A pedestrian walks by a Bed Bath and Beyond store in San Francisco, California.
Justin Sullivan | Getty Images
Check out the companies making headlines before the bell.
Verizon — Verizon shares slipped 1.51% after the company posted mixed results for the 2022 fourth quarter. While earnings met analyst predictions, forward earnings fell short of a Refinitiv consensus estimate. .
related investing news
Bed Bath & Beyond — The meme stock gained 5.78%, building on its dramatic start to the year, even as the retailer warns of a potential bankruptcy. Year to date, Bed Bath & Beyond shares are up 17.1%.
Lyft — The ride-sharing stock gained 3.4% following an upgrade from KeyBanc, which Lyft should feel positive impacts from cost-saving measures including layoffs and a stabilization in demand.
Johnson & Johnson — Shares of the drug maker ticked higher by less than 1% premarket after the company reported mixed quarterly financial results. Johnson & Johnson beat profit estimates by 10 cents per share, excluding items, according to Refinitiv. It also missed revenue estimates. Its full-year outlook for earnings was slightly higher than estimates while its revenue forecast was about in line with estimates.
Blackstone — Shares rose 1.3% after JPMorgan upgraded Blackstone to overweight from neutral, saying the investment management firm is a “best in class” business that’s set for a soft landing.
Lululemon — The athleisure retailer fell 2.07% after Bernstein downgraded the stock, warning that a reset is coming for the apparel stock and noting the company is facing an inflection point in its growth.
Lockheed Martin — Lockheed Martin shares gained 1.52% after the company posted latest quarterly results. The defense company’s revenue came in at $18.99 billion, topping a Refinitiv forecast of $18.27 billion. Lockheed’s earnings per share also topped expectations.
AMD — The chip stock fell more than 2% in premarket after Bernstein downgraded the chipmaker to market perform from outperform. The Wall Street firm said the downgrade is due to the sliding computer and new parts demand in the inflationary environment.
— CNBC’s Alex Harring, Yun Li, Tanaya Macheel and Sarah Min contributed reporting
U.S. stocks traded lower on Thursday, erasing most of their gains from their biggest rally in three weeks after a round of upbeat economic data and a warning from hedge-fund titan David Tepper that he was “leaning short” against both stocks and bonds on expectations the Federal Reserve and other central banks will continue tightening into 2023.
Positive economic news can be a negative for stocks by underlining expectations that monetary policy makers will remain aggressive in their efforts to quash inflation.
What’s happening
The Dow Jones Industrial Average
DJIA,
-1.51%
fell 472 points, or 1.4%, to 32,903.
The S&P 500
SPX,
-1.99%
shed 71 points, or 1.8%, to 3,807.
The Nasdaq Composite
COMP,
-2.84%
fell 272 points, or 2.5%, to 10,437.
A day earlier, all three major indexes recorded their best gain in three weeks as the Dow advanced 526.74 points.
What’s driving markets
Investors saw another raft of strong economic data Thursday morning, including a revised reading on third-quarter gross domestic product which showed the U.S. economy expanded more quickly than previously believed. Growth was revised up to 3.2%, up from 2.9% from the previous revision released last month.
See: Economy grew at 3.2% rate in third quarter thanks to strong consumer spending
The number of Americans who applied for unemployment benefits in the week before Christmas rose slightly to 216,000, but new filings remained low and signaled the labor market is still quite strong. Economists polled by The Wall Street Journal had forecast new claims would total 220,000 in the seven days ending Dec 17.
“Jobless claims ticking slightly up but coming in below expectations could be a sign that the Fed’s wish of a slowing labor market will have to wait until 2023. While weekly jobless claims aren’t the best indicator of the overall labor market, they have remained in a robust range these last two months suggesting the labor market remains strong and has withstood the Fed’s tightening, at least for the time being,” said Mike Loewengart, head of model portfolio construction at Morgan Stanley Global Investment Office, in emailed comments.
“While weekly jobless claims aren’t the best indicator of the overall labor market, they have remained in a robust range these last two months suggesting the labor market remains strong and has withstood the Fed’s tightening, at least for the time being,” he wrote. “It’s no surprise to see the market take a breather today after yesterday’s rally as investors parse through earnings data, and despite some beats this week, expectations that earnings will remain as resilient in 2023 may be overblown.”
Stocks were feeling pressure after Appaloosa Management’s Tepper shared a cautious outlook for markets based on the expectation that central bankers around the world will continue hiking interest rates.
“I would probably say I’m leaning short on the equity markets right now because the upside-downside doesn’t make sense to me when I have so many people, so many central banks, telling me what they are going to do, what they want to do, what they expect to do,” Tepper said in a CNBC interview.
Key Words: Billionaire investor David Tepper would ‘lean short’ on stock market because central banks are saying ‘what they’re going to do’
A day earlier, the Conference Board’s consumer confidence survey came in at an eight-month high, which helped stoke a rally in stocks initially spurred by strong earnings from Nike Inc. and FedEx Corp. released Tuesday evening. This optimistic outlook helped stocks clinch their best daily performance in three weeks.
Volumes are starting to dry up as the year winds down, making markets more susceptible to bigger moves. According to Dow Jones Market Data, Wednesday saw the least combined volume on major exchanges since Nov. 29.
Read: Is the stock market open on Monday after Christmas Day?
In other economic data news, the U.S. leading index fell a sharp 1% in November, suggesting that the U.S. economy is heading toward a downturn.
Many market strategists are positioned defensively as they expect stocks could tumble to fresh lows in the new year.
See: Wall Street’s stock-market forecasts for 2022 were off by the widest margin since 2008: Will next year be any different?
Katie Stockton, a technical strategist at Fairlead Strategies, warned clients in a Thursday note that they should brace for more downside ahead.
“We expect the major indices to remain firm next week, helped by oversold conditions, but would brace for more downside in January given the recent downturn,” Stockton said.
Others said the latest data and comments from Tepper have simply refocused investors on the fact that the Fed, European Central Bank and now the Bank of Japan are preparing to continue tightening monetary policy.
“Yesterday was the short covering rally, but the bottom line is the trend is still short and we’re still fighting the Fed,” said Eric Diton, president and managing director of the Wealth Alliance.
Single-stock movers
AMC Entertainment Holdings
AMC,
-14.91%
was down sharply after the movie theater operator announced a $110 million equity capital raise.
Tesla Inc.
TSLA,
-8.18%
shares continued to tumble as the company has been one of the worst performers on the S&P 500 this year.
Shares of Verizon Communications Inc.
VZ,
-0.53%
were down again on Thursday as the company heads for its worst year on record.
Shares of CarMax Inc.
KMX,
-6.60%
tumbled after the used vehicle seller reported fiscal third-quarter profit and sales that dropped well below expectations.
Chipmakers and suppliers of equipment and materials, including Nvidia Corp.
NVDA,
-8.60%, Advanced Micro Devices
AMD,
-7.17%
and Applied Materials Inc.
AMAT,
-8.54%,
were lower on Thursday.
Around two-thirds of Ford’s dealer network in the U.S. has signed up for the company’s electric-vehicle certification program, the price of batteries for electric cars is on the rise for the first time in over 10 years, and United Airlines is looking at Delta’s pilots’ contract as the template. These stories and more in The Morning Shift for Tuesday, December 6, 2022.
1st Gear: Most Ford Dealers are in on EV Certification
Ford says that nearly two-thirds of its U.S. dealer network are on board with the company’s pricy electric-vehicle certification program. The automaker’s CEO, Jim Farley, says 1,920 dealers have signed on.
He added that 1,659 went the “Certified Elite” route. That program requires investing as much as $1.2 million at the dealership. A further 261 dealers went with the cheaper “Certified” status. That program only requires dealers to spend up to $500,000 for EV enhancements. However, that level caps EV sales at 25 per year. From Automotive News:
Ford has about 3,000 dealerships in the U.S. The company said those that didn’t sign up by last week’s deadline will not be allowed to sell EVs beyond 2023 but will have another opportunity to do so in 2025.
Farley has said Ford’s retailer need to evolve to better compete with EV startups like Tesla and others that sell directly to customers.
“The future of the franchise system hangs in the balance here,” Farley said. “The No. 1 EV player in the U.S. bet against the dealers. We wanted to make the opposite choice.”
The announcement comes as opposition to the program grows. Last week, dealers in New York filed a lawsuit challenging the program as illegal, while a separate group of dealers in Illinois filed a protest with the state’s motor vehicle board. Also last week, U.S. Sen. Richard Blumenthal, D-Conn., and Connecticut state lawmakers voiced their displeasure over what they say are excessive costs that potentially violate state franchise laws.
Ford has consistently said it believes the program does not violate any state laws.
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“We want to work with our dealers, but there are certain things our customers want that are nonnegotiable,” Farley said to the crowd at the Automotive News Congress in Detroit.
He added that he does not regret rolling out the program.
“There’s always a better way,” Farley continued. “But I don’t think we made, really, any big mistakes.”
2nd Gear: EV Battery Prices on the Rise
The price of lithium-ion batteries is on the rise for the first time in over 10 years. The increase comes from surging prices raw material costs, and it will ultimately have a negative impact on the automotive industry’s push for EVs to get cheaper. From Financial Times:
Soaring prices of battery metals such as lithium, cobalt and nickel and higher component costs pushed battery pack prices up to $151 per kilowatt hour, a 7 per cent rise compared with a year ago and the first increase since BloombergNEF began its annual survey in 2010.
The company expects prices to rise further to $152 per kWh next year. In 2010, prices were $1,160 per kWh on average.
That’s bad news for the automotive industry. FT reports the industry has viewed $100 per kWH battery pack as the number where EVs become competitive with ICE vehicles from a price perspective.
However, lithium prices have increased 10-fold since the start of 2021 and nickel is up 75 per cent, while cobalt prices have been more than double their 2020 average this year.
As a result, BloombergNEF forecasts that the $100 per kWh level will be reached by 2026, two years later than previously expected. This will “negatively impact the ability for automakers to produce and sell mass-market EVs in areas without subsidies”, it said.
It added that the higher costs could also be problematic for the economics of battery energy storage projects that are vital to stabilising the grid as intermittent renewable power grows.
The rise in battery pack prices would have been even higher if car companies and cell manufacturers in the Chinese market had not switched to cheaper lithium iron phosphate (LFP) batteries, which do not use cobalt and nickel but have a shorter range.
Right now, there’s a lot of uncertainty about whether or not battery material prices will actually ease. Skyrocketing demand and manufacturing issues are only exacerbating the problem for battery makers and consumers.
3rd Gear: United Looking to Delta’s Contract as a Blueprint
United Airlines’ CEO Scott Kirby says a possible deal between Delta and its pilots union could be used as a template for similar agreements. From Reuters:
“It’s a rich contract but I think the really good news is it means we’ll all get deals done essentially on the same terms and can move forward,” Kirby told Reuters on the sidelines of an event in Washington late Monday. Delta struck a tentative deal Friday to give pilots a 34% cumulative pay increase in a new four-year contract.
Kirby says the Delta agreement will push pilot wages up across carriers and be passed onto consumers in the form of higher airplane ticket prices.
“The biggest news for an investor perspective is cost convergence in the industry means that what is different now is all the low cost carriers are going to have come up to these much higher pay rates,” Kirby said. “This is going to wind up like oil prices — it’s going to be a pass through.”
Delta’s contract reportedly also offers a lump-sum one-time payment, reduced healthcare insurance premiums, better 401(k) parameters as well as improved paid time off.
Kirby added that demand is still very strong for flight tickets, which he says are cheaper today than they have been over the past 15 years.
Its union estimates the proposed deal represents more than $7.2 billion of cumulative value increases over the next four years.
American Airlines and United have promised “industry-leading” contracts to their pilots.
Reuters reports that last month American Airlines pilots turned down a proposed 19 percent pay hike over the next two years that would cost the company about $2 billion. United pilots had previously turned down an offer that would give them about a 14.5 percent wage cumulative increase.
4th Gear: Works Strike at Pennsylvania Auto Parts Supplier
About 270 workers at an Autoneum AG plant in Bloomsburg, Pennsylvania have gone on strike at the global automotive insulation supplier, and soon ripples could be felt throughout the rest of the automotive industry.
Workers walked off the job last Thursday after negotiations between the company and the union stalled after the latest contract offer was rejected by the workers. From Automotive News:
Autoneum, based in Winterthur, Switzerland, focuses on internal and external sound and heat insulation systems. The supplier works with almost every major automaker, including General Motors, Ford Motor Co. and Stellantis, according to its website.
For the Bloomsburg plant, its exact list of customers is unclear. However, the plant received awards from Toyota in 2011, Ford in 2014 and GM in 2021. Autoneum did not respond to calls from Automotive News’ seeking comment on the strike.
Brian Heverly, president of Local 1700 Workers United, told FOX 56 that the rank-and-file turned down Autoneum’s third and final contract offer.
Among worker complaints is the supplier’s insistence that workers pay 5 percent more of their healthcare costs outside of usual yearly increases.
Local 1700 Vice President Dave Schaffer, an employee at the plant 44 years, told FOX 56 that the workers didn’t want to strike, but felt compelled to given the circumstances.
The last strike at this plant was reportedly back in 1968, a year known for nothing else but that strike.
A spokesperson for General Motors told the outlet that the automaker is aware of what’s going on, but they don’t see the strike having an immediate impact on GM operations.
5th Gear: GM’s BrightDrop Starts Production in Canada
General Motors has started production of its BrightDrop electric delivery vehicle at its CAMI Assembly plant in Ontario. That makes it the first EV factory in Canada as a whole.
Last month, GM said the startup will be worth about $1 billion in revenue in 2023. The company is expected to hit $5 billion in revenue by the middle of the 2020s, and it could be as high as $10 billion by 2030.
“Starting volume production is really important; this is a very important product for GM,” Sam Abuelsamid, principal research analyst leading Guidehouse Insights, told The Detroit News. “This finally starts to get them back into a more competitive offering in the van segment and with electrification, so … it has the potential to be a really strong business for GM.”
GM launched production this week of the larger Zevo 600 electric delivery vans at CAMI. The delivery vans were being manufactured at small scale at a Michigan supplier plant until the CAMI facility was ready for production. Production of the Zevo 400, a smaller model than the Zevo 600, will start in late 2023. BrightDrop expects to make 30,000 next year and scale to 50,000 by 2025.
[…]
GM formed BrightDrop in 2021. The business is focused on providing emissions-free products for delivery companies. Its products include the Zevo electric delivery vans, Trace eCarts for easier package delivery and the BrightDrop Core software platform.
The automaker invested more than $800 million to convert CAMI for high-volume EV production. The plant was revamped in just seven months — the quickest retooling of a GM plant ever.
[…]
BrightDrop also on Monday announced it’s entering the Canadian market with the addition of DHL Express Canada logistics company as a customer. DHL will add its first Zevo vans to its fleet early next year. The company is also piloting BrightDrop’s Trace eCarts and software platform in Toronto.
BrightDrop has also received requests for electric delivery vans from FedEx Corp., Walmart Inc., Hertz Global Holdings Inc. and Verizon Communications Inc.
All in all, BrightDrop has 25,000 production reservations and expressions of interest for its EV delivery vans. So far, the company has delivered 150 Zevo vans to FedEx out of the 2,500 the shipping company has ordered.
Reverse: Washington
Neutral: Boeing 747, Over and Out
On The Radio: Darlene Love – “Christmas (Baby Please Come Home)“
Darlene Love – Christmas (Baby Please Come Home) (Official Audio)
This is the best Christmas song, and I will not hear otherwise.
Check out the companies making the biggest moves midday:
Cisco Systems — Shares of the networking equipment producer jumped 5.8%. The company reported earnings after the bell on Wednesday that beat estimates. Cisco also provided a better-than-expected forecast for 2023.
Bed Bath & Beyond — The latest favored meme stock, which has surged in August, dropped over 20%. Investors appeared to be reacting to activist investor Ryan Cohen’s filing that he intends to sell his entire stake in the company.
Kohl’s — Kohl’s shares sank about 5% after the retailer slashed its financial forecast for the year, citing inflation pressures on middle-income customers. The company expects net sales in fiscal 2022 down 5% to 6%, down from a prior range of flat to up 1%. However, Kohl’s beat analysts’ expectations for fiscal second-quarter profit and revenue.
BJ’s Wholesale — Shares of the club retailer popped more than 7% on Thursday after BJ’s reported better-than-expected results for the second quarter. The company generated $1.06 in adjusted earnings per share on $5.01 billion of revenue. Analysts surveyed by FactSet were expecting 80 cents per share on $4.67 billion of revenue. The company’s comparable sales rose 7.6% year over year, excluding gasoline. BJ’s was also upgraded by Bank of America to a buy from neutral.
Elanco Animal Health — Shares of Elanco shed more than 3% after the company was downgraded by Morgan Stanley. The firm shifted the stock to equal weight from overweight citing concerns about future profits.
Verizon — Shares of Verizon slipped 2.7% after MoffettNathanson downgraded it to underperform and slashed its price target. Increased competition from AT&T and T-Mobile is weighing on Verizon and will likely drag shares lower, analysts said.
Canadian Solar — The solar equipment and services company hit a new 52-week high, popping nearly 18%, after reporting quarterly profits that beat expectations. Canadian Solar also raised its full-year revenue forecast and reported solar module shipments that were at the high end of its forecast.
Wolfspeed — Shares surged more than 27% after the semiconductor company surpassed expectations in its most recent earnings report. Wolfspeed CEO Gregg Lowe said he remains “very encouraged about the industry’s prospects for future growth and the activity we are seeing across our end-markets.”
Walgreens Boots Alliance — Shares of Walgreens fell more than 5% in midday trading. The drugstore chain, along with CVS and Walmart, was ordered Wednesday by a federal judge to pay a combined $650.6 million to two Ohio counties to address damage done by the opioid crisis. Walgreens also announced Wednesday it had sold 11 million shares of Option Care Health’s common stock in an underwritten secondary offering.
Energy stocks — Energy stocks were buoyed by the rise in oil prices, with shares of Devon Energy rising more than 3%. Halliburton jumped 4%, and APA added more than 5%. Exxon Mobil and Occidental Petroleum and both gained about 2%.
—CNBC’s Jesse Pound, Carmen Reinicke and Sarah Min contributed reporting.
Ja’Marr Chase #1 of the Cincinnati Bengals makes a catch over Jalen Ramsey #5 of the Los Angeles Rams during Super Bowl LVI at SoFi Stadium on February 13, 2022 in Inglewood, California.
Gregory Shamus | Getty Images
The National Football League now has its own streaming service.
Premiering Monday, the NFL is launching NFL+ for $4.99 per month or $39.99 per year.
A subscription will include all out-of-market preseason games, which was formerly only available with a subscription to NFL Game Pass for $99.99 per year. The NFL preseason kicks off Aug. 4 with the Jacksonville Jaguars facing the Las Vegas Raiders. Since that will be a nationally televised game, it won’t be featured on NFL+.
NFL+ will also include live mobile device access to local and prime-time regular season and postseason games, previously available for free on the Yahoo Sports app.
NFL+ marks the first time the NFL has operated its own streaming service, giving the league a new future platform to potentially show exclusive games. Major League Baseball and the National Basketball Association already both sell subscriptions to their own streaming services that include out-of-market games.
NFL+ won’t initially include exclusive regular-season games but could eventually depending how viewership habits evolve in the years to come, said Hans Schroeder, executive vice president and chief operating officer of NFL Media. The league has locked up its local broadcast rights for the next seven to 11 years.
“It’s another option we’ll consider with all of our other options,” Schroeder said. “We are really excited about where NFL+ can go. As quickly as media and the sports distribution business continues to change and evolve, there are lots of different factors.”
The NFL is in the process of renewing its Sunday Ticket package and will choose a streaming partner, possibly Apple or Amazon, by the fall. That package costs about $300 per month and offers access to all out-of-market games on Sundays. DirecTV has owned Sunday Ticket rights since 1994 but isn’t bidding for the rights after the current contract runs out this season. The length of its new Sunday Ticket deal is still to be determined, but the league wants to give a new partner “the right runway to be successful,” said Schroeder in an interview.
Added NFL+ benefits
In addition to games, NFL+ will include NFL Network shows on demand and archived NFL Films programming.
For $9.99 per month or $79.99 per year, the NFL is also selling NFL+ Premium. That subscription includes full and condensed game replays and access to “All-22” film, a bird’s-eye view of the game that coaches use to see how all 22 players move in a given play.
“We look forward to continuing to grow NFL+ and deepening our relationship with fans across all ages and demographics, providing them access to a tremendous amount of NFL content, including the most valuable content in the media industry: live NFL games,” NFL Commissioner Roger Goodell said in a statement.
WATCH: I believe NFL media rights will be moving to a streaming service, says NFLs Goodell
Disclosure: NBC Sports, which shares parent NBCUniversal with CNBC, broadcasts NFL games.
Check out the companies making headlines in premarket trading.
Coca-Cola — Shares of Coca-Cola rose about 1% after the company beat analysts’ expectations on the top and bottom lines in the recent quarter. The beverage giant reported adjusted earnings of 64 cents per share on revenues of $10.5 billion, while analysts expected 58 cents per share on $9.83 billion in revenue.
Twitter — Twitter ticked 5% higher on reports that the social media giant is close to a deal with Elon Musk. It comes a day after the company’s board reportedly met Sunday to discuss a takeover bid from Elon Musk, who has already secured $46.5 billion in financing.
Oil stocks —Shares of energy companies fell on Monday as oil prices fell on fears of a global slowdown amid lockdowns in Shanghai. Chevron, ConocoPhillips, and Marathon Oil dipped 2.2%, 2.6% and 2.8% respectively.
Kellogg — Shares of Kellogg dipped 1.8% after Deutsche Bank downgraded the stock to a hold. The bank cited the impact from workers’ strikes, rising inflation and supply chain disruptions among the reasons for the downgrade.
Verizon — Verizon shares fell 1% after Goldman Sachs downgraded the stock to neutral. The bank said Verizon is situated well for 5G growth but offers a lower potential return compared to peers like AT&T.
Penn National Gaming — The gaming stock rose 2.8% after Morgan Stanley named it a buy despite its recent underperformance. The bank also sees opportunities in its Barstool Sports and theScore businesses.
Warner Bros. Discovery — Warner Bros. Discovery’s stock fell 2.5% as investors continued to digest the news that the company would shutter its CNN+ service weeks after its launch.
Deere — The equipment manufacturer’s stock fell 3.4% after Bank of America downgraded the stock to neutral. The bank said it remains cautious on the farm economy and agricultural equipment space amid ongoing supply chain issues and other macro trends.
U.S. stocks fell sharply Friday, as investors continued to weigh hawkish comments on interest rates by Federal Reserve Chairman Jerome Powell a day earlier, as well as a fresh batch of corporate earnings that largely disappointed.
How are stocks trading?
The Dow Jones Industrial Average
DJIA,
-2.18%
was down 879 points, or 2.5%, at 33,914.
The S&P 500
SPX,
-2.18%
fell 107 points, or 2.4%, to 4,286, and was on track for a third straight weekly fall.
The Nasdaq Composite
COMP,
-2.03%
shed 298 points, or 2.3%, to trade at 12,875.
On Thursday, the Dow shed 368.03 points, or 1.1%, reversing a gain of as much as 331.43 points in intraday trading. The more-than 700-point intraday swing was its biggest since March 8, according to Dow Jones Market Data. The S&P 500 fell 1.5%, while the Nasdaq Composite slumped 2.1%.
What’s driving the market?
Stock-market weakness picked up Friday where Thursday’s selloff left off, when equities tumbled into the afternoon after Powell added his support for moving faster on raising interest rates to cool inflation, measures that would include a possible 50 basis point interest rate hike in May.
“It would seem investors have been too complacent about the upcoming [Fed] meeting, which will need to change,” said Michael Kramer, founder of Mott Capital, in a note.
The Cboe Volatility Index
VIX,
+20.55%,
an options-based measure of expected volatility over the next 30 days, had been too low heading into the May 3-4 Federal Open Market Committee, or FOMC, meeting, Kramer said. It rose Thursday and was up another 19.5% at 27.1- on Friday, moving above its long-term average just below 20.
Powell’s remarks appeared to make a half percentage point rate hike the base case, with the central bank also likely to announce the beginning of the unwinding of its balance sheet, Kramer said.
Meanwhile, traders of fed funds futures have priced in a 94% chance that the Federal Reserve will deliver a 75 basis point rate hike in June, up from 70% on Thursday and 28% a week ago, according to the CME FedWatch Tool.
The benchmark 10-year Treasury yield
TMUBMUSD10Y,
2.895%,
meanwhile, pulled back slightly to around 2.89% after climbing about 8.1 basis points to 2.917% on Thursday, the highest since Dec. 4, 2018.
Read: How to invest as inflation, higher interest rates and war roil markets
And some are warning that the Nasdaq is looking particularly vulnerable. The week has delivered some big earnings news for the technology sector, with investors cheering Thursday’s results from Tesla
TSLA,
-0.12%,
on the heels of deeply disappointing Netflix
NFLX,
-0.91%
results.
The Fed’s hawkish shift and the relentless rise in Treasury yields may be sapping the previous appeal of equities, which had previously been seen as the only viable avenue for many return-seeking investors.
“Investors appear to be moving away from the TINA (There is no Alternative) narrative as of late when it comes to equities,” said Brian Price, head of investment management at Commonwealth Financial Network, in a note. “This is the second straight week of significant outflows from equity mutual funds and days like today are unlikely to change the sentiment moving forward. The one positive takeaway may be that sentiment has become too bearish and we could see a countertrend rally at some point in the coming weeks.”
In One Chart: Investors just pulled a massive $17.5 billion out of global equities. They’re just getting started, says Bank of America.
All 11 major S&P 500 sectors fell Friday, with healthcare stocks dropping the most after a downbeat profit forecast from HCA Healthcare Inc.
HCA,
-20.47%
sent its shares tumbling. Other hospital operators, including Tenet Healthcare Corp.
THC,
-13.49%,
Community Health Systems Inc.
CYH,
-17.36%
and Universal Health Services
UHS,
-12.70%
also fell between 10.4% and 13.2%.
However, of the 99 companies in the S&P 500 that have reported earnings for the first quarter, 77.8% of them have beat market expectations. Typically, 66% of companies beat estimates, according to Refinitiv data.
Next week will mark another big week for earnings, with 558 companies reporting, Saxo noted. “It is the big test of companies’ ability to pass on costs to their customers,” they said.
Investors may also be skittish ahead of the final round of France’s presidential election on Sunday. An upset victory by far-right candidate Marine Le Pen over incumbent Francois Macron would likely spark market volatility, analysts said.
See: Here’s how markets are positioned for Sunday’s presidential election in France between Macron and Le Pen
What companies are in focus?
HCA shares were down 19.6%, on pace for their largest percentage decrease since March 16, 2020, when they fell 19.02%, according to Dow Jones Market Data.
Gap Inc.
GPS,
-18.51%
stock tumbled nearly 19%, following a bigger-than-expected drop in sales and as the retailer announced the depature of Old Navy CEO Nancy Green.
Shares of Qualtrics International Inc.
XM,
-9.41%
fell 9.5% after the experience-management software company reported fiscal first-quarter forecast-beating revenue.
Snap Inc.
SNAP,
-0.27%
shares lost 0.7% after the social media group reported quarterly revenue that fell short of Wall Street’s expectations.
Shares of American Express Co.
AXP,
-1.87%
fell 1.4% after topping earnings expectations Friday amid a continued rebound in travel and strong spending trends among younger consumers.
Verizon Communications Inc.
VZ,
-5.30%
fell after its earnings report showed a net loss of postpaid phone subscribers in its latest quarter, calling out “competitive dynamics within the industry,” though it said it had its best quarter of broadband net additions in more than a decade.
How are other assets trading?
The ICE U.S. Dollar Index
DXY,
+0.56%
rose 0.7% to trade at its highest since March 2020.
Bitcoin
BTCUSD,
-2.51%
fell 2.4% to trade near $39,500.
The U.S. oil benchmark
CL.1,
-1.90%
fell $1.72, or 1.7%, to settle at $102.07 a barrel on the New York Mercantile Exchange, falling 4.1% for the week.
Gold
GC00,
-0.60%
fell $13.90, or 0.7%, to settle at $1,934.30 an ounce, leaving a 2.1% weekly fall.
The Stoxx Europe 600
SXXP,
-1.79%
dropped 1.5% while London’s FTSE 100
UKX,
-1.39%
fell 1.4%.
The Shanghai Composite
SHCOMP,
+0.23%
rose 0.2%, while the Hang Seng Index
HSI,
-0.21%
slipped 0.2% in Hong Kong and Japan’s Nikkei 225
NIK,
-1.63%
fell 1%.
Pedestrians pass in front of a GAP store in New York.
Scott Mlyn | CNBC
Check out the companies making headlines in midday trading Friday.
American Express — Shares of the payment firm dipped 1.1% despite American Express topping earnings expectations for the first quarter. American Express reported a profit of $2.73 per share, versus the Refinitiv consensus estimate of $2.44 per share. Earnings got a boost from spending by millennials and Gen-X consumers, the company said.
Verizon Communications — Shares of Verizon fell 6.1% after the company reported a loss of 36,000 monthly phone subscribers during the first quarter, compared with a FactSet estimate of a 49,300 loss. Verizon also posted earnings and revenue for the quarter that were in line with Wall Street forecasts.
HCA Healthcare, Universal Health Services, Intuitive Surgical — The health-care sector was under pressure Friday, with HCA Healthcare as its greatest laggard after reporting disappointing full-year earnings and revenue guidance. HCA dropped 19%, Universal Health Services tumbled 13%, and Intuitive Surgical declined about 13%.
SVB Financial Group — Shares for the regional bank soared more than 11% after the company reported strong earnings. SVB Financial Group earned an adjusted $6.22 per share, compared with a consensus estimate of $5.60 from FactSet. The company’s net interest income also beat expectations.
Kimberly-Clark Corporation — Shares for the consumer products company spiked nearly 9% after Kimberly-Clark exceeded earnings expectations. The firm earned $1.35 per share in its most recent quarter, versus consensus estimates of $1.23 per share from Refinitiv. Kimberly-Clark also raised its full-year organic sales forecast.
Schlumberger — Shares jumped more than 3% after the oilfield services producer beat earnings expectations. Schlumberger earned 34 cents per share, versus analyst expectations of 33 cents per share. Schlumberger also hiked its dividend by 40%.
Gap — Shares for the retailer fell about 20% after Gap announced the chief executive officer of its Old Navy business, Nancy Green, is leaving the firm this week. Gap also cut its outlook for net sales growth this fiscal year.
Check out the companies making headlines before the bell:
American Express (AXP) – American Express rose 1.2% in the premarket after reporting better-than-expected profit and revenue for the first quarter. Amex reported a profit of $2.73 per share compared with the $2.44 consensus estimate, helped by increased spending by millennial and Gen-X consumers as well as small and medium-sized businesses.
Verizon (VZ) – Verizon earned an adjusted $1.35 per share for the first quarter, matching estimates, with revenue also essentially in line. Verizon lost 36,000 phone subscribers during the quarter, less than the 49,300 losses expected by analysts who were surveyed by FactSet. Verizon fell 1.4% in premarket trading.
Kimberly-Clark (KMB) – The consumer products company’s shares jumped 3.8% in the premarket after reporting better-than-expected quarterly earnings and revenue. Kimberly-Clark said it was able to deal with a “volatile and inflationary” environment and raised its full-year organic sales forecast.
Cleveland-Cliffs (CLF) – The steel producer and mining company’s stock rallied 3.5% in premarket trading after beating top and bottom-line estimates for the first quarter. Cleveland-Cliffs also raised its average selling price forecast for the full year.
Schlumberger (SLB) – The oilfield services producer beat estimates by a penny with an adjusted quarterly profit of 34 cents per share, and revenue also topped Wall Street forecasts. Schlumberger also raised its dividend by 40%, and its stock added 1.1% in premarket action.
Snap (SNAP) – Snap lost an adjusted 2 cents per share for its latest quarter, compared with consensus forecasts of a 1 cent per-share profit for the social media company. It also issued a conservative sales growth outlook for the current quarter, and the shares fell 1.1% in premarket trading.
Gap (GPS) – Gap cut its sales growth outlook amid increasing competition and more promotions. The company also announced that Old Navy President and CEO Nancy Green is departing. Gap stock tumbled 14.8% in the premarket.
Anheuser-Busch InBev (BUD) – AB InBev will sell its stake in its Russian joint venture and take a $1.1 billion impairment charge as a result. The beer brewer suspended sales of its Budweiser brand in Russia last month following Russia’s invasion of Ukraine. AB InBev fell 1.8% in premarket action.
SAP (SAP) – SAP shares slid 4.1% in premarket trading after the German business software company said it would take a $300 million revenue hit due to its exit from the Russian market.
Boston Beer (SAM) – Boston Beer reported a quarterly loss of 16 cents per share, compared with analysts’ expected profit of $1.97 per share. The beer brewer’s revenue missed estimates as shipment volume declined more than 25% from a year earlier and gross margins fell as well. Shares were down 3.2% in the premarket.
Here are the most important news, trends and analysis that investors need to start their trading day:
1. Stock futures fall as the 10-year Treasury yield tops a 3-year high
Traders on the floor of the NYSE, April 14, 2022.
Source: NYSE
2. BofA issues stronger earnings as it releases reserves for soured loans
A woman is reflected in a puddle as she passes a Bank of America branch in New York’s Times Square.
Brendan McDermid | Reuters
Bank of America, the last of the major banks to report earnings, on Monday delivered a better-than-expected 80 cents per share profit on revenue of $23.33 billion. BofA’s decision to release $362 million in loan-loss reserves was in contrast to JPMorgan Chase, which disclosed last week that it opted to build reserves by $902 million. JPMorgan said profit also slumped due to losses tied to Russia sanctions. Goldman Sachs, Morgan Stanley and Citigroup each topped expectations with stronger-than-expected trading results. Wells Fargo missed on revenue as mortgage lending declined.
3. Elon Musk’s tweet suggests an appeal directly to Twitter shareholders
Elon Musk posted a tweet Saturday, saying “Love Me Tender,” days after making an unsolicited $43 billion cash offer to buy Twitter. After a TED talk Thursday, Musk hinted at the possibility of a hostile bid, in which he would bypass the social media company’s board and put the offer directly to shareholders.
The tweet seemed to imply Musk, the world’s richest person and CEO of both Tesla and SpaceX, might seek to buy shares from investors in what’s called a tender offer. Twitter on Friday adopted a “poison pill” to limit Musk’s ability to raise his stake in the company. Shares of Twitter rose more than 3.5% in the premarket.
4. China’s first-quarter GDP beats estimates despite Covid lockdowns
A health worker wears a protective suit as he disinfects an area outside a barricaded community that was locked down for health monitoring after recent cases of COVID-19 were found in the area on March 28, 2022 in Beijing, China.
Kevin Frayer | Getty Images
China’s first-quarter gross domestic product grew a faster-than-expected 4.8% despite the impact of Covid lockdowns in March. Beginning last month, China struggled to contain its worst Covid outbreak since the initial phase of the pandemic in 2020. Three people have died as of Sunday, officials of locked-down Shanghai said, attributing the fatalities to preexisting health conditions. Shanghai began a two-stage lockdown and mass virus testing in late March that was supposed to stop after just over a week later. But authorities have yet to set an end date.
5. Russian strikes kill at least 7 people in Lviv, Ukrainian officials say
Dark smoke rises following an air strike in the western Ukrainian city of Lviv, on April 18, 2022.
Yuriy Dyachyshyn | AFP | Getty Images
Russian missiles hit Lviv in western Ukraine on Monday, killing at least seven people, Ukrainian officials said, as Moscow’s troops stepped up strikes on infrastructure in preparation for an all-out assault in the east. Mariupol, the besieged eastern city, has refused Russia’s demand to surrender. The mayor of Mariupol said last week that 10,000 civilians have died there. “The targeting of populated areas within Mariupol aligns with Russia’s approach to Chechnya in 1999 and Syria in 2016,” the U.K. Ministry of Defense said in an intelligence update.
— CNBC’s Hannah Miao, John Melloy, Sarah Min, Tanaya Macheel, Hugh Son, Evelyn Cheng, Natasha Turak and Ted Kemp as well as Reuters and The Associated Press contribute to this report.
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