 2021.
Now production is slated to start next year, with a ramp-up in production in 2024, putting it years behind other electric pickup offerings from Ford and upstart EV maker Rivian, both of which have electric pickups available for purchase today. It could also trail planned electric pickup offerings from General Motors.
“Elon Musk has a pathological problem with the truth,” said Gordon Johnson, one of the largest critics of Tesla among analysts. “When people say he’s a genius and innovator, it’s based on all his promises he never lives up to.”
Johnson said Tesla shares will have a much steeper fall ahead, once it starts being priced like other automakers rather than on its promises. He said that for Tesla to hit its growth targets it needs to be building new plants almost every year, but that new factories in Germany and Texas that opened in spring are still not operating at full capacity. And he said that its plant in China has had to scale back production due to weak sales in the market in the face of the Covid restrictions.
“Demand in the US has collapsed,” he said. “Two months ago, your wait time was two or three months. Now you can get one immediately. They’re going to build more cars than they sell for a third straight quarter. It’s the definition of excess capacity.”
Tesla is still by far the largest EV maker worldwide, although that title is being challenged in some key markets, by Volkswagen in Europe and by BYD in China. And more competition is coming from established automakers such as Ford and GM.
That’s not to say Twitter has played no role in Tesla’s stock price demise this year: Tesla shares have lost over 65% of their value since Musk’s interest in Twitter was first disclosed in April, with a nearly 50% decline since he closed on the deal in late October.
Investors have been disappointed that Musk appears to be paying for so much of his $44 billion purchase of Twitter by selling Tesla stock. Musk, Tesla’s largest shareholder, has sold $23 billion worth of Tesla shares since his interest in Twitter became public in April.
On a Twitter Spaces call last week call, Musk promised he was done selling shares of Tesla
(TSLA) stock until at least 2024, if not beyond. But he hasn’t lived up to a previous promise in April that he was done selling Tesla
(TSLA) shares, selling $14.4 billion of that stock since that time.
“It’s been a Pinocchio situation for Musk saying he is done selling stock. Investors want to see him walk the walk and not just talk the talk,” said Ives.
an outspoken and influential fund manager who was chief investment officer of Guggenheim Partners, died Wednesday of a heart attack.
Mr. Minerd, 63 years old and a committed weightlifter known to bench press more than 400 pounds, died during his daily workout, the firm said.
Mr. Minerd joined Guggenheim shortly after the firm was founded in 1998.
Guggenheim Chief Executive
Mark Walter
credited him with designing the organization, systems and procedures that helped Guggenheim rise from a startup to a manager of more than $218 billion in total assets and 900 employees.
Mr. Minerd served as the public face of Guggenheim. In that role, he was among Wall Street’s more prominent personalities, making frequent appearances on television and maintaining an active presence on social media to discuss markets and investments, often in blunt terms.
“That sound you hear is the Fed breaking something,” he wrote in October in a message to clients, warning that the central bank’s campaign to raise interest rates was causing dislocations in fixed-income and foreign-exchange markets.
Mr. Minerd was a member of the Federal Reserve Bank of New York’s Investor Advisory Committee on Financial Markets and an adviser to the Organization for Economic Cooperation and Development.
Mr. Minerd is survived by his husband Eloy Mendez.
“As an asset manager, I’ve come to view conventional wisdom as the surest path to investment underperformance,” Mr. Minerd wrote in a biographical summary.
Mr. Minerd grew up in western Pennsylvania and studied economics at the University of Pennsylvania’s Wharton School. He also took courses at the University of Chicago and described himself as a monetarist.
He worked as a dealer in currencies, bonds and structured securities at Merrill Lynch,
Morgan Stanley
and CS First Boston in the 1980s and 1990s.
At age 37, feeling burned out, he left Wall Street and moved to Los Angeles. “I walked away from extremely large offers on Wall Street,” he told Bloomberg in 2017. “I realized this wasn’t a dress rehearsal for life, this was it.” After joining what became Guggenheim Partners, he worked in a Santa Monica, Calif., office overlooking the ocean.
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Mr. Minerd was a conservative willing to embrace some ideas from the left and seek middle ground.
In a 2020 interview with the Los Angeles Times, he took aim at elite universities, including the University of Pennsylvania. “These schools have huge endowments, and why are they not focusing their endowment on advancing a cause of essentially free education or at least education that provides complete support for people below certain income levels?” he asked. Mr. Minerd said he wouldn’t make donations going to “bricks and mortar and making the place look better when people who would be qualified to come there can’t afford to do it. And, of course, if we had more equal access to education, it would help address some of the issues around race and poverty.”
Referring to his bulky bodybuilder’s physique, he once told a Wall Street Journal reporter that when people asked about “key man” risk at Guggenheim and wondered what would happen if Mr. Minerd was hit by a truck, his staff members would respond, “Do you mean what would happen to the truck?”
One of his favorite charities was Union Rescue Mission, which provides food, shelter, training and other services to homeless people in Los Angeles County.
Andy Bales,
chief executive of Union Rescue Mission, recalled meeting Mr. Minerd around 2008, when the mission was in poor financial shape and in danger of having to sell one of its sites. “He told me that God was tapping him on the shoulder, telling him to do more for others,” the Rev. Bales said. Mr. Minerd ended up donating more than $5 million to the mission to allow it to expand services.
Mr. Minerd was often seen with a rescue dog he called Grace, who accompanied him to the office and on trips.
His work schedule was punishing. “He was up early for East Coast customers and went late for his West Coast customers,” the Rev. Bales said.
Write to Charley Grant at charles.grant@wsj.com and James R. Hagerty at bob.hagerty@wsj.com
Morgan Stanley: “I want you to hold it. I think it’s terrific at $89.”
SLB: “[Russia] pretty much made a deal between our Western allies and us that allows them to overproduce [oil], which is going to cause Schlumberger to roll down another maybe $5, $6 before we’re interested in buying it.”
Alphabet Class A: “The company has got to cut costs, cut costs, cut costs. … It is not making enough money.”
Sprout Social Inc: “Another enterprise software company. Next. But I promise to go back and look at it again.”
GrowGeneration Corp: “We had that one. We nailed that. We got that right in a buy, we got that right in a sell, and what we did is we never looked back.”
Walt Disney Co: “I think Disney is a triple buy.”
Disclaimer: Cramer’s Charitable Trust owns shares of Alphabet, Disney and Morgan Stanley.
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A trader, center, wears a Citigroup jacket while working on the floor of the New York Stock Exchange (NYSE) in New York.
Michael Nagle | Bloomberg | Getty Images
Global investment banks Citigroup and Barclays cut advisory and trading personnel this week as Wall Street grapples with sharp declines in revenue and dimming prospects for next year.
New York-based Citigroup let go of roughly 50 trading personnel this week, according to people with knowledge of the moves who declined to be identified speaking about layoffs. The firm also cut dozens of banking roles amid a slump deal-making activity, Bloomberg reported Tuesday.
London-based Barclays cut about 200 positions across its banking and trading desks this week, according to a person with knowledge of the decision.
The moves show the industry has returned to an annual ritual that’s been part of what has defined life on Wall Street: Cutting workers who are deemed to be underperformers. The practice, which had been on pause the last few years amid a boom in deals activity, returned after Goldman Sachs laid off hundreds of employees in September.
While shallow in nature, especially compared with far deeper cuts occurring in tech firms including Meta and Stripe, the moves may only be the start of a trend if capital markets remain moribund.
Equity issuance plunged 78% this year through October as the IPO market remained mostly frozen, according to SIFMA data. Debt issuance has also fallen off as the Federal Reserve boosts interest rates, slumping 30% through September.
No reprieve in 2023
In recent weeks, executives have grown pessimistic, saying that revenue from robust activity in parts of the fixed-income world has probably peaked this year, and that equities revenue will continue to decline amid a bear market in stocks.
“Most of the banks are budgeting for declines in revenue next year,” according to a person involved with providing data and analytics to the industry. “Investors know the general direction of the market, at least in the first half, and the thinking is that client demand for hedging has probably peaked.”
Among Wall Street players, beleaguered Credit Suisse is contending with the deepest cuts, thanks to pressure to overhaul its money-losing investment bank. The firm has said it is cutting 2,700 employees in the fourth quarter and aims to slash a total of 9,000 positions by 2025.
But even workers toiling at Wall Street’s winners — firms that have gained market share from European banks in recent years — aren’t immune.
Underperformers may also be at risk at JPMorgan Chase, which will use selective end-of-year cuts, attrition and smaller bonuses to rein in expenses, according to a person with knowledge of the bank’s plans.
Morgan Stanley is also examining job cuts, although the scope of a potential reduction in force hasn’t been decided, according to a person with knowledge of the company. Lists of workers who will be terminated have been drawn up in Asian banking operations, Reuters reported last week.
To be sure, managers at Barclays, JPMorgan and elsewhere say they are still hiring to fill in-demand roles and looking to upgrade positions amid the industry retrenchment.
Spokespeople for the banks declined to comment on their personnel decisions.
Traders work on the floor of the New York Stock Exchange (NYSE) on October 27, 2022 in New York City. Stocks continued their upward gains Thursday with the Dow rising nearly 400 points following a new GDP report that beat expectations.
Spencer Platt | Getty Images News | Getty Images
Stock futures were lower — following recent market gains — as results of the midterm elections dragged on with control of the U.S. House of Representatives and Senate still up in the air.
S&P 500 futures fell by 0.25%, while Dow futures were down 95 points. Futures for the Nasdaq 100 traded fractionally lower.
Stocks are coming off three-straight days of gains and so possibly were due for a pause. The Dow climbed 333 points on Tuesday for its third-straight session of gaining more than 1%. The bounce for equities may be partly due to the elections, where Wall Street was expecting Republicans to gain ground and create gridlock in Washington, D.C.
But control of the houses of Congress were not clear overnight so far.
Morgan Stanley chief U.S. equity strategist Mike Wilson said on CNBC’s “Closing Bell” that if it does end up being divided government it could help ease concerns about inflation and higher interest rates going forward.
“It looks like the House will go the way of the Republicans,” Wilson said. “That means gridlock. Probably, less fiscal spending will be achieved.”
The market’s recent rally is occurring at the front end of a strong seasonal period. Historically, stocks tend to rise after midterm elections and the policy clarity it brings, and the final two months of the year are considered a bullish period for investors.
One stock that weighed on futures was Disney, which fell more than 6% in extended trading after the entertainment giant missed estimates on the top and bottom lines for its fiscal fourth quarter.
Banks have started to send $13 billion in cash backing
Elon Musk’s
takeover of
Twitter Inc.,
TWTR 1.08%
according to people familiar with the matter, the latest sign the $44 billion deal for the social-media company is on track to close by the end of the week after months of twists and turns.
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Deals
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Mr. Musk late Tuesday sent a so-called borrowing notice to the banks that agreed to provide him with the debt for the purchase, one of the people said. That kicked off a process that is currently under way by which banks will deposit funds they are on the hook for into an escrow account after hammering out final details of the debt contracts, the people said.
Once final closing conditions are met, the funds will be made available for Mr. Musk to execute the transaction by the Friday deadline.
It indicates the deal is on track to close, after Mr. Musk visited Twitter’s San Francisco office Wednesday. “Entering Twitter HQ – let that sink in!” Mr. Musk tweeted, along with a video of himself walking into Twitter’s headquarters carrying a white basin.
Twitter told employees in an internal message that they would hear directly from Mr. Musk on Friday, according to an internal note reviewed by The Wall Street Journal.
The billionaire also changed the bio description on his Twitter profile to “Chief Twit” and added his location as “Twitter HQ.”
Twitter will become a private company if Elon Musk’s $44 billion takeover bid is approved. The move would allow Musk to make changes to the site. WSJ’s Dan Gallagher explains Musk’s proposed changes and the challenges he might face enacting them. Illustration: Jordan Kranse
Funding notices are typically sent three to five days in advance of when the money is needed. In normal circumstances, such documents are part of the mundane deal-closing procedures handled by back-office staffers that receive little to no mention. But after Mr. Musk spent months trying to back out of the deal to buy Twitter before flip-flopping and agreeing to go through with it earlier this month, Wall Street and Silicon Valley alike have been on high alert for evidence that he will actually follow through.
If Mr. Musk proceeds to close the deal as the signs currently suggest, it would bring to an end a six-month-long corporate drama and Twitter would cease to be publicly traded, with its current shareholders receiving $54.20 a share. The outspoken billionaire entrepreneur is expected to take the influential platform in a new direction, having floated ideas for changing Twitter, including by limiting content moderation and ushering in a new business model.
As recently as earlier this month, Mr. Musk was slated to face Twitter in a Delaware court over the stalled deal. He had argued the company misled him about its business including the amount of spam on its platform. Twitter countered that he was looking for an out after a market downturn gave him cold feet.
Twitter has been at the center of a six-month-long corporate drama that appears to be close to an end.
Photo:
Justin Sullivan/Getty Images
Then, in the days before he was to sit for a deposition, Mr. Musk changed his position again and proposed closing the deal at the original price. The judge presiding over the legal clash postponed a trial scheduled to start Oct. 17 and gave Mr. Musk until Oct. 28 to close the deal.
Chancellor Kathaleen McCormick said if the deal doesn’t close by that date, the parties should contact her to schedule a November trial.
The closing of the deal won’t be the end of the story for the banks that agreed to help fund it, including
Morgan Stanley,
MS 0.50%
Bank of America Corp.
BAC 0.88%
and
Barclays
BCS -0.14%
PLC. They are likely to hold on to the debt rather than sell it to third-party investors, as is the norm in such deals, until the new year or later, people familiar with the matter have said. Those lenders could face upward of $500 million in losses if they tried to sell Twitter’s debt at current market levels, as many investors are worried about a recession and curbing new exposure to risky bonds and loans.
—Alexa Corse and Lauren Thomas contributed to this article.
Write to Laura Cooper at laura.cooper@wsj.com, Alexander Saeedy at alexander.saeedy@wsj.com and Cara Lombardo at cara.lombardo@wsj.com
