Coffee With Greta: Strong Private Job Growth Spooks Traders
DJIA Futures: -165 (-0.5%) SPX Futures: -22 (-0.6%) NASDAQ Futures: -72 (-0.6%) Good morning friends! Futures are falling after the release of strong labor market data. Let’s get right to it! Private Payrolls Surge In December Private sector job growth blew past expectations in December. Payroll firm ADP reported private employers added 235,000 employees last month. That was sharply higher than 153,000 expected and up from 127,000 in November. The services sector led those gains, adding 213,000 workers. Leisure and hospitality added 123,000, professional and business services grew by 52,000, and education and health services added 42,000. Wages also continued strong gains with annual pay across all categories up 7.3% year over year. This data comes ahead of the official December jobs report from the Labor Department on Friday. That’s expected to show the U.S. economy added 200,000 jobs last month with the unemployment rate unchanged at 3.7%. Weekly Jobless Claims Drop Weekly jobless claims fell to a 14-week low at the end of 2022. The Labor Department reported 204,000 Americans filed initial claims for unemployment benefits last week. That was down by 19,000 from the week before and better than 223,000 expected. Continuing claims also dipped by 30,000 to 1.69 million in the week ending December 24. Trade Deficit Tumbles In November The U.S. trade deficit narrowed more than expected in November. The Commerce Department reported that gap tumbled 21% to $61.5 billion. That was down from $77.8 billion in October and better than $63.1 billion expected. Bed Bath & Beyond Sinks After Warning Bed Bath & Beyond (BBBY) shares are plummeting 18.7% ahead of the open after the company warned about slower than expected sales. The home goods retailer said it now expects fiscal Q3 sales of $1.26 billion vs analysts’ expectations for $1.41 billion. That’s down from $1.88 billion in the same quarter one year ago. Bed Bath & Beyond also expects to report a $385.8 million net loss in the quarter, up from $276.4 million a year ago. The company also issued a “going concern” which is a warning that it likely will not have the cash to cover expenses in the upcoming months. BBBY is set to report full quarterly results on Tuesday. Silvergate Capital Tanks Silvergate Capital (SI) shares are tanking 35.5% in premarket trade after the crypto bank released preliminary Q4 results. That report showed total crypto deposits plunged 68% at the end of Q4 to $3.8 billion vs $11.9 billion at the end of Q3. The massive withdrawals came as crypto exchange FTX, which was a Silvergate customer, collapsed. The bank also said $150 million of its deposits at the end of December were held by customers who had filed for bankruptcy. Silvergate said it sold $5.2 billion of debt securities to raise cash. That put its total cash and cash equivalents held at the end of December at $4.6 billion. The CEO said, “In response to the rapid changes in the digital asset industry during the fourth quarter, we took commensurate steps to ensure that we were maintaining cash liquidity in order to satisfy potential deposit outflows, and we currently maintain a cash position in excess of our digital asset related deposits.” The bank also announced it’s laying off 200 employees, representing about 40% of its workforce. Walgreens Tops Fiscal Q1 Expectations, Hikes Outlook Walgreens (WBA) shares are falling 4.8% ahead of the open despite beating fiscal Q1 expectations. Here’s how the drugstore chain’s results compared to analysts’ expectations: Adjusted EPS: $1.16 vs $1.14 expected Revenue: $33.38 billion vs $32.84 billion expected But Walgreens reported an unadjusted loss of $3.7 billion, or $4.31 per share, driven by a $5.2 billion settlement for opioid-related litigation. An early cold and flu season drove strong sales in the quarter as demand surged for over-the-counter medications. Walgreens hiked its full-year sales guidance to $137.5 billion from $133.5 billion previously. The company maintained its full-year EPS guidance of $4.45 to $4.65 vs analysts’ estimates of $4.50. GM Reclaims America’s Top Automaker Title General Motors (GM) shares are slipping 0.8% in premarket trade after the company reclaimed the title of America’s top automaker from Toyota in 2022. GM reported its total 2022 sales in the U.S. on Wednesday. The automaker said it sold 2.27 million vehicles in the U.S. last year, up 2.5% year over year. That topped Toyota’s U.S. sales of 2.1 million vehicles in 2022. GM sold 623,261 vehicles in the fourth quarter, up 41.4% year over year. The automaker’s EV sales also surged in Q4, with the company selling 16,108 vehicles vs just 25 a year ago. In Case You Missed It The minutes of the Fed’s December 2022 meeting showed officials are committed to lowering inflation and expect higher interest rates to remain in place for “some time”. The meeting summary said, “Participants generally observed that a restrictive policy stance would need to be maintained until the incoming data provided confidence that inflation was on a sustained downward path to 2 percent, which was likely to take some time.” The Fed’s latest dot plot showed no interest rate cuts beginning until 2024. The number of job openings in the U.S. was relatively unchanged in November, a sign the labor market is maintaining strength in the face of the Fed’s rate hikes. The Labor Department’s Job Openings and Labor Turnover Survey showed there were 10.46 million unfilled jobs in November, down just slightly from the upwardly revised 10.51 million in October. The number of job openings outnumbered unemployed workers by 1.7 to 1. That’s well above pre-pandemic levels of 1.2 to 1. Apple (AAPL) reclaimed its $2 trillion market cap on Wednesday. The iPhone maker’s stock closed 1.03% higher at $126.36 per share. That put its valuation at $2.088 trillion. The company’s market cap slipped under that key level Tuesday for the first time since May 2021.
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DJIA Futures: +141 (+0.4%) SPX Futures: +23 (+0.6%) NASDAQ Futures: +90 (+0.8%) Good morning friends! Futures are higher as traders try to shake off Tuesday’s down start to the year and look ahead to key economic data. Let’s get right to it! Apple Market Cap Drops Below $2 Trillion Apple (AAPL) shares are up 1.1% ahead of the open, rebounding from Tuesday’s decline that pushed the tech giant’s market cap below $2 trillion. It was the first time since May that the iPhone maker’s valuation slipped below that key level. AAPL shares closed 3.7% lower Tuesday at $125.07, a new 52-week low and putting the company’s market cap at $1.99 trillion. The stock has fallen sharply from its brief jump above a $3 trillion market cap in January 2022. Apple’s share price fell nearly 27% in 2022. Salesforce To Cut 10% Of Its Workforce Salesforce (CRM) shares are up 4.7% in premarket trade after announcing a restructuring plan. The tech company said today it will lay off about 10% of its employees and close some offices. Those moves are expected to lead to between $1.4 billion and $2.1 billion in charges. $800 million to $1 billion of that will be record in fiscal Q4 2023. Co-CEO Marc Benioff said in a letter to employees, “The environment remains challenging and our customers are taking a more measured approach to their purchasing decisions.” Laid-off employees in the U.S. will receive five months pay, health insurance, and other benefits as part of their severance package. GE Healthcare Spinoff Starts Trading Today General Electric (GE) shares are up 0.3% ahead of the open as the company’s healthcare spinoff is set to begin trading as a separate company today. GE Healthcare Technologies will trade on the S&P 500 under the ticker symbol GEHC. This is part of GE’s plans it revealed in 2021 to break up into three separate companies so it can focus on its aviation business. The company plans to spinoff its energy segment in 2024. Ford Reigns As America’s Bestselling Truck Ford (F) are up 0.9% in premarket trade, extending Tuesday’s gains. The automaker reported sales of its F-Series pickups surpassed 640,000 trucks in 2022. That made the F-Series America’s bestselling truck for the 46th straight year and the bestselling vehicle overall for 41 years. The 2022 sales were down from 726,004 F-Series trucks sold in 2021. Ford is set to report its total year-end sales for 2022 on Thursday. Mortgage Demand Plunges At End of 2022 Mortgage demand plunged at the end of 2022 as rates pushed higher and seasonal slowness weighed on the market. The Mortgage Bankers Association reported total application volume dropped 13.2% last week compared to 2 weeks earlier. MBA was closed the prior week due to the holiday. Purchase applications dropped 12.2% on a weekly basis and were down 42% year over year. Refinance applications tumbled 16.3% weekly and 87% annually. The average 30-year fixed contract rate rose to 6.58% from 6.34%. That’s up sharply from 3.33% at the end of 2021. JOLTS Preview The Labor Department releases the first piece of key jobs data later this morning. The November Job Openings and Labor Turnover Survey (JOLTS) will be out at 10:00 a.m. ET. That survey is expected to show there were 10.1 million job openings in November, down from 10.3 million in October. Although openings are still outnumbering job seekers, that gap has shrunk as the labor market tightened at the end of 2022. In Case You Missed It The contraction in the U.S. manufacturing sector deepened in December. The S&P Global Manufacturing PMI fell to 46.2 from 47.7 in November. That was the lowest reading since May 2020 and the second straight month of contraction. Tesla (TSLA) shares plunged 12.2% on Tuesday after the electric automaker reported weaker-than-expected Q4 deliveries and production. The drop came as some analysts took that miss as a warning sign for Tesla’s future. The company still reported record 40% growth in deliveries year over year. TSLA shares are up 1.1% ahead of the open.
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DJIA Futures: +144 (+0.4%) SPX Futures: +22 (+0.6%) NASDAQ Futures: +93 (+0.8%) Good morning friends! Futures are higher as traders gear up for the start of a new year on Wall Street. Let’s get right to it! Tesla Q4 Deliveries Fall Short Tesla (TSLA) shares are falling 4.4% ahead of the open after reporting lower-than-expected Q4 deliveries. The electric automaker delivered 405,278 vehicles in the fourth quarter and producer 439,701. That brings Tesla’s total annual deliveries in 2022 to 1.31 million with total production at 1.37 million vehicles. The annual numbers are a new record for the company and up 40% year over year. But analysts were expecting Tesla to deliver around 427,000 vehicles in Q4. Gold Surges To 6-Month High Gold prices surged to a 6-month high early this morning as the recent rally continues. Spot gold peaked at just below $1,850 per troy ounce on the London Metal Exchange. U.S. gold futures are currently up 0.9% to $1,843. Gold prices have been rising since the beginning of November. Oil Prices Begin 2023 Lower Oil prices are falling this morning amid weak demand in China and global economic concerns. West Texas Intermediate crude futures are down 1.1% to under $79.50 bbl while Brent crude futures are down 1% to $85 bbl. The latest data from China shows factory activity shrank in December as Covid cases surged in the country after authorities relaxed restrictions. The IMF’s Managing Director also said over the weekend the the U.S., Europe, and China were all slowing simultaneously. She said that will make 2023 tougher than 2022 for the global economy. Treasury Yields Slip U.S. Treasury yields are falling this morning as uncertainty about 2023 lingers over the market. The 2-year yield is down 5 basis point to 4.38% while the 10-year yield is down 13 basis points to 3.75%. Investors are looking ahead to key data ahead this week for clues about the state of the economy. Busy Week Of Jobs Data It will be a big week of economic data, mostly focused on the labor market. On Wednesday, the Labor Department releases its November Job Openings and Labor Turnover Survey (JOLTS) and the Fed will release the minutes of its last meeting. ADP then reports private employment numbers for December on Thursday while the Labor Department reports weekly jobless claims. Then on Friday is the official December jobs report from the Labor Department. This data is key for the market to gauge its expectations for Fed policy as the bank has said a slowdown in the labor market is needed in order to get inflation under control. In Case You Missed It 2022 was Wall Street’s worst year since 2008. The Dow Jones ended the year 8.8% lower, while the S&P 500 dropped 19.4%, and the Nasdaq sank 33.1%. But the Dow and S&P 500 did post gains in the 4th quarter, breaking a three quarter losing streak. The Dow rose 15.4% in Q4 while the S&P 500 was up 7.1%. The Nasdaq still slipped 1.0% last quarter. Many analysts expect the bear market to persist into 2023 until a recession hits.
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DJIA Futures: -149 (-0.5%) SPX Futures: -26 (-0.7%) NASDAQ Futures: -117 (-1.1%) Good morning friends! Futures are lower as traders gear up for the final trading day of 2022. Let’s get right to it! The End of 2022 Today is the final trading day of 2022 with no Santa Rally lifting the market as the year comes to a close. This will be the worst year for stocks since 2008 and the major indexes are all on track to snap a two-month win streak in December. Year-to-date, the Dow Jones is down 8.6%, while the S&P 500 has lost 19.2%, and the Nasdaq has tumbled 33%. But the 4th quarter as a whole has actually been positive for Wall Street. The Dow is on track for a 15.7% quarterly gain, its best since Q2 2020. The S&P is also up 7.4% this quarter. But the Nasdaq has slipped 0.9%, on track for its fourth straight negative quarter for the first time since 2001. Most analysts expect the bear market to extend into the new year as the Fed continues to tighten and a recession is expected in the first half of the year. Oil Prices Slip, On Track For Annual Gain Oil prices are falling this morning but on track to close higher in 2022 for the second straight year. West Texas Intermediate crude futures are down 0.3% to $78 bbl while Brent crude futures are down 0.2% to $83 bbl. Although both contracts have fallen sharply from this year’s earlier peak they’re still on track for annual gains. Brent looks set to gain more than 7% in 2022 after a 50% jump in 2021. WTI is on track to rise 4.1% this year vs 55% last year. Bond Markets Close Early Today U.S. Treasury yields are mixed on the final trading day of the year as uncertainty remains about Fed policy and an impending recession. The 2-year yield is up 5 basis points to 4.41% while the 10-year yield is down 1 basis point to 3.87%. CME Group’s FedWatch Tool shows 69.7% of traders expecting the Fed to continue slowing rate hikes with a 25 basis point move at their first meeting in 2023. The bond markets close early at 2:00 p.m. ET today and will be closed Monday alongside the equities market in observance of New Year’s Day. Southwest Expects Normal Operations Today Southwest Airlines (LUV) shares are slipping 0.8% ahead of the open after rallying on Thursday after saying it expected to return to normal operations today. The airline has only canceled 39 flights scheduled for today, down from more than 2,300 on Thursday. In a staff memo Thursday, the CEO said, “We have all hands on deck and tested solutions in place to support the restored operation. I’m confident, but I’m also cautious.” Executives also warned on a call with reporters that the holiday meltdown “will certainly be an impact to the fourth quarter”. Southwest has promised to reimburse customers for expenses they incurred due to the cancellations including hotels, food, or other travel accommodations.
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DJIA Futures: +167 (+0.5%) SPX Futures: +29 (+0.8%) NASDAQ Futures: +116 (+1.1%) Good morning friends! Futures are higher as stocks rebound but traders’ hopes for a Santa rally fizzle out. Let’s get right to it! Unemployment Claims Jump Weekly jobless claims rose more than expected last week. The Labor Department reported 225,000 Americans filed initial claims for unemployment benefits. That was up by 9,000 from the previous week and higher than economists’ expectations for 223,000. Continuing claims also rose by 41,000 to 1.71 million in the week ending December 17. That’s the highest level since February and a sign that it’s taking more time for laid off workers to find new jobs. Tesla Rebounds Tesla (TSLA) shares are rising 5.2% ahead of the open, extending the rebound that started Wednesday afternoon. Wednesday was the first positive close for the stock in eight sessions. But TSLA is still on track for its worst year ever. CNBC obtained an email that CEO Elon Musk sent to employees on Wednesday telling them not to be “too bothered by stock market craziness.” He said Tesla needs to “demonstrate continued excellent performance,” and “long-term, I believe very much that Tesla will be the most valuable company on Earth!” Apple Bounces Back Apple (AAPL) shares are up 1.5% in premarket trade after the stock closed at a new 1.5 year low on Wednesday. Year-to-date, AAPL is down 29% as the tech sector has been hit hard in the 2022 bear market. So far in December, the iPhone maker’s stock is down nearly 15%. Oil Prices Fall As Covid Cases Spike In China Oil prices are rising this morning as surging Covid cases in China dampen hopes for higher demand. West Texas Intermediate crude futures are down 0.9% to $78 bbl while Brent crude futures are down 0.9% to $82.50 bbl. As China has relaxed its Covid restrictions, the country has seen a surge in cases. The latest outbreak has prompted five countries including the U.S. to enact a testing requirement for travelers from China. In Case You Missed It Pending home sales fell more than expected in November. The National Association of Realtors reported pending sales dropped 4% last month vs expectations for a 1.8% decline. That was the sixth straight monthly drop and the lowest level of contract signings since April 2020. Pending sales were down a sharp 37.8% compared to November 2021.
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DJIA Futures: +35 (+0.1%) SPX Futures: +1 (+0.03%) NASDAQ Futures: -6 (-0.1%) Good morning friends! Futures are flat as traders look ahead to the new year. Let’s get right to it! Tesla Headed For Worst Year Ever Tesla (TSLA) shares are falling 3.6% ahead of the open, extending the company’s recent losing streak to 8 days. The drop comes after TSLA plunged 11.4% on Tuesday and is down 44% so far in December. The tumbling stock price has the automaker on track for its worst quarter and year on record. The stock is down 69% in 2022 and has fallen 73% from its record high in November 2021. Tesla has only had one other negative year since its IPO in 2010, an 11% drop in 2016. Southwest Still Canceling Flights Southwest Airlines (LUV) shares are down 1.5% in premarket trade as the airline continues to cancel flights. The company announced on Tuesday it only planned to fly about a third of its schedule “for the next several days” in an attempt to reset its operations. That means more flight cancellations today after Southwest canceled more than 2,500 on Tuesday. In a message to employees this week, the CEO said, “we’ve got to get out of this. We’ve got to get to the point where we’re reliable and we get our Customers, our Crews, our aircraft, everything on track.” Treasury Yields Mixed As Investors Look To 2023 Treasury yields are mixed this morning as investors look ahead to 2023 and brace for a recession. The 2-year yield is down 2 basis points to 4.35% with the 10-year yield up 8 basis points to 3.83%. There’s uncertainty about what the Fed will do in the face of a recession and continued inflation pressures next year. The first Fed meeting is not until February 1. CME Group’s FedWatch Tool show 69.8% of traders expecting just a 25 basis point rate hike at that meeting with 30.2% anticipating another 50 basis point move. Pending Home Sales Expected To Fall The National Association of Realtors reports November pending home sales at 10:00 a.m. ET. That report is expected to show pending sales fell 1.8% following the 4.6% decline in October. Pending sales represent purchase contracts signed during the month with those sales expected to close in 30 to 60 days. The metric is a leading indicator for existing home sales. In Case You Missed It U.S. home prices fell for the fourth straight month in October. The S&P Case-Shiller national home price index fell 0.3% monthly and rose 9.2% year over year. That was a decline from the 10.7% annual gain in September and down sharply from the record price gains seen earlier this year. The Federal Housing Finance Agency’s home price index was flat on a monthly basis and up 9.8% year over year.
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DJIA Futures: +76 (+0.2%) SPX Futures: +3 (+0.1%) NASDAQ Futures: -29 (-0.3%) Good morning friends! Futures are mixed as traders hope for a Santa rally to close out the year. Let’s get right to it! Southwest Slides After Canceling Thousand of Flights Southwest Airlines (LUV) shares are sliding 4.1% ahead of the open after the company canceled thousands of flights over the weekend. The airline canceled more than 70% of its flights Monday and has already canceled 60% of the flights scheduled for today. Southwest said it would operate only one-third of its schedule “for the next several days”. In comparison, Delta (DAL) canceled just 9% of its flights Monday, United (UAL) canceled 5%, and American (AAL) canceled less than 1%. The Department of Transportation said it is looking into why Southwest had so many more cancellations than other airports. The Department said in a statement, “As more information becomes available the Department will closely examine whether cancellations were controllable and whether Southwest is complying with its customer service plan as well as all other pertinent DOT rules.” China To Scrap International Traveler Quarantine Chinese stocks listed in the U.S. are rising in premarket trade as the country is set to scrap its zero-Covid policy. Alibaba (BABA) shares are up 1.4%, JD.com (JD) shares are rising 1.8%, and Pinduoduo (PDD) shares are up 1.8%. China announced Monday that international travelers will no longer be required to quarantine upon arriving to the country starting January 8, 2023. This is the final change to end the bulk of China’s zero-Covid policy that has restricted citizens and visitors. Travelers to China previously had to quarantine in a hotel for 14 to 21 days upon arrival. Current policy requires 5 days of quarantine at a centralized facility and three days at home. The new policy will only require travelers to show a negative Covid test from within the last 48 hours. China’s National Health Commission also said starting January 8, authorities would stop tracking close contacts of Covid patients, stop the designation of certain areas as Covid risk areas, and cancel Covid measures that had slowed imports. Tesla Extends Recent Slide Tesla (TSLA) shares are tumbling 5.3% ahead of the open, extending the stock’s recent slide. The latest drop comes after news that the electric automaker will plans to run a reduced production schedule at its Shanghai factory in January. That follows a complete suspension of production during this final week of December. The production cuts are likely linked to lower demand in China but Tesla hasn’t responded to requests for comment. Chinese competitor Nio (NIO) also cut its delivery outlook for the fourth quarter this morning, citing headwinds in China. Nio shares are down 5.3% in premarket trade after saying it expects to deliver between 38,500 and 39,500 vehicles this quarter vs previous expectations for 43,000 to 48,000. Quiet Week of Data It will be a quiet week of economic data mostly focused on the housing market. Both the S&P Case-Shiller and the Federal Housing Finance Agency’s housing price indexes for October will be released at 10:00 a.m. ET today. Then the National Association of Realtors reports November pending home sales on Wednesday. The Labor Department releases weekly jobless claims on Thursday. It is a holiday-shortened trading week after the stock market was closed on Monday. In Case You Missed It Consumer sentiment improved more than expected in late December. The University of Michigan’s consumer sentiment index rose to 59.7 from a flash reading of 59.1. That was better than economists’ expectations for the index to be unchanged. Short-term inflation expectations also improved with respondents saying they expect inflation to be at 2.9% one year from now vs 3% previously. New home sales unexpectedly rose in November. The Commerce Department reported new home sales rose 5.8% to a seasonally adjusted annual rate of 640,000 units. That was up from the revised SAAR of 605,000 in October and better than expectations for 600,000. New home sales were still down 15.3% year over year.
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DJIA Futures: +162 (+0.5%) SPX Futures: +17 (+0.5%) NASDAQ Futures: +59 (+0.5%) Good morning friends! Futures are higher as cooling inflation data props up stocks. Let’s get right to it! Traders Hope For Santa Rally Traders are hoping Santa will pay a visit to Wall Street this weekend, gifting them an end-of-year rally. But the major indexes are still on track for large monthly losses. For December, the Dow Jones is down 4.5%, the S&P 500 has lost more than 6%, and the Nasdaq is down 8.7%. All three would be the largest monthly declines since September and stocks are also on pace for their worst year since 2008. Fed’s Fave Inflation Gauge Cools The Fed’s preferred inflation gauge continued to cool in November. The PCE price index rose 0.1% monthly and 5.5% year over year. That was down from the 6.1% annual increase in October. The core PCE price index, which excludes food and energy, rose 0.2% monthly and 4.7% annually. That was down from 5% in October but slightly higher than economists’ expectations for 4.6%. Durable Goods Orders Tumble U.S. durable goods orders tumbled more than expected in November as the manufacturing sector slows. The Commerce Department reported orders dropped 2.1% vs expectations for a 1.1% decline. Core durable goods orders rose 0.2% vs 0.1% expected while orders excluding defense tumbled 2.6%. Non-defense orders, excluding aircraft, rose 0.2% and transportation equipment orders plunged 6.3%. Shipments of durable goods rose 0.2%. Durable goods refers to products manufactured to last three years or more. Musk Vows Not To Sell More $TSLA Tesla (TSLA) shares are up 1.2% ahead of the open after CEO Elon Musk vowed to pause his sales of the stock. During a Twitter Spaces event Thursday, Musk said he would not sell any Tesla stock for a minimum of 18 to 24 months. Since November 2021, he has sold more than $39 billion worth of the stock. Musk said, “You certainly have my commitment I won’t sell stock until, I don’t know, probably two years from now. Definitely not next year under any circumstances and probably not the year thereafter.” In Case You Missed It The Conference Board’s leading economic indicators index dropped 1% in November. That was worse than expectations for a 0.5% decline and marked the ninth straight monthly drop. Higher jobless claims, slowing home sales, and a manufacturing slowdown contributed to the latest decline. The Conference Board’s senior director of economic research said, “We project a U.S. recession is likely to start around the beginning of 2023 and last through mid-year.”
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DJIA Futures: -205 (-0.6%) SPX Futures: -31 (-0.8%) NASDAQ Futures: -125 (-1.1%) Good morning friends! Futures are falling as traders digest the latest batch of weak earnings and a key meme stock announced plans for a reverse stock split. Let’s get right to it! AMC Plunges After Announcing Reverse Stock Split AMC (AMC) shares are plunging 25.5% in premarket trade after announcing plans for a reverse stock split. The theater chain revealed it is seeking a special shareholder meeting to vote on a 1-for-10 stock split and to convert APE units into AMC common shares. $APE are the preferred equity units issued by AMC to all shareholders earlier this year. The company also plans to raise $110 million in capital by selling APE units to Antara Capital at a weighted average price of $0.66 per share. AMC also plans to reduce its debt to Antara by $100 million in exchange for approximately 91 million APE units. The company said that debt reduction would reduce annual interest expenses by ~$10 million. Micron Revenue Plunges Micron (MU) shares are down 4.5% ahead of the open after reporting a wider-than-expected fiscal Q1 loss. Here’s how the chipmaker’s results compared to analysts’ expectations: Adjusted loss per share: $0.04 vs $0.02 expected Revenue: $4.09 billion vs $4.13 billion expected Revenue plunged 47% year over year and Micron warned that would worsen in the next quarter. The company’s forecast also came in weaker than expected. Micron expects an adjusted loss between $0.72 and $0.52 per share in fiscal Q2 on revenue of $3.6 billion to $4 billion. The midpoint of that revenue outlook would be 51% lower than a year ago. Analysts were forecasting a fiscal Q2 loss of $0.32 per share on $3.92 billion in revenue. In an SEC filing, Micron disclosed that management plans to cut about 10% of staff in 2023 with about $30 million in restructuring costs expected in fiscal Q2. CarMax Plunges On Earnings Miss CarMax (KMX) shares are tumbling 13.7% in premarket trade after missing Q3 expectations. Here’s how the used car retailer’s results compared to analysts’ expectations: EPS: $0.24 vs $0.65 expected Revenue: $6.51 billion vs $7.16 billion expected Revenue was down nearly 24% year over year as CarMax said “vehicle affordability challenges” continued to impact its sales. Under Armour Picks New CEO Under Armour (UAA) shares are 1.1% lower ahead of the open after naming its new CEO after-hours on Wednesday. The company announced it has hired Marriott International (MAR) President Stephanie Linnartz to be its next CEO. Linnartz was one of 60 candidates considered for the role during a seven-month search. Under Armour is focused on growing its digital business. The founder and Executive Chairman told CNBC Linnartz was chosen due to her success in transforming Marriott’s online presence. She will take over from the interim CEO on February 27. Weekly Jobless Claims Tick Higher Weekly jobless claims rose less than expected last week. The Labor Department reported 216,000 Americans filed initial claims for unemployment benefits. That was up by 5,000 from the previous week but lower than expectations for 220,000. Q3 GDP Growth Revised Higher The U.S. economy expanded more than previously estimated in the third quarter. The Commerce Department’s final revision of GDP growth increased to 3.2% from 2.9%. That was an unexpected increase as consumer spending, nonresidential fixed investment, and state and local government spending were revised higher. Private inventory investment and exports were revised lower. In Case You Missed It Consumer confidence jumped more than expected this month. The Conference Board’s consumer confidence index rose nearly 7 points to 108.3. That was the highest reading in 8 months and better than economists’ expectations for 101.2. One-year inflation expectations also fell to 6.7%, the lowest level since September 2021. Existing home sales fell more than expected in November. The National Association of Realtors reported existing sales dropped 7.7% last month to a seasonally adjusted annual rate of 4.09 million units. That was the 10th straight monthly decline, the longest losing streak since NAR started tracking existing home sales in 1999. Economists were expecting existing sales to fall to an SAAR of 4.17 million units. Sales have dropped by nearly 37% in the past 10 months as mortgage rates jumped.
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DJIA Futures: +329 (+1.0%) SPX Futures: +29 (+0.8%) NASDAQ Futures: +54 (+0.5%) Good morning friends! Futures are higher as traders digest strong earnings from Nike (NKE) which are boosting the Dow. Let’s get right to it! Nike Surges On Earnings Beat Nike (NKE) shares are surging 11.4% ahead of the open after beating fiscal Q2 expectations and raising its outlook. Here’s how the company’s results compared to analysts’ expectations: EPS: $0.85 vs $0.64 expected Revenue: $13.32 billion vs $12.57 billion expected Revenue jumped 17% year over year and the CFO said they now expect full-year revenue growth in mid-single digits vs the previous forecast for growth in the low-to mid-single digits. But the company still struggled with inventory in the quarter. Inventories were up 43% year over year to $9.3 billion, down from $9.7 billion in fiscal Q1. The CEO said he believes the company is past its inventory peak. FedEx Jumps After Strong Earnings FedEx (FDX) shares are up 5.8% in premarket trade after reporting mixed fiscal Q2 results. Here’s how the shipping giant’s results compared to analysts’ expectations: Adjusted EPS: $3.18 vs $2.81 expected Revenue: $22.8 billion vs $23.7 billion expected Although profits came in stronger than expected, those results were down from EPS of $4.38 on $23.5 billion in sales a year ago. FedEx’s earnings guidance also came in weak with the company expecting full year adjusted EPS of $13 to $14 vs Wall Street’s expectation of $14. The company said it is still facing headwinds from a weakening global economy but said it expects volume weakness to subside in the second half of its fiscal year. FedEx is cutting costs to offset that weakness with management planning to reduce expenses by about $3.7 billion this fiscal year. Refinance Demand Jumps As Rates Drop Refinance demand jumped last week as mortgage rates hit the lowest level since September. The Mortgage Bankers Association reported refinance applications jumped 6% weekly but were still down 85% year over year. Purchase applications fell 0.1% weekly and 36% annually, as this is historically the slowest time of the year for home purchases. The average 30-year fixed contract rate decreased to 6.34% from 6.42% the previous week. Although that’s the lowest since September, rates are still more than double what they were at this time in 2021. Existing Home Sales Expected To Fall The National Association of Realtors reports existing home sales for November at 10:00 a.m. ET. That report is expected to show the pace of sales slowed last month to a seasonally adjusted annual rate of 4.17 million units from 4.43 million in October. The housing market has seen a sharp slowdown in activity due to higher mortgage rates piling on top of the typical seasonal slowdown in sales. Consumer Confidence Expected To Improve The Conference Board releases its December consumer confidence index at 10:00 a.m. ET. That survey is expected to have improved to a reading of 101.2 from 100.2 in November. Consumer confidence hit the lowest level since July last month as inflation continues to pressure shoppers. In Case You Missed It Wells Fargo (WFC) agreed Tuesday to a $3.7 billion settlement with the Consumer Financial Protection Bureau over customer abuses tied to checking accounts, mortgages, and auto loans. The company was ordered ti pay a record $1.7 billion civil penalty plus more than $2 billion to customers. The CFPB said, “Consumers were illegally assessed fees and interest charges on auto and mortgage loans, had their cars wrongly repossessed, and had payments to auto and mortgage loans misapplied by the bank.” Wells Fargo said many of the “required actions” of the settlement have already been completed.
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