Tech stocks powered Wall Street higher on Tuesday.
Netflix (NFLX) helped lead the market rally, jumping 7% after announcing a price hike. Goodyear Tire & Rubber (GT) plunged 13% after issuing a profit warning due to weak car sales in China and India.
US markets mostly shrugged off the defeat of UK Prime Minister Theresa May’s Brexit plan in parliament. After sinking before the vote, the British pound recovered sharply and even turned positive against the US dollar.
Marjorie Chorlins, executive director of the US Chamber of Commerce’s US-UK Business Council, urged the British government to “find a solution” for Brexit that can win the support of Parliament:
The British pound shrugged off a dramatic vote in the UK parliament that left the government’s Brexit plans in tatters. Britain is scheduled to leave the European Union at the end of March.
A warning from Goodyear (GT) about a weaker-than-expected fourth quarter sent shares falling more than 13%.
The tire manufacturer blamed the “continued weakening” of car sales in China and India.
The company also pointed to a decline in winter tire sales in Europe, and supply constraints for certain truck tires in the US.
It now expects its 2018 operating income to be “slightly below” its previous guidance of $1.3 billion.
Blue Apron (APRN) said it might be profitable this year and that’s sending shares of the troubled meal-kit company up more than 30%. (Shares closed 45% higher for the day.)
Customers are apparently craving its new line of Weight Watchers meal kits. Blue Apron said the new line are being met with a “favorable consumer response” and are selling better-than-expected.
The company will release earnings on January 31.
The company has had a tough few years. Blue Apron announced late last year it was still losing money and slashed 4% of its workforce.
Back in 2017 the company axed 6% of its staff. The stock has lost roughly 90% of its value since it went public that year:
Wall Street appears to be unfazed by JPMorgan’s rare earnings miss and that looming Brexit vote.
Netflix (NFLX) is powering the rally, climbing 7% after announcing plans to raise prices to combat the steep cost of producing shows and movies.
Oil is also boosting stocks. US crude prices soared 2.4% to $51.70 a barrel, lifting energy stocks like Hess (HES) and Anadarko Petroleum (APC).
Wells Fargo’s trip to the penalty box is proving to be an extended one.
The scandal-ridden bank is now planning to operate under tough Federal Reserve sanctions “through the end of 2019.”
Citing “widespread consumer abuses,” the Fed put imposed an unprecedented asset cap on Wells Fargo last February. That penalty is to remain in place until regulators are satisfied the bank has cleaned up its act.
Wells Fargo (WFC) originally said the asset cap could be lifted as soon as September 2018.
But CEO Tim Sloan told analysts on Tuesday that Wells Fargo needs more time to incorporate the “feedback” it’s received from the Fed.
“We’re making progress,” Sloan said. “It’s just happening a little bit slower than we had originally anticipated, but we’ll get there.”
Wells Fargo shares were down 2% in midday trading.
US markets opened little changed Tuesday as investors wait for the Brexit vote in the United Kingdom.
JPMorgan Chase (JPM) declined 2% after reporting a rare earnings miss caused in part by market volatility. Sherwin-Williams (SHW) fell 5% after issuing a profit warning on “weak” sales growth in North America.
Traders will shift their attention to the looming Brexit vote, which could cause more turbulence in the currency markets and uncertainty for businesses.
Shares of Netflix (NFLX) are spiking 5% in early trading after it said it’s hiking prices for US subscribers.
All three subscription tiers will get more expensive.
The premium plan will now cost $16 per month (up from $14), the standard plan will jump from $11 to $13 per month and the basic plan will cost one dollar more at $9.
The price hikes come ahead of its fourth quarter earnings release on Thursday. Netflix previously raised prices in October 2017.
JPMorgan Chase CEO Jamie Dimon said the partial government shutdown, which has lasted 25 days, could seriously hurt the economy if it drags on.
“If it goes on for the whole quarter, it can reduce growth to zero,” he said today on a call with reporters just after the company reported fourth-quarter earnings.
A shutdown “is not going to help the economy,” Dimon added. The closure cramps lending and could even hurt capital markets activity by preventing companies from going public.
“We don’t know exactly what it’s going to do, but it’s not a positive,” Dimon said.
JPMorgan (JPM) previously said it would help customers affected by the shutdown by waiving fees for customers who stop receiving direct deposits from the federal government into their accounts.
JPMorgan Chase, the nation’s largest bank by assets, said it brought in $7.1 billion in profit from the last three months of 2018, a 67% increase compared to 2017.
But the results at JPMorgan (JPM) are below what Wall Street expected, moving the bank’s stock lower before markets open. (It’s also worth noting that profit fell in the fourth quarter of 2017 because of one-time charges related to President Donald Trump’s tax reform law.)
The jump in fourth quarter profits comes despite a rocky trading environment, which is hurting banks. Bond trading fell 16% as volatility spooked investors. Citi reported similar problems on Monday.
Wells Fargo, mired in years of scandal, suffered declines in profit, revenue and deposits at the end of 2018.
America’s third-largest bank by assets reported a 2% dip in fourth-quarter profit on Tuesday. Per-share earnings increased more than Wall Street expected.
Revenue declined 5%, which is more than analysts feared.
Wells Fargo (WFC) continues to suffer from year-over-year declines in deposits and loans even as its rivals grow these major metrics. The bank’s average deposits fell by 3% to $1.3 trillion. Wells Fargo said average loans slipped by 1% to $946.3 billion.
Wall Street will be happy to see that Wells Fargo successfully cut non-interest expenses, a major sore spot in recent years. The bank has been shutting branches and laying off workers in a bid to cut costs.
Delta Air Lines has warned investors of a turbulent first quarter.
The company is forecasting earnings per share of 70 cents to 90 cents for the beginning of 2019, which is far below Wall Street estimates. Delta also said a key measure of revenue from fares is likely to be flat.
Shares of Delta (DAL) fell as much as 1.6% in premarket trading, but the stock has eased off those lows.
Rivals’ stocks are also down. United Continental (UAL), which is set to report earnings after the market close, fell 1%. Shares of American (AAL) also slipped 1%.
The partial government shutdown, now in its 25th day, will cost Delta Air Lines $25 million in lost revenue this month.
CEO Ed Bastian said on CNBC that fewer government contractors are traveling.
He also said the shutdown could delay the launch of the new Airbus 220 jet, which is scheduled to go into service on January 31 from New York’s LaGuardia. FAA inspectors, who are currently furloughed, need to certify the airline’s operational plans.
Airports are also feeling the pinch. At Delta hub Atlanta Hartsfield-Jackson, travelers experienced long lines Monday at TSA checkpoints because so many officers were absent.
US stock futures are pointing higher after markets completed their first back-to-back declines of 2019 on Monday.
The Dow closed 0.4% lower, while the S&P 500 shed 0.5% and the Nasdaq dropped 0.9%.
Ahead of the open, we’re watching JPMorgan Chase (JPM) and Wells Fargo (WFC) — they’re set to report earnings.
UK lawmakers are widely expected to reject Prime Minister Theresa May’s divorce deal with the European Union on Tuesday, which could send the British pound into a tailspin.
The only real question is the size of May’s loss.
One analyst said the pound could weaken in the immediate aftermath of a defeat to $1.24, which would place it near its lowest level since early 2017.
A loss for the government might be good news for the currency in the long run. Analysts think a defeat for May makes it more likely that Brexit will eventually be delayed, or called off altogether.
