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U.S. stocks little changed in cautious trading ahead of inflation report, bank earnings

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U.S. stock indexes were edging higher on Wednesday with technology stocks looking to extend gains ahead of the December inflation report, which is expected to shed more direct light on when the Federal Reserve could dial back its two-year-long effort to tighten monetary policy and cool the economy.

How are stock indexes trading

The S&P 500
SPX
rose 8 points, or 0.2%, to 4,764
The Dow Jones Industrial Average
DJIA
was up 38 points, or 0.1%, to 37,562
The Nasdaq Composite
COMP
gained 43 points, or 0.3%, to 14,901.

On Tuesday, the Dow industrials fell 0.4%, to 37,525, while the S&P 500 declined 0.2%, to 4,757, and the Nasdaq Composite gained less than 0.1%, to 14,858.

What’s driving markets

Inflation and its impact on bond markets and the Federal Reserve’s monetary-policy trajectory are the primary focus for markets this week as investors remain on hold ahead of Thursday’s December inflation reading and high-profile corporate earnings reports on Friday, when some of the big banks will kick off the fourth-quarter 2023 earnings season.

The S&P 500 sits less than 0.7% shy of its record high of 4796.6 touched a little over two years ago, after rallying strongly in the last few months primarily on hopes that easing inflation will allow the Fed to lower interest rates sooner and faster than the markets previously anticipated.

The yield on the 10-year Treasury
BX:TMUBMUSD10Y,
the benchmark for borrowing costs, has fallen from 5% in October to 4.014% on Wednesday.

But for this bullish narrative to play out, inflation must be seen continuing to fall back to the central bank’s 2% target. That’s why great importance is therefore being placed on the consumer-price index for December, which will be published at 8:30 a.m. Eastern on Thursday.

See: These traders bet on surprise blip higher in key December inflation reading

Economists forecast that annual headline CPI inflation inch e d up to 3.2% last month from 3.1% in November. The core reading, which strips out more volatile items like food and energy, is expected to fall from 4% to 3.8%.

Adam Phillips, director of portfolio strategy at EP Wealth Advisors, said the CPI report may give investors enough confidence that the disinflation is likely to continue, even if the price levels are “still a very long way from anything that is considered healthy.”

However, he cautioned that the economy has “certain factors” that are beyond the Fed’s control, such as the volatility in supply chains and growing geopolitical risks, as well as a potential resurgence in inflation, he told MarketWatch via phone on Wednesday.

“[E]quities have remained broadly range-bound since just before Christmas, with little to push them in either direction,” said Jim Reid, strategist at Deutsche Bank.

“That might change soon, since we’ve got the U.S. CPI print tomorrow, and then the start of earnings season on Friday, but for now at least, there’s been few headlines for investors to latch onto, just a bit of indigestion after over exuberance before New Year left markets with a little bit of an extended hangover,” Reid added.

In U.S. economic data, the wholesale inventories declined 0.2% in November, in line with Wall Street expectations, as manufacturers continue to juggle with a fragile economy, according to the Commerce Department.

New York Fed President John Williams will speak in White Plains, N.Y., at 3:15 p.m. Eastern time.

Companies in focus

Shares of Boeing Co.
BA,
+1.53%
edged up 1.5% on Wednesday after chief executive David Calhoun on Tuesday told employees the jet maker needed to acknowledge its mistakes after a panel blew off a 737 Max 9 jet flown by Alaska Airlines days earlier, and approach the matter with “complete transparency.” Shares have fallen nearly 8% this week.
Crypto-related stocks slipped as bitcoin retreated after SEC Chair Gary Gensler denied that the agency had approved spot bitcoin ETFs. Shares of CoinBase Global Inc.
COIN,
-1.64%
fell 1.3%, and MicroStrategy Inc.
MSTR,
-1.33%
was off 1.5%. Prices of bitcoin
BTCUSD,
+0.04%
dropped to around $45,398 on Wednesday.
Shares of Intuitive Surgical Inc.
ISRG,
+6.15%
rallied 6.2% after the maker of robotic surgical equipment said it expected fourth-quarter sales that were above Wall Street’s expectations, helped by a recovery in China.

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January 10, 2024

Berkshire Buys More Liberty SiriusXM Tracking Stock

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Berkshire Hathaway purchased 2.8 million shares of the Liberty SiriusXM tracking stock in recent days, apparently seeking to capitalize on Liberty Sirius’ discount relative to the value of its stake in Sirius XM Holdings, the satellite radio company.

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January 4, 2024

GE's stock has its best year on record ahead of final breakup

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General Electric Co. has saved its best year for its last.

At the beginning of the second quarter, GE’s power and renewable-energy business will be spun off as GE Vernova, while its remaining business will be relaunched as GE Aerospace. That follows the conglomerate’s separation of GE HealthCare Technologies Inc.
GEHC,
-0.28%
in December 2022.

But rather than mourn the final breakup of the 150-year old company, which was co-founded by Thomas Edison, Wall Street cheered like it never had before.

GE’s stock
GE,
-0.54%
has rocketed 95.1% in 2023 as of afternoon trading Friday. That would be by far the stock’s best year on record, based on available data going back to 1972, according to Dow Jones Market Data. The next best year was 1982, when it gained 65.4%. In comparison, the S&P 500 index
SPX
has rallied 24.2% this year.

Read: GE stock sees biggest rally in more than 2 years after a big earnings beat, raised outlook.

As good as the stock’s performance has been leading up to the breakup, most analysts feel like investors still have more to gain. Keep in mind that in many cases, a company’s parts are worth more individually than they are valued as part of a whole.

Wells Fargo’s Matthew Akers has a pre-breakup target of $144 on GE’s stock, which implies about 13% upside from current levels.

“GE combines an attractive business with high aftermarket mix, solid management team with a clean balance sheet, L-T margin upside and built-in catalyst with the Vernova spin in early Q2,” Akers wrote.

J.P. Morgan’s Seth Seifman said he believes the combined equity values of GE Vernova and GE Aerospace, when including the company’s equity stake in GE HealthCare, is about $149 billion. That compares with GE’s current market capitalization of about $139 billion.

Of the 18 analysts surveyed by FactSet who cover GE, 12 are bullish and six are neutral, while there are no bears. And the average price target is $139.23, or about 9% above current levels.

GE’s 2023 marks the culmination of a five-year turnaround for the stock engineered by current Chief Executive Larry Culp, who will remain as CEO of GE Aerospace.

GE’s stock has nearly tripled in the five years that Larry Culp has been CEO, outperforming the S&P 500 by a wide margin.

General Electric Co.

The stock had suffered its worst year ever in 2018, plunging 56.6%, just after it had its fourth-worst year in 2017, when it suffered a 44.8% decline.

Things got so bad for GE that it got booted from the Dow Jones Industrial Average
DJIA
in June 2018, ending a record 111-year run in the blue-chip barometer.

Culp was named CEO in October 2018. During his tenure, GE’s stock has had only two down years. It fell 3.2% in 2020 as the COVID-19 pandemic wreaked havoc on the aerospace business, and slumped 11.3% in 2022 as spiking inflation and interest rates fueled fears that a recession was on the horizon.

But since the end of 2018, GE’s stock has climbed 181%, while the S&P 500 has rallied 90% and the Dow has gained 61%.

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December 29, 2023

WSJ News Exclusive | Cigna Calls Off Humana Pursuit, Plans Big Stock Buyback

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Updated Dec. 10, 2023 4:47 pm ET

Cigna Group abandoned its pursuit of a tie-up with Humana after shareholders balked at a deal that would have created a roughly $140 billion giant in the health-insurance industry.

The companies couldn’t come to agreement on price and other financial terms, according to people familiar with the matter. In the near term, Cigna is turning its focus toward smaller, so-called bolt-on, acquisitions.

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December 10, 2023

Here’s why you might not have to pay a 6% commission next time you sell a home

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Going back decades, if you wanted to buy or sell a stock on the open market, you had to pay a 2% commission to buy and a 2% commission to sell. Then the advent of discount brokerage, led by Charles Schwab Corp.
SCHW,
+1.64%,
made lower commissions available until eventually, with improved technology and efficiency, the entire industry changed to enable the average investor to avoid commissions completely.

But the internet hasn’t done much to reduce the cost of selling a home in the U.S. Sellers typically pay a 6% commission to a real-estate agent to list and sell a home, with the seller’s agent splitting that commission with the buyer’s agent. But all of that may change because of a verdict this week in a class-action lawsuit in federal court against the National Association of Realtors.

Aarthi Swaminathan covers the case, what may happen next and the implications for home sellers and buyers:

Real-estate advice from the Moneyist

MarketWatch illustration

Quentin Fottrell — the Moneyist — works with three readers to answer tricky real-estate questions:

Economic outlook

On Wednesday, Federal Reserve Chair Jerome Powell may have bolstered the case that the central bank is finished raising interest rates for this economic cycle. The federal-funds rate was left in its target range of 5.25% to 5.50%.

Jon Gray, the president of Blackstone Group, spoke with MarketWatch Editor in Chief Mark DeCambre and said he expected the Fed to succeed in bringing down inflation without pushing the U.S. economy into a deep recession.

Friday employment numbers: Jobs report shows 150,000 new jobs in October as U.S. labor market cools

Bond-market trend switches again

The U.S. Treasury yield curve has been inverted for nearly a year.

FactSet

Normally, longer-term bonds have higher yields than those with short maturities. But the yield curve has been inverted for nearly a year, with 3-month U.S. Treasury bills
BX:TMUBMUSD03M
having higher yields than 10-year Treasury notes
BX:TMUBMUSD10Y.

There has been elevated demand for long-term bonds, as investors have anticipated a recession and a reversal in Federal Reserve interest-rate policy. When interest rates decline, bond prices rise and vice versa.

As you can see on the chart above, the yield curve was narrowing until mid-October. Yields on 10-year Treasury notes were close to 5% on Oct. 19, but they have been falling the past several days as the three-month yield has remained close to 5.5%.

In this week’s ETF Wrap, Christine Idzelis reports on where all the money is flowing in the bond market.

In the Bond Report, Vivien Lou Chen summarizes the action as investors react to the Federal Reserve’s decision not to change its federal-funds-rate target range this week and to other economic news.

For income-seekers looking to avoid income taxes, here’s a deep dive into municipal bonds, with taxable-equivalent yields and a deeper look at those within four high-tax states.

Ford’s good news — in the bond market

Ford Motor Co.’s debt rating has been lifted by S&P to investment-grade.

Getty Images

Ford Motor Co.’s
F,
+4.14%
credit rating was upgraded to an investment-grade rating by Standard & Poor’s on Monday. This takes about $67 billion in bonds out of the high-yield, or “junk,” market, as Ciara Linnane reports.

A stock-market warning based on history

The original Magnificent Seven.

Courtesy Everett Collection

By now you have probably heard the term “Magnificent Seven” used to describe stocks of the tremendous tech-oriented companies that have led this year’s rally for the S&P 500
SPX
: Apple Inc.
AAPL,
-0.52%,
Microsoft Corp.
MSFT,
+1.29%,
Amazon.com Inc.
AMZN,
+0.38%,
Nvidia Corp.
NVDA,
+3.45%,
Alphabet Inc.
GOOGL,
+1.26%

GOOG,
+1.39%,
Meta Platforms Inc.
META,
+1.20%
and Tesla Inc.
TSLA,
+0.66%.
With Tesla’s recent decline, that company is now the ninth-largest holding in the portfolio of the SPDR S&P 500 ETF Trust
SPY,
which tracks the benchmark index. Here are the top 10 companies held by SPY (11 stocks, including two common-share classes for Alphabet), with total returns through Thursday:

Company	Ticker	% of SPY portfolio	2023 total return	2022 total return	Total return since end of 2021
Apple Inc.	AAPL, -0.52%	7.2%	37%	-26%	1%
Microsoft Corp.	MSFT, +1.29%	7.1%	46%	-28%	5%
Amazon.com Inc.	AMZN, +0.38%	3.5%	64%	-50%	-17%
Nvidia Corp.	NVDA, +3.45%	3.0%	198%	-50%	48%
Alphabet Inc. Class A	GOOGL, +1.26%	2.1%	44%	-39%	-12%
Meta Platforms Inc. Class A	META, +1.20%	1.9%	158%	-64%	-8%
Alphabet Inc. Class C	GOOG, +1.39%	1.8%	45%	-39%	-11%
Berkshire Hathaway Inc. Class B	BRK.B, +0.80%	1.8%	13%	3%	17%
Tesla Inc.	TSLA, +0.66%	1.7%	77%	-65%	-38%
UnitedHealth Group Inc.	UNH, -0.98%	1.4%	2%	7%	9%
Eli Lilly and Company	LLY, -2.15%	1.3%	60%	34%	115%
Sources: FactSet, State Street (for SPY holdings)

Five of these stocks (including the two Alphabet share classes) are still down from the end of 2021. SPY itself has returned 14% this year, following an 18% decline in 2022. It is still down 7% from the end of 2021.

Mark Hulbert makes the case that a decade from now, the Magnificent Seven are unlikely to be among the largest companies in the stock market.

A different market opportunity: India is seeing a multidecade growth surge. Here’s how you can invest in it.

The MarketWatch 50

The MarketWatch 50 series is back, with articles and video interviews starting this week, including:

PayPal soars after earnings report

PayPal CEO Alex Chriss.

MarketWatch/PayPal

After the market close on Wednesday, PayPal Holdings Inc.
PYPL,
+1.89%
announced quarterly results that came in ahead of analysts’ expectations, and the stock soared 7% on Thursday even though the company lowered its target for improving its operating margin.

In the Ratings Game column, Emily Bary reports on the positive reaction to PayPal’s new CEO, Alex Chriss.

A less enthusiastic earnings reaction: EV-products maker BorgWarner’s stock suffers biggest drop in 15 years after downbeat sales outlook

Consumers drive mixed reactions to earnings results

Apple Inc. reported mixed quarterly results.

Mario Tama/Getty Images

Here’s more of the latest corporate financial results and reactions. First the good news:

And now the news that may not be so good:

Harsh verdict for SBF

It might seem that some legal battles never end, but it took only a year from the collapse of FTX for the cryptocurrency exchange’s founder, Sam Bankman-Fried, to be convicted on all seven federal fraud and money-laundering charges brought against him. The charges were connected to the disappearance of $8 billion from FTX customer accounts.

Here’s more reaction and coverage of the virtual-currency industry:

Want more from MarketWatch? Sign up for this and other newsletters to get the latest news and advice on personal finance and investing.

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November 3, 2023

Here’s why Zillow, Redfin and other real-estate stocks tanked after a jury ruling

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Shares of real-estate names plunged Tuesday following a jury ruling that has the potential to shake up the way people purchase homes.

A Missouri jury earlier Tuesday deemed that the National Association of Realtors, HomeServices of America and Keller Williams colluded to inflate or maintain high commission rates. Jefferies analyst John Conaltuoni said in a note to clients that a judge could issue an injunction preventing commission sharing on MLSs, or multiple listing services, which would hurt the buyer-agent business.

See more: A Missouri jury goes after the real-estate industry’s commission structure. Here’s what that could mean for homeowners.

Shares of Opendoor Technologies Inc.
OPEN,
-9.09%
plunged 9% on Tuesday, while shares of Zillow Group Inc.
ZG,
-6.87%

Z,
-6.98%
fell 7%, shares of Redfin Corp.
RDFN,
-5.67%
dropped 6% and shares of RE/MAX Holdings Inc.
RMAX,
-4.36%
declined 4%.

Conaltuoni thinks the recent ruling could bring big changes to the Participation Rule, which is an NAR requirement for seller agents to disclose the compensation being offered to buyer agents when they list through an MLS. The Participation Rule could soon get banned or turn optional, in his view.

Such a ban “would cause negotiations about buyer agent commissions to occur when an offer is presented, since there would no longer be an avenue to communicate splits up front,” he wrote. “This would eliminate the seller’s incentive to compensate buyer agents, which would force them to seek compensation directly. Shifting the burden of payment to buyers would likely meaningfully reduce their use of agents given most already struggle to cover closing costs.”

Conaltuoni further commented that were the rule to become optional, the “status quo” likely would continue.

Read: Why aren’t homeowners selling their homes? It’s not just the ‘lock-in effect’

What would these developments mean for Zillow, which reports earnings Wednesday afternoon? He flagged that nearly two-thirds of the company’s revenue comes from its Premier Agent business, which itself is primarily made up of revenue from buyer agents. “[A] reduction in their usage would force [Zillow] to pivot to offering products for seller agents and create near-term headwinds to revenue,” he wrote, while cutting his price target on Zillow’s stock to $48 from $60.

Bernstein’s Nikhil Devnani wrote that Zillow “is NOT part of this case and not directly impacted by the ruling,” but there’s the potential for repercussions down the line.

“Premier Agent is built around buyer commissions,” Devnani said. “And a reduction to commission rates (which could happen if cooperative compensation were outright banned in the worst case scenario) would create challenges for industry revenue growth, in our view. Maintaining the current structure with more transparency would have less impact we believe. It would need a stronger decoupling of who pays for buyer and seller agents.”

While Redfin shares dropped Tuesday along with other names, Chief Executive Glenn Kelman put out a blog post titled: “Change Comes to the Real Estate Industry.”

“The judge may take days or weeks to decide what structural changes the jury’s verdict will entail,” he wrote, and appeals could take years.

But traditional brokers “will undoubtedly now train their agents to welcome conversations about fees, just as Redfin has been doing for years, especially when advising a seller on what fee to offer to buyers’ agents,” he continued. “Rather than saying that a fee for the buyers’ agent of 2% or 3% is customary or recommended, agents will say that a buyers’ agent fee, if one is offered at all, is entirely up to the seller. This is as it should be.”

RBC Capital Markets analyst Brad Erickson wrote after the ruling that just over half of Redfin transactions come from the buyside. Its stock and Zillow’s “partially reflected these risks coming in,” in his view.

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October 31, 2023

Big Tech earnings have been strong, but Apple is about to answer the thousand-dollar question

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While the stock market reactions may not prove it, Big Tech is four-for-four so far this earnings reporting season.

Alphabet Inc.
GOOG,
-0.03%

GOOGL,
-0.09%,
Amazon.com Inc.
AMZN,
+6.83%,
Meta Platforms Inc.
META,
+2.91%
and Microsoft Corp.
MSFT,
+0.59%
all beat earnings and revenue expectations for the latest quarter, showing, among other things that the advertising market was healthy in the latest quarter and that software spending is holding up.

But one more major test looms in the week ahead. Apple Inc.
AAPL,
+0.80%
is due to deliver September-quarter results on Thursday and those earnings will answer a key question: Are consumers still so willing to purchase thousand-dollar iPhones in the current economy?

Results from other companies in recent weeks have painted a mixed picture of consumer spending. Visa Inc.
V,
-0.87%,
Mastercard Inc.
MA,
-0.14%
and American Express Co.
AXP,
-1.42%
say that spending remains resilient, but there are also signs that cracks are starting to form in categories deemed non-essential. Just look at Align Technology Inc.
ALGN,
+0.20%,
the maker of Invisalign orthodontic aligners, which saw its stock plunge last week after noting that people seem to be putting off dental and orthodontic visits.

Read: Invisalign maker’s stock craters after soft earnings, but analysts still say it’s a buy

Granted, some might say that iPhones are glorified necessities these days for Apple fans, even with their high price tags. But Apple conducted an effective price increase on its iPhone 15 Pro model when it rolled out its new phones in September, all while delivering a mostly incremental suite of feature upgrades across all its latest models. Will the new phones prove enticing enough in a period of stretched budgets?

Just judging by S&P 500
SPX
results so far in the aggregate, the odds would seem to be in Apple’s favor for a beat this quarter. About half of index components have already reported, and 78% have posted earnings upside, while 62% have surprised positively on the top line, according to FactSet.

Revenue will be the key item for Apple, as consensus expectations call for a small decline on the metric, which would mark the fourth consecutive year-over-year drop. It’s also worth noting that companies on the whole haven’t been topping revenue estimates by their usual margin. S&P 500 components in aggregate have reported revenue 0.8% above expectations, which compares with a five-year average of 2.0%, FactSet Senior Earnings Analyst John Butters wrote in a recent report.

Apple’s report could also highlight the impact of currency on corporate results, as the company generates more than half of its revenue internationally.

“Given the stronger U.S. dollar in recent months, are S&P 500 companies with more international revenue exposure reporting lower (year-over-year) earnings and revenues for Q3 compared to S&P 500 companies with more domestic revenue exposure?” Butters asked. “The answer is yes.”

This week in earnings

Many U.S. investors in financial-technology companies likely hadn’t heard of European payments player Worldline SA
WLN,
+9.06%
before last week, but a warning from the French company about deteriorating conditions in Europe helped send shares of PayPal Holdings Inc.
PYPL,
-2.63%
and Block Inc.
SQ,
-3.98%
sharply lower Wednesday, in a selloff one analyst deemed an overreaction. Those companies will look to reassure Wall Street about the health of their businesses with their own reports this week. Plus, while not a payments name, SoFi Technologies Inc.
SOFI,
-0.43%
will provide another read on the fintech sector. Investors will be watching to see how the end of the student-loan moratorium impacted student lending volumes.

The week ahead will also shed light on how consumers’ dining preferences have evolved in the current economy. Starbucks Corp.
SBUX,
-0.70%,
Dine Brands Global Inc.
DIN,
-0.12%,
Cheesecake Factory Inc.
CAKE,
-0.47%
and Sweetgreen Inc.
SG,
+0.59%
are among names on the docket. Plus, amid concerns about the impact of GLP-1 drugs such as Ozempic and Wegovy on eating habits, Kraft Heinz Co.’s management will be in the spotlight.

Don’t miss: What exactly are patients taking new weight-loss drugs eating and what are they avoiding? Bernstein asked them.

The call to put on your calendar

You can’t spell Advanced Micro Devices without AI (sort of): Nvidia Corp.
NVDA,
+0.43%
has been ruling the chip world this year thanks to its dominance with the sort of hardware needed to power the corporate AI fervor. Investors will be watching Tuesday afternoon to see how quickly Advanced Micro Devices Inc.’s
AMD,
+2.95%
own AI story is coming together. “The AMD narrative feels all about their data center (and, particularly, their AI story) right now,” Bernstein analyst Stacy Rasgon wrote in a note to clients. “In the near term the achievability of their 2H data-center growth (guided to 50% half-over-half) will be the question.” Rasgon expects AMD to discuss recent customer wins for its MI300X chip, though he thinks it will take time for the company to see “real volume.”

The number to watch

PayPal transaction margins: Shares of the one-time investor darling are trading at their lowest levels since May 2017, and the latest source of anguish for Wall Street is the company’s transaction margins. PayPal’s lower-margin unbranded checkout business has been growing more quickly than its higher-margin branded checkout product, a trend that’s been weighing on overall transaction margins. Barclays analyst Ramsey El-Assal expects the third quarter to mark a bottom on the metric before trends stabilize in the fourth quarter. “We do not believe the stock is crowded on the long or short side into earnings, as investors lack conviction regarding the magnitude of transaction margin headwinds in Q3,” he wrote in a recent preview. “In any case, we view Q3 as a potential clearing event.” PayPal posts results Wednesday afternoon.

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October 29, 2023

These 20 stocks in the S&P 500 are expected to soar after rising interest rates have pushed down valuations

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Two things investors can be sure about: Nothing lasts forever and the stock market always overreacts. The spiking of yields on long-term U.S. Treasury securities has been breathtaking, and it has led to remarkable declines for some sectors and possible bargains for contrarian investors who can commit for the long term.

First we will show how the sectors of the S&P 500

have performed. Then we will look at price-to-earnings valuations for the sectors and compare them to long-term averages. Then we will screen the entire index for companies trading below their long-term forward P/E valuation averages and narrow the list to companies most favored by analysts.

Here are total returns, with dividends reinvested, for the 11 sectors of the S&P 500, with broad indexes below. The sectors are sorted by ascending total returns this year through Monday.

Sector or index	2023 return	2022 return	Return since end of 2021	1 week return	1 month return
Utilities	-18.4%	1.6%	-17.2%	-11.1%	-9.6%
Real Estate	-7.1%	-26.1%	-31.4%	-3.0%	-8.8%
Consumer Staples	-5.4%	-0.6%	-6.0%	-2.2%	-4.4%
Healthcare	-4.2%	-2.0%	-6.1%	-1.7%	-3.3%
Financials	-2.5%	-10.5%	-12.7%	-2.5%	-4.7%
Materials	1.3%	-12.3%	-11.2%	-1.9%	-7.0%
Industrials	3.5%	-5.5%	-2.1%	-1.8%	-7.3%
Energy	4.0%	65.7%	72.4%	-1.9%	-1.4%
Consumer Discretionary	27.0%	-37.0%	-20.0%	-0.6%	-5.2%
Information Technology	36.5%	-28.2%	-2.0%	0.8%	-5.9%
Communication Services	42.5%	-39.9%	-14.3%	1.1%	-1.3%

S&P 500	13.1%	-18.1%	-7.4%	-1.1%	-4.9%
DJ Industrial Average	2.5%	-6.9%	-4.5%	-1.7%	-4.0%
Nasdaq Composite Index COMP	28.0%	-32.5%	-13.7%	0.3%	-5.1%
Nasdaq-100 Index	36.5%	-32.4%	-7.7%	0.5%	-4.2%
Source: FactSet

Returns for 2022 are also included, along with those since the end of 2021. Last year’s weakest sector, communications services, has been this year’s strongest performer. This sector includes Alphabet Inc.
GOOGL
and Meta Platforms Inc.
META,
which have returned 52% and 155% this year, respectively, but are still down since the end of 2021. To the right are returns for the past week and month through Monday.

On Monday, the S&P 500 Utilities sector had its worst one-day performance since 2020, with a 4.7% decline. Investors were reacting to the jump in long-term interest rates.

Here is a link to the U.S. Treasury Department’s summary of the daily yield curve across maturities for Treasury securities.

The yield on 10-year U.S. Treasury notes

jumped 10 basis points in only one day to 4.69% on Monday. A month earlier the 10-year yield was only 4.27%. Also on Monday, the yield on 20-year Treasury bonds

rose to 5.00% from 4.92% on Friday. It was up from 4.56% a month earlier.

Market Extra: Bond investors feel the heat as popular fixed-income ETF suffers lowest close since 2007

The Treasury yield curve is still inverted, with 3-month T-bills

yielding 5.62% on Monday, but that was up only slightly from a month earlier. An inverted yield curve has traditionally signaled that bond investors expect a recession within a year and a lowering of interest rates by the Federal Reserve. Demand for bonds pushes their prices down. But the reverse has happened over recent days, with the selling of longer-term Treasury securities pushing yields up rapidly.

Another way to illustrate the phenomenon is to look at how the Federal Reserve has shifted the U.S. money supply. Odeon Capital analyst Dick Bove wrote in a note to clients on Friday that “the Federal Reserve has not deviated from its policy to defeat inflation by tightening monetary policy,” as it has shrunk its balance sheet (mostly Treasury securities) to $8.1 trillion from $9 trillion in March 2022. He added: “The M2 money supply was $21.8 trillion in March 2022; today it is $20.8 trillion. You cannot get tighter than these numbers indicate.”

Then on Tuesday, Bove illustrated the Fed’s tightening and the movement of the 10-year yield with two charts:

Odeon Capital Group, Bloomberg

Bove said he believes the bond market has gotten it wrong, with the inverted yield curve reflecting expectations of rate cuts next year. If he is correct, investors can expect longer-term yields to keep shooting up and a normalization of the yield curve.

This has set up a brutal environment for utility stocks, which are typically desired by investors who are seeking dividend income. In a market in which you can receive a yield of 5.5% with little risk over the short term, and in which you can lock in a long-term yield of about 5%, why take a risk in the stock market? And if you believe that the core inflation rate of 3.7% makes a 5% yield seem paltry, keep in mind that not all investors think the same way. Many worry less about the inflation rate because large components of official inflation calculations, such as home prices and car prices, don’t affect everyone every year.

We cannot know when this current selloff of longer-term bonds will end, or how much of an effect it will have on the stock market. But sharp declines in the stock market can set up attractive price points for investors looking to go in for the long haul.

Screening for lower valuations and high ratings

A combination of rising earnings estimates and price declines could shed light on potential buying opportunities, based on forward price-to-earnings ratios.

Let’s look at the sectors again, in the same order, this time to show their forward P/E ratios, based on weighted rolling 12-month consensus estimates for earnings per share among analysts polled by FactSet:

Sector or index	Current P/E to 5-year average	Current P/E to 10-year average	Current P/E to 15-year average	Forward P/E	5-year average P/E	10-year average P/E	15-year average P/E
Utilities	82%	86%	95%	14.99	18.30	17.40	15.82
Real Estate	76%	80%	81%	15.19	19.86	18.89	18.72
Consumer Staples	93%	96%	105%	18.61	19.92	19.30	17.64
Healthcare	103%	104%	115%	16.99	16.46	16.34	14.72
Financials	88%	92%	97%	12.90	14.65	14.08	13.26
Materials	100%	103%	111%	16.91	16.98	16.42	15.27
Industrials	88%	96%	105%	17.38	19.84	18.16	16.56
Energy	106%	63%	73%	11.78	11.17	18.80	16.23
Consumer Discretionary	79%	95%	109%	24.09	30.41	25.39	22.10
Information Technology	109%	130%	146%	24.20	22.17	18.55	16.54
Communication Services	86%	86%	94%	16.41	19.09	19.00	17.43

S&P 500	94%	101%	112%	17.94	19.01	17.76	16.04
DJ Industrial Average	93%	98%	107%	16.25	17.49	16.54	15.17
Nasdaq Composite Index	92%	102%	102%	24.62	26.71	24.18	24.18
Nasdaq-100 Index	97%	110%	126%	24.40	25.23	22.14	19.43

There is a limit to how many columns we can show in the table. The S&P 500’s forward P/E ratio is now 17.94, compared with 16.79 at the end of 2022 and 21.53 at the end of 2021. The benchmark index’s P/E is above its 10- and 15-year average levels but below the five-year average.

If we compare the current sector P/E numbers to 5-, 10- and 15-year averages, we can see that the current levels are below all three averages for four sectors: utilities, real estate, financials and communications services. The first three face obvious difficulties as they adjust to the rising-rate environment, while the real-estate sector reels from continuing low usage rates for office buildings, from the change in behavior brought about by the COVID-19 pandemic.

Your own opinions, along with the pricing for some sectors, might drive some investment choices.

A broader screen of the S&P 500 might point to companies for you to research further.

We narrowed the S&P 500 as follows:

Current forward P/E below 5-, 10- and 15-year average valuations. For stocks with negative earnings-per-share estimates for the next 12 months, there is no forward P/E ratio so they were excluded. For stocks listed for less than 15 years, we required at least a 5-year average P/E for comparison. This brought the list down to 138 companies.
“Buy” or equivalent ratings from at least two-thirds of analysts: 41 companies.

Here are the 20 companies that passed the screen, for which analysts’ price targets imply the highest upside potential over the next 12 months.

There is too much data for one table, so first we will show the P/E information:

Company	Ticker	Current P/E to 5-year average	Current P/E to 10-year average	Current P/E to 15-year average
SolarEdge Technologies Inc.	SEDG	89%	N/A	N/A
AES Corp.	AES	66%	75%	90%
Insulet Corp.	PODD	18%	N/A	N/A
United Airlines Holdings Inc.	UAL	42%	50%	N/A
Alaska Air Group Inc.	ALK	51%	57%	N/A
Tapestry Inc.	TPR	39%	49%	70%
Albemarle Corp.	ALB	39%	50%	73%
Delta Air Lines Inc.	DAL	60%	63%	21%
Alexandria Real Estate Equities Inc.	ARE	59%	68%	N/A
Las Vegas Sands Corp.	LVS	96%	78%	53%
Paycom Software Inc.	PAYC	61%	N/A	N/A
PayPal Holdings Inc.	PYPL	33%	N/A	N/A
SBA Communications Corp. Class A	SBAC	27%	N/A	N/A
Advanced Micro Devices Inc.	AMD	58%	39%	N/A
LKQ Corp.	LKQ	92%	44%	78%
Charles Schwab Corp.	SCHW	75%	54%	73%
PulteGroup Inc.	PHM	94%	47%	N/A
Lamb Weston Holdings Inc.	LW	71%	N/A	N/A
News Corp Class A	NWSA	93%	73%	N/A
CVS Health Corp.	CVS	75%	61%	67%
Source: FactSet

Click on the tickers for more about each company or index.

Click here for Tomi Kilgore’s detailed guide to the wealth of information available for free on the MarketWatch quote page.

News Corp
NWSA
is on the list. The company owns Dow Jones, which in turn owns MarketWatch.

Here’s the list again, with ratings and consensus price-target information:

Company	Ticker	Share “buy” ratings	Oct. 2 price	Consensus price target	Implied 12-month upside potential
SolarEdge Technologies Inc.	SEDG	74%	$122.56	$268.77	119%
AES Corp.	AES	79%	$14.16	$25.60	81%
Insulet Corp.	PODD	68%	$165.04	$279.00	69%
United Airlines Holdings Inc.	UAL	71%	$41.62	$69.52	67%
Alaska Air Group Inc.	ALK	87%	$36.83	$61.31	66%
Tapestry Inc.	TPR	75%	$28.58	$46.21	62%
Albemarle Corp.	ALB	81%	$162.41	$259.95	60%
Delta Air Lines Inc.	DAL	95%	$36.45	$58.11	59%
Alexandria Real Estate Equities Inc.	ARE	100%	$98.18	$149.45	52%
Las Vegas Sands Corp.	LVS	72%	$45.70	$68.15	49%
Paycom Software Inc.	PAYC	77%	$260.04	$384.89	48%
PayPal Holdings Inc.	PYPL	69%	$58.56	$86.38	48%
SBA Communications Corp. Class A	SBAC	68%	$198.24	$276.69	40%
Advanced Micro Devices Inc.	AMD	74%	$103.27	$143.07	39%
LKQ Corp.	LKQ	82%	$49.13	$67.13	37%
Charles Schwab Corp.	SCHW	77%	$53.55	$72.67	36%
PulteGroup Inc.	PHM	81%	$73.22	$98.60	35%
Lamb Weston Holdings Inc.	LW	100%	$92.23	$123.50	34%
News Corp Class A	NWSA	78%	$20.00	$26.42	32%
CVS Health Corp.	CVS	77%	$69.69	$90.88	30%
Source: FactSet

A year may actually be a short period for a long-term investor, but 12-month price targets are the norm for analysts working for brokerage companies.

Don’t miss: This fund shows that industry expertise can help you make a lot of money in the stock market

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October 3, 2023

U.S. banks and regional lenders slide across the board as S&P is latest to downgrade ratings

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U.S. banks and regional banks fell across the board on Tuesday, after S&P Global Ratings downgraded five smaller players after a review of risk related to funding, liquidity and asset quality with a focus on office commercial real estate.

Adding to the gloom, Republic First Bancorp. Inc.’s stock
FRBK,
-41.90%
tanked by 39%, after Nasdaq told the company that its stock would be delisted on Wednesday, after it failed to file its annual report in time.

S&P’s move comes just days after Fitch Ratings analyst Christopher Wolfe reduced his operating environment score for U.S. banks to aa- from aa due to the unknown path of interest rate hikes and regulatory changes facing the sector.

And Moody’s Investors Service just two weeks ago upset investors when it downgraded some lenders and said it was reviewing ratings on bigger banks, including Bank of New York Mellon
BK,
-1.71%,
State Street
STT,
-1.59%
and Northern Trust
NTRS,
-1.73%.

For more, see: Bank asset quality, weaker profits spark Moody’s reviews and downgrades as it weighs potential 2024 recession

The S&P 500 Financials Sector has fallen for seven consecutive days, and is on pace for its longest losing streak since April 7, 2022, when it also fell for seven straight trading days.

Individual bank names are also performing poorly, with Goldman Sachs Group Inc.
GS,
-0.94%
and Citigroup Inc.
C,
-1.68%
down for 10 of the past 11 days and Charles Schwab Corp.
SCHW,
-4.84%
down 11 straight days.

Goldman alone has fallen for seven straight days for a total loss of 6.3%. It’s the longest losing streak since Feb. 28, 2020, when it also fell for seven straight days as the pandemic was taking hold.

The KBW Nasdaq Regional Banking Index
KBWR
is down for 11 straight days. and the KBW Nasdaq Bank Index
BKX
is down for seven straight days.

S&P downgraded Associated Banc. Corp.
ASB,
-4.20%,
Comerica Inc.
CMA,
-3.82%,
KeyCorp
KEY,
-3.58%,
UMB Financial Corp.
UMBF,
-2.42%
% and Valley National Bancorp.
VLY,
-4.19%
by one notch and said the outlook on all five is stable.

The rating agency affirmed ratings on Zions Bancorp
ZION,
-4.17%
and maintained a negative outlook, meaning it could downgrade them again in the near-term. And it affirmed ratings and a stable outlook on Synovus Financial Corp.
SNV,
-3.37%
and Truist Financial Corp.
TFC,
-1.36%

“We reviewed these 10 banks because we identified them as having potential risks in multiple areas that could make them less resilient than similarly rated peers ,” S&P said in a statement.

“For instance, some that have seen greater deterioration in funding—-as indicated by sharply higher costs or substantial dependence on wholesale funding and brokered deposits—-may also have below-peer profitability, high unrealized losses on their assets, or meaningful exposure to CRE.”

The steep rise in interest rates orchestrated by the Federal Reserve over the past year has raised deposit costs as banks are now competing for savers seeking higher returns and that’s forced some to pay up on deposits and discourage their clients from heading to other institutions and instruments.

The sector has been skittish this year following the collapse of Silicon Valley Bank and other lenders that led to a run on deposits at a number of regional lenders.

However, S&P said about 90% of the banks it rates have stable outlooks and just 10% have negative ones. None have positive outlooks.

The widespread stable outlooks shows that stability in the U.S. banking sector has improved significantly in recent months.

S&P is expecting FDIC-backed banks in aggregate to earn a relatively healthy ROE of about 11% in 2023.

KeyCorp. and Comerica both fell more than 3% on the news. Of the two, KeyCorp. has more outstanding debt and its 10-year bonds widened by about 5 to 10 basis points, according to data solutions provider BondCliq Media Services.

As the following chart shows, the bonds have seen better selling on Wednesday with buyers emerging around midmorning.

KeyBank net customer flow (intraday). Source: BondCliQ Media Services

The next chart shows customer flow over the last 10 days.

Most active KeyBank issues with net customer flow (last 10 days). Source: BondCliQ Media Services

The next chart shows the outstanding debt of the downgraded banks, with KeyCorp. clearly the leader with almost $16 billion of bonds.

Outstanding S&P downgraded banks debt USD by maturity bucket. Source: BondCliQ Media Services

Don’t miss: Capital One confirms roughly $900 million sale of office loans as property sector wobbles

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August 22, 2023

Nasdaq falls to 6-week low as rising bond yields weigh on ‘Magnificent 7’ stocks

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U.S. stocks traded lower for a third straight day on Thursday as rising bond yields spurred weakness in some of the so-called Magnificent Seven megacap stocks, helping to drive the Nasdaq to a six-week low.

How are stocks trading

The S&P 500
SPX
was down 2 points, or 0.1%, to 4,401.
The Dow Jones Industrial Average
DJIA
shed 42 points, or 0.1%, to 34,725.
The Nasdaq Composite
COMP
fell by 46 points, or 0.3%, to 13,428.

The Dow and S&P 500 were on track to extend a losing streak to a third straight session as major indexes headed for another week in the red. The S&P 500 hasn’t fallen for three weeks in a row since February, FactSet data show.

What’s driving markets

Bonds have resumed command of the stock market of late as higher yields lash shares of megacap technology stocks, undermining their status as the undisputed market leaders.

Long-dated Treasury yields continued to rise Thursday, with the 10-year yield
BX:TMUBMUSD10Y
touching its highest level since the 2008 financial crisis, rising north of 4.31%. Bond yields move inversely to prices.

Rising yields helped heap more pressure on shares of some of this year’s highflying tech stocks, including Tesla Inc.
TSLA,
-0.34%,
Apple Inc.
AAPL,
-0.91%
and Microsoft Corp.
MSFT,
-0.01%

The elite group of megacap tech stocks which also includes Amazon.com Inc., Meta Platforms Corp.
META,
-0.24%
and Alphabet Inc.’s Class A
GOOGL,
+2.42%
and Class C
GOOG,
+2.48%
shares has been credited with driving much of the Nasdaq Composite’s nearly 30% run-up year-to-date. But their market dominance has faded in recent weeks as investors have favored other cyclical sectors like energy and materials stocks. Those two sectors were the best performers on the S&P 500 on Thursday.

“That’s a theme that’s been bubbling up here over the last three to four weeks, but there’s more of an exclamation point on it now,” said David Keller, chief market strategist at Stockcharts.com, during a phone interview with MarketWatch.

“First you had Microsoft and Apple breaking down a few weeks ago, now you’re getting Meta breaking below its 50-day moving average.”

Keller added that rising bond yields tend to have a bigger impact on growth stocks like technology names, while sectors like energy are more resilient.

“Energy can do just fine in a rising rate environment. energy and materials should probably do better in a relative basis,” he said.

Minutes from the Federal Reserve’s July meeting released Wednesday afternoon were being blamed for the latest leg higher in global bond yields. They showed that Fed policy makers could continue raising interest rates amid concerns that inflation could reaccelerate, potentially pushing bond yields even higher.

“It’s really uncertain where terminal interest rates will land given the economy isn’t giving us a decisive picture of being too strong or too weak. It’s keeping the window open for more rate hikes potentially,” said Mohannad Aama, a portfolio manager at Beam Capital Management, during a phone interview with MarketWatch.

Corporate earnings were also in focus as investors received results from Cisco Systems
CSCO,
+4.06%
and retail giant Walmart Inc.
WMT,
-1.74%.
Cisco reported strong quarterly results after Wednesday’s close. Walmart also reported stronger than expected earnings, helping to offset some concerns about the strength of the consumer spurred by Target Corp.’s
TGT,
+1.94%
lackluster earnings and guidance from Wednesday.

Shares of Cisco rose 2.6%, while Walmart shares turned lower, down 1.2%.

Economic updates released Thursday helped support the notion that the U.S. economy is growing at a faster pace than economists had expected, potentially complicating the Fed’s efforts to tamp down inflation.

First-time jobless-benefit claims fell by 11,000 to 239,000 last week, a sign that layoffs in the U.S. labor market remain low. The Philadelphia Fed factory index also shot higher to 12 in August, up from negative 13.5 during the prior month, a sign that manufacturers in the U.S. could be exiting a slump.

Companies in focus

Hawaiian Electric Industries Inc.
HE,
-15.24%
shares fell after The Wall Street Journal reported that the utility has engaged in talks with restructuring advisers to consider its next steps after the deadly Maui wildfires.
Shares of Ball Corp.
BALL,
+3.41%
rose 3% after agreeing to sell its aerospace unit to BAE Systems for $5.5 billion.
Chesapeake Energy Corp.
CHK,
+6.03%
will replace Mercury Systems Inc.
MRCY,
+2.99%
on the S&P MidCap 400, S&P Dow Jones Indices said on Wednesday. Shares of Chesapeake were up 6%.
Shares of Cigna Group
CI,
-7.10%
and CVS Health
CVS,
-8.89%
dropped following a report that a major nonprofit health insurer was preparing to shun the pharmacy-benefit industry.

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August 17, 2023

Warren Buffett’s Berkshire Hathaway swings to Q2 profit, operating earnings up 6%

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Warren Buffett’s Berkshire Hathaway swung to a profit in the second quarter owed to its investment portfolio and insurance holdings, according to a release out Saturday.

The holding company with businesses that range from insurer Geico and railroad BNSF Railway to Dairy Queen restaurants and its own energy division posted net income of $35.9 billion, or $24,775 a class A share equivalent. That compared with a loss of $43.8 billion, or $29,754 a class A share equivalent, a year earlier.

Berkshire’s
BRK.A,
-1.37%

BRK.B,
-1.08%
after-tax operating earnings, a figure Warren Buffett wants shareholders to and which excludes some investment results, rose 6% to just over $10 billion from $9.3 billion a year earlier. Regulations do require Berkshire to include unrealized gains and losses from its investment portfolio when it reports its net income.

Berkshire’s stock repurchases totaled $1.4 billion in the second quarter, compared with $4.4 billion in the first quarter and $1 billion for the year-earlier period. The Q2 repurchases were below an estimate of $2.2 billion from UBS analyst Brian Meredith.

Reduced buybacks did come alongside appreciation in Berkshire stock, which was up 10% in the second quarter.

Berkshire ended the second quarter with $147.4 billion in cash and cash equivalents, compared with $105.4 billion in the same period a year ago.

Berkshire’s Class A shares have been hovering near all-time highs, up 21% over the past year and bringing the company’s market value to roughly $780 billion.

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August 5, 2023

Berkshire Hathaway’s Profits Rise

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Berkshire Hathaway’s Profits Rise

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August 5, 2023

Warren Buffett Isn’t Worried About the Fitch Downgrade

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https://www.barrons.com/articles/warren-buffett-berkshire-hathaway-fitch-downgrade-t-bills-2a6d71a9

Updated Aug. 3, 2023 1:57 pm ET / Original Aug. 3, 2023 8:38 am ET

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Berkshire Hathaway

CEO Warren Buffett says he’s not concerned about the Fitch downgrade of the U.S. government’s credit rating, saying his company continues to buy $10 billion of Treasury bills each week.

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August 3, 2023

Charles Schwab’s stock on track for biggest one-day gain since March of 2020 after earnings beat

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Charles Schwab Corp.’s stock soared 12% Tuesday to put it on track for its biggest one-day increase since March of 2020, after the discount brokerage’s second-quarter earnings fell from a year ago but still topped consensus estimates.

Chief Executive Walt Bettinger acknowledged a “somewhat unsettled backdrop,” but said Schwab gathered $52 billion in core net new assets in the quarter, bringing the year-to-date total to more than $180 billion.

“While we observed signs of typical tax seasonality, as well as softer investor sentiment at the beginning of the quarter, we still attracted nearly 1 million new brokerage accounts and finished the period serving $8.02 trillion in total client assets across 34 million accounts,” he said in a statement.

The company
SCHW,
+12.57%
posted net income of $1.294 billion, or 64 cents a share, for the quarter, down from $1.793 billion, or 87 cents a share, in the year-earlier period. Adjusted per-share earnings came to 75 cents, ahead of the 71-cent FactSet consensus.

Revenue fell 9% to $4.656 billion, ahead of the $4.610 billion FactSet consensus.

See now: Morgan Stanley’s profit drops but beats expectations as stock rises

Bank deposits fell to $304.4 billion from $442.0 billion a year ago. The company’s clients have been engaged in a practice called “sorting,” where they are moving cash out of sweep accounts and into higher-paying products. When that process exceeds cash on hand, the company has to borrow from other funding sources that can be more expensive.

Still, Chief Financial Officer Peter Crawford said the daily outflows that have hurt the company over the last year as clients react to higher interest rates by seeking out better-paying options, began to slow.

“While anticipated client cash realignment, along with net equity buying during June, pushed cash levels lower, we observed a continued and substantial deceleration in the daily pace of cash outflows versus prior months,” he said.

Also read: Bank of America’s stock rises after second-quarter earnings and revenue beat expectations

“The continuation of this trend through the end of the quarter further strengthens our conviction that this realignment activity will inflect before the end of 2023, unlocking growth in client cash held on the balance sheet.”

On a call with analysts, Crawford said the company has not had to make any short-term borrowings from either CDs or Federal Home Loan Bank loans since late May and can now cover cash needs with organic sources.

“And as client cash realignment continues to slow and eventually reverses, we’d expect our supplemental funding balances to continue to decline over the next 18 months and be mostly paid off by the end of 2024,” he said, according to a FactSet transcript. “And this means that they should not really be a factor in our earnings picture in 2025 and beyond.”

Elsewhere, the company’s net interest income fell 10% to $2.3 billion as net interest margins fell 32 basis points from the first quarter to 1.87%.

Net interest revenue rose to $4.1 billion from $2.7 billion a year ago, while interest expenses jumped to $1.8 billion from $166 million.

The company also made progress with the conversion of client accounts from TD Ameritrade into Schwab accounts, with about 30% of accounts converted so far, said Bettinger. That comes after a major effort over the Memorial Day holiday weekend.

Schwab expects to move almost all of the rest over by year-end and to transition the final group in the first half of 2024, he said.

The stock has fallen 30% in the year to date, while the S&P 500
SPX,
+0.71%
has gained 17.8%.

Read now: JPMorgan Chase, Wells Fargo, Citi beat earnings targets but uncertainty clouds the economic outlook

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July 18, 2023

Bank of America, Morgan Stanley, Lockheed, Masimo, Novartis, and More Stock Market Movers

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https://www.barrons.com/articles/stock-market-movers-98396473

Updated July 18, 2023 5:41 am ET / Original July 18, 2023 4:48 am ET

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July 18, 2023

Cathie Wood’s ARK funds dump $26 million more in Coinbase stock, shed $13 million more of Tesla shares

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Funds associated with Cathie Wood’s ARK Investment continued to cull shares of Coinbase Global Inc. and Tesla Inc. on Monday, according to recent trade disclosures.

The ARK Fintech Innovation ETF
ARKF,
+1.58%
dumped 76,788 Coinbase shares
COIN,
+0.23%
on the day, while the ARK Innovation ETF
ARKK,
+2.29%
sold 127,266 and the ARK Next Generation Internet ETF
ARKW,
+2.23%
sold 44,784 shares.

Those were worth $26.3 million based on Coinbase’s Monday closing price of $105.55, and the sales follow ARK’s move to dump about $50 million in Coinbase’s stock Friday.

Coinbase represents 0.78% of the Fintech Innovation ETF, along with 0.15% of the Innovation ETF and 0.30% of the Next Generation Internet ETF. ARK disclosed the transactions and weightings in the daily trade notifications it posts to its website.

Read: Coinbase’s spectacular stock surge after Ripple ruling sparks fierce debate

Meanwhile, the ARK Innovation ETF shed 38,329 Tesla shares
TSLA,
+3.20%
on Monday, while the ARK Next Generation Internet ETF sold 6,855. Those shares were worth $13.1 million based on Tesla’s Monday closing level of $290.38. Tesla represents about 0.12% of both funds as they continue to unload shares.

Don’t miss: Tesla is looking at its best sales quarter ever

ARK scooped up 455 shares of Meta Platforms Inc.
META,
+0.57%
within its Next Generation Internet ETF and bought up 3,729 shares within the ARK Innovation ETF. That amounted to $1.3 million worth of stock based on Meta’s $310.62 Monday close.

Two ARK funds bought a combined $790 million in Robinhood Markets Inc.’s stock
HOOD,
+0.89%,
with the fintech fund scooping up 25,641 shares and the Next Generation Internet ETF buying 37,630 shares. ARK added 4,608 shares of SoFi Technologies Inc.
SOFI,
+4.41%
to the fintech fund, worth $43,683 based on Monday’s close.

ARK was also active in shares of Twilio Inc.
TWLO,
-0.63%,
buying 15,702 within the Fintech Innovation ETF, 133,499 within the Innovation ETF and 22,748 within the Next Generation Internet ETF. That amounted to $11.4 million in Twilio’s stock based on Monday’s $66.47 closing price.

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July 17, 2023

Siemens to Boost Manufacturing Capacity With $2.17 Bln Investments

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Siemens set out plans to invest 2 billion euros ($2.17 billion) to boost manufacturing capacity this year, pledging to develop a high-tech plant in Singapore and expand its digital factory in Chengdu, China, to tap growth opportunities in digitalization and automation.

The German industrial conglomerate said Thursday that it would pour around EUR200 million into its new Singapore facility, creating more than 400 jobs. The company will also invest EUR140 million to expand its digital factory in Chengdu, adding another 400 jobs.

…

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June 14, 2023

What you should do right now to prepare for a debt-ceiling breach

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If the U.S. government cannot pay all its bills because of a debt-ceiling impasse, household borrowing costs could soar, the job market could shed millions of jobs and stock-market valuations could shrink, according to forecasts.

The consequences of a prolonged default could be grim, according to Moody’s Analytics. The projected fallout from a brief default is less severe but still enough to push an “already fragile” economy into a mild recession, Moody’s says.

On Wednesday, Treasury Secretary Janet Yellen said it’s “almost certain” that the Treasury will run out of resources in early June. She also said she would provide a new update on the debt-limit deadline “pretty soon.”

For all the uncertainties, financial experts say there are ways individuals can prepare. Start by making sure your deposits are in accounts backed by the Federal Deposit Insurance Corp., and think hard about rate-sensitive purchases like a car or a house.

It’s important for people to have a plan in case there is a default, said Rob Williams, managing director of financial planning, retirement income and wealth management at the Schwab Center for Financial Research, a division of Charles Schwab Corp.
SCHW,
-1.34%.

“On Wednesday, Treasury Secretary Janet Yellen said it’s ‘almost certain’ that the Treasury will run out of resources in early June.”

“Having a financial plan in place that looks at the long and short term is the best way to prepare for the debt ceiling or any other crisis,” he said.

There is still widespread expectation that Congress will strike a political deal that lifts the federal government’s $31 trillion borrowing limit. President Joe Biden and House Speaker Kevin McCarthy met again on Monday, and more talks are planned.

McCarthy on Wednesday said he “firmly believe[d]” the sides would reach a deal avoiding default.

But the window of time in which to act is getting smaller. It’s “highly likely” that the government will get to the point where it cannot pay all its bills and debt obligations in early June — possibly as early as June 1, Yellen said this week.

Meanwhile, new Federal Reserve figures offer a reminder that Americans’ personal finances over the last year have been under pressure, even as inflation rates retreat slowly.

More than one-third of people in the U.S. (35%) said they were worse off in 2022 than in 2021, according to the Fed’s annual look at economic well-being, released Monday.

That’s the largest percentage of people saying they were worse off since central bank researchers started asking the question nearly a decade ago.

“If there ever was a time for a rainy-day fund, this is it. But it’s not going to be able to help a lot of consumers,” said Rachel Gittleman, financial services outreach manager for the Consumer Federation of America.

For example, Social Security payments and payments to veterans could be delayed in the event of a default, she said. “There will be a lot of consumers who will be in an impossible financial situation,” Gittleman said.

If the government does not raise the debt ceiling, household borrowing costs could soar, the job market could shed millions of jobs and stock-market valuations could shrink, according to forecasts.

Getty Images/iStockphoto

Make sure your money is safe

The FDIC guarantees deposits up to $250,000 on accounts including checking, savings and certificates of deposit. That won’t change in the case of any default, an FDIC spokesperson told MarketWatch.

Deposit-insurance coverage came into hard focus in early spring when Silicon Valley Bank and Signature Bank failed, putting other regional banks under pressure as many customers moved their money into bigger banks.

If economic conditions deteriorate after a default, Gittleman said, people will want assurance their money is safe. If you haven’t taken any of the recent bank failures as a sign to put money in an FDIC-insured account, “this would be the time,” she said.

Start cutting costs quickly

During the early days of the pandemic when there were millions of job losses, many people had to quickly cut back on or delay regular expenses.

If a default puts people in an economic vise, Gittleman said they may need to be ready to shut down nonessential recurring payments and talk with their lenders and credit-card companies. “It’s thinking holistically about all of your financial expectations and where you can possibly either get forbearance or some leniency and ask for some help,” she said.

Credit-card debt reached $986 billion in the first quarter, according to the Federal Reserve Bank of New York, and delinquencies on credit cards and car loans continued to move higher after pandemic lows.

Rate-sensitive purchases

After more than a year of rising interest rates, it’s already a tough time to finance a major purchase. On Tuesday, the 30-year fixed mortgage rate climbed higher than 7% for the third time this year.

Any default lasting at least a month would push the 30-year mortgage up to 8.4% in September and price out hundreds of thousands of buyers, according to Zillow
Z,
-0.83%.

But that is no reason to speed up a home purchase, said Daniel Milan, founder and managing partner of Cornerstone Financial Services.

“Any default lasting at least a month would push the 30-year mortgage up to 8.4% in September and price out hundreds of thousands of buyers, according to Zillow.”

The Federal Reserve doesn’t set mortgage rates, but its policies influence their direction. The big questions are when the central bank will stop increasing its benchmark rate and when it will begin to reduce the rate.

“The odds of a rate cut outweigh the fear or the rush into buying a home now because of the debt-ceiling crisis,” Milan said.

But the Schwab Center’s Williams noted that trying to time a major financial decision around market and political events is a difficult task.

Financial decisions are a mix of math and emotions, even though many people tend to focus more on the math, he said. That’s why it’s important to figure out a financial plan. Often the best course is to stick to your plan and say, “I’m not going to make major changes in the face of market news,” Williams said.

Portfolio protection

The Dow Jones Industrial Average
DJIA,
-0.77%,
the S&P 500
SPX,
-0.73%
and the Nasdaq Composite
COMP,
-0.61%
closed sharply lower in volatile trading on Tuesday and opened lower and have stayed lower in Wednesday trading.

Tuesday marked the Dow’s third straight trading-day loss. By Wednesday afternoon, the index had shed more than 200 points.

The yields on short-term Treasury debt
TMUBMUSD01M,
5.666%
maturing in early June are pushing toward 6% amid continued uncertainty about whether a debt-ceiling resolution can come together fast enough to avoid a government default. Bond prices and yields move in opposite directions, reflecting less investor appetite for debt.

There’s no one rule for preparing an investment portfolio for a debt default, financial advisers said. But older retired investors are in a trickier spot — especially in relation to the prospect of delayed Social Security checks — compared with younger investors who have more time to bounce back from adverse events.

“‘We continue to urge clients to make sure we know about any short-term cash needs so that those funds are not at risk.’”

— Lisa A.K. Kirchenbauer, founder and president of Omega Wealth Management

Cash investments have proven attractive in rocky times. But the risk of a debt default could make a heftier cash allocation even more important for older investors, financial advisers said.

“We continue to urge clients to make sure we know about any short-term cash needs so that those funds are not at risk,” said Lisa A.K. Kirchenbauer, founder and president of Omega Wealth Management.

Kirchenbauer said she’s starting to hear from clients about debt-ceiling concerns. “I am making sure that larger [required minimum distributions] are in cash for 2023 now, before anything bad happens in the markets.”

Required minimum distributions are the minimum yearly amounts that have to be pulled out of qualified retirement accounts once the owner reaches a certain age, currently 73.

Preparing for any default is a mental exercise as much as asset allocation, said Amy Hubble, principal investment adviser with Radix Financial. If there’s been no change in a person’s personal circumstances, like job status, income needs or retirement timeline, they should avoid getting sidetracked by short-term issues, she said.

“There are only a small handful of things we can actually control when investing,” Hubble added. “So my advice is always to focus on that: keeping costs low, staying diversified, managing tax-recognition timing and avoiding stupid emotion-driven actions.”

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May 24, 2023

Kite surfing, ice baths and 8-mile morning runs: How some CEOs stay in shape

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What is it about CEOs and their intense — and often oddball — workout routines?

These days, some top corporate honchos take their exercise rituals to extremes. Consider Damola Adamolekun, chief executive officer of restaurant chain P.F. Chang’s, who recently told Fortune magazine that he wakes up each day at 4:30 a.m. and runs seven to eight miles. He explained that the routine stimulates his nervous system and sets the tone for the day ahead. “You’ll feel better the whole day; you’ll be smarter, you’ll be sharper, you’ll be more energetic,” he said.

Adamolekun is in good company when it comes to training hard. Here are how five other executives work up a sweat and aim to stay healthy.

Jack Dorsey, head of Block and co-founder of Twitter, walks an hour and 15 minutes every day.

AFP via Getty Images

Jack Dorsey

The Twitter co-founder, who now heads the tech conglomerate Block
SQ,
+3.36%,
does it all: two-hour meditations, fasting — he has said he eats only once a day during the week and has almost no food on the weekends — and alternating saunas and ice baths. But he’s no gym rat: Dorsey gets his primary exercise by walking an hour and 15 minutes every day. “I might look a little bit more like I’m jogging than I’m walking. It’s refreshing … It’s just this one of those take-back moments where you’re like, ‘Wow, I’m alive!’” he once observed.

Mark Zuckerberg

The Meta Platforms
META,
+1.09%
chief isn’t one to get up at the crack of dawn, according to GQ, but he still runs three mornings a week. “I also try to take my dog running whenever I can, which has the added bonus of being hilarious because that’s basically like seeing a mop run,” he told GQ. As for diet, he once was said to experiment with an eating plan that involved only devouring animals he had killed himself — including chickens, goats and pigs. But he also apparently skips meals — or at least he said as much in a 2021 Facebook post. “Do you ever get so excited about what you’re working on that you forget to eat meals?” he asked.

Richard Branson

Kite surfing, anyone? The founder of the Virgin Group swears by it as one of his favorite ways to stay fit, according to Men’s Health. He once even kite surfed across the English Channel. His other activities include tennis and biking. He’ll work with a trainer if he’s on the road, but otherwise he likes to exercise outdoors on his private island in the British Virgin Islands. “I just want to be sure that when I’m 150, my body still looks as good as it is today,” said Branson, who is now 72.

Alex Karp

The head of software company Palantir Technologies takes advantage of the fact that he lives near the White Mountains of New Hampshire to have a regular cross-country skiing routine. Key to his approach, he told Axios, is taking it slow on the snow. “To run like a deer, you have to spend 90% of your time running like a snail,” he explained, adding that his unhurried pace “builds a cardio base.” He also includes tai chi and stretching to his routine. But he isn’t too fussy about his diet. “If I’m traveling and someone has a really nice Danish, I enjoy every minute of eating it,” he said.

Martha Stewart

The 81-year-old lifestyle entrepreneur and founder of Martha Stewart Living Omnimedia has been in the spotlight for her recent cover appearance on Sports Illustrated’s swimsuit issue. So what does she do to stay in shape for beach season? Stewart swears by Pilates, according to various media reports. And she rides horses. She has also said she doesn’t smoke, eats very well and every morning drinks a glass of “green juice” made with pears, cucumbers, celery stalks, parsley, fresh ginger and two oranges (complete with peels), a recipe she calls “so spectacular.”

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May 22, 2023

GE CFO Leaving Because Soon There Will Be No GE

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This copy is for your personal, non-commercial use only. To order presentation-ready copies for distribution to your colleagues, clients or customers visit http://www.djreprints.com.

https://www.barrons.com/articles/ge-cfo-leaving-b68a692

Updated May 19, 2023 3:15 pm ET / Original May 19, 2023 1:20 pm ET

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General Electric

is getting a new finance chief. Given what’s coming at the company, it makes sense.

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May 19, 2023

Tag: Diversified Holding Companies

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If the government does not raise the debt ceiling, household borrowing costs could soar, the job market could shed millions of jobs and stock-market valuations could shrink, according to forecasts.

Make sure your money is safe

Start cutting costs quickly

Rate-sensitive purchases

Portfolio protection

Jack Dorsey, head of Block and co-founder of Twitter, walks an hour and 15 minutes every day.

Jack Dorsey

Meta’s Mark Zuckerberg takes his dog for frequent runs — good exercise for both him and his pooch.

Mark Zuckerberg

Richard Branson takes off on another kite-surfing adventure.

Richard Branson

Palantir Technologies CEO Alex Karp works out by cross-country skiing — and says the key is to take it as slowly as possible to build your “cardio base.”

Alex Karp

Martha Stewart is one of the cover models for Sport Illustrated’s new swimsuit issue.

Martha Stewart