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Jack Ma Cedes Control of Fintech Giant Ant Group

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Billionaire

Jack Ma

is ceding control of Ant Group Co., capping a tumultuous period for the Chinese fintech giant.

Mr. Ma will no longer be the controlling person of Ant, the company said in a statement on Saturday, confirming a previous report by The Wall Street Journal.

The changes are being made to reduce Ant’s reliance on the flamboyant Chinese billionaire, who co-founded

Alibaba Group Holding Ltd.

BABA 2.70%

and helped create Ant, the Journal reported previously.

Mr. Ma will continue to hold voting rights in an entity that controls Ant, alongside nine Ant executives and employees who will be also given voting rights.

Mr. Ma doesn’t hold an executive role at Ant or sit on its board, but is a larger-than-life figure at the company. He has controlled Ant via an entity in which he holds the dominant position. The agreements that allowed Mr. Ma’s dominance will be terminated. The nine other Ant executives and employees to be given the voting rights at the company can exercise their power independently of each other and of Mr. Ma, according to Ant’s statement.

Ant, which owns the popular digital-payment platform Alipay, has been forced to overhaul its operations amid a government crackdown that began with Beijing calling off the company’s multibillion-dollar initial public offering in November 2020. The IPO, which had been slated to happen in Shanghai and Hong Kong concurrently, would have raised more than $34 billion and valued Ant at more than $300 billion. 

Ant has been revamping its various business lines, from consumer lending to insurance, and will eventually become a financial holding company subject to regulations in line with traditional financial firms.

The change of control moves Ant a step closer to finishing its overhaul. Yet it also could put back a potential revival of Ant’s IPO for a year or more. Chinese securities regulations require a timeout on public listings for companies that have gone through a recent change in control.

Regulators didn’t demand the change but have given their blessing, the Journal reported previously. Ant is required to map out its ownership structure when it applies to become a financial holding company.

The nine others who will hold voting rights include Chairman

Eric Jing,

Executive Vice President Xiaofeng Shao and Chief Technology Officer Xingjun Ni, in line with the details in the previous Journal report. Mr. Shao is also the general secretary of Ant’s Communist Party committee, according to people familiar with the matter. Mr. Ni was instrumental in founding Alipay in 2004.

Mr. Ma has all but vanished from the public spotlight since he laid into Chinese regulators in a controversial speech days before Ant’s planned IPO in 2020. He retired from Alibaba in 2019 but continued to control Ant. The two companies that Mr. Ma co-founded have been charting separate courses in light of Beijing’s crackdown on big internet platforms. 

Mr. Ma’s control over Ant goes back more than a decade to the period when he was CEO of Alibaba. Throughout the years, he had contemplated giving up control of Ant out of corporate-governance concerns that risks may arise from Ant being too reliant on a single dominant figure atop the company, the Journal reported previously.

Write to Jing Yang at jing.yang@wsj.com

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Business

Stocks Waver After Suffering Worst Day Since June 2020

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U.S. stocks wobbled between small gains and losses Wednesday, coming off a wild day of trading spurred by a stronger-than-expected inflation report.

The S&P 500 dropped 0.1%, a day after the benchmark index plummeted 4.3% in its worst selloff since June 2020. The Dow Jones Industrial Average fell 0.3%, while the tech-focused Nasdaq Composite gained 0.1%.

The release of U.S. inflation data for August on Tuesday spurred volatile moves across asset classes. The consumer-price reading showed the core inflation index, which excludes volatile energy and food figures, increased last month from a year earlier—indicating that broad price pressures strengthened.

The hot inflation report curbed investors’ hopes the Federal Reserve might slow its aggressive pace of interest-rate increases. That led traders on Tuesday to dump stocks across all sectors, sell bonds and cryptocurrencies, and push the U.S. dollar higher.

On Wednesday, markets seemed to take data measuring U.S. suppliers’ prices in stride. The producer-price index, which measures what suppliers are charging businesses and other customers, declined 0.1% from the month before, in line with economist expectations.

“We witnessed violent moves in the market yesterday as we reprice Fed and economic risk expectations,” said

Megan Horneman,

chief investment officer at Verdence Capital Advisors. “Today we’re absorbing such a destructive day.”

The latest U.S. inflation data curbed investors’ hopes the Federal Reserve might slow its aggressive pace of interest-rate increases.



Photo:

Julia Nikhinson/Associated Press

Some of Tuesday’s sharp market moves started to unwind Wednesday. The WSJ Dollar Index lost 0.4%, after notching its largest one-day jump since March 2020. Brent crude, which fell the day before, rose 1.3% to $94.32 a barrel.

Energy stocks rose broadly as Brent crude rebounded. The sector was the top gaining segment of the S&P 500 on Wednesday.

Among the top individual gainers in the S&P 500,

Starbucks

rose 5.8% after the coffee chain raised its longer-term financial outlook. The company now sees adjusted earnings-per-share growth over the next three years of 15% to 20%, up from its previous forecast of 10% to 12%.

Also making the index leaderboard,

Moderna

shares climbed 5.1% after its CEO told Reuters the company is open to supplying Covid vaccines to China.

Shares of railroad operators declined as a possible freight labor strike looms. The White House is assessing how other transportation providers could fill potential gaps in the nation’s freight network as labor unions and railroads continue contract talks.

Union Pacific

lost 4.9%, and

CSX

fell 3.1%.

Few market watchers were willing to suggest that volatile market moves may be in the rear-view mirror—especially until the Fed’s next meeting.

The Fed will make its next interest-rate policy decision next week. Federal-funds futures, used by traders to bet on interest-rate moves, showed a 68% chance that the central bank will lift rates by 0.75-percentage point. The data also show traders are assigning a 32% probability that the Fed will increase interest rates by 1 percentage point, according to CME Group data.

U.S. Treasury yields continued their upward climb, in another signal that investors are expecting higher interest rates.

The yield on the 10-year U.S. Treasury note rose to 3.427%, from 3.422% Tuesday. The yield on the two-year note, which is more sensitive to near-term rate expectations, climbed to 3.789%, from 3.754%. Yields and bond prices move in opposite directions. 

Some investors and strategists said the market may have overreacted Tuesday, especially after Fed Chairman

Jerome Powell

already said last month in Jackson Hole that the central bank must continue raising interest rates until it is confident inflation is under control.

“You’ve got this tension with dip buyers versus those who are selling the rally,” said Viraj Patel, global macro strategist at Vanda Research. “I think you can paint a very nice bullish picture and find plenty of evidence to buy equities, and you can paint a very nice bearish picture and find plenty of evidence to sell. That naturally means we are going to bounce around for a bit.”

Overseas, global indexes fell, following the U.S. stock market’s performance Tuesday. In Europe, the pan-continental Stoxx Europe 600 lost 1%. London’s FTSE 100 fell 1.2%, after U.K. inflation data showed that core consumer prices ticked up to 6.3% in August, from 6.2% in July, even as inflation eased slightly overall

In Asia, Hong Kong’s Hang Seng Index lost 2.5%, and the CSI 300 index of the largest stocks listed in Shanghai and Shenzhen was down 1.1%. Japan’s Nikkei 225 tumbled 2.8%.

Write to Caitlin McCabe at caitlin.mccabe@wsj.com and Dave Sebastian at dave.sebastian@wsj.com

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Business

Stock Futures Fall After Powell’s Hawkish Remarks

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U.S. stock futures fell and Treasury yields jumped to start the week, as investors remained rattled by the Federal Reserve’s resolve to keep fighting inflation even if it causes some economic pain.

Futures tied to the S&P 500 dropped 0.8%, putting the benchmark index on pace to extend its 3.4% loss on Friday. Contracts for the Dow Jones Industrial Average lost 0.8%, while those tied to the tech-focused Nasdaq-100 sank 1%.  

Monday’s declines before the opening suggest U.S. stocks will likely see another turbulent day of trading, as traders assess Fed Chairman

Jerome Powell’s

comments from last week. Speaking Friday in Jackson Hole, Mr. Powell said the U.S. central bank must continue raising interest rates and keep them at an elevated level, until it is confident inflation is under control.

The comments unsettled investors, many of whom had begun to wager that this year’s historically large rate increases were in the rearview mirror. Many had expected that, starting in September, the Fed would slow the magnitude of its interest-rate increases, until eventually cutting rates next year.

Friday’s comments reshuffled those expectations. On Monday, federal-funds futures, used by traders to place wagers on the course of interest rates, showed a nearly 65% chance that the central bank would lift interest rates by 0.75 percentage point for a third time in a row in September. That is up from 28% a month ago, according to CME Group data.

“The market kind of got ahead of itself over the last three, four weeks or so…in terms of pricing in a possible Fed pivot to a more dovish stance,” said Clara Cheong, a global market strategist at J.P. Morgan Asset Management.

Investors’ growing jitters stand to further unwind a rally that had sent stocks climbing from their 2022 lows reached in June. Already, all three major U.S. indexes have seen their August gains wiped out. Many investors are betting on further pain ahead, with net short positions against S&P 500 futures recently reaching levels not seen in two years.

In premarket trading Monday, many of the S&P 500’s biggest losers were companies that had risen sharply amid the stock market’s summer rebound.

Tesla

fell 1.7%, while

PayPal Holdings

lost 1.6%. Economically sensitive stocks also took a beating before the opening bell, with

Las Vegas Sands,

Alaska Air Group

and Royal Caribbean all falling 1.8% or more. 

“It’s game-changing. We’re coming from a world where people were looking for a Fed pivot, but they got a pivot in the wrong direction,” said Florian Ielpo, head of macro at Lombard Odier Investment Managers, who noted he began lowering his exposure to stocks last week as volatility rose. “We are not defensive yet, but our exposure remains cautious.”

Investors’ risk-off sentiment rippled around the globe and across asset classes. The pan-continental Stoxx Europe 600 dropped 0.9%, following indexes in Asia lower. Bitcoin fell 3.5% from its 5 p.m. ET level on Friday to about $19,942 according to CoinDesk.

U.S. Treasury yields climbed further as a selloff in government bonds gathered pace. The yield on the two-year Treasury note, which is more sensitive to near-term Fed policy expectations, rose to 3.435%, from 3.391% Friday. 

The 10-year Treasury yield rose to 3.091%, from 3.034%. High U.S. short-term yields relative to long-term yields—also known as an inverted yield curve—have in the past signaled a significant risk of a recession.

Oil prices rose, with Brent crude gaining 1.2% to $100.24 a barrel, buoyed by expectations of supply curbs.

In Asia, major indexes ended mostly lower. Japan’s Nikkei 225 fell 2.7%, South Korea’s Kospi dropped 2.2% and Hong Kong’s Hang Seng lost 0.7%. The Shanghai Composite was a rare bright spot, rising 0.1%.

Write to Caitlin McCabe at caitlin.mccabe@wsj.com and Dave Sebastian at dave.sebastian@wsj.com

All eyes on a television broadcast of Federal Reserve Chairman Jerome Powell’s speech at the Jackson Hole Economic Policy Symposium on Friday.



Photo:

Michael Nagle/Bloomberg News

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Business

U.S. Futures Edge Up After S&P 500 Slides Into Bear Market

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U.S. stock futures edged higher, pointing to muted gains for major indexes after the S&P 500 closed in a bear market for the first time since 2020. 

Futures tied to the S&P 500 added 0.5% after the broad-market index tumbled 3.9% on Monday. Nasdaq-100 futures climbed 0.8%, suggesting a moderate rise in technology stocks after the opening bell. Dow Jones Industrial Average futures inched up 0.4%. 

Global stocks have come under pressure in recent weeks on concerns that major central banks will have to move more aggressively than expected to combat inflation. The latest data release on consumer prices in the U.S. further stoked these fears, as it rose from the previous month to 8.6% and reached the highest level in more than four decades. The S&P 500 declined for the past four straight trading sessions, losing over 10%. The index is down nearly 22% from its last record high.

“I wouldn’t necessarily read a lot into a sort of mini reversal. Things got really oversold and now people are just going to wait for the Fed,” said Colin Graham, head of multiasset strategy at Robeco. 

The Federal Reserve is set to release a monetary policy decision on Wednesday, after a two-day meeting. The Wall Street Journal reported on Monday that the policy makers are considering a surprise 0.75-percentage-point interest-rate increase. 

Some investors are likely to be bargain shopping after such a sharp decline across markets, Mr. Graham said. “At one point yesterday, every single stock in the S&P 500 was down. As long-term investors, we search for value as long as the economic damage isn’t too great.”

Investors are struggling to come to terms with powerful forces in the market: soaring inflation that erodes consumer purchasing power, and the prospect of a recession that could damage company profits and tip weaker companies into failure. One bond market indicator, the yield curve difference between two-year and 10-year government debt, briefly inverted overnight, flashing a warning that a recession could be ahead. In the New York morning, it rose to 0.015 percentage point. 

The U.S. yield curve last inverted in April, when shorter-dated Treasury yields rose more than longer-dated ones on expectations that the Fed could raise rates at a quick pace following a strong jobs report.

Bond markets were broadly more stable on Tuesday. The yield on the benchmark 10-year Treasury note declined to 3.337% from 3.371% on Monday, reversing direction after four consecutive days of rises. Prices rise when yields fall. 

The yield on some shorter-dated bonds rose further, with the two-year edging up to 3.322% from 3.279% the day before, after its biggest two-day jump since the week after Lehman Brothers collapsed, according to an analysis by

Deutsche Bank.

The producer-price index, a measure of inflation for domestic producers, rose 10.8% on a 12-month basis in May, a slight decrease from the previous month.

While many markets have come under pressure this year, rising rates have had a particularly large effect on the shares of money-losing companies that were once pandemic darlings and other speculative bets. Higher interest rates on safe-haven assets such as government bonds tend to reduce the relative appeal of riskier investments—and the perceived value of future cash flows—while lifting corporate borrowing costs.

“I don’t think we’re going to see anything like a V-shaped recovery,” Rick Pitcairn, chief investment officer at Pennsylvania-based multifamily office Pitcairn, said of the stock market. “The way we’ll rebuild will be in a more muted way—it won’t be right back to the high-speculation stocks.”

As markets react to interest-rate hikes and the threat of a recession, stocks are dropping closer to bear-market territory. WSJ’s Gunjan Banerji explains what it takes to push stocks back into a bull market and why it’s hard to predict when they’ll turn around. Illustration: Jacob Reynolds

In premarket trading, business-software firm

Oracle

jumped 12% after reporting a rise in quarterly sales that beat analysts’ expectations, driven by its cloud-computing division. Oil producer

Continental Resources

rose nearly 9% after billionaire

Harold Hamm

offered to buy the shares his family doesn’t already own for around $4.3 billion.

Cryptocurrency platform

Coinbase

tumbled 7% ahead of the bell after it said it will reduce its workforce by about 18%. JPMorgan cut its price target for the stock. 

Bitcoin remained under pressure after selling off sharply in recent days. It traded at about $22,150 on Tuesday, losing another 5%. It is 68% down from its last record high.

Overseas, the pan-continental Stoxx Europe 600 slipped 0.6%. Shares of French IT firm Atos plunged 24% after its CEO resigned and the company said it plans to spin off its big data and security division. 

Bonds issued by the Greek government, one of the weakest European economies, sold off. The 10-year yield rose to 4.607%, the highest level since November 2018.

In Asia-Pacific trading, Australian stocks led losses after the market reopened following a holiday. The S&P/ASX 200 index in Sydney erased 3.6%, its biggest one-day drop in percentage terms in more than two years. 

The Shanghai Composite Index rose 1%, while Hong Kong’s Hang Seng Index closed flat. Japan’s Nikkei 225 fell 1.3%. 

The Japanese yen little changed, hovering close to the weakest level to the dollar in 24 years, which it reached on Monday. 

In commodities, Brent crude, the global oil benchmark, gained 1.4% to trade at $123.90.

Write to Anna Hirtenstein at anna.hirtenstein@wsj.com and Dave Sebastian at dave.sebastian@wsj.com

Shares in Asia remained under pressure on Tuesday.



Photo:

franck robichon/Shutterstock

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Business

Stocks Turn Higher After Tech-Led Selloff

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U.S. stocks rose Wednesday in choppy trading, clawing back some of their losses after selling off sharply a day earlier.

The S&P 500 gained 1.4% in afternoon trading, while the Dow Jones Industrial Average added 1.2%, or about 407 points. The technology-focused Nasdaq Composite advanced 1.4%. The gains were broad-based, with 10 of the S&P 500’s 11 sectors rising. Only the communications services group lost ground.

On Tuesday, the Nasdaq recorded its largest one-day percentage decline since September 2020, while the Dow dropped more than 800 points, as investors digested earnings reports and weighed concerns about inflation, the prospect of rapid policy tightening by the Federal Reserve and the spread of Covid-19 in China.

Major U.S. stock indexes are down substantially for the year, with the S&P 500 down 11% and the Nasdaq Composite down 19%. On Tuesday, the Nasdaq closed at its lowest level since December 2020, wiping out the gains it notched in 2021. The Russell 2000 index of small-cap companies closed Tuesday at its lowest level since December 2020. 

Investors said they looked at Wednesday’s moves higher as a temporary relief rally.

“Stocks have been so weak so far this month I believe investors are seeing some value in the current pricing,” said

Tracie McMillion,

head of global asset allocation strategy at Wells Fargo Investment Institute.

Seema Shah,

chief strategist at Principal Global Investors, said she sees the next moves in the stock market as either sideways or down. 

Earnings are “supporting the market to some extent, but I don’t think it’s enough to support it higher,” Ms. Shah said. She said her team has moved to a neutral recommendation on their overall equity positions. 

“The risks are just piling up,” she said. “We don’t want to be picking up pennies in front of the steamroller.”

Many big companies are reporting earnings this week, with results due after Wednesday’s closing bell from companies including Facebook parent

Meta Platforms

and

Ford.

Twitter,

which this week agreed to sell itself for $44 billion to Elon Musk, is set to report Thursday.

Nearly 80% of S&P 500 companies that have reported earnings so far have surpassed analysts’ estimates,

FactSet

data show. Still,

Emily Roland,

co-chief investment strategist at John Hancock Investment Management, said investors remain focused on a number of wide-ranging issues weighing on markets.

“Markets are mostly focused on some of the macro concerns around aggressive tighter Fed policy, as well as this global growth scare that’s playing out,” she said.

Many of those concerns have driven the dollar to its highest level in more than two years. The dollar tends to strengthen when the global economy sours and when investors expect U.S. growth to outpace the rest of the world. Rising interest rates in the U.S. also typically benefit the greenback as higher rates attract yield-seeking investors to the currency. 

The ICE U.S. Dollar Index, which tracks the currency against a basket of others, rose 0.9% to 103.23, on pace to finish at its highest level since January 2017 and surpass even the coronavirus-induced market downturn of March 2020. Including Wednesday, the index has risen for all but two of April’s 18 trading sessions. 

In the bond market, the yield on the 10-year U.S. Treasury note rose to 2.786% on Wednesday from 2.773% on Tuesday. Recently, investors have sold bonds in anticipation of higher interest rates, and the yield on the benchmark note remains close to its highest level since 2018. Bond yields and prices move inversely.

Natural-gas prices in Europe rose 3.8%, after earlier leaping more than 20% on Wednesday. The moves came after Russia said it would halt gas flows to Poland and Bulgaria over their refusal to pay on Moscow’s new terms. Brent crude, the international benchmark for oil prices, fell 0.3% to $104.26 a barrel. 

Among individual stocks,

Tesla

shares added 2.9%, on pace to recoup some of their losses after tumbling 12% Tuesday, its biggest one-day drop in more than a year. Twitter shares fell 3% to $48.26, about 11% below the $54.20 per-share-price that

Elon Musk

and Twitter agreed to in their deal to take the company private.

Boeing

shares were recently down 8.9%. The company posted a $1.24 billion quarterly loss and again pushed back the expected first delivery of its new 777X twin-aisle jet.

Microsoft

shares jumped 6.4% after the company on Tuesday reported higher revenue and profit last quarter as demand for its cloud services and software continued to climb. 

On Tuesday, the Nasdaq Composite recorded its largest one-day percentage decline since September 2020, while the Dow dropped more than 800 points.



Photo:

Michael Nagle/Zuma Press

Chipotle Mexican Grill

shares added 1.9% after the burrito chain said total revenue increased 16% last quarter amid higher food, beverage and packaging costs—which the company said was partially offset by menu-price increases. 

Lucid Group

shares gained 3% after the company late Tuesday said the government of Saudi Arabia had agreed to purchase up to 100,000 vehicles over a 10-year period. 

Shares of Google parent

Alphabet

fell 3.7% after the technology behemoth posted slower sales growth amid disruptions in digital advertising spending.

Robinhood Markets

shares fell 5.1% after the online brokerage said it was laying off 9% of its full-time employees. The company is set to report earnings Thursday.

European stocks rose, with the Stoxx Europe 600 closing up 0.7%. Major markets in Asia were mixed, with benchmarks in Japan and South Korea falling more than 1% and Chinese indexes gaining.

The CSI 300 index of the largest stocks listed in Shanghai and Shenzhen rose 2.9%, recouping some of its recent losses. In Hong Kong, the Hang Seng Index was up 0.1%.

The rebound came after China on Tuesday reported its lowest tally of Covid-19 cases in three weeks, and President

Xi Jinping

highlighted the importance of infrastructure for economic growth, singling out transport, energy and water conservation. Machinery and building-materials stocks jumped.

Write to Caitlin McCabe at caitlin.mccabe@wsj.com, Dave Sebastian at dave.sebastian@wsj.com and Karen Langley at karen.langley@wsj.com

How the Biggest Companies Are Performing

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