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Tesla Inc. Chief Executive Elon Musk just sold nearly $3.6 billion more of the company’s stock, according to a filing with the Securities and Exchange Commission released late Wednesday.
Musk sold just under 22 million shares worth $3.58 billion in aggregate from Dec. 12 to Dec. 14, the latest filing shows. Tesla shares TSLA fell in all three of those trading sessions, dropping 12.4% in total over the three-day stretch to finish Wednesday at $156.80.
This…
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The numbers: The University of Michigan’s gauge of consumer sentiment rose to a preliminary December reading of 59.1 from a November reading of 56.8.
Economists polled by the Wall Street Journal had expected a December reading of 56.5.
Inflation expectations over the next year fell to 4.6% from 4.9% last month. It is the lowest since September 2021. Five-year inflation expectations remained steady at 3%.
Key details: A gauge of consumer’s views of current conditions rose to 60.2 in December from 58.8 in November, while an indicator of expectations for the next six months rose to 58.4 from 55.6 last month.
Big picture: Economists think falling gasoline prices are behind the improvement in confidence.
The national average retail price for a gallon of gas is now $3.33, down $1.69 from June, according to White House data.
Still, high inflation has consumers remain in a relatively dour mood. The index is only marginally above the record low of 50 in June. By comparison, the consumer sentiment index was 101 in February of 2020.
Looking ahead: “High prices coupled with ongoing aggressive rate hikes will be a headwind for consumers and sentiment going forward,” said Rubeela Farooqi, chief U.S. economist at High Frequency Economics.
Market reaction: Stocks
DJIA,
SPX,
were higher on Friday on the back of hotter-than-expected wholesale inflation in November. The yield on the 10-year Treasury note
TMUBMUSD10Y,
rose to 3.54%.
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The U.S.-listed shares of China-based electric vehicle maker XPeng Inc. skyrocketed Wednesday, as investors cheered changes in China’s COVID policy while shrugging off weak third-quarter results and a downbeat outlook.
The stock
XPEV,
charged up 45.0% in midday trading, enough to pace all gainers on the New York Stock Exchange. It was also headed for the biggest one-day gain since going public in August 2020, surpassing the previous record advance of 33.9% on Nov. 23, 2020.
The rally comes even after XPeng reported a wider-than-expected loss for the third-straight quarter, missed on revenue for the first time and said it expected fourth-quarter revenue to fall 40% to 44% from a year ago while the FactSet consensus called for just a 4.4 decline.
Instead, investors seemed China appeared to move toward easing its zero-COVID policy, amid growing social unrest and a slowing economy. China’s government said Tuesday that it would renew its push to vaccinate the elderly, and said it would amend COVID control measures.
XPeng’s stock rally also comes at a time when investor sentiment had soured. Earlier this week, Jefferies analyst Johnson Wan downgraded the EV maker, citing recent “missteps” by the company at a time that the “honeymoon stage” for EVs in China was coming to an end.
In addition, short interest, or bearish bets on XPeng’s stock, was 5.7% of the public float, or freely tradable shares, based on the latest available exchange data. That compares with short interest as a percent of float for China-based rivals Nio Inc.
NIO,
at 4.1% and Li Auto Inc.
LI,
at 4.7%.
For Tesla Inc.
TSLA,
which generated $5.13 billion in revenue from China in its latest quarter, or about 24% of total revenue, short interest as a percent of float was 2.9%.
XPeng’s stock has soared 60.7% in November but has still tumbled 41.7% over the past three months. In comparison, the Invesco Golden Dragon China exchange-traded fund
PGJ,
has shed 11.7% the past three months while the S&P 500 index
SPX,
has slipped 1.1%.
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For the first time ever, rich nations, including a top-polluting U.S., will pay for the climate-change damage inflicted upon poorer nations.
These smaller economies are often the source of the fossil fuels
CL00,
minerals
PICK,
and other raw materials behind the developed world’s modern conveniences and technologicial advancement, including many practices responsible for the Earth-warming emisisons. And yet the developing world shoulders the worst of the droughts, deadly heat, ruined crops and eroding coastlines that take lives and eat into economic growth.
The deal, called “loss and damage” in summit shorthand, was struck as the U.N.’s Conference of Parties, or COP27, gaveled to a close near dawn Sunday in Egypt. Official talks ended Friday, but negotiations extended into the weekend.
Read: Historic compensation fund approved at U.N. climate talks
It was a big win for poorer nations which have long sought money — sometimes viewed as reparations — because they are often the victims of climate-worsened floods, famines and storms despite contributing little directly to the pollution that heats up the globe. It took last-minute, pre-summit negotiations to even get the topic on the official agenda.
“Three long decades and we have finally delivered climate justice,” said Seve Paeniu, the finance minister of island nation Tuvalu, according to the Associated Press. “We have finally responded to the call of hundreds of millions of people across the world to help them address loss and damage.”
“ ‘Three long decades and we have finally delivered climate justice.’ ”
Pakistan’s environment minister, Sherry Rehman, said the establishment of the fund “is not about dispensing charity.” Pakistan, hit by devastating drought and more, dominated climate-change headlines this year.
“It is clearly a down payment on the longer investment in our joint futures,” she said, speaking for a coalition of the world’s poorest nations.
According to many conference participants, the U.S. was a late-stage roadblock to establishing this official payout language, though it signed off in the end. U.S. participation was also impacted once chief climate negotiator John Kerry tested positive for COVID-19, although he continued to work from his hotel.
According to the agreement, the fund would initially draw on contributions from developed countries and other private and public sources such as international financial institutions, including the World Bank and the International Monetary Fund.
While major emerging economies such as China wouldn’t automatically have to contribute, that option remains on the table. This is a key demand by the European Union and the U.S., who argue that China and other large polluters currently classified as “developing” countries have the financial clout and responsibility to pay their way.
The fund would be largely aimed at the most vulnerable nations, though there would be room for middle-income countries that are severely battered by climate disasters to get aid.
Attention on methane, a more-potent but shorter-lasting greenhouse gas than carbon, was considered a major win at the summit. Some 150 countries have now signed on to the voluntary Global Methane Pledge, an official effort to cap the release of the GHG whose reduction presents perhaps the easiest way to reduce the global warming.
Read more: Natural gas-focused methane pact expands at climate summit, minus China
With the pledge, countries representing 45% of global methane emissions have vowed to reduce their emissions by 30% by 2030. If methane-reduction pledges are met, the result would be equivalent to eliminating the GHG emissions from all of the world’s cars, trucks, buses and all two- and three-wheeled vehicles, according to the International Energy Agency.
China, the world’s largest polluter by some measures, has not signed the deadline-based pledge, but has agreed to reduce methane emissions.
COP27 talks wrapped without concrete progress on the contentious issue of shifting an overall 1.5 degrees Celsius temperature limit from a voluntary marker to an established requirement of nations. Most voluntary pacts among nations and private entities, including a vow by Amazon.com
AMZN,
Ford Motor
F,
Apple
AAPL,
and others signing on to a “First Movers” pledge, loosly use the 1.5-degree limit set in 2015 when talks took place in Paris.
Private banks, insurers and institutional investors representing $130 trillion said they would align their investments with the goal of keeping global warming to 1.5 degrees Celsius, toward a pledge to net-zero emissions economy-wide by 2050. Advocacy groups cheer the pledge and its expanding roster but are also keeping up pressure on the signatories to speed up progress toward this goal and to stop undermining the pledge with fossil-fuel investment.
Read: Here’s where the big U.S. banks stand up and fall down on climate change
The Egypt pact was also void of firmer language on emissions cutting and the desire by some officials to target all fossil fuels
NG00,
for a phase-down.
Natural gas, which is relatively cheaper to produce than other fossil fuels, has been the major alternative to more-polluting coal in electricity generation. Still, it has its own emissions risk.
In the U.S., for example, electricity is the most common energy source used for cooking — electricity often powered by gas. Still, about 38% of U.S. households use natural gas directly for cooking, according to the U.S. Energy Information Administration.
Natural gas providers also own an established pipeline infrastructure that may serve alternative energy, and is pushed by the industry as a viable alternative alongside solar, wind
ICLN,
and other means. The industry also promotes its efforts to cap methane leaks.
Related: World’s richest nations stick to 1.5-degree climate pledge despite energy crunch
“ ‘It is more than frustrating to see overdue steps on mitigation and the phase-out of fossil energies being stonewalled by a number of large emitters and oil producers.’”
With fossil fuels in their sight, the European Union and other nations fought back at what they considered backsliding in the Egyptian presidency’s overarching cover agreement and threatened to scuttle the rest of the process, while advancing their own draft. The package was revised again, removing most of the elements Europeans had objected to but adding none of the heightened ambition they were hoping for, the AP said.
Egypt has played a unique role as host, representative of Africa, which sits at the front lines of those hurt by climate change and yet, remaining loyal to its own fossil-fuel ambitions and those of OPEC nations.
Germany’s Foreign Minister Annalena Baerbock voiced frustration.
“It is more than frustrating to see overdue steps on mitigation and the phase-out of fossil energies being stonewalled by a number of large emitters and oil producers
XOM,
BP,
” she said.
The agreement includes a veiled reference to the benefits of natural gas as low- emission energy, despite many nations calling for a phase down of natural gas, which does contribute to climate change.
At least 636 representatives of the fossil fuel industry registered to attend the summit, a 25% increase over the industry’s presence last year, according to an analysis released by three advocacy groups.
More fossil fuel lobbyists are on the roster than any single national delegation, besides the UAE who has registered 1,070 delegates compared to 176 last year, according to a report from Corporate Accountability, Corporate Europe Observatory (CEO) and Global Witness (GW).
Frances Colón, senior director for International Climate Policy at the Center for American Progress, found plenty of fault with this round of talks.
“The final text reflects the outsized and corrupting presence of fossil fuel and big agricultural lobbyists at COP27, compounded by a lack of ambition from key, high-emitting countries,” she said, in a statement. “The agreement makes only a passing reference to the 1.5-degree Celsius warming goal and does not include any new language on phasing down or phasing out all fossil fuels
RB00,
— the only way to reach emissions reduction goals and secure a livable future.”
Colón also worried that the official statement did not adequately advance efforts. World leaders failed to reference the twin, interlocking crises of nature loss and climate change, and declined to link COP27 to next month’s U.N. biodiversity summit in Montreal.
“ ‘The agreement makes only a passing reference to the 1.5-degree Celsius warming goal and does not include any new language on phasing down or phasing out all fossil fuels — the only way to reach emissions reduction goals and secure a livable future.’”
While the new agreement doesn’t ratchet up calls for reducing emissions, it does retain language to keep alive the voluntary global goal of limiting warming to 1.5 degrees Celsius (2.7 degrees Fahrenheit). The Egyptian presidency kept offering proposals that harkened back to 2015 Paris language which also mentioned a looser goal of 2 degrees.
This year’s pact also neglected to toughen the main sticking point from the previous COP, in Glasgow last year. At that time, China and India united to dig in unless coal language was softened. Nations this year did not expand on last year’s call to phase down global use of “unabated coal” even though India and other countries pushed to include oil and natural gas in language from Glasgow.
“We joined with many parties to propose a number of measures that would have contributed to this emissions peaking before 2025, as the science tells us is necessary. Not in this text,” the United Kingdom’s Alok Sharma said.
Climate campaigners are concerned that pushing for strong action to end fossil fuel use will be even harder at next year’s meeting, which will be hosted in Dubai, located in the oil-rich United Arab Emirates.
The Associated Press contributed.
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The numbers: A closely-watched index that measures U.S. manufacturing activity fell 0.7 percentage points to 50.2 in October, according to the Institute for Supply Management on Tuesday.
Economists surveyed by the Wall Street Journal had forecast the index to inch down to 50. Any number below 50% reflects a shrinking economy.
It is the lowest level since May 2020.
Key details: The index for new orders remained in contraction territory, rising 2.1 points to 47.1. The production index rose 1.7 points to 52.3.
The employment index rose 1.3 points to 50 in October.
Supplier deliveries fell 5.6 points to 46.8 in October. This is the first time that deliveries were in a “faster” territory since February 2016.
The price index dropped 5.1 points to 46.6., also the lowest reading since the pandemic. Pricing power is shifting back to the buyer, the ISM said.
Only 8 of the 18 manufacturing industries reported growth in October.
Big picture: Manufacturing has been slowing recently led by softening business spending and fading demand for consumer goods. Economists think it is inevitable the index slips below the 50 threshold.
In a separate data, the S&P global U.S. manufacturing PMI inched up to 50.4 in its “final” reading in October from the “flash” reading of 49.9. This is down from a reading of 52 in September.
What ISM said: Manufacturing is slowing down and could soon enter contraction territory, but that doesn’t mean there will be a recession in the U.S., said Timothy Fiore, chair of the ISM factory business survey.
“I don’t see a collapse of new orders. I don’t see a collapse of the PMI,” Fiore said.
Looking ahead: “Recession jitters among manufacturers won’t disappear any time soon…manufacturing will endure more pain as demand weakens at home and abroad while prices stay high and interest rates remain fairly elevated,” said Oren Klachkin, economist at Oxford Economics.
Market reaction: Stocks
DJIA,
SPX,
were lower after the economic data. The yield on the 10-year Treasury note
TMUBMUSD10Y,
moved back above 4%.
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The Chicago Business Barometer, also known as the Chicago PMI, dropped to 45.2 in October from 45.7 in the prior month, according to data released Monday.
Economists polled by the Wall Street Journal forecast a 47 reading.
Readings below 50 indicate contraction territory.
The index is produced by the ISM-Chicago with MNI. It is released to subscribers three minutes before its release to the public at 9:45 am Eastern.
The Chicago PMI is the last of the regional manufacturing indices before the national factory data for October is released on Tuesday.
Economist polled by the Wall Street Journal expect the closely-watched Institute for Supply Management’s factory index to barely remain above the 50 breakeven level in October.
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DETROIT — All summer long, Aleen Hudson kept looking for a new minivan or SUV for her growing passenger shuttle service.
She had a good credit rating and enough cash for a down payment. Yet dealerships in the Detroit area didn’t have any suitable vehicles. Or they’d demand she pay $3,000 to $6,000 above the sticker price. Months of frustration left her despondent.
“I was depressed,” Hudson said. “I was angry, too.”
A breakthrough arrived in late September, when a dealer called about a 2022 Chrysler Pacifica. At $41,000, it was hardly a bargain. And it wasn’t quite what Hudson wanted. Yet the dealer was asking only slightly above sticker price, and Hudson felt in no position to walk away. She’s back in business with her own van.
It could have been worse. Hudson made her purchase just as the prices of both new and used vehicles have been inching down from their eye-watering record highs and more vehicles are gradually becoming available at dealerships. Hudson’s van likely would have cost even more a few months ago.
Not that anyone should expect prices to fall anywhere near where they were before the pandemic recession struck in early 2020. The swift recovery from the recession left automakers short of parts and vehicles to meet demand. Price skyrocketed, and they’ve scarcely budged since.
Prices on new and used vehicles remain 30% to 50% above where they were when the pandemic erupted. The average used auto cost nearly $31,000 last month. The average new? $47,000. With higher prices and loan rates combining to push average monthly payments on a new vehicle above $700, millions of buyers have been priced out of the new-vehicle market and are now confined to used vehicles.
The high prices are yielding substantial profits for most automakers despite sluggish sales. On Tuesday, for example, General Motors reported that its third-quarter net profit jumped more than 36%, thanks in part to sales of pricey pickup trucks and large SUVs.
Still, as Hudson discovered, many vehicles are becoming slightly more affordable. Signs first emerged weeks ago in the 40-million-sales-a-year used market. As demand waned and inventories rose, prices eased from their springtime heights.
CarMax said it sold nearly 15,000 fewer vehicles last quarter than it had a year earlier. The CEO of the used-vehicle company, based in Richmond, Virginia, pointed to inflation, higher borrowing rates and diminished consumer confidence.
A “buyer’s strike” is how Adam Jonas, an auto analyst at Morgan Stanley, characterized the sales drops — a dynamic that typically foretells lower prices. And indeed, the average used vehicle price in September was down 1% from its May peak, according to Edmunds.com.
At AutoNation, the nation’s largest dealership chain, sales of used vehicles and profit-per-vehicle both dropped last quarter. CEO Mike Manley noted that while the supply of vehicles remains low, used-auto prices are declining.
“Our analysis shows that we are coming off the high values that we saw before,” Manley told analysts Thursday.
Ivan Drury, director of insights at Edmunds cautioned that it will take years for used prices to fall close to their pre-pandemic levels. Since 2020, automakers haven’t been leasing as many cars, thereby choking off one key source of late-model used vehicles.
Similarly, rental companies haven’t been able to buy many new vehicles. So eventually, they are selling fewer autos into the used market. That’s crimped another source of vehicles. And because used cars aren’t sitting long on dealer lots, demand remains strong enough to prop up prices.
When auto prices first soared two years ago, lower-income buyers were elbowed out of the new-vehicle market. Eventually, many of them couldn’t afford even used autos. People with subprime credit scores (620 or below) bought only 5% of new vehicles last month, down from nearly 9% before the pandemic. That indicated that many lower-income households could no longer afford vehicles, said J.D. Power Vice President Tyson Jominy.
Higher borrowing rates have compounded the problem. In January 2020, shortly before the pandemic hit, used-vehicle buyers paid an average of 8.4% annual interest, according to Edmunds. Monthly payments averaged $412. By last month, the average rate had reached 9.2%. And because prices had risen for over two years, the average payment had jumped to $567.
The 1% average drop in used prices will help financially secure buyers with solid credit scores who can qualify for lower loan rates. But for those with poor credit and lower incomes, any price drop will be wiped out by higher borrowing costs.
The new-vehicle market, by contrast, has become an option mainly for affluent buyers. Automakers are increasingly deploying scarce computer chips to make costly, loaded-out versions of pickups, SUVs and other outsize vehicles, typically with relatively low gas mileage. Last month, the average price of a new vehicle was down slightly from August but remained more than $11,000 above its level in January 2020.
Glenn Mears, who runs five dealerships south of Canton, Ohio, says the Federal Reserve’s interest rate hikes, by contributing to pricier auto loans, are slowing his showroom traffic.
“We can feel some pullback,” he said.
Analysts generally say that with shortages of computer chips and other parts still hobbling factories, new-vehicle prices won’t likely fall substantially. But further modest price drops may be likely. The availability of vehicles on U.S. dealer lots improved to nearly 1.4 million vehicles last month, up from 1 million for most of the year, Cox Automotive reported.
Before the pandemic, normal supply was far higher — around 4 million. So historically speaking, inventory remains tight and demand still high. Like Hudson, many buyers are still stuck paying sticker price or above.
“It’s extraordinarily expensive these days,” said Jominy, who estimates that there are still 5 million U.S. customers waiting to buy new vehicles.
Despite recent stock market declines, many such buyers have built up wealth, especially in their homes, and are rewarding themselves with high-end autos. In the San Francisco Bay area, for example, notes Inder Dosanjh, who runs a 20-dealership group that includes General Motors, Ford, Acura, Volkswagen and Stellantis brands, many people have received substantial pay raises.
“There’s just a lot of money out there,” he said.
In its earnings report Tuesday, GM noted that its customer demand is holding up. Though GM and other automakers would like to produce more vehicles, at the moment they are benefiting from slower production, which typically means higher prices and profits.
John Lawler, Ford’s chief financial officer, noted Wednesday that near-record new-vehicle prices were starting to decline. And consumer appetites are starting to change: Demand for midrange vehicles, he said, has begun to outpace more profitable autos loaded with options.
Next year could be a turning point, suggested Jeff Windau, an analyst at Edward Jones. With the economy likely to weaken and possibly enter a recession, prices could fall “as consumers become more focused on their financial situation and what they’re willing to bite off from a payment perspective.”
————
This story has been corrected to show that 9% of new-vehicle buyers had subprime credit scores, and that has since dropped to 5%.
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The European Union reached a deal Thursday to effectively ban new gas-powered cars beginning in 2035.
It’s a move seen as a key part of a broader plan to reduce carbon emissions across economic sectors — and a major policy achievement to carry into high-profile United Nations climate-change talks in Egypt early next month.
Speculation about a deal, which had been heavily debated, was reported earlier this week and confirmed Thursday via a tweet from the spokesperson for the rotating presidency of the bloc, currently held by the Czech Republic.
Broadly, the agreement is part of a plan that requires a 55% cut in emissions across transportation, buildings, power generation and other sources this decade. That halfway mark is seen as a major milestone as the EU aims to reach net-zero emissions by 2050.
The announcement comes as the U.N. climate arm has released a series of updated reports this week. One chastised the “highly inadequate” steps to date by rich nations to cut emissions of Earth-warming greenhouse gases, such as those from burning fossil fuels. The window to act is closing but is not quite shut yet, according to the Emissions Gap report from the U.N. Environment Programme. “Global and national climate commitments are falling pitifully short,” U.N. Secretary-General Antonio Guterres said Thursday. “We are headed for a global catastrophe.”
The EU is the world’s largest trade bloc, and its moves could push other major economies to also set firm cutoff dates for gasoline
RB00,
and diesel engines. Volkswagen AG
VOW,
and Daimler Truck Holding AG
DTG,
are already moving deeper into electric vehicles. Volkswagen this week said it would stop selling internal-combustion-engine cars in Europe between 2033 and 2035.
Other major economies, including the U.S., have set similar goals, but the U.S. has not set any federal-level restrictions on vehicle manufacturing. Some individual automakers, including General Motors
GM,
have set their own timelines. And California approved plans in August to mandate a gradual phasing out of vehicles powered by internal-combustion engines, with only zero-emission cars and a small portion of plug-in gas/electric hybrids to be allowed by 2035.
As the world’s fifth-largest economy, California can create ripple effects with its moves. At least 15 other states have signed on to California’s existing zero-emission vehicle program or have shown interest in and are working toward codifying the change. Among them, Washington, Massachusetts, New York, Oregon and Vermont are expected to adopt California’s ban on new gasoline-fueled vehicles.
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After betting big on self-driving cars — including $1 billion on soon-to-be shuttered startup Argo AI — Ford Motor Co. is softening its expectations on vehicles that don’t require drivers.
Ford
F,
executives on Wednesday said they were winding down their investment in Argo, which confirmed an earlier report of its plans to shut down, saying there were too many challenges to running a profitable network of fully self-driving vehicles anytime soon. That resulted in a $2.7 billion impairment on the startup, disclosed when Ford reported third-quarter results earlier in the day.
“We still believe in Level 4 autonomy, that it will have a big impact on our business of moving people,” Ford CEO Jim Farley said on the company’s earnings call, referring to cars that are autonomous enough not to need handling from a driver. “We’ve learned, though, in our partnership with Argo, and after our own internal investments, that we will have a very long road.”
“It’s estimated that more than $100 billion has been invested in the promise of Level 4 autonomy,” he continued. “And yet no one has defined a profitable business model at scale.”
Executives described hurdles with building out technology and auto fleets, as well as the vast infrastructure of non-technological services, to turn a profit on self-driving cars. And they said the talents of the staff they have today would be better spent on less-sophisticated driver-assistance systems.
Argo AI told MarketWatch that some of its 2,000 employees would be able to continue working on the vehicle technology with Ford and Volkswagen AG. Volkswagen
VOW,
was Argo’s other big backer.
“In the third quarter, Ford made a strategic decision to shift its capital spending from the L4 advanced driver-assistance systems being developed by Argo AI to internally developed L2+/L3 technology,” executives said in Ford’s earnings release. “Earlier, Argo AI had been unable to attract new investors.”
The remarks came as the auto industry deals with more immediate concerns about both production and demand, as ongoing supply-chain contortions lead to parts shortages and higher prices. Some signs have emerged that those supply-chain hitches have eased. But higher prices risk spooking potential car buyers.
During the call on Wednesday, executives said they’d seen a slight downtick in commodity prices. But Farley painted a mixed portrait of pricing and demand trends.
Demand for commercial vehicles and electric vehicles was “through the roof,” he said. But he noted a “slight uptick” from the prior quarter on 84-month customer financing, as customers stretch out car payments. And he said some of Ford’s rivals had boosted spending on incentives.
Meanwhile, Ford’s third-quarter results beat analysts’ estimates, though the auto maker forecast full-year adjusted profit at the low end of its expectations.
Ford reported a net loss of $800 million for the third quarter, or 21 cents a share, contrasting with a $1.8 billion profit, or 45 cents a share, in the prior-year period. The auto maker’s sales were $39.4 billion, compared with $35.7 billion in the quarter last year.
Adjusted for gains and losses on pensions, investments and costs related to things like staff and dealerships, Ford earned 30 cents a share, compared with 51 cents a year ago.
Analysts polled by FactSet expected adjusted earnings of 27 cents a share, on sales of $37.46 billion.
Executives said they expected full-year earnings before interest and taxes to be about $11.5 billion. In September, the company said it expected that figure to land within a range of $11.5 billion to $12.5 billion.
Ford also raised its full-year outlook for adjusted free-cash flow to $9.5 billion to $10 billion. It ended the third quarter with operating cash flow of $3.8 billion, and adjusted free-cash flow of $3.6 billion.
Shares fell 1% after hours.
Ford in September warned that tighter supplies of auto parts would leave it with 40,000 to 45,000 unfinished vehicles sitting in its inventories at the end of the third quarter, with “inflation-related supplier costs” running about $1 billion higher than expected. But the company, at that time, stuck with its full-year adjusted-profit outlook.
Ford, as with other auto makers, is putting more effort behind developing electric cars and trucks, including an electric version of its popular F-150. But it is laying off thousands as part of a split into two businesses — one devoted to electric vehicles, called Ford Model e, and one devoted internal combustion engines, called Ford Blue.
A day earlier, rival General Motors Co. noted signs of its supply chains loosening up.
On Tuesday, executives at General Motors
GM,
noted easing in its supply chain and production improvements despite a difficult economic backdrop. GM stuck with its full-year outlook, cited strong demand, and said the company had landed some supply agreements and was working with chip makers to loosen up the flow of car parts and components.
Shares of GM fell 0.2% on Wednesday.
The auto market has been roiled by a semiconductor shortage that gummed up production and drove up the price of new cars, and then used ones, as new vehicles got too expensive for buyers. Used car prices have trended lower since. UBS analysts have said that an auto undersupply could balloon into an oversupply, as higher prices threaten to suppress consumer shopping and raise concerns of a recession.
Edmunds last month said it expected new-vehicle sales in the U.S. to fall 0.9% in the third quarter when compared with the period in 2021. The auto-data provider said auto inventories have expanded, as chip supply chains open up.
Ford stock is down 38% so far this year. By comparison, the S&P 500 index
SPX,
is down 20% over that time.
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Mobileye Global Inc. priced its initial public offering higher than its targeted range late Tuesday to raise nearly $1 billion, most of which will go to Intel Corp.
Mobileye priced its initial public offering at $21 late Tuesday, the company announced in a news release, after previously stating a targeted range of $18 to $20; shares are expected to begin trading on the Nasdaq under the ticker symbol “MBLY” on Wednesday. Intel
INTC,
will sell at least 41 million shares of Mobileye, which would raise $861 million, and also agreed to a $100 million concurrent sale of stock to General Atlantic, which would make the total raised at least $961 million.
Intel paid $15.3 billion to acquire Mobileye in 2017, and was reportedly aiming for a valuation as high as $50 billion when originally planning this IPO, but instead will settle for a basic valuation of roughly $16.7 billion. After a record year with more than 1,000 offerings in 2021, the IPO market has largely dried up in 2022.
Read: Mobileye IPO: 5 things to know about the Intel autonomous-driving spinoff
Underwriting banks — Intel listed two dozen underwriters, led by Goldman Sachs Group Inc.
GS,
and Morgan Stanley
MS,
— have access to an additional 6.15 million shares for overallotments, which could push the total raised higher than $1 billion and make Mobileye the second-largest offering of the year. Only two offerings thus far this year have raised at least $1 billion — private-equity firm TPG Inc.
TPG,
raised exactly $1 billion in January, and American International Group Inc.
AIG,
spinoff Corebridge Financial Inc.
CRBG,
raised at least $1.68 billion in September.
Intel will receive the bulk of the proceeds of the offering — after promising to make sure that Mobileye has $1 billion in cash and equivalents, the chip maker will take the rest of the proceeds for its own coffers. Wells Fargo analysts calculated that Mobileye will need about $225 million to hit that level, leaving at least $736 million for Intel before fees and other costs.
Intel will also maintain control of the company after spinning it off, keeping class B shares that will convey 10 votes for each share while selling class A shares that convey one vote per share. Intel will retain more than 99% of the voting power and nearly 94% of the economic ownership of the company, and the Mobileye board is expected to include four members with ties to Intel, including Chief Executive Pat Gelsinger serving as chairman of the board.
Read also: Intel files for Mobileye IPO, creating a share structure that will keep the chipmaker in control
Mobileye will continue to be led by founder Amnon Shashua, who served as chief executive before Intel acquired the company and stayed at the helm while it was part of the Silicon Valley chip maker. Shashua founded Mobileye in 1999 and turned it into a pioneer in the field of automated-driving technology and one of Israel’s most prominent tech companies.
Mobileye filed for the initial public offering at the end of September, when executives were still reportedly hoping for a $30 billion valuation.
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Pegged to be the metal for nation-building, stainless steel is being increasingly used in architecture, building and construction activities, automobiles, railways and transport in India and globally. Yet, the recently imposed export duty of 15 per cent on steel is dampening the business operability.
Abhyuday Jindal, Managing Director, Jindal Stainless, in an exclusive conversation with BT’s Nidhi Singal talks about the company’s strategy, its upcoming merger, expansion plans, and much more. Edited experts:
BT: Jindal Stainless reported an 8 per cent year-on-year growth in its consolidated profit for the April-June quarter, despite rising input costs and export duties. What was the strategy that worked for the company?
Abhyuday Jindal: The last quarter was actually quite a challenging quarter because there were two-three external factors that are coming into effect now. First, the commodity cycle was on a downward trend. All your raw material prices were falling. So when that starts, the whole economy, and the world, go into kind of destocking mode. There is pressure to sell volumes, there is pressure on margins.
At this time, our government came up with this 15 per cent export duty. So, it is actually a double whammy for companies like us. Prices any way were coming down, plus with this export duty coming, it became unviable or very challenging for Indian companies to export. Companies like us, where there is not so much demand in stainless steel (that we are trying to create), we were dependent on the export market.
There are certain sizes that we have or certain equipment we created, which are created only for the export segment. That was a big negative impact on us because of that kind of volume we then had to push to domestic.
One positive thing for our company is that we are very agile. We are not dependent on any industry or any segment more than 15-20 per cent. Just to give an example, last two years, the auto was severely impacted because of semiconductors. And auto is a big sector for us, but our volumes were not impacted at all because whatever shortfall was in auto, we were very easily able to push that into other sectors. (As) railway picked up, so we pushed it into railways.
The infrastructure segment has picked up with all the support coming from the government. The same thing we are doing now is that with this export duty coming on, we are not able to export the volumes that we were (doing earlier). So, we have pushed our volumes into the sector in that we were not very aggressive. We were leaving that more for the Indian secondary stainless steel players and the smaller company. But with the export market not available to us, we have entered into this segment. There was a little dip as compared to Q4 last year, but overall we were able to maintain the volumes. Margins are definitely impacted by this export duty coming in because everybody is then buying only for the domestic market. And I think that was the impact the government wanted, which has been created. So, we are hopeful that next couple of months, they should do away with this export duty.
The other factor is that now steel players can add boron, which classifies them as alloy steel, and then they are able to export without export duties. But in stainless steel, that is not possible.
We are into process industries also: petrochemical, nuclear, auto, and railways. Architecture Building Constructions (ABC) is a massive area where stainless steel is consumed, and the world showcases that. And anywhere you see stainless steel is the material that is consumed in infrastructure to a maximum. So, in the same way, India is also leading up to that. A lot of interesting areas, like railway foot-over bridges, are now completely into stainless steel. In all coastal areas, they are supposed to be made of stainless steel. So that way, we are able to manage our Q1 performance.
BT: What percentage of your business was coming from domestic and export?
AJ: To serve domestic customers in one passion and export in a strategic manner aligned with the ‘local to global vision.
Pre-pandemic, our export share has been 20-25 per cent. During the pandemic, it increased to about 30 per cent. However, post exports duty imposition it is low at 10 per cent only. When this export duty goes down, we hope to take up our export percentage (back) higher again.
BT: When you divert your production to other sectors, how easy or difficult is it to switch manufacturing?
AJ: There are standard grades, and there are customised grades. And when we say we can switch, we can switch in the series also. Last full year, the 300 series was the major series for us. Almost 50 to 60 per cent of our sales were in the 300 series. That was also because the export market is more on the 300 series. So then, because export was high, the 300 series was high. Now that export duties have (been) put in, the 300 series has come down by about 10 to 15 per cent. But we’ve picked up 400 series and 200 series, which go into other sectors and segments. So that way, we are able to move very fast into other industries and streams.
(The switch can happen) within, I would say, 20 to 25 days. We can very easily switch because it is purely (about) getting the required raw material. Nothing else needs to be done. If the raw material is with us, we can switch instantly. But if raw material has to be organised, then it can take about 20-25 days. The equipment, processing techniques – everything is the same. It is only the grade that we need to switch.
BT: How will the merger with Jindal Stainless (Hisar) Ltd impact your operations?
AJ: Jindal Stainless (Hisar) Ltd. was demerged in 2014. The reason was that we were in corporate debt restructuring. Along with our committee of bankers and our team internally, one way to protect our organization was decided. We had two factories, one in Hisar, and one in Orissa. Splitting them into two listed companies was a good option.
Hisar, in the history of the Jindal Group, has never been at loss. For almost 50 years, Hisar has continuously been making profits. However, at that time, the stainless steel industry went through a very tough time. The point of view was that let us protect one company during those trying times.
Today, the biggest reason that the domestic stainless steel industry is suffering is unwarranted imports — heavy dumping that happens from China and Indonesia. Over the course of the last 10 years, due to excessive dumping, the whole industry and our margins and volumes were always under pressure. In 2014-15, the companies decided to split.
(Today) I would say we are the only company in the whole manufacturing sector that successfully did the splitting of companies and successfully got out of CDR. 2019 is when we completely paid all the debt, did not take any haircuts, and got out of CDR. Over the last couple of years, we have reduced our debt significantly, and our ratios are now one of the best in the metal sector. So now we felt it was the right time to remerge the companies.
This was also from the perspective of having one standalone entity that is a global major in stainless steel. After the merger, we will be among the top 10 stainless steel producers in the world. And after our expansion, which will start in January of this financial year, we aim to be in the top 5 in the world.
The merger will have a lot of benefits, including an improved balance sheet and stakeholder benefits. Our negotiating power will increase because rather than negotiating with our vendors and suppliers as two separate entities, we will now negotiate as one. It will also help in improving our customer service. Our investors will benefit too. There was always confusion in the market – what does Hisar do, or what does Jajpur (Orissa) do? Because of having two legal entities, we had to make a lot of double investments – warehousing, logistics, etc. Now, we’d be able to do away with all this.
BT: Where does India stand in the stainless steel ecosystem globally?
AJ: Till last year, we were actually number two in terms of production in stainless steel. China is number one, always, and then India was number two. Then certain factors happened – anti-dumping duty and CVD on stainless steel for imports coming in from China and Indonesia were removed. As soon as that got removed, Indonesia picked up its production and now has overtaken India as number two in terms of the stainless steel ecosystem.
So it’s China number one, India used to be number two last year, and then Indonesia. Now it’s China, Indonesia, and India. So because of the government policies and because of the factors that have impacted us, India’s position is falling, which is a very big negative, I can say it from the government’s point of view.
BT: So aren’t the new export duties going to further damage India’s position in the stainless steel leatherboard?
AJ: Definitely, because now everybody, after the two years and the momentum that we saw in the industrial activity, every company has announced expansion, adding capacities and making India further strengthen its position. But with this duty and depending on how long it will continue, everybody is now either questioning that expansion or delaying it further. I mean everything is under question because of this export duty. We do feel that it should not stay for long, but all our plans are under, I would say, fix right now.
BT: But on the other side, isn’t the government really pushing every sector with the PLI?
AJ: The government is reworking the steel PLI. Nobody has been able to really apply or get anything from the steel PLI. The focus for PLI has been importing substitution, but I feel that the interaction with the industry requires being more robust. That is reason, why they are reworking on it, because every company from the steel industry represented that there is nothing in this that we can actually apply for or we can actually go and get this PLI for us. This is why, from the information that I’m getting now, they are reworking it and coming out with a new PLI for the steel industry.
BT: Stainless steel is created using scrap. So, where do you source your raw material from?
AJ: Stainless steel is the most sustainable material because it is 100 per cent recyclable and contributes to a circular economy. We use more than 85 per cent of scrap in one production. For this reason, we are completely focused on scrap (which is also a global phenomenon).
We source our scrap from all over. It is mainly domestic and nearby countries. South East Asia, Middle-East, and India contribute to 70-75 per cent of our scrap consumption. The remaining 20-25 per cent comes from the US and Europe.
BT: How much of it is coming from India? And do you see this growing?
AJ: India, you can say, is almost 45 per cent. And yes, especially with government – the kinds of policies that they coming out with are helping and supporting this. Now they are coming up with the National Scrap Recycling policy, which will definitely help in terms of getting more scrap available to the Indian ecosystem.
BT: Even though you don’t use coke for melting, your process of sourcing the scrap (raw material) is heavy on carbon emissions. What initiatives have you taken to reduce your carbon footprint?
AJ: Manufacturing through the scrap route is relatively low on carbon emission.
We (have) already announced that we are not going to be investing in any more thermal power plants. We are setting up and investing in almost 300 megawatts of renewable capacity in Odisha, Harayana, and Rajasthan. We are also going to commission a green hydrogen project in Hisar that will enable the company to reduce its carbon dioxide emissions by nearly 2,700 metric tonnes per annum.
We have also looped in EY India for charting out a dynamic plan to achieve our ESG and decarbonisation goals.
For all our expansion, we require a lot of energy that will all be met through renewable sources.
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Shares of Twitter plunged in premarket trade on Friday after a report Biden administration officials are considering subjecting some of Elon Musk’s ventures to national-security reviews.
Twitter
TWTR,
shares plunged 9% to $47.64 in premarket trade, below the $54.20 per share buyout price.
Bloomberg News reported late Thursday that some U.S. officials have become concerned in recent weeks by Musk’s Russia-friendly tweets and his threat to cut off Starlink satellite internet service to Ukraine. The Tesla
TSLA,
and SpaceX CEO’s pending $44 billion acquisition of Twitter has also reportedly drawn concerns because of its foreign investors, including a Saudi prince, Binance Holdings — a crypto exchange that was initially based in China — and Qatar’s sovereign wealth fund.
Citing anonymous sources familiar with the matter, Bloomberg said discussions are still in the early stages and officials are trying to figure out what regulatory tools are available to them. One option could be a national-security review by the Committee on Foreign Investment in the United States, the report said.
Separately, Bloomberg also reported late Thursday that Musk’s lawyers and bankers are preparing paperwork for the Twitter deal to be completed ahead of a Oct. 28 deadline, and that relations between Musk and Twitter have turned cordial rather than adversarial.
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Tesla Inc. Chief Executive Elon Musk suggested the electric-vehicle maker could repurchase up to $10 billion worth of its stock Wednesday, as shares declined following a third-quarter revenue miss and his CFO brought down delivery expectations for the full year.
Some Tesla
TSLA,
investors have been agitating for a stock buyback after multiple stock splits and the company losing more than a third of its market capitalization in 2022, and Musk said in an earnings conference call that Tesla’s board has discussed a buyback in the range of $5 billion to $10 billion.
“We debated the buyback idea extensively at board level. The board generally thinks that it makes sense to do a buyback, we want to work through the right process to do a buyback, but it is something possible for us to do a buyback on the order of $5 [billion] to $10 billion even in a downside scenario next year, given next year is very difficult,” he said, adding that it “is obviously pending board review and approval.”
“So it’s likely that we will do some meaningful buyback,” he concluded.
The statement did not immediately move Tesla’s stock, as it was followed closely by a forecast revision from Chief Financial Officer Zachary Kirkhorn, who said, “We do expect to be just under 50% growth [for deliveries] due to an increase in the cars in transit at the end of the year.”
Tesla delivered a record number of cars in the third quarter, but still missed analysts’ expectations and made it more difficult to hit executives’ target for the year of an increase of more than 50% in vehicle deliveries. Kirkhorn said that the company will increase production of cars by 50%, “although we are tracking supply-chain risks which are beyond our control.”
Shares declined more than 6% following the car company’s earnings report. Tesla reported third-quarter earnings of $3.29 billion, or 95 cents a share, on sales of $21.45 billion, up from $13.76 billion a year ago. After adjusting for stock-based compensation, the electric-vehicle manufacturer reported earnings of $1.05 a share, up from 62 cents a share a year ago.
Analysts on average were expecting adjusted earnings of $1 a share on sales of $21.98 billion, according to FactSet. Tesla shares declined about 5% in after-hours trading immediately following the release of the results, after closing with a 0.8% increase to $222.04 in the regular trading session.
Tesla shares have fallen more than 37% so far this year, a harder descent than the 22% decline of the S&P 500 index
SPX,
after years of outsize gains. Pundits have put forth a variety of reasons for the downturn, including increasing competition in the EV market, negative press around Tesla’s full-self-driving claims and actual performance, and Musk’s attention being diverted to his attempt to acquire Twitter Inc.
TWTR,
Don’t miss: Market share for electric vehicles expected to roughly double
None of that cowed Musk, however. He predicted that Tesla would be worth as much as the two most valuable companies in the world, Apple Inc.
AAPL,
and Saudi Arabian Oil Co.
2222,
combined. Both companies have market capitalizations topping $2 trillion.
“Now I am of the opinion that we can far exceed Apple’s current market,” Musk said on the call, after referencing a previous prediction that Tesla would reach Apple’s then-record market cap. “In fact, I see a potential path for Tesla to be worth more than Apple and Saudi Aramco combined. That doesn’t mean it will happen or that it will be easy, in fact it will be very difficult, require a lot of work, very creative new products, expansion and always good luck. But for the first time I’m seeing, I see a way for Tesla to be, let’s say roughly twice the value of Saudi Aramco.”
In a preview of the report Tuesday, Wedbush Securities analyst Daniel Ives said that “the Street is starting to worry that the bloom is coming off the rose in the Tesla story with delivery shortfalls front and center.”
“Between logistical issues in China, supply-chain problems, FSD black-eye moments, the Musk Twitter fiasco and EV competition increasing across the board, there is growing pressure on Musk & Co. to prove themselves,” Ives wrote.
Tesla’s automotive gross margin, which declined in the second quarter despite price increases that Musk called “embarrassing,” were the same sequentially at 27.9%. Operating margin increased both sequentially and year-over-year, however, to 17.2% from 14.6% both in the third quarter a year ago and the previous quarter.
Earnings preview: Do record Tesla deliveries mask a demand problem?
In their communications with investors on Wednesday, Tesla executives disclosed that they will change the process for one of their most challenging tasks of late — transporting cars — in hopes of bringing costs down.
“We are reaching such significant delivery volumes in the final weeks of each quarter that transportation capacity is becoming expensive and difficult to secure. As a result, we began transitioning to a smoother delivery pace, leading to more vehicles in transit at the end of the quarter,” the company’s shareholder deck reads. “We expect that smoothing our outbound logistics throughout the quarter will improve cost per vehicle.”
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Investors are bracing for some choppiness on Wall Street, with oil prices falling as growth worries rattle around the globe. That’s as the clock ticks down to CPI and the start of a earnings season later this week, and in the backdrop a war is intensifying in Europe.
Tough times don’t last, but tough investors do right? Maybe, hopefully. In any case, focusing on the distant future might offer some comfort right now.
And that’s where we’re headed with our call of the day from Citigroup, whose strategists have stock ideas to play what they expect will be one of the ten fastest-growing markets through 2040.
They are talking about the global fuel cell industry, a direct play on the green energy debate, and “reaching the part that batteries cannot.”
“Fuel cells enable both de-carbonization and energy resilience, and we see them as crucial in harder-to-abate sectors like commercial vehicles and marine,” a Citi team led by research analyst Martin Wilkie told clients in a note on Tuesday.
Their base case sees this market reaching 50 gigawatts (GW) and $40 billion by 2030, offering a compound average growth rate of more than 35% in dollar terms, with further acceleration to 500GW/$180 billion by 2040.
They admit they’re on the bullish side with these projections, and note fuel cell stocks are on average down around 70% since their January 2021 peaks .
“The fuel cell equity story has had false starts before, but we see the impetus from emissions policy as well as announced hydrogen plans as creating attractive opportunities,” said the Citi analysts, highlighting policies such as the U.S. Inflation Reduction Act, which aims at beefing up renewable energy and a recent EU move to offer more green-energy research and development subsidies.
While passenger cars were a big source of demand for the growing fuel cell market in 2021, they don’t think it can be a big competitor to battery electric. However, stationary power, such as distributed and backup power generation and heavy-duty transport, think commercial vehicles, off-road and later marine are set to become key fuel-cell markets.
U.K.-based Ceres Power
CWR,
Plug Power
PLUG,
Belgium’s Umicore
UMI,
and Japan’s Toyota
7203,
TM,
are Citi’s buy-rated stocks with high exposure to the fuel-cell theme.
Other names they mention, include Daimler Truck
DTG,
and Volvo
VOLV.B,
VOLV.A,
which are working with Germany’s Traton
8TRA,
on a joint venture called Cellcentric that aims to develop that technology for trucks, with a production goal of 2025. Others are outsourcing fuel-cell tech, such as Italy’s Iveco Group
IVG,
which has teamed up with South Korea’s Hyundai
005380,
and U.S.-based Paccar
PCAR,
with Toyota
TM,
Stock futures
ES00,
NQ00,
have pared some losses, while bond yields
TMUBMUSD10Y,
TMUBMUSD02Y,
are mixed, and the dollar
DXY,
has turned lower. Oil prices
CL.1,
are also pressure.
Shares of the world’s biggest chip maker, TSMC
2330,
fell 8% in Taiwan
Y9999,
where stocks dropped more than 4% following new limits by the U.S. imposed on exports of semiconductors and chip-making equipment to China.
The Bank of England made the second move this week to calm jittery markets, saying Tuesday it will expand its bond purchases to index-linked U.K. bond. But the program still ends Friday, something the pensions fund industry wants to see extended. Those yields
TMBMKGB-10Y,
TMBMKGB-30Y,
meanwhile, continue to creep higher.
The National Federation of Independent Business small-business index showed confidence rising in September, but inflation a nagging problem. At noon Eastern we’ll hear from Cleveland Fed President Loretta Mester.
Subscription-based private aviation company Flexjet plans to go public through a merger with SPAC Horizon Acquisition
HZON,
valuing it at $3.1 billion.
The U.S.’s third-biggest railroad union will be back at the negotiating table with employers on Tuesday, after rejecting a deal and raising the possibility of crippling strikes.
The Kremlin’s war hawks were thrilled at the devastating strikes across Ukraine on Monday. Now they want more. G-7 leaders are holding an emergency meeting to discuss the ramping up of the war.
Amazon’s
AMZN,
second Prime-Day like event kicks off Tuesday.
U.K. spy chief says Russians are starting to realize the cost of Putin’s war in Ukraine
India’s biodegradable bags are in demand, and reviving its industry
We are not at peace. The world needs to get ready for more sabotage
One of the greatest transfers of intergenerational wealth is coming, says head of TIAA
This graphic by Visual Capitalist’s Truman Du, shows Disney’s
DIS,
streaming empire — Disney+, Hulu, ESPN+ — is “giving Netflix
NFLX,
a run for its money.”
These were the top searched tickers on MarketWatch as of 6 a.m. Eastern Time:
| Ticker | Security name |
|
TSLA, |
Tesla |
|
GME, |
GameStop |
|
AMC, |
AMC Entertainment Holdings |
|
AAPL, |
Apple |
|
NIO, |
NIO |
|
BBBY, |
Bed Bath & Beyond |
|
APE, |
AMC Entertainment Holdings preferred shares |
|
NVDA, |
Nvidia |
|
TWTR, |
|
|
AMD, |
Advanced Micro Devices |
Everyone hail to this 2,560-pound pumpkin.
“Where’s Tony gone?” Supply-chain woes hit (shudder) Frosted Flakes.
Need to Know starts early and is updated until the opening bell, but sign up here to get it delivered once to your email box. The emailed version will be sent out at about 7:30 a.m. Eastern.
Listen to the Best New Ideas in Money podcast with MarketWatch reporter Charles Passy and economist Stephanie Kelton.
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Shares of Rivian Automotive Inc.
RIVN,
sank 8.8% toward a three-month low in premarket trading, in the wake of the electric vehicle maker’s large vehicle recall due to steering problems. The company said late Friday that it intends to recall about 13,000 vehicles, which The Wall Street Journal reported was to repair improperly installed fasteners that could cause drivers to lose steering control. The company said it was “committed to fixing this issue” as quickly as possible. The stock, which sank 7.6% on Friday prior to the report of the recall, has plunged 67.3% year to date while the S&P 500
SPX,
has shed 23.6%.
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When the stock market has jumped two days in a row, as it has now, it is easy to become complacent.
But the Federal Reserve isn’t finished raising interest rates, and recession talk abounds. Stock investors aren’t out of the woods yet. That can make dividend stocks attractive if the yields are high and the companies produce more cash flow than they need to cover the payouts.
Below is a list of 21 stocks drawn from the S&P Composite 1500 Index
SP1500,
that appear to fit the bill. The S&P Composite 1500 is made up of the S&P 500
SPX,
the S&P 400 Mid Cap Index
MID,
and the S&P Small Cap 600 Index
SML,
The purpose of the list is to provide a starting point for further research. These stocks may be appropriate for you if you are looking for income, but you should do your own assessment to form your own opinion about a company’s ability to remain competitive over the next decade.
One way to measure a company’s ability to pay dividends is to look at its free cash flow yield. Free cash flow is remaining cash flow after planned capital expenditures. This money can be used to pay for dividends, buy back shares (which can raise earnings and cash flow per share), or fund acquisitions, organic expansion or for other corporate purposes.
If we divide a company’s estimated annual free cash flow per share by its current share price, we have its estimated free cash flow yield. If we compare the free cash flow yield to the current dividend yield, we may see “headroom” for cash to be deployed in ways that can benefit shareholders.
For this screen, we began with the S&P Composite 1500, then narrowed the list as follows:
For real-estate investment trusts, dividend-paying ability is measured by funds from operations (FFO), a non-GAAP figure that adds depreciation and amortization back to earnings. Adjusted funds from operations (AFFO) takes this a step further, subtracting cash expected to be used to maintain properties. So for the two REITs on the list, the FCF yield column makes use of AFFO.
For many companies in the financial sector, especially banks and insurers, free cash flow figures aren’t available, so the screen made use of earnings-per-share estimates. These are generally considered to run close to actual cash flow for these heavily regulated industries.
Here are the 21 companies that passed the screen, with dividend yields of at least 5% and estimated 2023 FCF yields at least twice the current payout. They are sorted by dividend yield:
| Company | Ticker | Type | Dividend yield | Estimated 2023 FCF yield | Estimated “headroom” |
| Uniti Group Inc. |
UNIT, |
Real-Estate Investment Trusts | 8.33% | 25.25% | 16.92% |
| Hanesbrands Inc. |
HBI, |
Apparel/ Footwear | 8.33% | 17.29% | 8.96% |
| Kohl’s Corp. |
KSS, |
Department Stores | 7.68% | 16.72% | 9.04% |
| Rent-A-Center Inc. |
RCII, |
Finance/ Rental/ Leasing | 7.52% | 17.26% | 9.73% |
| Macerich Co. |
MAC, |
Real-Estate Investment Trusts | 7.43% | 18.04% | 10.60% |
| Devon Energy Corp. |
DVN, |
Oil & Gas Production | 7.13% | 14.47% | 7.33% |
| AT&T Inc. |
T, |
Major Telecommunications | 6.98% | 14.82% | 7.84% |
| Newell Brands Inc. |
NWL, |
Industrial Conglomerates | 6.59% | 17.42% | 10.82% |
| Dow Inc. |
DOW, |
Chemicals | 6.18% | 15.63% | 9.45% |
| LyondellBasell Industries NV |
LYB, |
Chemicals | 6.09% | 16.07% | 9.99% |
| Scotts Miracle-Gro Co. Class A |
SMG, |
Chemicals | 6.04% | 12.68% | 6.65% |
| Diamondback Energy Inc. |
FANG, |
Oil & Gas Production | 5.56% | 13.63% | 8.08% |
| Best Buy Co. Inc. |
BBY, |
Electronics/ Appliance Stores | 5.53% | 14.08% | 8.55% |
| Viatris Inc. |
VTRS, |
Pharmaceuticals | 5.50% | 28.95% | 23.45% |
| Prudential Financial Inc. |
PRU, |
Life/ Health Insurance | 5.38% | 13.30% | 7.91% |
| Ford Motor Co. |
F, |
Motor Vehicles | 5.23% | 15.95% | 10.72% |
| Invesco Ltd. |
IVZ, |
Investment Managers | 5.23% | 14.95% | 9.73% |
| Franklin Resources Inc. |
BEN, |
Investment Managers | 5.17% | 13.21% | 8.04% |
| Kontoor Brands Inc. |
KTB, |
Apparel/ Footwear | 5.17% | 14.15% | 8.98% |
| Seagate Technology Holdings PLC |
STX, |
Computer Peripherals | 5.11% | 13.19% | 8.07% |
| Foot Locker Inc. |
FL, |
Apparel/ Footwear Retail | 5.03% | 15.52% | 10.49% |
| Source: FactSet | |||||
Any stock screen has its limitations. If you are interested in stocks listed here, it is best to do your own research, and it is easy to get started by clicking the tickers in the table for more information about each company. Click here for Tomi Kilgore’s detailed guide to the wealth of information for free on the MarketWatch quote page.
For the “estimated FCF yields,” consensus free cash flow estimates for calendar 2023 were used for all companies except the following:
Don’t miss: Dividend yields on preferred stocks have soared. This is how to pick the best ones for your portfolio.
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Stocks declined again on Friday, closing out September with large losses across the board as the rally from the June lows partway through August faded into memory.
The S&P 500
SPX,
fell 1.5% on Friday. The benchmark index slumped 9.3% for September, leading to a 2022 loss of 24.8%. The Dow Jones Industrial Average
DJIA,
gave up 1.7% on Friday, for a September decline of 8.8%. The Dow has now fallen 20.9% for 2022. The Nasdaq Composite Index
COMP,
pulled back 1.5% on Friday for a September drop of 10.5% and a year-to-date plunge of 32.4%. (All price changes in this article exclude dividends.)
Below is a list of stocks in the S&P 500 that fell the most during September.
It was the worst September performance for U.S. stocks since 2008, according to Dow Jones Market Data. William Watts looked back to see what poor performance during September may portend for October.
All sectors of the S&P 500 were down during September, including five that fell by double digits:
| S&P 500 sector | Sept. 30 price change | September price change | 2022 price change |
| Real Estate | 1.0% | -13.6% | -30.4% |
| Communication Services | -1.7% | -12.2% | -39.4% |
| Information Technology | -1.9% | -12.0% | -31.9% |
| Utilities | -2.0% | -11.5% | -8.6% |
| Industrials | -1.3% | -10.6% | -21.7% |
| Energy | -0.9% | -9.7% | 30.7% |
| Materials | -0.3% | -9.6% | -24.9% |
| Consumer Staples | -1.8% | -8.3% | -13.5% |
| Consumer Discretionary | -1.8% | -8.1% | -30.3% |
| Financials | -1.1% | -7.9% | -22.4% |
| Health Care | -1.4% | -2.7% | -14.1% |
| S&P 500 | -1.5% | -9.3% | -24.8% |
| Source: FactSet | |||
| Company | Ticker | Sept. 30 price change | September price change | 2022 price change | Decline from 52-week intraday high | Date of 52-week intraday high |
| FedEx Corp. |
FDX, |
-2.5% | -29.6% | -42.6% | -44.4% | 01/05/2022 |
| V.F. Corp. |
VFC, |
-2.7% | -27.8% | -59.2% | -62.1% | 11/16/2021 |
| Lumen Technologies Inc. |
LUMN, |
-1.4% | -26.9% | -42.0% | -49.8% | 11/05/2021 |
| Ford Motor Co. |
F, |
-2.4% | -26.5% | -46.1% | -56.7% | 01/13/2022 |
| Charter Communications Inc. Class A |
CHTR, |
-3.0% | -26.5% | -53.5% | -59.8% | 10/07/2021 |
| Adobe Inc. |
ADBE, |
-1.1% | -26.3% | -51.5% | -60.7% | 11/22/2021 |
| Carnival Corp. |
CCL, |
-23.3% | -25.7% | -65.1% | -73.5% | 10/01/2021 |
| CarMax Inc. |
KMX, |
1.3% | -25.4% | -49.3% | -57.7% | 11/08/2021 |
| Advanced Micro Devices Inc. |
AMD, |
-1.2% | -25.3% | -56.0% | -61.5% | 11/30/2021 |
| Caesars Entertainment Inc. |
CZR, |
-0.5% | -25.2% | -65.5% | -73.1% | 10/01/2021 |
| Boeing Co. |
BA, |
-3.4% | -24.4% | -39.9% | -48.2% | 11/15/2021 |
| WestRock Co. |
WRK, |
-1.6% | -23.9% | -30.4% | -43.6% | 05/05/2022 |
| International Paper Co. |
IP, |
-1.2% | -23.8% | -32.5% | -44.0% | 10/13/2021 |
| Western Digital Corp. |
WDC, |
1.1% | -23.0% | -50.1% | -53.1% | 01/05/2022 |
| Newell Brands Inc. |
NWL, |
-0.6% | -22.2% | -36.4% | -47.5% | 02/16/2022 |
| Eastman Chemical Co. |
EMN, |
0.3% | -21.9% | -41.2% | -45.1% | 01/19/2022 |
| Nike Inc. Class B |
NKE, |
-12.8% | -21.9% | -50.1% | -53.6% | 11/05/2021 |
| Seagate Technology Holdings PLC |
STX, |
-2.1% | -20.5% | -52.9% | -54.8% | 01/05/2022 |
| PVH Corp. |
PVH, |
-3.6% | -20.4% | -58.0% | -64.3% | 11/05/2021 |
| Dish Network Corp. Class A |
DISH, |
-2.2% | -20.3% | -57.4% | -70.1% | 10/04/2021 |
| Source: FactSet | ||||||
Click on the tickers for more about each company, including developments that led to their share-price declines.
Click here for Tomi Kilgore’s detailed guide to the wealth of information for free on the MarketWatch quote page.
FedEx Corp.
FDX,
tops the list because of investors’ harsh reaction to the company’s sales and profit warning on Sept. 16. Claudia Assis and Greg Robb explained the implications of FedEx’s warning for the broad economy.
Shares of Carnival Corp.
CCL,
fell 23% on Friday (for a September decline of 26%) after the cruise giant again reported sales and earnings below what analysts had expected, even though it reported increasing its capacity usage to 92%.
Nike Inc.
NKE,
was down 13% on Friday for a September decline of 22%, after the company warned that discounting to clear inventory would continue to affect its earnings performance. Here’s how analysts reacted.
Adobe Inc.
ADBE,
made the list because of investors’ doubt about its dilutive $20 billion deal to acquire Figma.
The bulk of CarMax’s
KMX,
drop for the month came on Sept. 29, after the used-car dealer missed sales and earnings estimates and indicated that consumers were beginning to resist high prices.
Don’t miss: Dividend yields on preferred stocks have soared. This is how to pick the best ones for your portfolio.
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This week Freddie Mac said the average interest rate on a 30-year mortgage loan in the U.S. had climbed to 6.70% from 6.29% the week before and 6.02% two weeks ago. The average rate a year ago was 3.01%.
Would-be sellers who have low-rate mortgage loans are reluctant if it means they need to take out a new loan to fund their next home. Would-be buyers are forced out of the market, as the monthly principal and interest payment for a new 30-year loan, based on Freddie Mac’s figures, has increased 53% from a year ago.
Home-sale contracts are being canceled at a record pace in some areas.
But these factors could lead to a buyer’s market in 2023 if prices plunge. Here are the areas economists expect to see the largest home price declines.
The dollar has strengthened as the Federal Reserve has taken the lead among central banks in raising interest rates. This is reverberating across the world, making it more costly for countries to make interest payments on dollar-denominated debt and increasing the cost of any commodity traded in dollars.
The rising dollar lowers prices on imported goods for Americans and can also lower their international travel costs. But Michael Wilson, Morgan Stanley’s chief equity strategist, warns that earnings for the S&P 500
SPX,
would decline as a direct result of the strong dollar and called the current foreign-exchange backdrop an “untenable situation” for the stock market.
On the other hand: Companies are trying to blame weak earnings on the strong U.S. dollar, but that’s a lame excuse
Michael Brush interviews David Baron, co-manager of the Baron Focused Growth Fund
BFGFX,
who describes opportunities cropping up as institutional investors dump stocks. He also explains his winning long-term strategy, which has included a very long-term investment in Tesla Inc.
TSLA,
A a positive sign for the stock market: These 12 stocks have seen strong insider buying
When interest rates rise, bond prices fall. But it also means that if you have money to put to work, bond yields have become much more attractive.
Khuram Chaudhry, a European equity quantitative strategist at JPMorgan in London, makes the case for buying bonds now.
Preferred stocks feature stated dividend yields and prices that move the same way bond prices do. That means prices for many issues are now heavily discounted to face value and that current yields are much higher than they were at the end of 2021. Here’s an in-depth guide on how to research preferred stocks and make your own selections.
Related: 22 dividend stocks screened for quality and safety
Bloomberg
Stanley Druckenmiller predicted a U.S. recession in 2023 as a result of monetary policy tightening by the Federal Reserve. That may not be much of a stretch, considering that the U.S. economy contracted during the first half of 2022, according to revised GDP figures from the Bureau of Economic Analysis.
But investors should be careful — macro forecasts often turn out to be incorrect, Mark Hulbert warns.
More on stocks: It’s the worst September for stocks since 2008. What that means for October.
Alessandra Malito has advice on how retirees and people planning for retirement can prepare for tough economic times.
Agence France-Presse/Getty Images
After the new U.K. government of Prime Minister Liz Truss announced a massive tax cut along with a new spending program to help counter rising fuel costs and new borrowing, the pound hit a new low against the dollar on Sept. 26 as investors and money managers panicked and sold-off U.K. government bonds. Steve Goldstein explains how and why the Bank of England came tot the rescue.
Beth Pinsker digs deeply to explain how to use a reverse mortgage as a financial planning tool.
After Tesla CEO Elon Musk said the upcoming Cybertruck would be sufficiently waterproof to “serve briefly as a boat,” the San Francisco Bay Ferry offered this advice to patrons.
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Volkswagen AG said late Wednesday that it priced Porsche AG’s initial public offering at the top of its range, setting the sports-car maker’s IPO on a course to be among the largest ever in Europe.
VW
VOW,
priced the IPO at EUR82.50 a share, or about $80, valuing Porsche
P911,
at more than $70 billion. In a nod to Porsche’s iconic 911 two-door car, first introduced in the mid-1960s, 911 million shares were made available.
See also: Porsche IPO is set for Thursday. Here’s what to know.
Porsche shares are expected to trade on the Frankfurt Stock Exchange on Thursday.
VW is planning to distribute 49% of the proceeds in a special dividend, and set a December meeting to put the proposal to a shareholder vote.
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Special $2 admission for all ghouls, ghosts and goblins of all ages.
Press Release
–
updated: Oct 20, 2019
RENO, Nev., October 20, 2019 (Newswire.com)
–
Trick or Treat in the Streets of the National Automobile Museum, The Harrah Collection, in downtown Reno – and you’ll be assured of treats, not tricks for your goblins, princesses and action heroes on Halloween, Thursday, Oct. 31 from 4:30 to 7:30 p.m.
Special $2 per person admission is being offered by the Museum for everyone, including children, family members and friends on Halloween.
Traditional candy collecting on Halloween can be accomplished in climate-controlled comfort during the popular “Trick or Treat in the Streets.” Located on the corner of Lake and Mill Streets in downtown Reno, the Museum offers free parking in its own parking lot.
“We’ll have candy stations and games designed specifically for youngsters,” says National Automobile Museum Executive Director Jackie Frady. “This annual event provides us with an opportunity to give back to the community which is always so supportive of the museum.”
The National Automobile Museum offers parents a chance to enjoy more than 200 cars and authentic street scenes with facades; cars and artifacts from each era while they help their kids collect candy. When children “Trick or Treat in the Streets” at the Museum, nobody has to be shivering in the cold on Halloween.
For more information on Trick or Treat in the Streets call 775-333-9300 or visit www.automuseum.org.
About The National Automobile Museum (The Harrah Collection)
One of America’s Top 10 Automobile Museums, the National Automobile Museum showcases more than 200 remarkable automobiles. It features theatre presentations and audio tours in English and Spanish through 100,000 square-feet of galleries, exhibits and vibrant street scenes and accompanying artifacts that bring displays to life. The museum is a dynamic and popular venue for special events as intimate as 60 and as large as 1,200 guests. It also features the Nevada Space Center, home of the Challenger Learning Center of Northern Nevada. For more information, visit www.automuseum.org.
Hours of Operation
Mon. – Sat.: 9:30 a.m. – 5:30 p.m.
Sun.: 10 a.m. – 4 p.m.
Tickets
Adults $12
Seniors $10 (62 and older)
Junior $6 (6 to 18 years old)
Children Free (5 and younger)
Members Free
Source: National Automobile Museum
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