US stocks ended in the red on Wednesday, with tech and consumer stocks leading the declines.
Wednesday’s economic data didn’t help the market. The ADP employment report showed the private sector added fewer jobs than expected in February. Meanwhile the US services sector also expanded at a slower-than-predicted pace.
On top of that the 10-year US Treasury bond yield is back up again, at 1.47% — or 0.05% higher — around the time of the closing bell. Rising yields on the back of expectations for higher interest rates have been weighing on the market recently.
The Dow finished 0.4%, or 119 points, lower.
The S&P 500 fell 1.3%.
The tech-heavy Nasdaq Composite closed down 2.7%.
Investors in Oscar Health (OSCR) were probably in a grouchy mood after shares of the Joshua Kushner-backed insurance startup dipped 10% in their first day of trading Wednesday.
Oscar Health isn’t benefiting so far from Wall Street’s current love affair with initial public offerings and special purpose acquisition companies. That market mania has helped propel the shares of new stocks like Airbnb (ABNB), Bumble (BMBL) and Churchill Capital IV (CCIV), the blank-check firm that is merging with Lucid Motors.
But it’s not all bad news for Oscar Health — or Kushner, whose brother Jared is married to Ivanka Trump.
Despite the first day’s stock slide, Oscar Health still raised $1.4 billion from the sale of shares. Demand was strong enough before the IPO that Oscar Health raised both the price range and the size of the deal before settling on an offering of 37 million shares at $39 a pop.
At that price, Kushner’s Thrive Capital’s stake in the company is worth $1.3 billion. Kushner, a co-founder of Oscar Health, also has a controlling stake in the company.
Other big investors include venture capital firms Khosla Ventures, General Catalyst Group and Founders Fund; Google owner Alphabet (GOOGL); and mutual fund giant Fidelity.
Profits fell slightly at Fiat Chrysler in its final year as an independent company before being merged with PSA Group in January, but members of the United Auto Workers union still did better than they did in 2019.
Under a new profit sharing formula approved as part of their 2019 contract, the 43,000 unionized US workers received an average of $8,000 in profit sharing, up 12% from the 2019 payment.
That’s more than twice as much as the $3,625 paid to UAW members at Ford, though it trails the $9,000 average payment to members at General Motors.
Overall, Fiat Chrysler, which is now part of the combined automaker named Stellantis, reported 2020 earnings of 1.9 billion euros, or $2.2 billion, excluding special items, down 57% from 2019. Net income came to only 24 million euros, essentially breaking even. Global sales fell 22% to 3.4 million vehicles due to the pandemic, although sales rebounded by the fourth quarter to basically match year-earlier sales.
But there was a 20% decline in earnings in its North American unit, which is used to calculate UAW profit sharing.
The full-year results for the former Fiat Chrysler were slightly better than Wall Street forecasts and company’s earlier guidance. But the fact that the merger was completed in January reduced the attention given to the pre-merger results at either Fiat Chrysler or PSA Group
Stocks are mixed today but they’re still near their all time highs.
“We’re seeing momentum about getting vaccines distributed, we’re seeing more stimulus coming online,” but there are concerns that too much of a good thing could lead to a jump in prices, according to Laura Kane, UBS Global Wealth Management’s head of Americas thematic investing.
Over the past several weeks, worries that a sudden inflation spike could force the Federal Reserve to hike interest rates sooner than expected have led to a rise in US Treasury yields. This in turn weighed on stocks.
But not so fast.
“We’re not concerned about a sustained and broad-based increase in prices,” Kane told Alison Kosik on CNN Business’ digital live show Markets Now.
That said, not all sectors would perform well in an environment where interest rates will eventually go up.
Tech did very well in last year’s low-interest rate environment, for example, Kane said, but that might not continue. Cyclical and more value-oriented sectors, such as consumer companies, should be at an advantage this year.
Despite sitting near its all-time highs, the market as a whole isn’t overvalued, Kane said.
The pandemic has changed live sports, but it didn’t change how much people want to bet on it.
FanDuel parent Flutter (PDYPF) reported a 42% increase in sports revenue for 2020, for example.
“We see a number of years of growth ahead for us,” said FanDuel CEO Matt King on the CNN Business digital live show Markets Now.
While sports betting is not yet legal in every state, notable exemptions include California Florida and Texas, and King remains confident about FanDuel’s outlook in the current market.
States also understand that betting must to be governed by common sense legislation and can be a source of taxes, he said.
It’s been a wild few weeks for Bitcoin. The cryptocurrency is up 8.4%,to $51,414 today. And the rally isn’t over yet, William Quigley, co-founder of cryptocurrency-focused investment fund Magnetic.
Over the next “12 to 18 months [after Bitcoin halves], Bitcoin can go up between 300% and 500%,” Quigley told Alison Kosik on the CNN Business digital live show Markets Now. “We’re about halfway through the midpoint halving.”
Bitcoin halving refers to the process that cuts the reward to mine Bitcoin in half. That last occurred in May 2020.
As for corporate America, perhaps most prominently Tesla (TLSA), becoming more interested and invested in Bitcoin, Quigley says “it’s huge.” For company financial officers and treasurers the cryptocurrency is a great inflation hedge as well, he added. “By the end of the decade all economies in the world will have tokenized their currency. There are really no drawbacks, only benefits, to do this.” He added, however:
Weekly claims for unemployment benefits just aren’t getting better.
Economists predict another 750,000 workers filed for first-time benefits last week. That would be an increase from the 730,000 claims filed the week before.
Continued jobless claims— meaning claims filed for at least two weeks in a row — are expected at 4.3 million, down from 4.4 million in the prior week.
The Labor Department’s jobless claims report is published every Thursday at 8:30 am ET.
People stuck at home during the pandemic continue to find comfort in expensive alcohol.
Brown-Forman, the owner of the Jack Daniel’s whiskey brand, said in its most recent earnings report Wednesday that sales of premium bourbon soared.— even as drinkers ordering booze through delivery apps like Drizly aren’t buying as much classic Jack.
Brown-Forman (BF.B) noted that sales of pricier bourbon brands such as Woodford Reserve and Old Forester have surged 18% so far this fiscal year compared to a year ago.
But sales of the classic Jack Daniel’s brand were down 2%, despite offering trendy flavors like honey, cinnamon and apple to go along with the traditional Tennessee whiskey.
“Premiumization remains a trend as consumers continue to treat themselves to everyday luxuries,” said Brown-Forman chief financial officer Jane Morreau during a conference call with analysts.
Cheers to that!
It’s lunchtime and the stock market looks choppy.
The three major indexes are mixed, with energy and financials shares up and technology and consumer stocks down.
The Dow is up 0.3%, or 88 points.
The S&P 500, a broader measure of the market, is down 0.3%.
The Nasdaq Composite is down 1.1%.
The deep freeze that paralyzed the Texas energy system dealt a major blow to oil refineries along the US Gulf Coast.
US oil refining activity plunged by 2.3 million barrels per day in the week ended February 26, according to federal stats published Wednesday.
That’s down by one-third compared with before the cold snap and the lowest level since the Energy Information Agency began tracking this weekly metric in 1982.
The record low highlights the impact of the extreme cold that caused deadly blackouts in Texas last month and caused several refineries around its cities Houston, Corpus Christi and Port Arthur to fully or partially shut down.
Texas is not only the nation’s No. 1 oil, wind and natural gas producer, but also the refining hub of America, accounting for nearly one-third of total US refining capacity.
Refining activity in the Gulf Coast, which includes Texas, tumbled by 2.1 million barrels per day in the latest week, the EIA said.
“The unprecedented winter storm in Texas has resulted in refining activity being pushed to a record low,” Matt Smith, director of commodity research at ClipperData, said in an email.
Not as good as expected. That’s apparently the theme of today’s economic reports.
First ADP reported disappointing February employment data and now the Institute for Supply Management’s services sector is following suit.
Last month, the purchasing managers’ index for the sector stood at 55.3%, below economists’ expectations of 58.7%, which would have been flat from January.
On the upside, any number above 50 means the sector expanded and February marked the ninth straight month of growth. So that’s good news, just not quite as good as hoped.
The captains of Corporate America are accelerating a campaign to persuade Washington to give Dreamers a path to citizenship.
The Coalition for the American Dream — comprised of more than 100 organizations, including Amazon, Apple, General Motors and Target — wrote a letter to Senate leadership Wednesday calling on lawmakers to provide certainty to Dreamers, undocumented immigrants brought to the United States as children.
The letter, first reported by CNBC, expressed “strong support” for the Dream Act of 2021. That’s a recently reintroduced, bipartisan bill that would allow Dreamers to apply for lawful permanent resident status and eventually citizenship.
The legislation “would provide a permanent legislative solution for these young people and end the limbo they have been in for years,” the coalition said.
The letter was signed by leading business groups, including the US Chamber of Commerce, the National Retail Federation and the National Association of Manufacturers. A wide range of companies are also backing the effort, including Best Buy, Microsoft, Google, Uber and Starbucks.
Failure to act could cost the US economy $350 billion in GDP and $90 billion in federal tax revenue, the group argued.
“Continued delay or inaction will cause significant negative economic and social impact on businesses and hundreds of thousands of deserving young people across the country,” the letter said.
The campaign includes a full-page ad in the New York Times, as well as virtual meetings between Senate offices and Dreamers who work at IBM, Intel, Microsoft and other companies.
US stocks opened mixed on Wednesday following a turbulent start to the week. Monday was one of the market’s best days in months, but it pulled back from its highs on Tuesday.
The ADP employment report showed the private sector added fewer jobs than expected in February, which doesn’t bode well for the government’s official jobs report due Friday.
All three indexes climbed into positive territory in the first minutes of trading.
It’s jobs week, so that means we’re kicking things off with the ADP employment report for February this morning. And It missed expectations. Ugh.
117,000 private-sector jobs were added to the economy last month, the report says —a good clip fewer than the 177,000 economists had expected.
Even though the ADP report and the government’s official look at the labor market due Friday morning aren’t correlated, the former is a bit of a bellwether for how the official numbers might look.
Mid-sized companies, as well as the trade, transportation and utilities sector, saw the biggest job gains.
Meanwhile, the January ADP report was revised up, with 195,000 jobs added versus the 174,000 initially reported.
Las Vegas Sands Corp. (LVS), the upscale resort and casino company founded by the late Sheldon Adelson, is leaving its namesake city and selling its two Nevada properties in a $6.25 billion deal.
Apollo Global Management and Vici Properties are partnering to buy the Venetian, a 7,000 room resort on the Las Vegas Strip, and the nearby Sands Expo and Convention Center.
Las Vegas Sands is shortening its name to Sands as a result of leaving Las Vegas. In a press release, Adelson’s company said the change is “bittersweet” and will help it focus on faster growing markets, such as Asia.
Sands shares spiked nearly 3% in premarket trading.
US stocks are rebounding after closing in the red on Tuesday. A mix of travel, banking and energy stocks are buoying the gains.
Here’s where things stand as of 6:30 am ET:
Inflation concerns have led to more volatility in the stock and bond markets of late.
That should be good news for gold, a tangible asset with a limited supply that often does well in times of inflation. Central banks can always print more money. Miners can’t just magically create more gold.
But gold has recently lost some of its luster thanks to a new financial kid in town: bitcoin. Gold prices are down about 9% this year and are trading nearly 15% below the all-time high of more than $2,000 an ounce set last summer.
Meanwhile, bitcoin has soared nearly 70% and is currently hovering just below $50,000 per coin — not far from the record high it reached last month.
Still, fans of gold think the yellow metal is due for a rebound — even if bitcoin continues to march higher as well.
UK finance minister Rishi Sunak is preparing to deliver a crucial budget in the wake of the economy’s worst slump in more than three centuries, the messy Brexit divorce from its largest trading partner and increasingly strained government finances.
Sunak will announce later on Wednesday that emergency support measures for workers and businesses are being extended, while making the case that public finances will need to be repaired once the country’s rapid vaccine rollout has eased the economic pain caused by the coronavirus pandemic.
The UK government has borrowed vast sums of money to fund nearly £300 billion ($419 billion) in fiscal stimulus over the past 12 months. Total government debt has soared to £2 trillion ($2.8 trillion), or close to 100% of GDP, a level not seen since the 1960s, according to the Office for National Statistics.
