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.
