Stock futures fell Tuesday morning, reversing directions after the Bank of Japan announced to widen its yield target range.
Futures tied to the Dow Jones Industrial Average lost 236 points, or 0.72%. S&P 500 futures and Nasdaq 100 futures fell 0.86% and 1.05%, respectively.
During regular trading on Monday, the Dow shed more than 162 points, or about 0.5%. The S&P 500 fell 0.9%, and the Nasdaq Composite lost nearly 1.5%. Stocks are on track to end the month and the year in the red, and investors’ hopes for a Santa Claus rally are fading fast.
“There’s still no Santa sighting. Buckle up,” said Louis Navellier, founder of growth investing firm Navellier & Associates. “One would like to think all the bad news is in. There are no more Fed moves until February at the earliest. We’re not gapping down but certainly not clawing back last week’s losses.”
Fears that the Federal Reserve could tip the economy into a recession plagued investors. Last week, the central bank raised its benchmark interest rate by 50 basis points and policymakers indicated the terminal rate could rise as high as 5.1%.
Other central banks in hawkish mode put further pressure on traders, with the European Central Bank raising rates and its outlook for further hikes last week.
“Over 90% of central banks have hiked interest rates this year, making the (mostly) global coordinated effort unprecedented” said Lawrence Gillum, fixed income strategist at LPL Financial. “The good news? We think we’re close to the end of these rate hiking cycles, which could lessen the headwind we’ve seen on global financial markets this year.”
A handful of big companies will report their quarterly results this week ahead of the Christmas holiday. General Mills will report before the bell Tuesday. Nike and FedEx are set to report after the bell.
In economic data, housing starts data for November are due Tuesday morning. This week promises lots of insight into the housing industry. Sales data for existing homes and new homes will be released Wednesday and Friday, respectively.
November’s personal consumption expenditures report, a preferred measure of inflation for the Fed, is due on Friday.
Oil has been falling for four out of five last weeks
Keystone pipeline shut, Russia threatens to cut output
SINGAPORE/LONDON, Dec 12 (Reuters) – Oil prices fell on Monday, deepening a multi-week decline, as a weakening global economy offset supply woes stemming from the closure of a key pipeline supplying the United States and Russian threats of a production cut.
Brent crude futures were down 38 cents, or 0.4%, at $75.72 a barrel by 0900 GMT. U.S. West Texas Intermediate crude was at $70.76 a barrel, down 26 cents, or 0.3%.
Last week, Brent and WTI fell to their lowest since December 2021 amid concerns that a possible global recession will impact oil demand.
China, the world’s biggest crude oil importer, continued to loosen its strict zero-COVID policy, though streets in the capital Beijing remained quiet and many businesses stayed shut over the weekend.
On Monday, queues formed outside fever clinics in the cities of Beijing and Wuhan, where COVID first emerged three years ago.
“Oil markets will likely stay volatile in the near term amid uncertainty over the impact on Russian output from the EU’s ban, headlines on China’s COVID policy, and central bank movements in the U.S. and Europe,” UBS analysts said in a note.
UBS said it believed Brent should recover to above $100 per barrel in the coming months amid supply constraints and rising demand while OPEC+ would keep supply tight.
On Sunday, Canada’s TC Energy (TRP.TO) said it had not yet determined the cause of the Keystone oil pipeline leak last week in the United States. It gave no timeline as to when the pipeline would resume operation.
The 622,000 barrel-per-day Keystone line is a critical artery shipping heavy Canadian crude to U.S. refiners.
Russian President Vladimir Putin said on Friday that Russia could cut production and would refuse to sell oil to any country that imposes a “stupid” price cap on Russian exports.
Saudi Arabia’s energy minister also said on Sunday that price cap measures had had no clear results yet.
“The emergent EU embargo on Russian crude… may add moderate upside energy price risks in the next few months. But supply uncertainty should ease by spring 2023, after the embargo on oil products (on Feb.5) plays out,” Deutsche Bank said in a note.
Reporting by Florence Tan and Emily Chow in Singapore; Editing by Christian Schmollinger, Bradley Perrett and Simon Cameron-Moore
Our Standards: The Thomson Reuters Trust Principles.
The Dow Jones Industrial Average dropped Wednesday, as the major stock indexes threatened to fall again after consecutive stock market sell-offs Monday and Tuesday. Apple and Tesla stock traded sharply lower after the market open.
X
Academy Sports + Outdoors (ASO), MongoDB (MDB), discount retailer Ollie’s BargainOutlets (OLLI), Thor Industries (THO) and homebuilder Toll Brothers (TOL) all reported earnings ahead of Wednesday’s market open.
Academy shares rallied almost 5% after the company’s results, while MDB stock rocketed more than 22% after a big earnings beat. Ollie’s shares dived 9%, while Thor Industries rallied nearly 4%. And Toll Brothers climbed around 4% in early trade, after reporting better-than-expected results late Tuesday.
Solar stock Enphase Energy (ENPH) rose more than 1% after being called a top pick at Wells Fargo. Enphase shares fell below a 316.97 buy point Tuesday. SolarEdge Technologies (SEDG) jumped nearly 5% on a BofA Securities upgrade from neutral to buy. Mastercard (MA) moved slightly lower Wednesday morning after the company announced a $9 billion share buyback program.
Electric-vehicle giant Tesla (TSLA) traded down more than 3% Wednesday. Dow Jones tech leaders Apple (AAPL) and Microsoft (MSFT) were lower after today’s stock market open.
Celsius (CELH), Chubb (CB), IBD Leaderboard stock Dexcom (DXCM) and KLA (KLAC) — as well as Dow Jones names Caterpillar (CAT) and Chevron (CVX) and Home Depot (HD)— are among the top stocks to buy and watch.
Dexcom is an IBD Leaderboard stock. Caterpillar and Home Depot were featured in this week’s Stocks Near A Buy Zone column. Celsius was a recent IBD 50 Stocks To Watch pick and a New America stock. Caterpillar was Thursday’s Stock Of The Day.
IBD’s latest newsletter MarketDiem gives you actionable ideas for stocks, options and crypto right in your inbox.
Dow Jones Today: Oil Prices, Treasury Yields
After Wednesday’s opening bell, the Dow Jones Industrial Average fell 0.2%, while the S&P 500 dropped 0.25%. The tech-heavy Nasdaq composite traded down 0.7% in morning action.
Among exchange-traded funds, the Nasdaq 100 tracker Invesco QQQ Trust (QQQ) declined 0.3% and the SPDR S&P 500 ETF (SPY) lost 0.2% early Wednesday.
The 10-year Treasury yield ticked higher to 3.55% Wednesday morning, looking to rebound from Tuesday’s losses. Meanwhile, U.S. oil prices bounced slightly after three straight heavy losses, giving back nearly all of the prior week’s advance. West Texas Intermediate futures traded up 1% to above $74 a barrel after briefly dipping below $73 a barrel early Wednesday.
Stock Market Rally
On Tuesday, the stock market posted a second consecutive session of heavy losses, as the tech-heavy Nasdaq composite dived another 2%. The Dow Jones Industrial Average sold off 1%, while the S&P 500 tumbled 1.4%.
Tuesday’s The Big Picture commented, “The blue chip index fell 1.4% Tuesday, erasing all gains from Wednesday’s 3.1% burst after Fed Chair Jerome Powell’s speech. This week’s losses dropped the index back below the 4,000 level and the 200-day moving average — two important guideposts for the stock market.”
Now is an important time to read IBD’s The Big Picture column amid the ongoing stock market volatility.
Five Dow Jones Stocks To Buy And Watch Now
Dow Jones Stocks To Buy And Watch: Caterpillar, Home Depot, Chevron
Dow Jones member Caterpillar continues to drift further away from a cup base’s 238 buy point, according to IBD MarketSmith pattern recognition, in the wake of Tuesday’s 1.8% loss. CAT stock was down 0.8% Wednesday.
CAT stock shows a solid 94 out of a perfect 99 IBD Composite Rating, per the IBD Stock Checkup.
Energy giant Chevron slipped 2.6% Tuesday, ending further below a 182.50 buy point in a consolidation base. CVX shares rose 0.5% Wednesday morning, as oil prices paused amid this week’s drop.
Home improvement retailer Home Depot ended Tuesday about 5% below a cup base’s 333.08 buy point. HD stock traded 0.3% higher Wednesday.
4 Top Growth Stocks To Watch In The Current Stock Market Rally
Top Stocks To Buy And Watch: Celsius, Chubb, Dexcom, KLA
Energy-drink maker Celsius was a lone bright spot during Tuesday’s stock market sell-off, climbing 0.5%. Shares are about 3% below a cup base’s 118.29 buy point. The stock was up 0.5% Wednesday.
Chubb moved further above a cup-with-handle’s 216.10 buy point Tuesday after the session’s 1% rise. The 5% buy area tops out at 226.91. The insurance giant traded unchanged Wednesday morning.
IBD Leaderboard stock Dexcom is approaching an alternate entry at 123.46 and is about 5% away from that buy point amid Tuesday’s 0.2% rise. Dexcom stock was up 0.9% early Wednesday.
Chip leader KLA finished Tuesday just below a 392.60 buy point, according to IBD MarketSmith chart analysis. A key technical strength is the stock’s strong RS line. It hit another new high during Tuesday’s stock market dive. KLA stock was down 0.1% Wednesday.
Join IBD experts as they analyze leading stocks in the current stock market rally on IBD Live
Tesla Stock
Tesla stock skidded another 1.4% Tuesday, adding to Monday’s plunge. Despite the recent losses, the stock is holding above its recent lows, set in mid-November. Shares are about 55% off their 52-week high. Meanwhile, the stock appears to be seeing some resistance around the 200 price level, which is a key area to watch if the stock is able to mount another rally attempt.
Shares slid another 3.1% Wednesday morning.
Dow Jones Leaders: Apple, Microsoft
Among Dow Jones stocks, Apple shares sold off 2.5% Tuesday, giving up support around their 50-day line. The stock is more than 20% off its 52-week high. Apple stock traded down 1.3% Wednesday.
Microsoft faltered 2% Tuesday, as shares continue to tread water above the 50-day line. The software giant remains about 29% off its 52-week high. Microsoft shares ceded 0.7% early Wednesday.
Be sure to follow Scott Lehtonen on Twitter at @IBD_SLehtonen for more on growth stocks and the Dow Jones Industrial Average.
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NEW YORK/LONDON, Dec 6 (Reuters) – Global stocks headed for a third straight day of losses on Tuesday and the dollar held steady as the market assesses how long the Federal Reserve keeps interest rates higher and the likelihood that policy provokes a recession.
U.S. stocks followed European shares lower, with all sectors in the red, with the exception of the defensive utilities sector (.SPLRCU), which seesawed between gains and losses.
MSCI’s U.S.-centric all-country world index (.MIWD00000PUS) fell 1.06%, on track for a third session in a row of declines after hitting a three-month high last week.
Treasury yields fell, but more at the long end of maturities than the short end, which deepened the inverted yield curve, a market indicator of a looming recession. The gap between yields on two- and 10-year notes was -82.6 basis points.
The market needs to recognize that a recession most likely is a reality, not just a hypothetical, and that valuations need to go lower, said Jason Pride, chief investment officer of private wealth at Glenmede in Philadelphia.
“During recessions, markets on average price at a discount to fair value, which they have not yet done,” Pride said. “There is not a single instance in which a market has bottomed before the recession started.”
Data released on Monday showing U.S. services industry activity unexpectedly picked up in November and last week’s robust U.S. payrolls report have raised doubts about how soon the Fed would ease monetary policy from being restrictive.
Futures show the market expects the Fed’s peak terminal rate to rise to 4.9951% next May, but by December 2023 to have declined to 4.565% on speculation the Fed will cut rates to help the economy rebound from an expected slowdown in growth.
Wall Street was dragged lower by banking shares and Meta Platforms Inc (META.O), after European Union regulators ruled its Facebook and Instagram units should not require users to agree to personalized ads based on their digital activity.
The Dow Jones Industrial Average (.DJI) fell 0.79%, the S&P 500 (.SPX) slid 1.19% and the Nasdaq Composite (.IXIC) dropped 1.57%. In Europe, the STOXX 600 index (.STOXX) lost 0.56%.
The dollar was mostly unchanged against the euro and yen after strong gains on Monday, with investors awaiting next week’s expected 50 basis points rate hike by the Fed.
The euro rose 0.24% to $1.0516, while the yen strengthened 0.22% at 136.44 per dollar.
Euro zone government bond yields fell after two European Central Bank officials signaled inflation and rates may be close to peaking in the run-up to a raft of major central bank decisions.
The ECB, the Bank of England and the Fed all meet next week to discuss monetary policy. The Reserve Bank of Australia offered a glimpse of decisions to come after raising interest rates to decade highs and sticking with a prediction of more hikes ahead.
All eyes will be on the release next Tuesday of November’s U.S. consumer price index data, which will provide insight into the pace of inflation.
The yield on U.S. 10-year notes fell 4.2 basis points to 3.557%.
Oil prices fell in a volatile market as the dollar stayed strong and economic uncertainty offset the bullish impact of a price cap placed on Russian oil and the prospects of a demand boost in China.
On Monday, crude futures recorded their biggest daily drop in two weeks.
U.S. crude fell 2.24% to $75.21 a barrel and Brent was at $80.70, down 2.39% on the day.
Spot gold added 0.3% to $1,774.09 an ounce.
Reuters Graphics
Reporting by Herbert Lash, additional reporting by Anshuman Daga in Singapore and Alun John in London; Editing by Simon Cameron-Moore, Angus MacSwan and Jonathan Oatis
Our Standards: The Thomson Reuters Trust Principles.
Dow Jones futures rose slightly overnight, along with S&P 500 futures and Nasdaq futures, with Fed chief Jerome Powell and the start of key economic data on tap.
X
The stock market rally closed mixed Tuesday with Apple (AAPL) once again a drag on the major indexes, along with Amazon.com (AMZN) and Tesla (TSLA). Meanwhile, Apple’s fellow Dow giants Boeing (BA), Chevron (CVX) and Goldman Sachs (GS) are near buy points.
Hewlett Packard Enterprise (HPE) and NetApp (NTAP) headlined earnings reports late Tuesday, with CrowdStrike (CRWD) and Workday (WDAY) kicking off big software reports this week.
HPE stock rose modestly in overnight trade after HPE earnings topped views. HP Enterprise stock, above its 200-day line, is working on a long cup base. NTAP stock plunged in extended action on weak NetApp revenue and guidance. WDAY stock jumped overnight on a Q3 beat and a $500 million buyback. CRWD stock dived despite beating Q3 views as subscriptions came in light and the cybersecurity firm implied a Q4 revenue miss.
On Wednesday morning, ADP will release its November employment estimate of private payrolls. The Labor Department will release job openings in the October JOLTS report. Job openings are watched closely by Fed chief Jerome Powell, who will speak Wednesday afternoon.
All that foreshadows the Fed’s favorite inflation gauge, the PCE price index, on Thursday morning, along with the November jobs report on Friday, as well as several other notable economic releases.
Investors should be cautious about opening new positions until there’s more clarity on the economy and Fed rate hike outlook. If anything they may want to be lightening positions in the very short term.
CVX stock is on IBD Leaderboard. BA stock is on SwingTrader.
Fed Chief Powell Speech
Fed Chief Jerome Powell will speak at the Brookings Institution at 1:30 p.m. ET on Wednesday. He’s expected to reinforce expectations that the central bank will shift to a 50-basis-point rate hike on Dec. 14. Markets see a 67.5% chance of a half-point move, but still a decent chance of a fifth straight Fed rate hike of 75 basis points. But he’ll also likely indicate that rate hikes will continue into 2023.
Whatever Powell says will quickly be overtaken by economic data. If inflation starts to show significant cooling and labor markets ease, even the most-hawkish Fed policymakers will favor slowing the pace of rate hikes and ending earlier than markets may expect. Hot price and employment data will stiffen the resolve of many Fed doves. Of course, the economic data in the coming days may show mixed results, or marginal improvement.
Dow Jones Futures Today
Dow Jones futures climbed slightly vs. fair value, along with S&P 500 futures. Nasdaq 100 futures rose a fraction.
The 10-year Treasury yield fell 1 basis point to 3.74%. Crude oil futures climbed slightly.
China’s official manufacturing index fell 1.2 points to 48 in November, falling further below the neutral 50 level and views for 49. The services index sank to 46.7 vs. forecasts for 48. China’s Covid lockdowns have taken a serious toll on the economy.
Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.
Join IBD experts as they analyze actionable stocks in the stock market rally on IBD Live
Stock Market Rally
After Monday’s sharp selling, the stock market rally closed mixed Tuesday.
The Dow Jones Industrial Average closed just above break-even in Tuesday’s stock market trading. The S&P 500 index fell about 0.2%. The Nasdaq composite declined 0.6%. The small-cap Russell 2000 rose 0.3%.
Apple stock fell 2.1%, its third straight significant decline, as China Covid cases, lockdowns and protests weigh on the tech giant. On Tuesday, shares fell 2.6%, below their 50-day moving average. Above the 50-day line looms 200-day resistance for AAPL stock. Apple has seen unrest at a massive Foxconn iPhone assembly factory in China.
Amazon stock declined 1.6% and Tesla stock fell 1.1%, both retreating from near their 21-day lines. Both are relatively close to bear market lows.
U.S. crude oil prices climbed 2.4% to $79.62 a barrel. Intraday Monday, crude oil futures hit their lowest levels of the year.
The 10-year Treasury yield rose 5 basis points to 3.75%.
ETFs
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) dipped 0.2%, while the Innovator IBD Breakout Opportunities ETF (BOUT) rose 0.5%. The iShares Expanded Tech-Software Sector ETF (IGV) sank 0.8%. The VanEck Vectors Semiconductor ETF (SMH) fell 0.3%.
SPDR S&P Metals & Mining ETF (XME) gained 2.3% and the Global X U.S. Infrastructure Development ETF (PAVE) 0.1%. U.S. Global Jets ETF (JETS) ascended 1.8%. The Financial Select SPDR ETF (XLF) climbed 0.6%. The Health Care Select Sector SPDR Fund (XLV) fell 0.25%.
Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) edged down 0.5% and ARK Genomics ETF (ARKG) dipped 0.4%. Tesla stock is a major holding across Ark Invest’s ETFs.
Five Best Chinese Stocks To Watch Now
Dow Stocks Near Buy Points
Boeing stock rose 2% to 175.32 on Tuesday, back above a 173.95 cup-base buy point, according to MarketSmith analysis. Shares have been trading tightly in light volume near the buy point after a big run-up on optimism for the aerospace giant. Analysts expect Boeing to return to profitability in 2023 after four years of losses. The recent pause in BA stock has the 21-day line catching up.
Chevron stock climbed 1.45% to 180.94, slightly below the 182.50 buy point and just above the 21-day line. CVX stock has been trading around that official buy point all month. An early entry near 167 on Oct. 19 was probably the safer bet initially. But with Chevron stock right at the 21-day and no longer extended from the 50-day, it’s looking more interesting.
GS stock edged up 0.35% on Tuesday to 383.71. The investment bank has a 389.68 buy point from a 35%-deep cup-with-handle base going back to November 2021. Investors also could view the recent pause as a shelf just above the buy range from a bottoming base that Goldman stock cleared in early November. The 21-day moving average is close to catching up, while the 50-day line is starting to gain ground. The relative strength line is at a multiyear high reflecting GS stock’s outperformance vs. the S&P 500.
Market Rally Analysis
The stock market rally is pulling back with key technical tests and economic data on tap, along with uncertainty over China’s Covid policies.
The S&P 500 index is extending a pullback from just below the 200-day moving average, but still above its 21-day line. The Russell 2000, which dropped back below the 200-day and 21-day lines on Monday, nudged back above the 21-day.
The laggard Nasdaq fell below the 21-day line and is closing in on its 50-day line.
Apple stock, Tesla and other megacaps have been weighing on the Nasdaq and the S&P 500 index.
The Invesco S&P 500 Equal Weight ETF (RSP) is still above its 200-day moving average.
But don’t exaggerate Apple’s impact. Many leading stocks are testing or falling below buy points or round-tripping decent gains.
The silver lining is that the stock market isn’t rallying into Fed speeches and important economic data. That could mean that markets could bounce if there are no negative surprises, with the possibility of bigger gains if upcoming headlines are positive.
But the market rally is going to do what it’s going to do.
Time The Market With IBD’s ETF Market Strategy
What To Do Now
With the markets pulling back there aren’t a whole lot of stocks flashing buy signals. Investors probably should wait for Powell’s speech and the economic data to roll in before making significant new buys. Investors may want to take at least some partial profits in winners, especially if the winning stocks are retreating back to buy points.
If the market rally revs higher soon, a large of number of stocks will look actionable. But a lot of interesting stocks today will start looking damaged if the major indexes fall significantly from here.
So investors need to stay engaged and flexible. Keep your watchlists up to date but have exit strategies for your holdings as well.
Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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For much of the past year, China’s economy has been reeling under Xi Jinping’s dual campaigns to rein in soaring property prices and to stamp out any traces of Covid-19 within the country’s borders.
Now, as he moves to loosen pandemic restrictions, China’s leader, Mr. Xi, is signaling a reversal of his real estate crackdown, too, a tacit acknowledgment of the economic pain and public frustration that the two policies have engendered.
China’s central bank and top banking regulator issued a wide-ranging series of measures aimed at bolstering housing demand and supply, according to a notice circulated on Friday to the country’s financial institutions and officials involved in policy-making. The authenticity of the document was confirmed by people close to the central bank.
The new policies, which were signed off on by Mr. Xi, according to the officials involved in policy-making, unwind some of the previous restrictions aimed at curbing property developer debt and give lenders permission to extend loans to home builders in financial trouble.
“These property measures, on top of announcements of Covid loosening, are a clear indication that Beijing’s efforts to support growth are intensifying,” said
Michael Hirson,
head of China Research at 22V Research, a New York-based firm focused on investment strategy.
While local governments across China have taken more modest measures to ease some of the pressure facing real-estate companies, the new bundle of 16 measures represents the single biggest step yet to rescue a sector that has for decades been a key pillar of growth for the world’s second-largest economy.
The property measures had led to falling home sales, hurting overall growth in the real-estate sector.
Photo:
Cfoto/Zuma Press
Chinese home prices for decades outpaced the rate of broader economic growth.
Photo:
Anthony Kwan/Bloomberg News
The new measures are “massive in scale” and amount to “targeted credit easing for the property industry,” said
Dan Wang,
chief economist at
Hang Seng
Bank China, who drew a contrast with previous rounds of incremental support measures.
As developers face looming loan repayment deadlines, regulators are eager to avoid any systemic risks in the financial sector triggered by a wave of potential defaults, Ms. Wang said. Even so, she added, “demand for home purchase remains weak,” with any reversal in housing-market sentiment likely to depend on the longer-term outlook for the economy.
The easing of real estate and Covid restrictions comes just weeks after Mr. Xi secured another five years in power at a closely watched Communist Party congress. With Mr. Xi having consolidated political control, he now faces the prospect of a third term in office facing the country’s worst prolonged economic slowdown in decades.
Much of the economic weakness is a direct product of his campaign-style clampdowns to crush Covid and, starting last year, tame a four-decade-old property market boom that officials have warned may be a bubble.
The property measures led to increased defaults by property developers, rising bad debts for banks, falling home sales and investment—all of which have weighed heavily on overall growth in recent quarters.
China’s gross domestic product expanded just 3.0% in the first nine months of 2022, well below the government’s official full-year target of about 5.5%, set in March.
China Evergrande Group, long the country’s largest developer, is now its biggest debtor.
Photo:
ALY SONG/REUTERS
Chinese home prices have for decades outpaced the rate of broader economic growth, driving more credit into real estate speculation and further pushing up property values. Authorities in recent years have repeatedly tried to break the vicious cycle with various tightening measures, only to loosen them whenever growth appears threatened.
By 2019, the total value of Chinese homes and developers’ inventory was $52 trillion, according to
Goldman Sachs Group Inc.,
twice the size of the U.S. residential market.
As Beijing tightened the screws on developers last year—and then reaffirmed their commitment to the tougher rules—several private developers began to teeter on the brink of crisis. Among the most prominent was
China Evergrande Group,
long the country’s largest developer and now its biggest debtor, though the concerns have spread to other large private players.
More than 30 developers have defaulted on their dollar-denominated bonds. International investors have dumped their bonds, driving price levels to new lows and leaving even the strongest private developers struggling to sell new debt.
Shares of Chinese property developers surged on Monday following the news.
Country Garden Holdings Co.
, one of the country’s largest real-estate companies by contracted sales, jumped 40% in early trading in Hong Kong, taking its gains this month to more than 200%. A Hang Seng subindex of property stocks rose 7%.
Prices of dollar bonds of developers that haven’t defaulted on their debt—including
Agile Group Holdings Ltd.
and
Longfor Group Holdings Ltd.
—also rose sharply from deeply distressed levels, as investors placed bets on their potential recovery.
As the broader economic pain mounted this year, regulators and regional governments moved only modestly to try to avert a full-blown housing crisis, introducing limited measures such as tax rebates, cash rewards and lower down payments, as well as providing banks with window guidance to increase property lending. But those piecemeal moves have so far failed to reverse sentiment and lift the sector.
In October, sales at the country’s 100 largest property developers fell to the equivalent of $76.7 billion, down 28.4% from a year earlier and the 16th straight month of year-over-year declines, according to China Real Estate Information Corp., an industry data provider.
As foreign investors and home buyers lose confidence in China’s property market, developers are offering cars and pigs to boost sales. WSJ examines ads and policies to see how the country’s real estate turmoil could ripple out into the global economy. Photo composite: Sharon Shi
Now, with a new leadership team in place after the party congress—one packed with party members loyal to Mr. Xi—the top leader is moving toward a more concerted approach to shoring up the economy, part of a broader effort to brace for greater competition with the U.S.
“It seems that room for policy easing has widened post-party congress,” said
Larry Hu,
a Hong Kong-based economist at Macquarie. “After the impact of previous efforts turned out to be muted, policy makers are giving a big push now to get credit to flow to the property sector.”
Credit has been a particular headache for developers, since many had relied on heavy borrowing to build new projects and stay afloat. In the first nine months of this year, funds raised by China’s property developers dropped by 24.5%, according to data from the National Bureau of Statistics.
The new notice, jointly issued by the People’s Bank of China and the China Banking and Insurance Regulatory Commission, doesn’t represent a total reversal of Mr. Xi’s earlier efforts to tamp down exuberance in the sector.
“‘Policy makers are giving a big push now to get credit to flow to the property sector.’”
— Larry Hu, a Hong Kong-based economist at Macquarie
The notice, which has been billed as a package aimed at ensuring the sector’s “stable and healthy development,” still underlines the need to curb speculative real estate buying, repeating Mr. Xi’s mantra that “housing is for living in, not for speculating on.”
Under the new measures, developers’ outstanding bank loans and some types of nonbank credit due within the next six months can be extended for a year. Repayments on developers’ bonds can also be extended.
In addition, banks are encouraged to offer financing to unfinished housing projects and negotiate with home buyers on extending mortgage repayment, an apparent effort to help defuse growing resentment among those who have boycotted mortgage payments since the summer.
Banks are also encouraged to offer financing to support acquisitions of real-estate projects by financially sounder developers from weaker ones.
The new policies require financial institutions to treat state-owned developers and private developers equally, a measure that appears aimed at addressing banks’ reluctance to lend to private developers, according to
Yan Yuejin,
research director at Shanghai-based E-House China R&D Institute, a research firm.
“Regulators are making all-round efforts to target a soft landing for the property sector,” said
Bruce Pang,
chief China economist at Jones Lang LaSalle. Still, with the measures’ heavy skew toward improving liquidity for cash-strapped developers, he said, “these measures likely aren’t enough to avert the slowdown in the physical market.”
—Rebecca Feng contributed to this article.
Write to Lingling Wei at Lingling.Wei@wsj.com, Cao Li at li.cao@wsj.com and Stella Yifan Xie at stella.xie@wsj.com
Emily Ratajkowski is flaunting her post-breakup glow and is ready to mingle! The model, 31, just shared a comical and sultry TikTok video over the weekend in which she is seen dancing on the street and letting viewers know that her DMs are filled with messages from potential suitors.
READ MORE: Emily Ratajowski Sparkles In A Completely Sheer Fishnet Dress, ‘Her Wildest Look’ Since Filing For Divorce
@emrata♬ kodak catching paper planes by vatolocz – vatolocz !
“Stepfather Applications” And Ratajkowski’s Cheeky Dance
In the clip, Ratajkowski dances while donning a white, long turtleneck dress by Eterne with black heeled boots and a black purse slung over her shoulder. The My Body author exhaled smoke while dancing and wore her long, brunette tresses in an elegant updo. The mom of son 19-month-old Sylvester wrote in her TikTok, “Me coming out of a sad girl day to check in on the stepfather applications in my DMs,” while a remix of “Paper Planes” by M.I.A. played in the background.
Naturally, fans in the comment section showed their love for Ratajkowski’s “empowered mindset” as one wrote, while others joked that they’d like to “shoot their shot” to impress her and “take her out,” as well. Other users raved about her “cute dress” and “great style” and we couldn’t agree more.
@emrata♬ original sound – Jayde
That same night, Ratajkowski posted another video in the same dress while doing her makeup, and giving off more confident vibes. The My Body author set up her phone in front of a mirror, and looked into it while applying lip liner.
The stunner then mouthed a classic quote from Cher to tell us how she really feels about her success and love for being single, as she lip synced the following words: “I love men, I think men are the coolest, but you don’t really need them to live. My mom said to me, ‘you know sweetheart, one day you should settle down and marry a rich man.’ I said, ‘Mom, I am a rich man.’”
To complete her gorg makeup look for the night out, Ratajkowski rocked black eyeliner, mascara, and rosy blush along her high cheekbones. Fans also got a closer look at her updo hairstyle, which included framing tendrils falling at the sides of her face, and she also accessorized her look with silver hoop earrings.
Details of Ratajkowski’s Divorce & Recent Dating History
While Ratajkowski seems to be living it up and having fun with the single life now, many insiders and publications reported that the mom of one’s recent divorce from producer Sebastian Bear-McClard was tumultuous, as he was rumored to have been unfaithful during their four years of marriage. Word first spread online that the couple had called it quits back in July, and their divorce was officially announced in September when she filed for it.
Since then, many sources also linked Ratajkowski to Brad Pitt for a brief fling period in August, and she was also photographed by paparazzi making out with Orazio Rispo, a DJ and son of a luxury realtor while on a date in New York City last month.
Despite Ratajkowski’s jokes about dating and recent TikToks, she made clear in a recent Harper’s Bazaar interview that her son is always her first priority, and that remaining single and focusing on him is her current plan. “I’ve never had such clear priorities in my life,” she told the outlet when sitting down for their November issue. “Number one is Sly, and that’s that. It’s made me re-evaluate what’s important to me, like, what do I want to teach my son?”
She added that she’s also realized that she’s “never been single before,”and opened up about the complicated emotions that have come to the forefront as a result of the painful end to her marriage. She shared that she’s letting herself feel “all the emotions,” Ratajkowski and embracing what she can learn from them. “I feel anger, sadness. I feel excitement. I feel joy. I feel levity,” she said. “Every day is different. The only good thing I know is that I’m feeling all those things, which is nice because it makes me believe that I’ll be OK.”
Yen volatile as Tokyo suspected of intervention for 2nd day
FX officials remains tight lipped on intervention
Policymakers keep up warning vs excess FX volatility
BOJ Kuroda repeats need to keep ultra-low rates
TOKYO, Oct 24 (Reuters) – Japanese policymakers on Monday continued efforts to tame sharp yen falls, including through two straight market days of suspected intervention, but ultimately failed to prop up the currency against persistent dollar strength.
The yen’s sell-off is hurting the world’s third-largest economy by driving already surging import bills and challenges the Bank of Japan’s commitment to ultra-low rates in the face of rapid global monetary tightening to combat rampant inflation.
The Japanese currency jumped 4 yen to 145.28 per dollar in early Asia trade on Monday, suggesting authorities had stepped in for a second straight day after a similar move by Tokyo on Friday.
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“We won’t comment,” Masato Kanda, vice finance minister for international affairs, told reporters at the Ministry of Finance (MOF), when asked if they intervened again on Monday.
“We are monitoring the market 24/7 while taking appropriate responses. We’ll continue to do so from now on as well,” said Kanda, who oversees Japan’s exchange-rate policy.
However, the yen failed to cling to early gains and briefly hit a low of 149.70 per dollar, as markets continued to focus on the widening divergence between the Bank of Japan’s ultra-easy monetary policy and steady rate hike plans by the U.S. Federal Reserve. It last stood around 148.80.
“In the past crises involving British pound and Italy’s lira, authorities have ended up failing to defend their currencies. Likewise, Japan’s stealth intervention only has limited effects,” said Daisaku Ueno, chief FX strategist at Mitsubishi UFJ Morgan Stanley Securities.
“Strength in the dollar is the biggest factor behind the weak yen. If the United States shows signs of its rate hikes peaking out and even cutting interest rates, the yen would stop weakening even without intervention.”
BOJ’s BIND
The yen’s plight puts the BOJ under the spotlight as it meets for a two-day rate meeting ending on Friday, when it is widely expected to maintain ultra-loose monetary policy.
With inflation relatively modest and the economy unable to move into a faster gear, the central bank is wary of raising rates and risk triggering a recession.
“It’s extremely undesirable” that Japan’s real wages, adjusted for inflation continue to fall, BOJ Governor Haruhiko Kuroda told parliament on Monday.
“It’s desirable for inflation to stably achieve our 2% target accompanied by wage rises,” Kuroda said, stressing the need to keep supporting the economy with ultra-low rates.
The Fed, which meets the following week, is widely expected to hike rates again as it focuses on fighting red-hot inflation.
The widening U.S.-Japanese rate differential is likely to keep downward pressure on the yen, which has fallen more than 20% against the dollar this year.
Japanese authorities confirmed that they stepped into the market when it intervened on Sept. 22, spending 2.8 trillion yen ($18.80 billion) to prop up the yen for the first time since 1998.
Since then, authorities have remained silent on whether they made any further attempts to support the currency including on Friday, when Tokyo likely conducted stealth intervention.
At $1.33 trillion, Japan’s foreign reserves provide it with enough fire power to intervene many more times, but traders doubt that Tokyo will be able to reverse the yen’s downtrend on its own.
Finance Minister Shunichi Suzuki repeated that excessive currency moves were undesirable.
“We absolutely cannot tolerate excessive moves in the foreign exchange market based on speculation,” he told reporters at the finance ministry. “We will respond appropriately to excess volatility,” he said, a view echoed by Prime Minister Fumio Kishida in parliament later on Monday.
($1 = 148.9000 yen)
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Reporting by Tetsushi Kajimoto and Yoshifumi Takemoto; Additional reporting by Chang-Ran Kim, Sakura Murakami and Leika Kihara; Editing by Shri Navaratnam and Sam Holmes
Our Standards: The Thomson Reuters Trust Principles.
Oct 14 (Reuters) – Profits slid at Wall Street’s biggest banks in the third quarter as they braced for a weaker economy while investment banking was hit hard, but investors saw a silver lining with some banks beating estimates.
JPMorgan Chase & Co (JPM.N), Morgan Stanley (MS.N), Citigroup Inc (C.N) and Wells Fargo & Co’s (WFC.N) showed a slide in net income after turbulent markets choked off investment banking activity and lenders set aside more rainy-day funds to cover losses from borrowers who fall behind on payments.
“We’re in an environment where it’s kind of odd,” said JPMorgan Chief Executive Officer Jamie Dimon, who said that while the bank was “hoping for the best, we always remain vigilant and are prepared for bad outcomes.”
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Central banks globally have been battling surging inflation which is expected to cause an economic slowdown. The Federal Reserve has raised the benchmark interest rate from near zero in March to the current range of 3.00% to 3.25% and signaled more increases.
Rising rates tend to buoy bank profits, but the broader risk of an economic downturn sparked by high inflation, supply-chain bottlenecks and the war in Ukraine could weigh on future earnings.
On a conference call, Dimon said U.S. consumers remained strong and he wasn’t predicting a recession but “there are a lot of headwinds out there.”
Money that people have in their checking accounts will “deplete probably by sometime midyear next year” while they are contending with headwinds like inflation, higher rates and higher mortgage rates, he cautioned.
Banks set aside more money in preparation for a hit from a potential economic slowdown. JPMorgan set aside $808 million in reserves, Citi added $370 million to reserves and Wells had a $385 million increase in the allowance for credit losses.
Still, shares of JPMorgan and Wells Fargo gained strongly, up 2.5% and 3.7% respectively while Citi gained 1.2% as the profit falls were not as deep as feared.
JPM also said it hopes to be able to resume stock buybacks early next year, although other banks were less bullish with Citi saying buybacks continue to be on hold and Wells Fargo saying it continues to be prudent about buybacks.
“JPMorgan delivered a solid set of results, from top to bottom,” Susan Roth Katzke, an analyst at Credit Suisse, wrote in a note. “At least equally as important is the evidence of preparedness to manage through whatever turn the macro takes; expect the latter to be in focus.”
JPMorgan reported a 17% drop in third-quarter profit to $9.74 billion, although that was less than had been feared. Wells Fargo posted a 31% decline to $3.53 billion but it also beat expectations. And Citi reported a 25% drop to $3.5 billion which also beat expectations.
“Most of these banks are making more spread income now than ever because of the change in interest rates,” said Chris Marinac, Director of Research at Janney Montgomery Scott. “And this was the first quarter where you had the full effect of the Fed, because the Fed increased a little bit in May.”
Signage is seen at the JPMorgan Chase & Co. New York Head Quarters in Manhattan, New York City, U.S., June 30, 2022. REUTERS/Andrew Kelly
JPMorgan said net interest income rose 34% to a record $17.6 billion, up 34%.
“Generally banks obviously seem to be benefiting from a higher rate environment, and we’ve obviously seen banks able to earn, in terms of revenues, on higher interest rates,” said Eric Theoret, global macro strategist at Manulife Investment Management.
Marinac said investors would want to see banks build reserves at this point in the economic cycle.
“They’re bracing for a hard landing, because they’re building the reserves,” said Marinac. “But that’s not necessarily a bad thing.”
While a number of the banks managed to beat expectations, Morgan Stanley reported a 30% slump in profit to $2.49 billion which missed estimates. Its shares fell 5%.
Morgan Stanley’s earnings showed that investment banking revenue more than halved to $1.3 billion with declines across the bank’s advisory, equity and fixed income segments.
Reuters Graphics
James Gorman, Chairman and Chief Executive Officer of Morgan Stanley, said his firm’s performance was “resilient and balanced in an uncertain and difficult environment.”
Corporations’ interest in mergers, acquisitions and initial public offerings dried up, particularly hitting banks strong in investment banking. Global M&A lost ground in the third quarter with volumes in the United States plummeting nearly 63% as the rising cost of debt forced companies to postpone big buyouts.
While banks were optimistic they could weather the likely tougher economy ahead, some observers were concerned about the long term outlook for growth.
“Against the backdrop of economic headwinds, the solid earnings reports from this morning will quickly pass into the rearview mirror,” said Peter Torrente, KPMG US National Sector Leader for Banking and Capital Markets. “Worries of inflation, which shows little sign of slowing down, are casting a long shadow on future outlook.”
Torrente said while banks’ revenues reflect the benefit of rising interest rates and persisting loan demand, the buildup in loan loss provisions also reflects the uncertainty in the road ahead.
“Next quarter and beyond, credit risk, loan growth, and deposit balances will be key areas to monitor in the banking industry,” Torrente said.
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Reporting by Saeed Azhar and Lananh Nguyen and Davide Barbuscia in New York, Noor Zainab Hussain, Niket Nishant, Mehnaz Yasmin, Sweta Singh and Manya Saini in Bengaluru
Writing by Megan Davies
Editing by Lananh Nguyen, Mark Potter, David Gregorio and Chizu Nomiyama
Our Standards: The Thomson Reuters Trust Principles.
Intel is planning to cut costs by eliminating thousands of jobs this fall, Bloomberg reported Tuesday, forecasting that the chipmaker’s sales and marketing organization could lose as many as 20% of its staff.
The reported cutbacks come amid a steep decline in revenue, dragged down by plunging demand for PCs. In July, Intel cut its sales forecast for 2022 to $67 billion, down from $79 billion last year. And early warnings from other tech companies suggest the PC market continued to decline through the summer.
Intel declined comment Tuesday on Bloomberg’s report. The news organization said Intel might announce the cutbacks when it reports quarterly financial results Oct. 27, citing unspecified people “with knowledge of the situation.”
Intel has about 114,000 employees across the business, approximately a fifth of them in Oregon. The company is the state’s largest corporate employer, an anchor for the regional economy. Broad layoffs across the company could easily put hundreds of Oregonians out of work.
The prospect of layoffs is a shocking reversal for Intel, which had been laboring under a worker shortage last year amid hearty demand for computer chips. And Intel has begun a building boom, with two new chip factories under construction in Arizona and two more coming in Ohio.
With the PC market now in a post-pandemic slump, Intel has put itself in a difficult position having committed billions of dollars to expand the business even as sales are falling. So layoffs wouldn’t be surprising, especially in business units that don’t produce direct revenue.
Bloomberg reported the ax will fall heaviest in Intel’s sales and marketing group, with that organization losing as many as one in five jobs. Steep cuts to Intel’s manufacturing and research group might be less likely, with new CEO Pat Gelsinger committed to an ambitious – and expensive – plan to rebuild Intel’s manufacturing and technology prowess.
That gamble may yet pay off if Intel can deliver the succession of upgrades to its microprocessors that it has promised. But with sales in decline and the global economy teetering on the edge of recession, Intel may be in for an excruciating stretch even if Gelsinger’s turnaround project succeeds.
Intel’s had two large rounds of layoffs in 2015 and 2016 as the company restructured in preparation for long-term decline in its PC group, eliminating 13,000 jobs altogether. Those layoffs were a wrenching cultural moment for Intel, creating lingering resentment and bitterness as former CEO Brian Krzanich tried to reposition the business.
Intel now faces increasing dissatisfaction with its investors. The company’s stock has lost nearly half its value this year, plunging from around $50 a share at the end of 2021 to $25.04 at Tuesday’s close.
Oregon’s unemployment rate remains near a historic low, at 3.7%. Vacant positions in the state handily outnumber people looking for work, but soaring inflation, federal interest rate hikes and global economic uncertainty could rapidly darken Oregon’s economic picture.
