Equity Indexes Wrap: Insurance, Food Rise as Investors Dump Cybersecurity, Communications
2 hr 28 min ago
The Dow
Boeing (BA) led the index’s small group of winners, rising 1.3% after Federal Aviation Administration officials said they had completed inspections of about 40 grounded 737 Max 9 jets.
UnitedHealth Group (UNH) gained 1.2% as investors pivoted to low-risk stocks. Fellow insurer Travelers Companies (TRV) rose 0.5%.
Walgreens Boots Alliance (WBA) led the index lower, falling 3.1%.
Walt Disney (DIS) fell 2.9% after presenting a slate of 12 nominees to its board of directors, snubbing activist investors Nelson Peltz and Blackwells Capital.
Verizon (VZ) stock fell 1.1% after the telecom company said it would take a $5.8 billion charge to write down the value of its business connectivity unit.
The S&P 500
Humana (HUM), one of several insurers to outperform the market Wednesday, gained 2%. Aon Plc (AON) and Allstate Corp. (ALL) rose 1% and 0.7%, respectively.
Consumer staples stocks gained, including J.M. Smucker (SJM), up 2%, and Campbell Soup Co. (CPB), up 1.3%. Conagra Brands (CAG) climbed 1.1% and General Mill (GIS) added 0.4%.
Citizens Financial Group (CFG) shares rose 1.7% despite reporting a 71% decline in profit in the fourth quarter as the cost of attracting deposits ate into earnings.
Albemarle (ALB) fell 4.2% after announcing plans to cut jobs and other costs amid a slowdown in demand for electric vehicles, the batteries for which Albemarle is a major lithium supplier.
Tesla (TSLA) lost 2% after cutting prices in several European markets just one week after slashing prices in China.
U.S. Bancorp (USB) shares fell 1.4% after reporting profit fell 14% in the fourth quarter.
Charles Schwab (SCHW) also slid 1.4% after saying higher interest rates and an FDIC charge halved quarterly earnings in the last three months of the year.
Streaming and entertainment companies were hit by today’s sell-off; Warner Bros Discovery (WBD) fell 1.8% and Paramount Global (PARA) lost 1.7%. Netflix (NFLX) was spared the worst of it, falling just 0.2% after analysts at Bank of America and KeyBanc raised their price targets on the streamer ahead of its earnings report next week.
The Nasdaq 100
PayPal (PYPL) rose 2.5%, recovering some of the losses suffered yesterday when Mizuho Securities downgraded the stock on concerns about competition from Apple Pay and buy now, pay later.
Advanced Micro Devices (AMD) shares rose 0.9%, adding to yesterday’s gains that followed from KeyBanc analysts raising their price target on the stock amid a promising AI outlook.
Kraft Heinz (KHC) rose 0.5%, one of several food makers to gain today as investors shunned risk in favor of consumer staples stocks.
Cybersecurity stocks—some of the market’s best performers lately—sank. Crowdstrike (CRWD), which has risen more than 180% in the last year, fell 3.5% Wednesday. ZScaler (ZS) lost 3%, and Fortinet (FTNT) fell 2.2%.
PDD Holdings (PDD) fell 0.7% after economic data out of China raised concerns about the impact falling prices and a sluggish property sector will have on the world’s second-largest economy this year.
Insurers, Food Makers Gain as Investors Shun Risk
3 hr 46 min ago
Traditional safe-haven stocks gained Wednesday as investors, spooked by hawkish talk from central bankers on both sides of the Atlantic and a better-than-expected U.S. retail sales report, trimmed bets the Fed will lower rates this quarter.
Consumer staples and healthcare were the session’s best-performing sectors, spared the worst of a broad sell-off that sent the consumer discretionary sector falling 1.2% and real estate stocks tumbling 2.4%.
Insurers were the health sector’s leaders, with Humana (HUM) and UnitedHealth Group (UNH) up 2.4% and 1.6%, respectively, late Wednesday afternoon.
Packaged food and grocery stocks were also among the S&P 500’s best-performing stocks. J.M. Smucker (SJM) gained 1.9%, while Campbell Soup Co. (CPB) rose 1.8% and Lamb Weston (LW) added 1.4%.
Chinese Stocks Stumble Amid Growth Concerns
4 hr 50 min ago
American depositary receipts of Chinese companies fell across the board Wednesday after economic data raised concerns about the stability and growth prospects of the world’s second-largest economy.
The Chinese economy grew 5.2% in 2023, about in line with expectations. But investors and economists see trouble lurking beneath the surface. Prices fell for a third consecutive quarter in the last three months of the year. Home prices also fell, as did new housing starts, a sign of caution among developers.
China’s population fell by 2 million to 1.41 billion last year, as births fell to their lowest on record. The country’s aging population poses a risk to its economy, as fewer working-age people are relied on to fund social services for a growing elderly population.
Shares of Chinese e-commerce companies JD.com (JD), PDD Holdings (PDD), and Alibaba (BABA) fell 5%, 1.8%, and 1.2%, respectively, Wednesday afternoon. Internet search provider Baidu (BIDU) lost about 3%, and carmaker Li Auto (LI) dropped almost 4%.
Charles Schwab Stock Slumps as Fed Rate Hikes and FDIC Charge Squeeze Profit
5 hr 58 min ago
Charles Schwab (SCHW) shares sank close to 3% in early trading Wednesday after the discount brokerage and financial services firm reported profit and sales plunged on a decline in interest revenue and a regulatory charge.
Schwab posted fourth quarter net income of $1.05 billion, a 47% drop from a year earlier. Revenue fell 19% to $4.46 billion. Net interest revenue slid 30% to $2.13 billion.
CFO Peter Crawford said that Federal Reserve interest rate hikes and the spillover effects of the banking crisis impacted the company’s financial results throughout 2023.
Crawford added that the benefits of high interest rates were more than offset by lower interest-earning assets and increased utilization of higher-cost supplemental funding.
Shares of Charles Schwab were down 2.3% at $62.83 early Wednesday afternoon. They’ve lost about one-quarter of their value over the past year.
Albemarle Cuts Costs and Plans Layoffs as EV Demand and Lithium Prices Fall
6 hr 45 min ago
Shares of Albemarle (ALB) lost ground Wednesday as the world’s largest lithium producer announced it was cutting costs and jobs, as well as taking other measures to save money because of “changing end-market conditions.”
Albemarle has been hurt by slowing demand for electric vehicles (EVs), which use batteries made with the metal, and plunging lithium prices.
The company said it would lower 2024 capital expenditures to between $1.6 billion and $1.8 billion, down from $2.1 billion last year. It explained that the change “reflects a re-phasing of larger projects in the near term to focus on those that are significantly progressed, near completion and in startup.”
Albemarle also plans to take actions to “optimize” its cost structure as it looks to slash expenses by $95 million per year.
Albemarle shares were down 2.1% at $123.25 per share midday Wednesday. They have lost about half their value over the past year.
Treasury Yields Rise to 1-Month High as Fed Talk Tilts Hawkish
7 hr 26 min ago
The yield on the benchmark 10-year Treasury note rose more than 6 basis points on Wednesday morning to as high as 4.13%, its highest since mid-December when bonds were in the middle of a two-month rally on expectations of rate cuts coming as early as March of this year.
Traders have pulled back on those bets this week, nudged by Federal Reserve Governor Christopher Waller, who on Tuesday said the central bank likely would begin lowering interest rates this year, but that cuts would need to be “carefully calibrated and not rushed.”
Investors now see a 56% chance the Fed will cut rates 25 basis points at its March meeting, down from a 63% chance yesterday, according to CME’s FedWatch Tool, which uses federal funds futures trading data to calculate market expectations for central bank policy.
Tesla Stock Falls After Slashing Prices in Europe
7 hr 57 min ago
Tesla (TSLA) shares fell over 3% in early trading Wednesday after slashing prices of its Model Y cars across several European countries, just a week after reducing prices in China.
The electric vehicle (EV) maker reportedly lowered the prices of its Model Y variants in Germany, France, Norway, and the Netherlands.
The Model Y rear-wheel drive variant in Germany is now available at 42,990 euros ($46,714), a decrease of roughly 4.2%, while the Model Y Long Range’s price was reduced by 8.1% to 49,990 euros ($54,321).
Tesla slashed prices several times last year, in China as well as in the U.S., to cope with slowing demand and rising competition. Warren Buffet-backed BYD, a Chinese firm, pulled ahead of Tesla as the world’s largest EV maker by global sales in the last quarter of 2023.
Shares of Tesla were about 3% lower at $213.38 per share Wednesday morning. They’ve gained about 62% over the past year.
AMD Stock Fueled by Optimism About AI Opportunity—Important Technical Levels to Monitor
8 hr 31 min ago
Chipmaker Advanced Micro Devices (AMD) gained over 8% Tuesday to close at its highest level since late 2021 amid growing optimism about AI-fueled demand for its semiconductors.
Barclays analyst Tom O’Malley says the company could generate $4 billion in AI chip sales this year, while KeyBanc analysts also see growth from chips powering AI servers. In the fourth quarter, the company announced a new AI server chip similar to Nvidia’s (NVDA) that OpenAI uses to train and run ChatGPT.
Magnificent Seven members Meta (META) and Microsoft (MSFT) said in December that they plan to use AMD’s chips for AI inference workloads and running cloud computing platforms. Barclays has placed a $200 price target on the stock, implying 26% upside from Tuesday’s close of $158.74.
Source: TradingView.com.
AMD broke above the June 2023 swing high last month before staging a successful retest of the breakout level in recent weeks. Tuesday’s price action saw the stock close above a flag pattern, suggesting a continuation of the bullish momentum. However, investors should keep a close on the $164.5 level—an area on the chart that may encounter resistance from the stock’s all-time high.
Stocks Making the Biggest Moves Premarket
9 hr 24 min ago
Gains:
- Instacart (CART): Shares of the grocery delivery business were up 4% after Wolfe Research upgraded the stock to “outperform” from “peer perform,” citing its potential to grow its advertising business and even, they speculated, merge with ride-hailing pioneer Uber (UBER).
- Nutanix Inc. (NTNX): Shares of the cloud software provider rose 4% after getting an upgrade from William Blair, which noted the firm’s potential to take market share from VMWare following its recent acquisition by Broadcom (AVGO).
Losses:
- Charles Schwab Corp. (SCHW): Shares fell 6% after the brokerage reported fourth-quarter net income of about $1 billion, a 50% drop from a year ago, as higher deposit costs and outflows weighed on profit.
- PDD Holdings (PDD): The Chinese e-commerce company fell about 4% after economic data showed China’s economy continued to struggle with deflation and muted property sector investment at the end of 2023. Chinese peers trading on U.S. exchanges, like JD.com (JD) and Alibaba (BABA) also fell pre-market.
- Tesla Inc. (TSLA): The electric vehicle maker’s stock fell about 2% after it cut prices on its Model Y in Germany, just a week after similar price cuts in China, the world’s largest EV market.
Stock Futures Fall as Central Banks Temper Rate Cut Expectations
10 hr 3 min ago
Futures contracts connected to the Dow Jones Industrial Average were down 0.4% in premarket trading Wednesday.
S&P 500 futures slipped 0.5%.
Nasdaq 100 futures traded 0.6% lower about an hour before markets opened.
