Pfizer Inc. PFE, +4.17%
said Thursday that it plans to sell the COVID-19 shot it developed with BioNTech SE BNTX, +7.14%
for $110 to $130 per dose once the U.S. market for COVID-19 shots becomes commercial, likely in the first quarter of next year.
Pfizer and BioNTech are currently paid $30.50 per vaccine dose by the U.S. government, which contracted with the companies (as well as other vaccine makers like Moderna Inc. MRNA, +6.57%
and Novavax Inc. NVAX, +8.88%
) and then made the COVID-19 shots available at no cost to people in the U.S. during the public-health emergency.
The emergency declaration in the U.S. isn’t expected to be renewed next year, which will lead to the formation of an official commercial market for COVID-19 vaccines, tests and treatments. That said, this change doesn’t mean most Americans will be on the hook to pay for their shots in 2023 and beyond.
A recent Kaiser Family Foundation analysis said most people with private insurance won’t be expected to pay anything out of pocket for the vaccines, though the costs may eventually be baked into the price of health-insurance premiums, as is done with flu shots. People with Medicare will have their shots covered by Medicare Part B, while those with Medicaid should also have coverage of COVID-19 vaccines. It’s the uninsured who may find it difficult to find free vaccines and boosters in the future.
Wall Street analysts cheered the news, saying Pfizer’s pricing plan came in above expectations. It also bodes well for Moderna’s stock. SVB Securities upgraded the company to market perform from underperform, though the company has not yet announced its pricing plans for its COVID-19 shots.
“Presuming that MRNA prices as a rational duopolist, this substantially improves the company’s ability to meet 2023 revenue guidance,” SVB analyst Mani Foroohar told investors.
Grocery-delivery company Instacart Inc. is delaying its long-awaited initial public offering because of poor market conditions, according to news reports Thursday.
The New York Times first reported Thursday that the San Francisco-based company has halted its IPO plans, and is awaiting more favorable conditions. Later Thursday night, the Wall Street Journal confirmed the report, citing a memo from Instagram CEO Fidji Simo saying an IPO will be “highly unlikely” this year.
The IPO market has been severely curtailed this year following a record-setting 2021, as the stock market has slid amid high inflation and recession fears. As of September, the number of U.S. IPOs was down 79% year over year, with total proceeds down 95%, according to Renaissance data.
According to the Times, Instacart had intended to start the IPO process this week by releasing some financial information, but decided not to, for now, due to market volatility.
The Journal reported that the IPO had received positive feedback from potential investors, but executives came away with the message that the market will not support a tech IPO at this time.
“Our business has never been stronger,” Instacart said in a statement Thursday. “In Q3, our revenue grew more than 40% year-over-year, and our net income and adjusted EBITDA more than doubled from Q2. We remain focused on building for the long term, and we are excited about the opportunity ahead.”
Last month, the Wall Street Journal reported Instacart didn’t plan on raising much capital in its IPO, instead having most of its listing come from the sale of employees’ shares — a move that could greatly benefit current employees.
We may be paying a price for our pumpkin-spice cravings.
A new study from the MagnifyMoney.com website has found that retailers routinely charge more for pumpkin-spice items than for the standard versions of those same products — in fact, a lot more. On average, the pumpkin-spice “tax,” as MagnifyMoney.com dubs it, is 14.1%.
That’s a significant increase from 2020, which was the last time MagnifyMoney looked at the pumpkin-spice pricing differential. At that time, the “tax” was 8.8%.
“I think companies are finding it’s a great way to capitalize on a seasonal trend,” said Ismat Mangla, executive editor of MagnifyMoney.com. “As long as consumers are willing to pay for it, they can take advantage of it.” MagnifyMoney.com, which is owned by LendingTree, offers information on how to manage and grow your money.
Craig Agranoff, a Florida-based marketing expert, put it this way: “It’s Retailing 101.”
Some retailers really push the pumpkin-spice upcharge to the upper limits, the 2022 study noted. A case in point: Trader Joe’s, the supermarket chain beloved for its low prices, charges 161.1% more for its Pumpkin Spiced Teeny Tiny Pretzels than for its Honey Wheat Pretzel Sticks. The retailer also charges 49.9% more for its Pumpkin Spice Hummus than for its Mediterranean Style Hummus.
And what about Starbucks SBUX, -1.60%,
the coffee chain that made pumpkin spice a household favorite? The study found that it levies an 18.3% “tax” on its ever-popular Pumpkin Spice Latte (or PSL), with a standard 16-ounce latte running $5.45 and the PSL costing $6.45.
Trader Joe’s and Starbucks didn’t respond to a MarketWatch request for comment.
Agranoff said consumers are probably willing to pay more for pumpkin-spice products without complaining because the products are not considered essentials. By contrast, consumers tend to be very sensitive when it comes to price increases on items they need to buy on a regular basis, such as milk or gasoline.
Still, not every retailer is asking consumers to shell out more for pumpkin-spice products. Target TGT, -1.28%
charged less for several items versus the standard ones, the MagnifyMoney.com study found. One example: A bag of Pepperidge Farm Milano pumpkin-spice cookies was 14.3% cheaper than the traditional Milano cookies at Target.
Regardless of whether the price is higher or lower, Mangla of MagnifyMoney.com isn’t one to buy these products. “Personally, I’m over pumpkin spice,” she said.
You probably already know that because of market-capitalization weighting, a broad index such as the S&P 500 SPX, -0.67%
can be concentrated in a handful of stocks. Index funds are popular for good reasons — they tend to have low expenses and it is difficult for active managers to outperform them over the long term.
For example, look at the SPDR S&P 500 ETF Trust SPY, -0.71%,
which tracks the S&P 500 by holding all of its stocks by the same weighting as the index. Five stocks — Apple Inc. AAPL, +0.08%,
Microsoft Corp. MSFT, -0.85%,
Amazon.com Inc. AMZN, -1.11%,
Alphabet Inc. GOOG, -1.08%
But there are other considerations when it comes to diversification — namely, factors. During an interview, Scott Weber of Vaughan Nelson Investment Management in Houston explained how groups of stock and commodities can move together, adding to a lack of diversification in a typical portfolio or index fund.
Weber co-manages the $293 million Natixis Vaughan Nelson Select Fund VNSAX, -0.96%,
which carries a five-star rating (the highest) from investment-researcher Morningstar, and has outperformed its benchmark, the S&P 500.
Vaughan Nelson is a Houston-based affiliate of Natixis Investment Managers, with about $13 billion in assets under management, including $5 billion managed under the same strategy as the fund, including the Natixis Vaughan Nelson Select ETF VNSE, -0.87%.
The ETF was established in Sept, 2020, so does not yet have a Morningstar rating.
Factoring-in the factors
Weber explained how he and colleagues incorporate 35 factors into their portfolio selection process. For example, a fund might hold shares of real-estate investment trusts (REITs), financial companies and energy producers. These companies are in different sectors, as defined by Standard & Poor’s. Yet their performance may be correlated.
Weber pointed out that REITs, for example, were broken out of the financial sector to become their own sector in 2016. “Did that make REIT’s more sensitive to interest rates? The answer is no,” he said. “The S&P sector buckets are somewhat better than arbitrary, but they are not perfect.”
Of course 2022 is something of an exception, with so many assets dropping in price at the same time. But over the long term, factor analysis can identify correlations and lead money managers to limit their investments in companies, sectors or industries whose prices tend to move together. This style has helped the Natixis Vaughan Nelson Select Fund outperform against its benchmark, Weber said.
Getting back to the five largest components of the S&P 500, they are all tech-oriented, even though only two, Apple and Microsoft, are in the information technology sector, while Alphabet is in the communications sector and Tesla is in the consumer discretionary sector. “Regardless of the sectors,” they tend to move together, Weber said.
Exposure to commodity prices, timing of revenue streams through economic cycles (which also incorporates currency exposure), inflation and many other items are additional factors that Weber and his colleagues incorporate into their broad allocation strategy and individual stock selections.
For example, you might ordinarily expect inflation, real estate and gold to move together, Weber said. But as we are seeing this year, with high inflation and rising interest rates, there is downward pressure on real-estate prices, while gold prices GC00, -0.01%
have declined 10% this year.
Digging further, the factors also encompass sensitivity of investments to U.S. and other countries’ government bonds of various maturities, credit spreads between corporate and government bonds in developed countries, exchange rates, and measures of liquidity, price volatility and momentum.
Stock selection
The largest holding of the Select fund is NextEra Energy Inc. NEE, -1.89%,
which owns FPL, Florida’s largest electric utility. FPL is phasing-out coal plants and replacing power-generating capacity with natural gas as well as wind and solar facilities.
Weber said: “There’s not a company on the planet that is better at getting alternate (meaning solar and wind) generation deployed. But because they own FPL, some of my investors say it is one of the largest carbon emitters on the planet.”
He added that “as a consequence of their skill in operating, they re generating amazing returns for investors.” NextEra’s share shave returned 446% over the past 10 years. One practice that has helped to elevate the company’s return on equity, and presumably its stock price, has been “dropping assets down” into NextEra Energy Partners LP NEP, -2.61%,
which NEE manages, Weber said. He added that the assets put into the partnership tend to be “great at cash-flow generation, but not on achieving growth.”
When asked for more examples of stocks in the fund that may provide excellent long-term returns, Weber mentioned Monolithic Power Systems Inc. MPWR, -0.24%,
as a way to take advantage of the broad decline in semiconductor stocks this year. (The iShares Semiconductor ETF SOXX, +0.64%
has declined 21% this year, while industry stalwarts Nvidia Corp. NVDA, +0.70%
and Advanced Micro Devices Inc. AMD, -1.19%
are down 59% and 60%, respectively.)
He said Monolithic Power has been consistently making investments that improve its return on invested capital (ROIC). A company’s ROIC is its profit divided by the sum of the carrying value of stock it has issued over the years and its current debt. It doesn’t reflect the stock price and is considered a good measure of a management team’s success at making investment decisions and managing projects. Monolithic Power’s ROICC for 2021 was 21.8%, according to FactSet, rising from 13.2% five years earlier.
“We want to see a business generating a return on capital in excess of its cost of capital. In addition, they need to invest their capital at incrementally improving returns,” Weber said.
Another example Weber gave of a stock held by the fund is Dollar General Corp. DG, +0.33%,
which he called a much better operator than rival Dollar Tree Inc. DLTR, +0.14%,
which owns Family Dollar. He cited DG’s roll-out of frozen-food and fresh food offerings, as well as its growth runway: “They still have 8,000 or 9,000 stores to build-out” in the U.S., he said.
Fund holdings
In order to provide a full current list of stocks held under Weber’s strategy, here are the 27 stocks held by the the Natixis Vaughan Select ETF as of Sept. 30. The largest 10 positions made up 49% of the portfolio:
You can click on the tickers for more about each company. Click here for a detailed guide to the wealth of information available free on the MarketWatch.com quote page.
Fund performance
The Natixis Vaughan Select Fund was established on June 29, 2012. Here’s a 10-year chart showing the total return of the fund’s Class A shares against that of the S&P 500, with dividends reinvested. Sales charges are excluded from the chart and the performance numbers. In the current environment for mutual-fund distribution, sales charges are often waived for purchases of new shares through investment advisers.
FactSet
Here’s a comparison of returns for 2022 and average annual returns for various periods of the fund’s Class A shares to that of the S&P 500 and its Morningstar fund category through Oct. 18:
This may surprise you: Wall Street analysts expect earnings for the S&P 500 to increase 8% during 2023, despite all the buzz about a possible recession as the Federal Reserve tightens monetary policy to quell inflation.
Ken Laudan, a portfolio manager at Kornitzer Capital Management in Mission, Kan., isn’t buying it. He expects an “earnings recession” for the S&P 500 SPX, +2.78%
— that is, a decline in profits of around 10%. But he also expects that decline to set up a bottom for the stock market.
Laudan’s predictions for the S&P 500 ‘earnings recession’ and bottom
Laudan, who manages the $83 million Buffalo Large Cap Fund BUFEX, -2.86%
and co-manages the $905 million Buffalo Discovery Fund BUFTX, -2.82%,
said during an interview: “It is not unusual to see a 20% hit [to earnings] in a modest recession. Margins have peaked.”
The consensus among analysts polled by FactSet is for weighted aggregate earnings for the S&P 500 to total $238.23 a share in 2023, which would be an 8% increase from the current 2022 EPS estimate of $220.63.
Laudan said his base case for 2023 is for earnings of about $195 to $200 a share and for that decline in earnings (about 9% to 12% from the current consensus estimate for 2022) to be “coupled with an economic recession of some sort.”
He expects the Wall Street estimates to come down, and said that “once Street estimates get to $205 or $210, I think stocks will take off.”
He went further, saying “things get really interesting at 3200 or 3300 on the S&P.” The S&P 500 closed at 3583.07 on Oct. 14, a decline of 24.8% for 2022, excluding dividends.
Laudan said the Buffalo Large Cap Fund was about 7% in cash, as he was keeping some powder dry for stock purchases at lower prices, adding that he has been “fairly defensive” since October 2021 and was continuing to focus on “steady dividend-paying companies with strong balance sheets.”
Leaders for the stock market’s recovery
After the market hits bottom, Laudan expects a recovery for stocks to begin next year, as “valuations will discount and respond more quickly than the earnings will.”
He expects “long-duration technology growth stocks” to lead the rally, because “they got hit first.” When asked if Nvidia Corp. NVDA, +6.14%
and Advanced Micro Devices Inc. AMD, +3.69%
were good examples, in light of the broad decline for semiconductor stocks and because both are held by the Buffalo Large Cap Fund, Laudan said: “They led us down and they will bounce first.”
Laudan said his “largest tech holding” is ASML Holding N.V. ASML, +3.79%,
which provides equipment and systems used to fabricate computer chips.
Among the largest tech-oriented companies, the Buffalo Large Cap fund also holds shares of Apple Inc. AAPL, +3.09%,
Microsoft Corp. MSFT, +3.88%,
Amazon.com Inc. AMZN, +6.63%
and Alphabet Inc. GOOG, +3.91%
Laudan also said he had been “overweight’ in UnitedHealth Group Inc. UNH, +1.77%,
Danaher Corp. DHR, +2.64%
and Linde PLC LIN, +2.25%
recently and had taken advantage of the decline in Adobe Inc.’s ADBE, +2.32%
price following the announcement of its $20 billion acquisition of Figma, by scooping up more shares.
Summarizing the declines
To illustrate what a brutal year it has been for semiconductor stocks, the iShares Semiconductor ETF SOXX, +2.12%,
which tracks the PHLX Semiconductor Index SOX, +2.29%
of 30 U.S.-listed chip makers and related equipment manufacturers, has dropped 44% this year. Then again, SOXX had risen 38% over the past three years and 81% for five years, underlining the importance of long-term thinking for stock investors, even during this terrible bear market for this particular tech space.
Here’s a summary of changes in stock prices (again, excluding dividends) and forward price-to-forward-earnings valuations during 2022 through Oct. 14 for every stock mentioned in this article. The stocks are sorted alphabetically:
You can click on the tickers for more about each company. Click here for Tomi Kilgore’s detailed guide to the wealth of information available free on the MarketWatch quote page.
The forward P/E ratio for the S&P 500 declined to 16.9 as of the close on Oct. 14 from 24.5 at the end of 2021, while the forward P/E for SOXX declined to 13.2 from 27.1.
The Centers for Disease Control and Prevention said a new COVID variant dubbed BQ.1 and a descendant called BQ.1.1 have gained traction in the U.S., accounting for 11.4% of new cases across the nation in the week ending Oct. 15.
The two variants are lineages of BA.5, the omicron subvariant that remains dominant but has shrunk to account for just 67.9% of circulating variants, the agency said in a Friday update. The CDC had previously combined BQ.1 and BQ.1.1 with BA.5 cases because the numbers of the new variants were so small. BQ.1 was first identified by researchers in early September and has been found in the U.K. and Germany, among other places.
New York and New Jersey currently have the highest proportion of BQ.1 and BQ.1.1 infections, at about 20% of overall cases, according to CDC estimates.
“When you get variants like that, you look at what their rate of increase is as a relative proportion of the variants, and this has a pretty troublesome doubling time,” Anthony Fauci, President Joe Biden’s chief medical adviser, said in an interview with CBS News.
Adding to concerns, the variant seems “to elude important monoclonal antibodies,” he added.
Fauci is confident that Moderna MRNA, +3.92%,
as well as Pfizer PFE, +1.84%
and German partner BioNTech BNTX, +2.45%,
will be able to update boosters to target the new subvariant. “The somewhat encouraging news is that it’s a BA.5 sublineage, so there are almost certainly going to be some cross-protections that you can boost up,” he said.
So far, only 14.8 million people living in the U.S. have taken advantage of the new bivalent boosters that were authorized by the Food and Drug Administration in late August. That’s equal to about 7% of the 209 million who were initially eligible.
The FDA authorized the Pfizer booster for use in people aged 12 and older and the Moderna booster for adults aged 18 and older. Last week, the FDA added children aged 5 to 11 to the Pfizer program and children aged 6 through 17 to the Moderna one.
Experts are concerned that the low number of vaccinations is due to a sense that the pandemic is over and no longer poses a major risk for most people. U.S. cases are steadily declining and now stand at their lowest level since mid-April; however, the true tally is likely higher than the official count, because many people are testing at home, where data are not being collected.
The daily average for new cases stood at 37,649 on Sunday, down 19% from two weeks ago, according to a New York Times tracker.
The daily average for hospitalizations was down 5% to 26,475, while the daily average for deaths was down 8% to 374.
But cold weather is expected to bring a new wave of cases, and hospitalizations are rising again in much of the Northeast, the Times tracker is showing.
“That’s the thing that’s so frustrating for me and for my colleagues who are involved in this, is that we have the capability of mitigating against this. And the uptake of the new bivalent vaccine is not nearly as high as we would like it to be,” said Fauci.
• Moderna and Gavi, the Vaccine Alliance, which is supplying vaccines to low- and middle-income countries, have agreed to cancel remaining orders under their 2022 COVID-19 vaccine agreement given “sufficient supply.” The biotechnology company has supplied Gavi with nearly 70 million doses of COVID-19 vaccines, in addition to facilitating the donation of more than 100 million doses. Moderna and Gavi said they will create a new framework that enables Gavi to buy up to 100 million COVID-19 vaccine doses in 2023.
• The World Health Organization, the Food and Agriculture Organization of the United Nations, the United Nations Environment Program and the World Organization for Animal Health on Monday launched a new initiative that aims to address health threats to humans, animals, plants and the environment. The One Health Joint Plan of Action “aims to create a framework to integrate systems and capacity so that we can collectively better prevent, predict, detect, and respond to health threats,” the four agencies said in a statement.
• China is doubling down on its zero-COVID strategy as a historic Communist Party congress opens in Beijing, BBC News reported. Zero COVID was a “people’s war to stop the spread of the virus,” said President Xi Jinping as he kicked off the meeting. There is increasing public fatigue over lockdowns and travel restrictions, and Beijing has come under strict security measures ahead of the congress, sparking frustration in the city, including a rare and dramatic public protest on Thursday criticizing Xi and his strategy.
In a rare display of defiance, two banners were unfurled from a highway overpass in Beijing condemning Chinese President Xi Jinping and his strict COVID-19 policies. The protest took place days before the expected extension of Xi’s tenure.
• Airline stocks rallied Monday after data showed that on Sunday, more people flew than on any other day since before the pandemic. Data from the Transportation Security Administration showed that 2.495 million travelers went through TSA checkpoints on Sunday, which is just above the previous 2022 high of 2.490 million on July 1 and the most since Feb. 11, 2020, which was exactly one month before the World Health Organization declared COVID-19 a global pandemic. In comparison, the day with the fewest travelers since the start of the pandemic was April 12, 2022, with 87,534 people traveling. And in 2019, there were 116 days of more travelers than Sunday, while the average for that year was 2.306 million. The U.S. Global Jets ETF JETS, +2.02%
was up 2.2%.
The U.S. leads the world with 96.9 million cases and 1,065,118 fatalities.
The Centers for Disease Control and Prevention’s tracker shows that 226.2 million people living in the U.S., equal to 68.1% of the total population, are fully vaccinated, meaning they have had their primary shots. Just 110.8 million have had a booster, equal to 49% of the vaccinated population, and 25.6 million of those who are eligible for a second booster have had one, equal to 39% of those who received a first booster.
will spur debate about whether the consolidation will raise food prices, or lower them.
The Biden administration’s antitrust regulators are scrutinizing mergers more closely than did predecessors, and an old argument against combinations is that they lead to price-gouging.
A new study has found that the COVID antiviral Paxlovid can interact badly with certain heart medications, raising concerns for patients with cardiovascular risk who test positive.
The study was published in the Journal of the American College of Cardiology and found the reaction involved such medications as blood thinners and statins. As patients who are hospitalized with COVID are at elevated risk of heart problems, they are likely to be described Paxlovid, which was developed by Pfizer PFE, -0.45%.
“Co-administration of NMVr (Paxlovid) with medications commonly used to manage cardiovascular conditions can potentially cause significant drug-drug interactions and may lead to severe adverse effects,” the authors wrote. “It is crucial to be aware of such interactions and take appropriate measures to avoid them.”
White House coordinator Dr. Ashish Jha told the New York Times that greater use of the medicine could reduce the average daily death count to about 50 a day from close to 400 currently.
“I think almost everybody benefits from Paxlovid,” Jha said. “For some people, the benefit is tiny. For others, the benefit is massive.”
Yet a smaller share of 80-year-olds with COVID in the U.S. is taking it than 45-year-olds, Jha said, citing data said he has seen.
On Thursday, the White House extended its COVID pubic health emergency through Jan. 11 as it prepares for an expected rise in cases in the colder months, the Associated Press reported.
The public health emergency, first declared in January 2020 and renewed every 90 days since, has dramatically changed how health services are delivered.
The declaration enabled the emergency authorization of COVID vaccines, as well as free testing and treatments. It expanded Medicaid coverage to millions of people, many of whom will risk losing that coverage once the emergency ends. It temporarily opened up telehealth access for Medicare recipients, enabling doctors to collect the same rates for those visits and encouraging health networks to adopt telehealth technology.
Since the beginning of this year, Republicans have pressed the administration to end the public health emergency.
President Joe Biden, meanwhile, has urged Congress to provide billions more in aid to pay for vaccines and testing. Amid Republican opposition to that request, the federal government ceased sending free COVID tests in the mail last month, saying it had run out of funds for that effort.
Separately, the head of the World Health Organization urged countries to continue to surveil, monitor and track COVID and to ensure poorer countries get access to vaccines, diagnostics and treatments, reiterating that the pandemic is not yet over.
Tedros Adhanom Ghebreyesus said most countries no longer have measures in place to limit the spread of the virus, even though cases are rising again in places including Europe.
“Most countries have reduced surveillance drastically, while testing and sequencing rates are also much lower,” Tedros said in opening remarks at the IHR Emergency Committee on COVID-19 Pandemic on Thursday.
“This,” said the WHO leader, “is blinding us to the evolution of the virus and the impact of current and future variants.”
U.S. known cases of COVID are continuing to ease and now stand at their lowest level since late April, although the true tally is likely higher given how many people overall are testing at home, where the data are not being collected.
The daily average for new cases stood at 38,530 on Thursday, according to a New York Times tracker, down 19% from two weeks ago. Cases are rising in six states, namely Nevada, New Mexico, Kansas, Maine, Wisconsin and Vermont, and are flat in Wyoming. They are falling everywhere else.
The daily average for hospitalizations was down 7% at 26,665, while the daily average for deaths is down 7% to 377.
The new bivalent vaccine might be the first step in developing annual Covid shots, which could follow a similar process to the one used to update flu vaccines every year. Here’s what that process looks like, and why applying it to Covid could be challenging. Illustration: Ryan Trefes
• Federal Health Minister Karl Lauterbach has urged German states to reintroduce face-mask requirements for indoor spaces due to high COVID cases numbers, the Local.de reported. Lauterbach was launching his ministry’s new COVID campaign on Friday. “The direction we are heading in is not a good one,” he said at a press conference in Berlin, adding it’s better to take smaller measures now than be forced into drastic ones later.
• Health officials in Washington and Oregon said Thursday that a fall and winter COVID surge is likely headed to the Pacific Northwest after months of relatively low case levels, the AP reported. King County (Wash.) Health Officer Dr. Jeff Duchin said during a news briefing that virus trends in Europe show a concerning picture of what the U.S. could soon see, the Seattle Times reported.
Two banners unfurled from a highway overpass in Beijing condemned Chinese President Xi Jinping and his strict Covid policies, in a rare display of defiance. The protest took place days before the expected extension of the leader’s tenure.
• Kevin Spacey’s trial on sexual-misconduct allegations will continue without a lawyer who tested positive for COVID on Thursday, Yahoo News reported. The “American Beauty” and “House of Cards” star is on trial in Manhattan federal court facing allegations in a $40 million civil lawsuit that he preyed upon actor Anthony Rapp in 1986 when Rapp was 14 and Spacey was 26. Jennifer Keller’s diagnosis comes after she spent about five hours cross-examining Rapp on the witness stand over two days — a few feet away from the jury box without wearing a mask.
• A man who presents himself as an Orthodox Christian monk and an attorney with whom he lived fraudulently obtained $3.5 million in federal pandemic relief funds for nonprofit religious organizations and related businesses they controlled, and spent some of it to fund a “lavish lifestyle,” federal prosecutors said Thursday. Brian Andrew Bushell, 47, and Tracey M.A. Stockton, 64, are charged with conspiracy to commit wire fraud and unlawful monetary transactions, the U.S. attorney’s office in Boston said in a statement, as reported by the AP.
The U.S. leads the world with 96.9 million cases and 1,064,821 fatalities.
The Centers for Disease Control and Prevention’s tracker shows that 226.2 million people living in the U.S., equal to 68.1% of the total population, are fully vaccinated, meaning they have had their primary shots. Just 110.8 million have had a booster, equal to 49% of the vaccinated population, and 25.6 million of those who are eligible for a second booster have had one, equal to 39% of those who received a first booster.
Some 14.8 million people have had a shot of the new bivalent booster that targets the new omicron subvariants.
The effects of COVID-19 forced companies across many industries to adapt and innovate rapidly. Yet even as the pandemic subsides, there are opportunities for business leaders to continue to apply the lessons they have learned over the last few years.
“Where we are today … retail is a completely different industry [than in 2019],” Kohl’s CEO Michelle Gass said Tuesday during Fortune’s Most Powerful Women Summit in California. “So many changes—from living through the pandemic, supply chain challenges, the spikes in demand, the pull back in demand, labor.”
But the roller coaster ride likely isn’t over yet, as many experts predict the U.S. will enter a recession next year due to the Federal Reserve’s attempts to tamp down soaring inflation with interest rate hikes.
Gass said Kohl’s is already grappling with recession fears and inflation woes. “We’ve already started feeling it,” she said. “We operate in the more discretionary categories, as opposed to food and gas, and where a lot of budgets are being constrained. And so, as we see this unfolding, we are quickly adapting.”
While Gass acknowledged that her company is holding off on stocking up on inventory, Kohl’s, like many companies today, is using the current circumstances as a “catalyst for change,” she explained. “Oftentimes the harder things are around really structurally changing your cost, structurally changing the way you’re working,” she said.
The retailer is also utilizing customer data more than ever before. Gass noted that Khol’s serves 65 million customers across the country, and the chain has over 30 million subscribers in its loyalty program.
“For someone passionate about data—because it’s a treasure chest—we’re able to tailor and actually do different offers for Julie and Alan, based on what’s going to get them motivated to come and shop,” Gass said. “That, especially in this environment, is extremely powerful to make sure that you’re giving offers to people who need it, versus not.”
But utilizing data comes with challenges as well, said Julie Sweet, chair and CEO of Accenture. “This is the area where I think everyone intuitively understands that data is important. And I’ve not yet found a company that has actually solved the problems of data,” she said.
Sweet’s team is spending time talking to CEOs today around five key forces of change, the first being the “total enterprise reinvention through technology.” Sweet said most businesses have talked about digitization, but reinvention goes a step further and asks companies to systematically overhaul everything that they do. “That has profound implications for how you invest and think about the future,” Sweet said.
Talent is the second key—how companies access talent, create opportunities to unlock talent potential and build pathways to future growth.
Sustainability, broadly, is third. It includes aspects like energy transformation, but it’s also about diversity and what companies are doing within the communities they operate and how that all translates to the bottom line, Sweet said.
The metaverse is the fourth key force of change, an area where Accenture in particular has made a lot of investment, building its own metaverse for onboarding and employee training. “I will say lots of debate around this, but there isn’t a company or industry that doesn’t need to be thinking about what is it going to be like to go in and out of the virtual and physical world and how will that profoundly change everything, from what we buy, how we buy it, to how we work,” Sweet said.
Finally, the last aspect is the “ongoing technology revolution,” Sweet said. Companies are already investing in this today, but Sweet said leaders need to be able to think ahead and really understand how those trends might affect the business. “It’s also an important part of what CEOs and their leadership teams have to do today.”
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WATERBURY, Conn. (AP) — The conspiracy theorist Alex Jones should pay $965 million to people who suffered from his false claim that the Sandy Hook Elementary School shooting was a hoax, a jury in Connecticut decided Wednesday.
The verdict is the second big judgment against the Infowars host over his relentless promotion of the lie that the 2012 massacre never happened, and that the grieving families seen in news coverage were actors hired as part of a plot to take away people’s guns.
It came in a lawsuit filed by the relatives of five children and three educators killed in the mass shooting, plus an FBI agent who was among the first responders to the scene. A Texas jury in August awarded nearly $50 million to the parents of another slain child.
“ Experts testified that Jones’s audience swelled when he made Sandy Hook a topic on the show, as did his revenue from product sales. ”
The Connecticut trial featured tearful testimony from parents and siblings of the victims, who told about how they were threatened and harassed for years by people who believed the lies told on Jones’s show.
Strangers showed up at their homes to record them. People hurled abusive comments on social media. Erica Lafferty, the daughter of slain Sandy Hook principal Dawn Hochsprung, testified that people mailed rape threats to her house.
Mark Barden told of how conspiracy theorists had urinated on the grave of his 7-year-old son, Daniel, and threatened to dig up the coffin.
Superior Court Judge Barbara Bellis discusses a question from the jury with attorneys on Tuesday.
H. John Voorhees III/Hearst Connecticut Media/AP
Testifying during the trial, Jones acknowledged he had been wrong about Sandy Hook. The shooting was real, he said. But both in the courtroom and on his show, he was defiant.
He called the proceedings a “kangaroo court,” mocked the judge, called the plaintiffs’ lawyer an ambulance chaser and labeled the case an affront to free speech rights. He claimed it was a conspiracy by Democrats and the media to silence him and put him out of business. “I’ve already said ‘I’m sorry’ hundreds of times, and I’m done saying I’m sorry,” he said during his testimony.
Twenty children and six adults died in the shooting on Dec. 14, 2012. The defamation trial was held at a courthouse in Waterbury, about 20 miles from Newtown, where the attack took place.
The lawsuit accused Jones and Infowars’ private parent company, Free Speech Systems, of using the mass killing to build his audience and make millions of dollars.
Experts testified that Jones’s audience swelled when he made Sandy Hook a topic on the show, as did his revenue from product sales.
In both the Texas lawsuit and the one in Connecticut, judges found the company liable for damages by default after Jones failed to cooperate with court rules on sharing evidence, including failing to turn over records that might have showed whether Infowars had profited from knowingly spreading misinformation about mass killings.
Because he was already found liable, Jones was barred from mentioning free-speech rights and other topics during his testimony.
Jones now faces a third trial, in Texas around the end of the year, in a lawsuit filed by the parents of another child killed in the shooting.
It is unclear how much of the verdicts Jones can afford to pay.
During the trial in Texas, he testified he couldn’t afford any judgment over $2 million. Free Speech Systems has filed for bankruptcy protection. But an economist testified in the Texas proceeding that Jones and his company were worth as much as $270 million.
Amazon AMZN, -0.76%
is debuting a new holiday shopping event this week called “Amazon Prime Early Access Sale” where shoppers can get exclusive access to hundreds of thousands of deals ahead of the holidays.
The new sale is essentially another Amazon Prime Day event, where subscribers can get certain deals for a 48-hour period, just with a different name.
As millions of shoppers are impacted by record-high inflation in the U.S., some data still suggest, consumers are still set to spend more than last year this holiday season.
According to data insights from Adobe Inc. ADBE, -1.00%, online-only holiday spending (Nov. 1 to Dec. 31) is expected to grow 2.5% in 2022, representing the smallest increase since Adobe began tracking this data in 2015. In 2021, holiday spending was 8.6% higher than the year prior, despite, at the time, the rate of U.S. inflation at a 30-year high.
Here’s what you need to know about Amazon’s Early Access Sale:
When is Amazon Prime’s Early Access Sale?
Amazon’s savings event is two days long, running from Tuesday, Oct. 11 through Wednesday, Oct. 12.
What time does Amazon Prime’s Early Access Sale start?
The Early Access Sale begins at midnight PT (3 a.m. ET) on Tuesday, Oct. 11, and runs for 48 hours, through the end of the day on Wednesday, Oct. 12.
Which countries participate in Amazon Prime’s Early Access Sale?
Fifteen countries in total are participating in the deals. Those countries include: Austria, Canada, China, France, Germany, Italy, Luxembourg, the Netherlands, Poland, Portugal, Spain, Sweden, Turkey, the U.K., and the U.S., according to Amazon.
How does Amazon Prime’s Early Access Sale work?
Items for sale can be viewed on Amazon.com or on Amazon’s app. Anybody can locate which items are listed on sale through Amazon’s platform, but the deals are only available to Prime subscribers, similar to how Amazon’s flagship annual savings event Prime Day is structured.
Is Amazon Prime’s Early Access Sale only for Prime members?
Yes. Only Prime members can participate in the deals. Non-Prime members can make purchases on Amazon, but won’t get the type of savings that members get — non members also don’t get access to typically cheaper, and sometimes free shipping costs.
Additionally, people who sign up for a 30-day free trial of Amazon Prime can participate in the Early Access Sale.
How much does Amazon Prime cost?
An Amazon Prime subscription is $14.99 a month, or $139 for a full year. The subscription includes access to free delivery on millions of items, Prime Video, Prime Gaming, Amazon Music, and Amazon Photos, and broadcasts of “Thursday Night Football.”
Earlier in 2022, Amazon increased its Prime subscription price from $119 to $139.
Amazon increased its Prime subscription price from $119 to $139 in 2022.
What are the best Amazon Prime Early Access deals this year?
According to a statement from Amazon prior to the event beginning, some of the top deals will be on items including Fire TVs, Alexa enabled devices, and products from LEGO, Adidas ADS, -1.14%
and Ashley Furniture.
There will also be a Top 100 list that features the best deals on the e-commerce platform. The list will highlight the most popular products being purchased, Amazon says, and will launch in unison with the event’s start on Tuesday.
Are retailers like Target and Walmart starting holiday deals too?
Target Inc. TGT, +0.51%
announced customers will enjoy “earlier than ever” holiday shopping deals this year, including seven weeks of Black Friday deals, marking another instance when retailers are ditching the traditional shopping calendar of the holidays.
Last month, Walmart WMT, +0.58%
announced a “holiday guarantee” that extends the return window for purchased items, beginning Oct. 1, and running through Jan. 31.
Shares of Ford Motor Co. were hit hard Monday by UBS analyst Patrick Hummel’s recommendation that investors sell, as the auto industry is facing a worrisome U-turn from undersupply to oversupply.
Hummel also cut his ratings on several other global auto makers, including General Motors Co. GM, -5.59%,
saying that as a recession concerns grow, “demand destruction is no longer a vague risk.”
In addition to all of the data suggesting the economy is slowing, Hummel said growing U.S. dealer inventories, weak used-car pricing, used-car dealer profit warnings and signs indicating deteriorating orders and shorter delivery times make him more cautious on the overall auto industry.
“We think it will only take 3-6 months for the auto industry to end up in oversupply, which will put an abrupt end to a 3-year phase of unprecedented OEM [original equipment manufacturer] pricing power and margins,” Hummel wrote in a note to clients.
As part of his negative industry outlook, he cut his rating on Ford F, -7.38%
to sell from neutral and his stock price target to $10 from $13, with the new target implying about 11% downside from current levels.
Ford’s stock sank 7.6% in morning trading. It was trading up just 0.6% month to date, after plunging 26.5% in September to suffer its worst monthly performance since it plummeted 30.6% during pandemic-stricken March 2020.
Hummel noted that Ford has already warned about having more vehicles in inventory than expected, and above payments to suppliers running about $1 billion higher than projected, so he sees little margin left for negative surprises in terms of fourth-quarter deliveries and supply costs.
Hummel cut his 2023 adjusted earnings-per-share estimate by 61% to 52 cents a share, to reflect a $6.5 billion drop in price and sales mix. The compares with the current 2023 FactSet EPS consensus of $1.87.
“This sounds very negative, but Ford gains $19 billion in price alone since the beginning of 2020,” Hummel wrote.
Meanwhile, GM’s stock dove 6.9% in morning trading toward a three-month low, and shares have shed 2.5% so far this month after tumbling 16% last month.
Hummel downgraded GM to neutral from buy, and dropped his price target by 32%, to $38 from $56.
The rating remains above Ford’s, because unlike its rival, Hummel noted that GM has had “no hiccups” in its third-quarter production schedule and therefore a “solid” quarterly report is expected. However, the downgrade reflects the fact that GM is “not immune” to a downturn in the industry.
Separately, Hummel also cut his stock-price target on Tesla Inc. TSLA, -0.16%
to $350 from $367, saying that following a third-quarter volume report that was below expectations, it will be “more challenging” for the electric-vehicle maker to meet its 2022 delivery growth target.
However, Hummel reiterated his buy rating on Tesla, as he believes the EV maker is best positioned to use pricing as the tool to fill its factories.
“Overall, the recession outlook should result in moderately lower margins for Tesla than previously expected, but we’re highly confident that by keeping the top line [revenue] momentum, Tesla will even widen the gap vs. competitors in terms of profitability,” Hummel wrote.
Ford’s stock has fallen 3% over the past three months, while GM shares have lost 3.1% and Tesla’s stock has dropped 11.8%. In comparison, the S&P 500 index SPX, -1.08%
has declined 7.5% the past three months.
Among other auto makers, he also downgraded both Renault SA RNO, +2.41%
A large number of U.S. COVID deaths could be prevented if patients would take Paxlovid, the antiviral developed by Pfizer PFE, -1.79%
that helps reduce the risk of hospitalization and death, according to White House COVID coordinator Dr. Ashish Jha.
Jha told the New York Times that the average daily death count could be reduced to about 50 a day from 400 currently, if every American aged 50 and above that tests positive for the virus took a course of either Paxlovid or used monoclonal antibodies.
“The public doesn’t seem to understand that the evidence around hospitalization and deaths is really powerful,” Dr. Robert Wachter, chair of medicine at the University of California in San Francisco told the paper.
The issue seems to be a combination of worry about certain issues that Paxlovid can cause, including a strange metallic taste and the potential for “rebound COVID,” where patients quickly become reinfected after the five-day course of pills has been completed. That happened to both President Joe Biden and first lady Jill Biden recently.
The second reason is that many Americans — and Republicans, in particular — have refused to take COVID seriously and are not willing to take steps to reduce its impact. Trials have found Paxlovid to be effective across all age groups, but mostly among older patients. But as the COVID death rate for people under 50 is already close to zero, reducing it in a statistically significant way is difficult.
The news comes as U.S. known cases of COVID are continuing to ease and now stand at their lowest level since late April, although the true tally is likely higher given how many people are testing at home, with data generally not being collected.
The daily average for new cases stood at 41,605 on Thursday, according to a New York Times tracker, down 25% from two weeks ago. Cases are declining in northeastern states including New York and New Jersey, while cases are rising in the western states Montana, Washington and Oregon.
The daily average for hospitalizations was down 11% at 27,021, while the daily average for deaths is down 8% to 391.
• Molnupiravir, the COVID pill developed by Merck MRK, +0.18%
and privately held Ridgeback Therapeutics, produced mixed results in two recent studies, the companies said Thursday. Early data from a trial conducted in the U.K. by the University of Oxford found no evidence of a difference when molnupiravir was added to usual care in reducing hospitalizations and death. A second study conducted in Israel found a benefit in patients who were 65 and older, but no benefit for 40- to 60-year-olds.
• Homelessness is surging in the U.S. again as pandemic programs that halted evictions are being phased out, the Associated Press reported. The overall number of homeless people in a federal report to be released in the coming months is expected to be higher than the 580,000 unhoused before the coronavirus outbreak, the National Alliance to End Homelessness said. The AP tallied results from city-by-city surveys conducted earlier this year and found the number of people without homes is up overall compared with 2020 in areas reporting results so far.
• The idea was to have China in stable and tip-top shape when thousands of delegates gather in Beijing to usher in a historic third term in power for Xi Jinping, BBC News reported. However, the coronavirus is not playing nicely. In recent weeks, tens of millions of people have again been confined to their homes in lockdowns across 60 towns and cities, and this is bringing political pressure on the man who has become the most powerful Chinese figure since the first communist-era leader, Mao Zedong.
Covid-19 lockdowns, corruption crackdowns and more have put China’s economy on a potential crash course. WSJ’s Dion Rabouin explains how China’s economic downturn could harm the U.S. and the rest of the world. Illustration: David Fang
• A new COVID-19 wave appears to be brewing in Europe as cooler weather arrives, with public health experts warning that vaccine fatigue and confusion over types of available vaccines will likely limit booster uptake, Reuters reported. The omicron subvariants BA.4 and BA.5 that dominated this summer are still behind the majority of infections, but newer omicron subvariants are gaining ground. Hundreds of new forms of omicron are being tracked by scientists, the World Health Organization said this week.
The U.S. leads the world with 96.6 million cases and 1,062,130 fatalities.
The Centers for Disease Control and Prevention’s tracker shows that 225.8 million people living in the U.S., equal to 68% of the total population, are fully vaccinated, meaning they have had their primary shots. Just 110.5 million have had a booster, equal to 48.9% of the vaccinated population, and 24.8 million of those who are eligible for a second booster have had one, equal to 37.9% of those who received a first booster.
Some 11.5 million people have had a shot of the new bivalent booster that targets the new omicron subvariants.
The Republican Party has an edge again in the generic ballot, and that advantage has reached a level last seen in late July, according to a RealClearPolitics average for that closely watched indicator.
Republicans are now scoring 46.0% support in the RCP average of generic ballots, a percentage point ahead of Democrats at 45.0%.
The GOP hit a 1-point edge last Wednesday, then saw a dip, but as of Tuesday was back at that level, as shown in the chart below.
It’s not a big advantage, but it’s the best showing for Republicans in RCP’s data for generic ballots since July 28, as Democrats had the advantage for much of August and September.
The generic ballot refers to a poll question that asks voters which party they would support in a congressional election without naming individual candidates. Analysts tend to see it as a useful indicator.
Other websites focused on political analysis and forecasting, such as FiveThirtyEight, still show Democrats with an edge in their data for generic ballots.
Election Day for the midterm contests is now five weeks away. Democrats have focused their campaigns on abortion rights after the Supreme Court’s June decision that overturned Roe v. Wade, while Republicans have seized on Americans’ frustration with high inflation.
The additional chart below is interactive and shows RCP’s data for the generic ballot over a longer time frame.
U.S. stock indexes ended modestly lower on Wednesday, despite briefly turning positive in the final hour of trading, while data showed steady growth in private-sector jobs and in the service sector, indicating more scope for the Federal Reserve to continue to raise interest rates.
How stocks traded?
The Dow Jones Industrial Average DJIA, +0.03%
lost 42.45 points, or 0.1%, to finish at 30,273.87
The S&P 500 SPX, +0.21%
was off 7.65 points, or 0.2%, ending at 3,783.28
The Nasdaq Composite COMP, +18.82%
shed 27.77 points, or 0.2%, to end at 11,148.64
On Tuesday, the Dow jumped 825 points, or 2.8%, while the S&P 500 increased 3.1% and the Nasdaq Composite rallied 3.3%.
What drove markets?
Wall Street stocks finished in the red after three main indexes bounced back from earlier losses in the final hour of trade, following a strong September private employment report in the morning.
Data released Wednesday showed that private-sector payrolls rose by 208,000 in September, indicating steady growth and supporting the view that the Fed has enough scope to keep raising interest rates. Economists surveyed by The Wall Street Journal had expected a rise of 200,000.
The report came two days before the closely watched nonfarm payrolls data issued by the Bureau of Labor Statistics. Investors are eying on it for important guidance on the Fed’s policy stance in the November meeting.
Friday’s employment report is expected to show the economy added 275,000 jobs in September, compared with 315,000 new positions added in August, according to a survey polled by Dow Jones.
“That certainly could move the needle,” said Kristina Hooper, chief global market strategist at Invesco. “Again, it doesn’t mean that it actually is going to change the market, but it could be the catalyst for short term rally if we get a disappointing jobs report.”
“But keep in mind, that’s just the anticipation of a Fed pivot based on data. But that does not ensure a Fed pivot. And so it could be one of those short-term rallies like the one we saw earlier this week,” Hooper said.
In other data Wednesday, an ISM barometer of U.S. business conditions in the service sector dipped to 56.7% in September but still showed steady growth and rising employment in a sign the economy is still expanding.
The U.S. trade deficit in August fell to $67.4 billion, the lowest level since mid 2021, paving the way for a resumption of growth in gross domestic product in the third quarter.
The S&P 500 had just enjoyed its largest two day percentage gain since April 2020 on Monday and Tuesday, and the best start to a quarter since 1938, according to Dow Jones Market data.
The bounce followed three quarters of declines, the worst such run since 2008, during which time the S&P 500 fell 24.8% to a near two-year trough as investors worried that the Federal Reserve’s interest rate hikes to crush inflation would harm the economy.
Brian Mulberry, client portfolio manager at Zacks Investment Management, believes the volatility in the stocks will continue because markets are getting a very “consistent message” from the Fed.
“Given what has happened over the last five trading sessions alone, we would be basically telling our clients to tighten your seatbelt a little bit because it’s definitely going to continue to be a bumpy ride,” Mulberry told MarketWatch in a phone interview on Wednesday. “If we get a ‘Goldilocks’ (jobs) report, that would mean decent economic activity is going on. That’s good for earnings overall in the market, but it’s not growing to a point where interest rates would have to be ratcheted up another 125 basis points by the end of the year.”
One major reason behind the rise early this week was the view that the Fed would pivot away from its aggressive monetary tightening.
Johanna Chua, chief Asia economist at Citi, said that though U.S economic growth remained in better shape than other countries and Fed officials continued to sound hawkish, the market risked being wrongfooted by any signs that interest rates could soon peak.
“Even as the overall fundamental setup has not changed… trimming of bearish risk/bearish rates/bullish USD positions has driven a sharp reversal,” Chua said.
Mary Daly, president of the Federal Reserve Bank of San Francisco said Wednesday that the Federal Reserve needs to keep raising its benchmark interest rate in order to cool inflation that hit a 40-year high earlier this year and has shown little signs of cooling. Atlanta Fed President Raphael Bostic will speak at 4 p.m. Eastern.
CLX22,
rose $1.24, or 1.4%, to settle at $87.76 a barrel on the New York Mercantile Exchange.
The S&P 500’s energy sector SP500.10, -0.07%
rose 2.1% following the news, up 12.6% over the last three trading days. According to Dow Jones Market Data, it was the best three-day percentage gain since November 2020 when it gained 16.1%. Shares of Schlumberger SLB, +0.77%
gained 6.3% at the close, while Exxon Mobil XOM, +1.32%
shares advanced 4%.
Companies in focus
Shares of Helen of Troy Ltd. HELE, -2.75%
finished 3.4% higher Wednesday, after the consumer products company, with brands including OXO, Hydro Flask and Braun, reported fiscal second-quarter earnings that beat expectations but cut its full-year outlook, as rising inflation has prompted consumers to change their spending patterns.
Shares of Monopar Therapeutics Inc. MNPR, +6.36%
gained 1.8% after the company said it completed enrollment in a Phase 2b clinical trial evaluating its experimental therapy aimed at preventing severe oral mucositis in patients undergoing chemoradiotherapy for oropharyngeal cancer.
Shares of Eiger BioPharmaceuticals Inc. EIGR, +0.85%
tumbled 5% after the company said it will not pursue emergency authorization of its experimental treatment for mild and moderate COVID-19 infections.
Shares of Lamb Weston Holdings Inc. LW, +2.45%
ended 4.2% higher Wednesday, after the potato supplier reported fiscal first-quarter profit that beat expectations, higher prices helped offset a volume decline.
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, +3.12%
that appear to fit the bill. The S&P Composite 1500 is made up of the S&P 500 SPX, +3.06%,
the S&P 400 Mid Cap Index MID, +3.18%
and the S&P Small Cap 600 Index SML, +3.80%.
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.
Cash flow is key
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:
Dividend yield of at least 5.00%.
Consensus free cash flow estimate available for calendar 2023, among at least five analysts polled by FactSet. We used calendar-year estimates, even though fiscal years for many companies don’t match the calendar.
Estimated 2023 free cash flow yield of at least double the current dividend yield.
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:
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:
For the REITs, (Uniti Group Inc. UNIT, +7.36%
and Macerich Co. MAC, +8.18%
), consensus AFFO estimates were used.
Consensus EPS estimates were used for Prudential Financial Inc. PRU, +5.66%,
Invesco Ltd. IVZ, +6.76%
and Franklin Resources Inc. BEN, +4.37%.
Online secondhand-fashion marketplace Poshmark Inc. has agreed to be bought by South Korean internet company Naver in a $1.2 billion deal, the companies announced Monday, a move that executives said would help both brands expand internationally.
Shares of Poshmark POSH, -0.64%
jumped 11.8% in after-hours trading on the news.
Under the terms of the deal, Naver 035420, -8.79%
will acquire Poshmark’s outstanding shares for $17.90 in cash, representing a 15% upside to Poshmark’s Monday closing price of $15.57. The transaction is set to close by the first quarter of next year, pending Poshmark shareholders’ approval.
Poshmark went public in late 2020, pricing shares at $42 a share, and ended its first day of trading at more than $100 a share, but has never approached those heights again. It last traded for more than the acquisition price Naver has agreed to pay late last year.
In a statement, executives from both companies talked up the potential to combine Naver’s array of search, e-commerce, AI and social-media technology with Poshmark’s social and shopping platforms. Poshmark, the companies said, would also embark on a bigger international expansion strategy, including into other markets in Asia, in the “medium-term.”
They also talked about the potential for the combined company to save around $30 million annually within two years after the deal’s closing through “rationalization of public company costs” and higher operating leverage, along with the potential for more than 20% yearly sales growth by harnessing Naver’s advertising resources.
Naver, which runs large search and e-commerce platforms, said the move would broaden its e-commerce platform, bring younger users into the company’s fold and allow it to “capitalize on the global online fashion re-commerce and sustainable economy opportunity.”
“Naver’s leading technology in search, AI recommendation and e-commerce tools will help power the next phase of Poshmark’s global growth,” Choi Soo-Yeon, Naver’s chief executive, said in a statement, which also said that Naver hosted a large number of digital content creators in Korea.
Naver owns companies like Wattpad, a social-media platform, and runs Webtoon, a site for digital comics, along with a metaverse platform called Zepeto, and also has joint ownership of an internet service group in Japan. Naver said its online community in Korea consists of more than 36 million monthly users, who use its search engine and other services.
Poshmark Chief Executive Manish Chandra said the deal would also give Poshmark opportunities to grow.
“Longer term, as part of Naver, we will benefit from their financial resources, significant technology capabilities, and leading presence across Asia to expand our platform, elevate our product and user experiences, and enter new and large markets,” he said in the statement.
Naver said the acquisition would also help give it a bigger foothold in the U.S. And it said the deal would allow it to broaden the appeal of so-called live-stream shopping.
“Live-stream shopping is a key driver of e-commerce in China and Korea (and increasingly in the U.S.) today, allowing shoppers to buy products in real-time through live video broadcasts, enabling greater insights and more clarity around purchasing decisions,” the statement said.
Once the deal closes, Poshmark will be a standalone subsidiary of Naver, with the same management team, brand and headquarters in Redwood City, Calif., the companies revealed.
At the close of Monday’s trading, shares of Poshmark were down around 9% year-to-date. The S&P 500 index SPX, +2.59%,
by comparison, has slid 23% over that time.
About half of the American public has heard little or nothing about the new COVID-19 bivalent booster, a new survey by the Kaiser Family Foundation has found. The new booster targets the omicron variants that have become dominant around the world.
One in five of those surveyed said they had heard “nothing at all” about the new boosters. Some 17% said they had heard “a lot” about the boosters, while 33% said they had heard “some” about the new shots. About a third said they’d already gotten the new booster or intended to do so as soon as possible.
“Intention is somewhat higher among older adults, one of the groups most at risk for serious complications of a coronavirus infection,” the authors wrote. “Almost half (45%) of adults ages 65 and older say they have gotten the bivalent booster or intend to get it ‘as soon as possible.’”
Source: Kaiser Family Foundation
The news will likely disappoint health experts who cheered the regulatory authorization of the new boosters in August. The U.S. Food and Drug Administration granted emergency-use authorization to boosters developed by Moderna MRNA, +1.36%
and by Pfizer PFE, -0.07%
and German partner BioNTech BNTX, +1.53%
for use in people aged 12 and older who have had an initial series of a COVID vaccine, including those who have already had one or more booster doses.
The Centers for Disease Control and Prevention is recommending that all adults get one of the bivalent boosters at least two months after completing a primary series of shots. So far, some 7.6 million people in the U.S. have received it, according to the CDC.
Once again, the country’s partisan divide is evident, with 6 in 10 Democrats saying they’ve already had the shot or will get it soon, compared with 1 in 8 Republicans.
“Notably, 20% of Republicans say they will ‘definitely not’ get the new COVID-19 booster dose, while a further 38% of Republicans are unvaccinated or only partially vaccinated and therefore not eligible for the new updated COVID-19 booster dose,” the survey authors said.
In the U.S., known cases of COVID are continuing to ease and now stand at their lowest level since late April, although the true tally is likely higher given how many people are testing at home, where data are not being collected.
The daily average for new cases stood at 47,569 on Thursday, according to a New York Times tracker, down 26% from two weeks ago and now at the lowest level since late April. Cases are rising in 14 states and are sharply higher in several. Montana leads the count with a 75% rise in the last two weeks, followed by Washington with a 48% rise. Cases are up by double digits in Rhode Island, New York, Massachusetts, New Hampshire, Vermont and New Jersey.
The daily average for hospitalizations was down 13% to 28,639, while the daily average for deaths was down 11% to 407.
The new bivalent vaccine might be the first step in developing annual COVID shots, which could follow a similar process to the one used to update flu vaccines every year. Here’s what that process looks like, and why applying it to COVID could be challenging. Illustration: Ryan Trefes
• The U.K. is the only G-7 country whose economy is smaller now than before the pandemic, the Guardian reported, citing data released Friday by the Office for National Statistics. The ONS released figures showing that rather than the economy being 0.6% larger than it was in February 2020, a combination of a deeper recession during the pandemic and a weak recovery had left it 0.2% smaller. All the other major economies in the G-7, including France and Italy, recovered strongly enough to be larger than they were in February 2020.
• Taiwan is the latest country to end mandatory COVID quarantines for people arriving from overseas, the Associated Press reported. Officials said that beginning Oct. 13, the previous weeklong quarantine requirement would be replaced with a seven-day self-monitoring period. A rapid antigen test will still be required upon arrival, but people showing no symptoms will be allowed to take public transportation.
• Germany’s health ministry is warning of a rise of COVID cases heading into the fall and is urging older people in particular to get a second booster shot, the AP reported separately. Other European countries such as France, Denmark and the Netherlands are also recording an increase in cases, German Health Minister Karl Lauterbach told reporters in Berlin. “We are clearly at the start of a winter wave,” he said.
COVID-19 lockdowns, corruption crackdowns and more have put China’s economy on a potential crash course with the U.S. and the rest of the world, the Wall Street Journal’s Dion Rabouin explains. Illustration: David Fang
• The first Chinese mRNA-based COVID vaccine has received government approval — in Indonesia, the New York Times reported. The shot, developed by Walvax Biotechnology 300142, +0.49%,
Suzhou Abogen Biosciences and the Chinese military, was cleared this week by Indonesia for emergency use. Countries all over the world, including Indonesia, have embraced mRNA vaccines, and they are considered among the most effective vaccines that the world has to offer. But more than two years into the pandemic, they are not yet available in China, which has relied on an increasingly draconian “zero-COVID” approach to keep cases and deaths from the virus low.
• Patriarch Kirill of Moscow, the head of the Russian Orthodox Church and a supporter of Russia’s war on Ukraine, has tested positive for COVID-19, the church’s press service said on Friday, Reuters reported. The church said Kirill, 75, a close ally of Russian President Vladimir Putin, had canceled all his planned trips and events and had “severe symptoms” requiring bed rest and isolation. It said his condition was “satisfactory.”
The U.S. leads the world with 96.3 million cases and 1,059,291 fatalities.
The Centers for Disease Control and Prevention’s tracker shows that 225.3 million people living in the U.S., equal to 67.9% of the total population, are fully vaccinated, meaning they have had their primary shots. Just 109.9 million have had a booster, equal to 48.8% of the vaccinated population, and 23.9 million of those who are eligible for a second booster have had one, equal to 36.6% of those who received a first booster.
Shares of Nike Inc. plunged as much as 10% after hours Thursday, after the athletic-gear giant’s executives said price-cutting efforts to flush off-season clothing from warehouses in North America would dent gross margins for the rest of its fiscal year and warned of a big potential hit from the stronger dollar.
Management also said they expected their rivals to keep cutting prices through at least the end of the calendar year, as they try to clear their own stockpiles. But the Nike executives said inventory levels in North America likely “peaked” in its first quarter, which ended on Aug. 31, and expected levels to even out — with newer, seasonally-aligned, in-demand product — in the months ahead as it prepares for the holiday rush.
“We’re taking decisive action to clear excess inventory, focusing on specific pockets of seasonally late product, predominantly in apparel,” Chief Financial Officer Matthew Friend said on Nike’s earnings call.
He added that he expected the moves to have a “transitory impact” on gross margins for the year.
The lopsided inventory levels, which grew 44% during Nike’s third quarter, followed factory closures last year in Asia, where most of its footwear is made, that led to late product deliveries, Friend said.
But those late deliveries are now getting mixed in with holiday-season deliveries that are set to arrive earlier than planned. The earlier arrivals, executives said, were a function of earlier ordering — due to the shipping delays that have characterized the past year —and then a sudden, more recent improvement in those shipping times.
And as the U.S. dollar strengthens, Friend said he expected the full-year negative impact of foreign exchange on reported sales and earnings before interest and taxes to be $4 billion and $900 million, respectively.
Still, executives said inventory management in China was “ahead of plan” as it recalibrates supply and navigates COVID-19 related restrictions there. And they said that consumer demand was still strong, despite rising prices. Friend and CEO John Donahoe both repeated that Nike remained customers’ “No. 1 cool” and “No. 1 favorite” brand.
Donahoe said shoes like the Air Max Scorpion — which offered the “most air ever, in terms of pound per square inch” — reflected Nike’s commitment to innovation. The company’s Travis Scott and LeBron 20 sneakers also remained popular, executives said. The back-to-school season, and demand for its Jordan and Converse sneakers, were also solid.
As for fiscal first-quarter financials, Nike reported net income of $1.5 billion, or 93 cents a share, compared with $1.9 billion, or $1.16 a share, in the year-earlier period. Sales came in at $12.7 billion, compared with $12.2 billion a year ago.
Analysts polled by FactSet expected earnings of 92 cents a share on sales of $12.28 billion. Shares of Nike NKE, -3.41%
were last down 9.3% after hours, but fell more than 10% at one point after the close.
Prior to the report, analysts following Nike had zeroed in on the impact of the stronger U.S. dollar, the impact of China’s COVID lockdowns, as well as the effects from bigger discounts to sell shoes and other gear that sat around for too long due to backups in the company’s supply chain. The back-to-school season, and competition with the likes of Adidas AG ADDYY, -5.21%
were also points of focus for Wall Street.
Gross margins fell to 44.3% from 46.5% during the quarter. Nike executives said the decrease “was primarily driven by North America, which took measures to liquidate excess inventory through Nike Direct markdowns and wholesale marketplace actions.”
Inventory for Nike stood at $9.7 billion, a 44% increase from the year-earlier period, due to what executives described as “ongoing supply-chain volatility, partially offset by strong consumer demand during the quarter.”
Nike, in June, said it expected “higher promotional activity” in the first quarter, as it tries to sell seasonal items that arrived late, following the factory closures last year in Asia. However, for the full year ahead, management at that time said it was planning for “mid-single-digit price increases.”
Executives also said then that they were planning to expand sales that go directly to consumers, via its own stores and online. The company over the years has been trying to rely less on retail chains like Foot Locker Inc. FL, -6.36%
for sales.
Shares of Nike have fallen 43% so far this year. By comparison, the S&P 500 index SPX, -2.11%
is down around 24% over that time.
Sweden’s Hennes & Mauritz AB said Thursday that net profit for its third quarter fell significantly after it booked a one-time cost related to the winding down of its Russian operations, and that it will start a cost and efficiency program.
The company HM.B, -3.17%
posted a net profit of 531 million Swedish kronor ($47.4 million) for the fiscal quarter ended Aug. 31, compared with SEK4.69 billion a year earlier. Analysts polled by FactSet had expected a net profit of SEK2.17 billion.
Sales were SEK57.45 billion compared with SEK55.59 billion a year earlier. Analysts polled by FactSet had expected sales of SEK57.45 billion.
The company said it has booked a one-time cost of SEK2.10 billion, related to the winding down of Russian operations, hitting the result for the quarter.
The cost and efficiency program is expected to result in annual savings of around SEK2 billion.
“The third quarter has largely been impacted by our decision to pause sales and then wind down the business in Russia. This has had a significant effect on our sales and profitability, which explains half of the decrease in profits compared with the third quarter last year,” Chief Executive Helena Helmersson said.
