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Business

Stock futures flat after a volatile session following the Fed’s latest interest rate hike

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Stock futures were muted Thursday morning following losses during the daily trading session after the Federal Reserve delivered another interest rate hike and signaled that no pivot or rate cut is coming anytime soon.

Futures tied to the Dow Jones Industrial Average inched up 9 points, or 0.03%. S&P 500 futures and Nasdaq 100 futures were both roughly flat.

Shares of Qualcomm, Roku and Fortinet slipped after reporting disappointing quarterly results and forward guidance.

Traders had anticipated the central bank’s 0.75 percentage point rate increase and initially read the Fed’s statement as dovish, sending stocks higher.

Those gains reversed when Federal Reserve Chair Jerome Powell said it was “premature” to talk about a rate hike pause and that the terminal rate would likely be higher than previously stated.

Traders react as Federal Reserve Chair Jerome Powell speaks on a screen on the floor of the New York Stock Exchange (NYSE) in New York City, November 2, 2022.

Brendan McDermid | Reuters

“We still have some ways to go and incoming data since our last meeting suggests that the ultimate level of interest rates will be higher than previously expected,” he said.

The Dow Jones Industrial Average ended Wednesday’s trading session 416 points lower, or down1.3%, decreasing its significant October rebound. The S&P 500 dropped 2% and the Nasdaq Composite was off by 2.8%.

Markets will likely continue to seesaw until it is clear inflation has cooled off and that the Fed has stopped marching rates higher. Any data that shows the U.S. economy isn’t slowing as the central bank tightens policy will likely weigh on stocks.

The next important report is October nonfarm payrolls, set to be released Friday.

“You get a good jobs number, in other words a good unemployment rate that doesn’t go higher, then the market is in a lot of trouble,” said Guy Adami, director of advisor advocacy at Private Advisor Group, said on CNBC’s “Fast Money.”

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Business

Roku, Amazon, First Solar, Intel, Apple & more

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People pass by a video sign display with the logo for Roku, a Fox-backed video streaming firm, that held it’s IPO at the Nasdaq Marketsite in New York, September 28, 2017.

Brendan McDermid | Reuters

Check out the companies making headlines in midday trading Friday.

Amazon — Shares of the e-commerce giant jumped more than 11%, giving the broader market a boost, after the company reported better-than-expected second-quarter revenue and issued an optimistic outlook. Revenue growth of 7% in the second quarter topped estimates, bucking the trend among its Big Tech peers.

Roku — Roku shares plummeted 25% after the streaming company reported disappointing results for the second quarter, as it faces a slowdown in advertising. The company shared disappointing guidance for the current quarter, noting that dwindling ad spending and recessionary fears could continue to impact its business going forward.

Apple — Shares of Apple rose 3% after the company beat Wall Street profit and revenue forecasts, and CEO Tim Cook said he expects growth to accelerate despite “pockets of softness.” Sales of its iPhone saw double-digit growth in new customers.

First Solar — Shares of First Solar surged more than 10% after the company reported better-than-expected earnings for the second quarter. Oppenheimer also upgraded the stock to outperform from neutral on Friday citing a deal reached between Sen. Joe Manchin, D-W.V. and Senate Majority Leader Chuck Schumer, D-N.Y., on a bill that includes climate spending.

Chevron, Exxon Mobil — The energy stocks jumped on the back of record profits reported in their second-quarter earnings, boosted by higher oil and gas prices. Chevron jumped 8.2%, and Exxon Mobil added 4.3%.

Bloomin’ Brands — Shares jumped 2.6% after Bloomin’ Brands reported second-quarter earnings that beat analyst expectations. The restaurant company behind Outback Steakhouse and other brands earned 68 cents per share on revenue of $1.13 billion. Analysts expected a profit of 61 cents per share on revenue of $1.1 billion, according to Refinitiv.

Stanley Black & Decker — Shares of the toolmaker slid 4% on Friday, building on a 16% loss on Thursday that came after a disappointing quarterly report and guidance cut. Wolfe Research downgraded the stock to peer perform from outperform, saying that “negative news flow likely dominates” through the end of this year.

Procter & Gamble — The consumer goods company posted mixed second-quarter results, sending shares down 5%. Procter & Gamble also said expects rising commodity costs will continue to be a challenge ahead.

Church & Dwight — Shares dropped 8.4% after the consumer goods company behind Arm & Hammer reported a revenue miss in its most-recent quarter, citing greater inflationary pressures.

Intel — Shares of the chipmaker tumbled 8.8% after a second-quarter report that came in well short of expectations. Intel reported 29 cents in adjusted earnings per share on $15.32 billion of revenue. Analysts surveyed by Refinitiv had penciled in 70 cents in earnings per share on $17.92 billion of revenue. Third-quarter guidance also came in below expectations. Susquehanna downgraded the stock to negative from neutral, warning that free cash flow could be “significantly depressed for at least the next few years.”

— CNBC’s Yun Li, Jesse Pound, Samantha Subin, Tanaya Macheel and Carmen Reinicke contributed reporting

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Business

Amazon, Apple, Roku and more

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Amazon signage is displayed outside of an Amazon.com Inc. delivery hub in the late evening of Amazon Prime Day, July 12, 2022 in Culver City, California.

Patrick T. Fallon | AFP | Getty Images

Here are the stocks making notable moves after hours:

Amazon — Shares of Amazon surged 12% despite the tech giant reporting a loss of 20 cents per share for the second quarter. The company’s revenue came in higher than expected, however, at $121.23 billion. Analysts surveyed by Refinitiv were expecting $119.09 billion. Sales for Amazon Web Services came in stronger than expected.

Apple — Shares of the tech giant added more than 3% after Apple beat estimates on the top and bottom lines for the third quarter. Apple reported $1.20 in earnings per share on $82.96 billion of revenue. Analysts surveyed by Refinitiv had penciled in $1.16 earnings per share on $82.81 billion of revenue. The iPhone segment helped fuel the beat, with sales topping expectations.

Intel — The chip stock sank more than 7% after Intel missed estimates on the top and bottom lines for the second quarter. Intel reported 29 cents in adjusted earnings per share on $15.32 billion of revenue. Analysts surveyed by Refinitiv were looking for 70 cents per share on $17.92 billion of revenue. Third-quarter guidance also came in lighter than expected.

Roku — The streaming stock dropped nearly 25% after Roku missed estimates on the top and bottom lines for the second quarter, with the company citing a slowdown in advertising spending. Roku’s third-quarter revenue forecast also came in much lower than expected at $700 million. Analysts surveyed by Refinitiv were expecting $902 million.

Dexcom — Shares of the medical device company sank 17% after DexCom’s second-quarter earnings came in below expectations on the top and bottom lines. DexCom reported 17 cents in adjusted earnings per share on $696.2 million. Analysts were expecting 19 cents per share on $698.6 million of revenue, according to FactSet’s StreetAccount. Net income was down year over year.

Avantor — Shares of the life science company slid nearly 10% after Avantor’s second-quarter earnings and revenue missed expectations. Avantor reported 37 cents in earnings per share on $1.91 billion in revenue. Analysts surveyed by FactSet’s StreetAccount were looking for 38 cents in earnings per share and $1.99 billion in revenue.

Five9 — The software stock rose more than 7% after a stronger-than-expected second-quarter report. Five9 reported 34 cents in adjusted earnings per share on $189 million of revenue. Analysts surveyed by Refinitiv were looking for 18 cents per share and $180 million of revenue. Five9 said it expected revenue to grow sequentially in the third quarter.

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Business

Stock futures are flat after Dow suffers its worst day of the year

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Traders on the floor of the NYSE, Feb. 17, 2022.

Source: NYSE

Stock futures were flat in overnight trading Thursday following the Dow Jones Industrial Average’s worst day of 2022 as investors dumped risk assets amid geopolitical concerns.

Futures on the blue-chip Dow were up by 30 point. S&P 500 futures and Nasdaq 100 futures both edged 0.1% higher.

Wall Street suffered a steep sell-off on Wednesday with the Dow falling more than 600 points for its biggest daily drop since end of November. The S&P 500 dropped more than 2% to break a two-day winning streak, while the Nasdaq Composite declined 2.9%.

Investors continued to be on edge about the ongoing tensions between Russia and Ukraine. Ukraine accused pro-Russian separatists of attacking a village near the border. In the U.S., meanwhile, Secretary of State Antony Blinken was headed to the United Nations to make an urgent appeal against an invasion.

“A further escalation of tensions in the near term could roil markets due to the potential impact on a tenuous global supply chain, particularly as the Fed prepares for its first-rate hike in years,” said Peter Essele, head of portfolio management at Commonwealth Financial Network. “A perfect storm may be on the horizon if calmer heads don’t prevail.”

Investors have been grappling with the outlook for Federal Reserve policy. St. Louis Fe President James Bullard, who had just called for aggressive action, warned that inflation could get out of control without rate hikes.

Major averages are on pace for their second negative week in a row. The Dow is down 1.2% week to date, while the S&P 500 and the Nasdaq have fallen 0.9% and 0.5% this week, respectively.

“Wall Street is feeling very jittery as it looks to the left and sees intensifying geopolitical risks with the Ukraine situation and then it looks to the right and sees the potential for aggressive Fed tightening,” Edward Moya, senior market analyst at Oanda, said in a note.

Roku shares dropped as much as 12% in extended trading after the video-streaming company reported a revenue miss and issued a weaker-than-expected guidance.

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Business

Shares rise after Tim Cook says supply chain improving

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The supply chain guru has spoken.

Apple CEO Tim Cook on Thursday eased investors’ fear that supply chain problems rattling industries across the globe are starting to improve for the iPhone maker.

Cook told CNBC he expects supply constraints to improve compared to the December quarter. And boy did Apple investors like that. Apple shares were up as much as 5% in after-hours trading Thursday. (Shares were up more than 4% Friday morning.)

Despite the excitement around the rosy picture Cook painted, his comments on the supply chain improvements weren’t much different from some of his peers in the industry. From Intel to Tesla, executives have offered similar predictions about improvements to the supply chain throughout 2022. The difference: Shares of those companies fell after earnings, while Apple got a nice boost from investors.

Why?

Remember: Cook has built his entire reputation on being a supply chain genius. It’s a big part of the reason why he got the CEO job after Steve Jobs stepped down over a decade ago. (Cook is reportedly famous for negotiating parts down to fractions of a cent, for example.)

In fact, an analyst asked Cook on Thursday if he’s happy with the structure of Apple’s supply chain. Spoiler alert: Cook said he has Apple’s supply chain just the way he wants it, injecting even more optimism into the idea his company can navigate Covid’s disruptions until the supply chain woes get sorted out over the coming year.

Still, Cook didn’t say much we hadn’t heard yet.

Tesla CEO Elon Musk CEO said on his company’s earnings call Wednesday the company faces tough supply constraints, especially for computer chips the vehicles need. But Musk still projected solid growth for Tesla throughout the year, even if it won’t be able to launch new products.

Intel CEO Pat Gelsinger also had positive things to say about the supply chain recently. He said last week he expects “incremental improvements” to the supply chain throughout 2022, which is very similar to what Cook said Thursday.

But things may be harder on smaller technology companies that make hardware. Sonos, the smart speaker company, raised prices last year due to extra costs in the supply chain. Roku, the maker of streaming video devices for TVs, warned investors last year its supply chain costs were hurting its margins. Companies like Xerox and Western Digital also had dire warnings for their supply chains this month.

Those are signals that smaller companies could have a harder time managing supply chain headaches than giants like Apple. (Even with all those extra costs, Apple continues to deliver incredible margins.)

Although it’s still early in the earnings season, the narrative coming out of tech companies is clear so far: Titans like Apple are well-positioned to shield themselves from the worst of the supply chain problems, and comments from Cook and his peers bode well for the entire industry going into next year.

For now, though, the market has shown it has faith in Cook’s supply chain predictions above anyone else’s.

–CNBC’s Robert Hum contributed to this report.

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Business

Carnival, Nike, Match and more

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The Carnival Cruise Ship ‘Carnival Vista’ heads out to sea in the Miami harbor entrance known as Government Cut in Miami, Florida June 2, 2018.

RHONA WISE | AFP | Getty Images

Check out the companies making headlines in midday trading.

Carnival — Carnival shares rose 4% after the cruise line said voyages for the third quarter were cash flow positive and expects this to continue. Shares of Norwegian Cruise Line gained 3.2% and Royal Caribbean added 3%.

Match Group — Shares of Match Group rose 3.6% after the online dating platform announced on Thursday that it will sell shares of its common stock in a registered direct offering. The price per share and number of shares of common stock issued will be calculated by a volume-weighted average price during a five-day averaging period starting Friday, the company said.

Merck — Shares of the pharmaceutical giant rose 1.2% on Friday after Merck and AstraZeneca announced that treatment using the drug Lynparza showed positive results in a phase-three trial. The trial results suggest that the treatment slows the progression of prostate cancer and show a trend toward increased survival, the companies said.

Nike — The apparel stock fell more than 6% after Nike cut its full-year guidance for sales growth. The company said supply chain issues in Vietnam were slowing sales. Nike now projects mid-single-digit revenue growth for its 2022 fiscal year, down from prior guidance of low-double-digit growth.

Costco — Shares of the retailer jumped more than 2% following Costco’s fourth-quarter results. The company beat top- and bottom-line estimates during the quarter, earning $3.90 per share excluding items on $62.68 billion in revenue. Analysts surveyed by Refinitiv were expecting $3.57 per share on $61.3 billion in revenue.

Salesforce — Salesforce extended its Thursday gains, rising 2.2% after Piper Sandler upgraded the stock to overweight from neutral, saying it’s confident the company could see “a multi-year period of multiple and profit expansion.” The stock jumped on Thursday after the software company raised its full-year 2022 revenue guidance.

Coinbase — Shares of the cryptocurrency exchange slid about 1.6% even after Needham reiterated the stock as a buy. Cryptocurrencies plunged Friday morning on news that China is issuing yet another crypto crackdown. Coinbase derives 90% of its revenue from retail transactions, which is highly correlated with crypto asset prices, according to Needham, so its stock price tends to move in tandem with cryptocurrencies.

Cheesecake Factory, Dave & Buster’s — Cheesecake Factory and Dave & Buster’s added 4.4% and 5.2%, respectively, after Jefferies upgraded the restaurant stocks to buy from hold. “We are incrementally more positive on the full service category following delta/inflation sell-off and exuberant Consensus forecasts reigned in,” Jefferies said.

Roku — Roku shares fell 3.8% after Wells Fargo downgraded the video streaming platform to equal weight from overweight. Wells Fargo said rising competition makes expectations for Roku’s revenue growth likely too high.

— CNBC’s Jesse Pound, Pippa Stevens and Tanaya Macheel contributed reporting

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Business

Darden Restaurants, BlackBerry, Salesforce and others

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Check out the companies making headlines before the bell:

Darden Restaurants (DRI) — The Olive Garden parent reported earnings of $1.76 per share, higher than the $1.64-per-share forecast. The restaurant company also reported same-store sales that rose 47.5%, topping estimates. Shares rose 3% in premarket trading.

BlackBerry (BB) — The company reported better-than-expected quarterly earnings, with an adjusted gross margin of 65%. BlackBerry reported a loss of 6 cents per share, compared with the expected loss of 7 cents per share, according to Refinitiv. Revenue came in at $175 million, topping estimates of $164 million. Shares rose more than 7% premarket.

Salesforce (CRM) — The software company raised its full-year 2022 revenue guidance to between $26.25 billion and $26.35 billion. This is higher than the company’s previous estimate of revenue between $26.2 billion and $26.3 billion. Analysts expected $26.31 billion. Shares rose 2% in premarket trading.

KB Home (KBH) — Shares of the homebuilder rose in premarket trading despite missing top and bottom-line estimates. KB Home reported quarterly earnings of $1.60 on revenue of $1.47 billion. Wall Street expected earnings of $1.62 per share on revenue of $1.57 billion, according to Refinitiv.

Joby Aviation (JOBY) — Morgan Stanley initiated coverage of the air taxi start-up with an overweight rating, saying in a note to clients on Thursday that investors should take a look at a stock with major potential upside. Shares of Joby Aviation popped more than 5% in extended trading.

Biogen (BIIB) — The drugmaker’s stock rose in premarket trading after Needham initiated coverage of the stock with a buy rating, saying in a note to clients on Wednesday that the company’s controversial Alzheimer’s drug Aduhelm will be a big seller for the company long term.

Roku (ROKU) — Shares of the streaming company rose 2% in premarket trading after Guggenheim upgraded the stocks to buy from neutral. The Wall Street firm assigned Roku a 12-month price target of $395, implying a 22% one-year return.

SoFi (SOFI) — Shares of the fintech company rose in premarket trading after gaining 11% during the regular session on Wednesday. Sofi is the 6th most-mentioned stock on Reddit’s WallStreetBets, according to quiver quant.

Accenture (ACN) — Accenture shares rose in extended trading after reporting better-than-expected earnings. The company also increased its dividend and buyback authorization.

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Technology

Amazon’s Fire TV update with a brand new home screen is out now

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Amazon’s new Fire TV software

Amazon

Amazon on Thursday announced that its big new Fire TV software update is rolling out to devices now. It has a totally redesigned home screen and features like separate user profiles, so recommendations for what to watch are different for each person in your family.

The software was first announced in September and made its debut on the Fire TV Stick Lite and third-generation Fire TV Stick in December, but now everyone who owns Amazon’s Fire TV Cube (1st and 2nd Gen) and the 3rd-gen Fire TV, the Fire TV Stick 4K will be able to use the new features. Amazon says it’s updating smart TVs and the second-generation Fire TV Stick later this year.

The new features may help it compete more aggressively against Roku, which still has a 50% market share of global connected TV streaming hours with strong growth opportunities, according to an analyst note from Deutsche Bank in August.

Amazon’s new Fire TV software

Amazon

Up to six people can create different profiles with the new software. So, if you watch a lot of comedy shows, Amazon might recommend other comedies you’ll like. But if your spouse watches a lot of dramas, they’ll get recommendations for more of that type of content. Currently, with a single profile, Amazon just recommends more based on whatever has been watched, no matter who does the viewing.

The new Amazon Fire TV interface, which includes user profiles.

Amazon

The personalization also extends to the home screen, where you can pin specific apps to the top for quick access. Maybe you use Netflix, YouTube TV and Disney+ often, for example. You can put new smaller icons for those up top. Recommendations for the stuff you watch across services are displayed below that.

There’s also a new “Live” tab that shows you a channel-guide so it’s easier to jump right into live TV, if you pay for a streaming TV service like Sling or YouTube TV. Amazon told CNBC in September it designed this to make it a more familiar experience for people who are switching from cable to streaming.

The update also includes deeper integration with the Alexa voice assistant, so you can say “Alexa go to Live TV” and it’ll launch the live streaming TV service you pay for.

Amazon’s new Fire TV software

Amazon

Finally, there’s a new “Find” section that makes it easier to find something to watch. It shows movies, on-demand TV shows, live TV, your watch list and more. 

You can update your Fire TV by opening Settings and selecting “My Fire TV,” then “About” and choosing “Check for System Update.”

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Business

Cathie Wood’s Ark Innovation fund is set for a big rebound Tuesday as Tesla, other tech darlings pop

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Cathie Wood, CEO and founder of ARK Invest.

CNBC

Widely followed investor Cathie Wood is about to recoup some of her recent sharp losses as tech stocks rebounded Tuesday after a brutal correction triggered by surging bond yields.

Wood’s flagship active exchange-traded fund Ark Innovation ETF (ARKK) climbed 4.8% in premarket trading on Tuesday. Tesla, the fund’s biggest holding, is up 5.2% in early trading. Among other holdings, Zoom Video is up 4.2%, while Palantir gained 3.7%.

Another big holding Invitae is up 10% in premarket trading Tuesday. She told CNBC on Monday that the company, which operates in the molecular diagnostics space, is one of the firm’s most under-appreciated holdings.

The rebound in ‘ARKK’ came amid a 2% jump in Nasdaq 100 futures as bond yields stabilized. The Nasdaq Composite dropped 2.4% on Monday, falling into correction territory, or more than 10% from its recent high.

Wood, who focuses on innovative technology, has seen stocks fitting her strategy get hammered lately amid a big market rotation out of high-flying tech and into cyclical value stocks in the face of higher rates. The fund lost 5.8% on Monday alone, pushing its 2021 losses to 11%.

High-growth names are hit particularly hard as rising rates make their future profits less valuable today, making the stocks’ lofty valuations less justifiable. Many of her big stakes experienced steep losses over the past month: Tesla has shed 33%, Zoom Video has lost 27%, Palantir is down 41%.

The Ark Investment Management founder and CEO said Monday she is not concerned about the recent drop in her funds and she believes over time her disruptive strategy will pay off.

“Right now the market is broadening out and we think in an underlying sense the bull market is strengthening and that will play to our benefit over the longer term,” said Wood said on CNBC’s “Closing Bell” on Monday.

“We are getting great opportunities” in the sell-off to buy the pure play names in the funds, added Wood.

Wood gained a wide following on Wall Street after a banner 2020 that saw her flagship fund return nearly 150% as the pandemic accelerated innovation trends. The fund’s asset under management has ballooned to more than $17 billion.

— CNBC’s Maggie Fitzgerald contributed reporting.

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Business

Cathie Wood says the underlying bull market is strengthening and she’s finding great buying opportunities in the sell-off

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Cathy Wood

Crystal Mercedes | CNBC

Ark Investment Management founder and CEO Cathie Wood said she is not worried about the recent drop in her funds and that the bull market is simply broadening out to include more strategies like value.

The hot handed investor added that over time her disruptive strategy will pay off, and she’s capitalizing on the sell-off.

“Right now the market is broadening out and we think in an underlying sense the bull market is strengthening and that will play to our benefit over the longer term,” Wood said on CNBC’s “Closing Bell” on Monday.

Wood manages five ETFs focused around “disruptive innovation” that have raked in more than $15 billion of investor money this year alone. Ark’s flagship fund — Ark Innovation — returned nearly 150% in 2020 as the pandemic accelerated innovation trends and now has more than $17 billion in net assets. However, ARKK is down about 8% this year amid recent weakness in technology stocks, pressured by rising interest rates.

“We are getting great opportunities” in the sell-off to buy the pure play names in the funds, said Wood. “When we get opportunities like this to invest in pure plays instead of more mature plays…we will move back into pure plays.””

We are becoming more and more optimistic about our portfolios in this sell-off,” she added.

Wood took the recent tech weakness as an opportunity to buy the dip in some of her ETF’s top holdings. Wood has made big purchases of Tesla, Teladoc, Zoom Video and Palantir, according to the firm’s disclosures. Ark Innovation also scooped up shares of Square, Roku, Zillow and Shopify recently.

Wood said Ark Invest is struck that the market never priced in 0.5%, 1%, or 1.5% yield on the U.S. 10-year Treasury.

“We do think the speed of the increase in interest rates is scaring people. It became very comfortable in a low interest rate environment: nothing much changing, the Fed has our back and so forth,” said Wood.

Wood added that this type of pullback happened to Ark during the fourth quarter of 2016, when President Donald Trump was elected and promised to lower tax rates. During that period, Ark’s strategies went negative.

“The bull market was broadening out to incorporate value or more cyclical sectors and I thought that was going to be very good news for our strategies longer run. The worst thing that could have happened to us what another tech and telecom bubble where the market narrowed so that only a few groups won,” said Wood.

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