Medtronic falls to lowest level since March 2020
One more stock hit a fresh 52-week low in addition to the open. Shares of Medtronic were trading at lows not seen since March 2020.
Meanwhile, two new stocks were trading at new 52-week highs after the open. Shares of Ross Stores traded at levels not seen since November 2021. Meanwhile, Merck & Co. traded at all-time highs going back to 1978.
— Chris Hayes, Sarah Min
Nasdaq and S&P 500 post third day down
Next two weeks can help investors, policymakers better understand future of markets, investment director says
The next 10 to 14 days will be a “data-rich period” that will help investors and policymakers alike see how inflation and growth will be balanced going forward, said Bill Northey, senior investment director at U.S. Bank.
Northey said he’ll be watching closely for the labor report coming Friday for any signs of economic tightening. Next week, he said he’ll be watching the producer price index for insights into if inflation is cooling.
“It’s a data-rich period of time over the course of the next 10 to 14 days,” he said, adding that it will help help investors and policy makers see “what is necessary” when it comes to slowing economic growth to bring down inflation.
He said portfolios are currently being positioned “more defensively,” being modestly overweight to short-duration, high-quality fixed incomes, which can include bonds and bills. Meanwhile, Northey he said he is recommending being underweight on global equities.
— Alex Harring
Loop Capital maintains buy rating on Apple, says some concerns priced into stock
Loop Capital is staying bullish on shares of Apple even amid concerns that China’s Covid-19 lockdowns could weigh on iPhone Pro production.
“The long and the short of it is that while we believe Street could have estimates set too high for Dec [quarter] – Jun Q … we believe some degree of this is in the stock … while also now seeing a commensurate revenue and EPS upside opportunity beginning in the Sep Q ’23,” wrote analyst Ananda Baruah in a note to clients Tuesday.
Amid an uncertain demand backdrop and supply constraints, Baruah said expected units for the December period could move as much as 10 million units lower.
The analyst maintained the firm’s $180 price target, suggesting shares could rally 25% from Monday’s close.
“What could get us more cautious could be the updating of our iPhone [average selling price] work, should it show a materially more conservative delta vs Street,” Baruah said, noting its possible for these figures to come in lower than Wall Street’s expectations.
— Samantha Subin
Three indexes in the red as trading enters final hour
Investors are watching for data and insights coming later in the week, but long-term investors should ‘stay the course,’ Baird strategist says
The markets are moving little with investors looking ahead to Wednesday’s speech from Fed Chair Jerome Powell and data on jobs, labor and inflation coming later in the week, according to Ross Mayfield, investment strategist analyst at Baird.
“This is a really big week of economic data,” Mayfield said. “A lot of times, when you have a handful of big catalysts in the near term, the market will kind of just trade sideways or be a little calm in anticipation of those events.”
But Mayfield said he advises clients, especially those looking at long-term strategies, to keep focused on bigger investing goals and not be swayed by short-term ups and downs.
“If you’re just a long-term investor, it really is just about staying the course,” he said.
— Alex Harring
Dow turns positive
The Dow turned positive as investors entered the penultimate hour of trading.
After trading down for much of the day, the 30-stock index moved up 0.1%.
— Alex Harring
Data suggest Apple Pay is winning over customers, Deutsche Bank says
The findings show that Apple Pay grew 52% in November on a year-over-year basis, and 59% in the U.S. alone, even though it accounts for just 5% of global e-commerce purchases, wrote analyst Bryan Keane in a note to clients Monday.
At the same time, usage of PayPal, which makes up 16% of e-commerce purchases worldwide, slipped 8% year over year and 4% on that same basis in the United States.
“We continue to expect PYPL will face the steepest competition in the coming months and years from Apple Pay, a belief that has only been strengthened after our review of Salesforce’s holiday spending data,” he said.
Both stocks were trading down more than 2% in midday trading as technology stocks more broadly underperformed.
— Samantha Subin
Best Buy ‘well positioned’ for holiday season, Loop Capital says
A Cyber Monday price comparison from Loop Capital showed Best Buy had narrowed price differences with competitors. The firm said the closing of that gap put the electronics retailer in a good position entering the holiday season.
Managing director Anthony Chukumba said Best Buy was largely at “price parity” with Walmart when looking at a basket of 30 electronics, while Amazon remained the low-price “leader.” Still, he said Best Buy’s ability to make the price gap smaller with the two other retailers was encouraging, especially as consumers feel more price conscious amid inflationary pressures.
“Given the relative price parity we believe Best Buy is well positioned for the holiday selling season,” he said in a note to clients.
He also said the company will be helped by its omnichannel model, wide assortment of merchandise and strong costumer service.
Best Buy was trading up 2.1% Tuesday. The electronics retailer has lost 17.6% so far this year, performing slightly worse than the S&P 500.
— Alex Harring
Indexes stay in red entering second half of trading day
Stocks making the biggest moves midday
These companies are making headlines in midday trading Tuesday.
- Bilibili — Shares surged more than 21% after Bilibili posted better-than-expected earnings and revenue. The Chinese internet company’s daily and monthly active users rose 25% from the prior year.
- Hibbett — Shares of Hibbett dropped more than 9% after the company posted a disappointing profit for the third quarter. The sporting goods retailer said higher expenses cut into its profit margins.
- JD.com — Shares of U.S.-listed Chinese internet companies rose as a group after Chinese health authorities reported an improvement in recent senior vaccination rates. Shares of JD.com were up 7.9%. Pinduoduo and Baidu climbed 6.4% and 5.7%.
— Sarah Min
S&P 500 sectors split as market trades down
The S&P 500 sectors were split in Tuesday trading.
The best performer was real estate, up 1%. Utilities was performing the worst, down 1.1%.
— Alex Harring
Amazon, Meta and Alphabet should benefit from online holiday shopping, Citi says
Online shopping is taking a greater share of holiday spending this year, benefitting a few retail stocks, according to Citi.
“As we enter the prime holiday shopping season, we believe eCommerce is gaining share of overall transactions,” analyst Ronald Josey wrote in a Monday note. “Adobe’s reported eCommerce sales came in ~2% above its the Cyber Five projections, on average, Salesforce and MasterCard SpendingPulse reported Black Friday U.S. eCommerce sales rose +10% Y/Y and +14% Y/Y, respectively, and Shopify reported +17% Y/Y growth in BF sales globally with strength in the U.S., U.K., and Canada.”
While there are some continued challenges for retail — a weaker economic environment and U.S. consumer — Citi is confident in holiday 2022 shopping trends so far and project mid-to-high-single-digit growth for eCommerce sales.
— Carmen Reinicke
Jefferies downgrades Generac, says this technology poses a threat
Jefferies downgraded shares of the generator maker Generac to an outperform rating.
The firm said this “game-changing” technology poses a risk to Generac’s business model and the long-term penetration of its home standby generators.
CNBC Pro subscribers can read more on the downgrade here.
— Samantha Subin
Foreign data shows how inflation is moving internationally
Data out of Germany, Spain and Brazil signaled that inflation in the country could be cooling, as desired by officials, Reuters reported.
German consumer prices in comparison to other European Union countries rose 11.3% in November, according to data from its federal statistics office. That’s in line with estimates from analysts polled by Reuters and showed it has cooled slightly off the record high posted in October.
In Spain, consumer prices in the year leading up to November rose 6.8%, under the 7.3% seen in October. Inflation without food or energy prices came to 6.3%, up slightly from the 6.2% seen the month before.
Brazil’s measure of credit card default ratios rose to the highest level seen in nearly four years, according to Retuers, pointing yet again to the argument that monetary restriction actions are having an impact.
— Alex Harring
China-related instruments moving markets today
Assets related to China are moving today as the country announced a push for vaccines for the elderly to move forward with reopening amid protests on zero-Covid policy lockdowns.
The China internet ETF is up more than 2% today and on pace for its best month since inception, up 38%. The China Large-Cap fund is up more than 28% on the month, its best performance since its inception in 2004. MSCI China is also up 26% this month, inline for its best gain since March 2011.
Emerging market ETFs are also outperforming – the EM Asia ETF is up 16%, on pace for its best month ever and the EM ETF is up nearly 13% in November, its first positive month in six.
A slew of individual stocks are boosting fund returns. The Real Estate company Country Garden is up more than 200% this month while Real Estate Development company Longfor Group is up 11% today and 131% in November. Alibaba Health and Tencent Music have gained almost 84% and 75% this month, respectively.
Commodities are also outperforming. The Steel ETF is up 15.3% on the month, set for its best month since November 2020. The Copper Miners ETF is up 21% on the month.
—Carmen Reinicke, Gina Francolla
AutoZone is one of few retailers with potential upside, Wells Fargo says
Wells Fargo raised its price target on AutoZone on Tuesday, noting that its shares have outperformed the S&P 500 (21% versus 2% since its fiscal fourth quarter) and that industry dynamics are have proven “resilient.”
“AZO is clearly taking share, and post recent management meetings, we see reasons for FY23 upside via DIY volume normalization, [double digit percentage] commercial growth, and 2H margin recovery,” Zachary Fadem, an equity analyst at Wells Fargo, said in a note to investors. “In our view, AZO sits among few retailers with clear defensive characteristics yet upside to FY23 estimates.”
— Tanaya Macheel
Consumer confidence moves lower in November, indicating ‘elevated’ recession risk
Consumer confidence edged lower in November but was slightly above Wall Street expectations, the Conference Board reported Tuesday.
The board’s Consumer Confidence Index fell to 100.2 for the month, down from 102.2 in October. Economists surveyed by Dow Jones had been looking for a reading of 100.
Along with the declining confidence came more worries about prices, with the expectations for inflation 12 months from now rising to 7.2%, the highest since July and up 0.3 percentage point from October. Expectations for interest rates also climbed, with 67.2% of respondents seeing an increase over the next year, compared to 65.5% in October.
The expectations index for the short-term outlook also declined to 75.4 from 77.9, and the present situation index fell to 137.4 from 138.7.
“Consumers’ expectations regarding the short-term outlook remained gloomy. Indeed, the Expectations Index is below a reading of 80, which suggests the likelihood of a recession remains elevated,” said Lynn Franco, The Conference Board’s senior director of economic indicators.
Amazon, Chewy well-positioned this holiday season, says Wells Fargo
Wells Fargo is “cautiously optimistic” about this year’s holiday shopping season after better-than-expected Black Friday results.
Consumers spent a record $9.12 billion online on the day after Thanksgiving, up 2.3% year over year. That increase was likely at the expense of physical store sales, said Wells Fargo analyst Brian Fitzgerald.
“We expect consumers to be more value-driven this holiday shopping season, which should benefit online retailers and AMZN in particular,” he wrote in a note Tuesday.
Amazon had a price advantage over 12 leading retailers in Profitero’s annual price comparison study and was the price leader in 14 of 15 categories, Fitzgerald pointed out. It tied with Chewy as a price leader in pet supplies, he said.
“This set-up, however, could change materially through the end of December as excess inventory levels across retailers could lead to deeper discounting in certain categories,” Fitzgerald wrote. “If this happens, especially late in the season, we expect to see some incremental purchases from consumers that continue looking for last-minute bargains.”
— Michelle Fox
Indexes open slightly lower as trading kicks off
Home prices rise less than expected
An index surveying home prices in a basket of 20 U.S. cities showed a smaller year-over-year increase than anticipated by analysts.
The 20-city composite of the the S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index posted a 10.4% year-over-year gain in September. That’s a cooler increase than the 10.9% expected by analysts polled by Dow Jones.
It also reflects a smaller year-over-year increase compared with the prior month. August saw prices up 13.1% in the month compared with the same one a year before.
Of the 20 cities, Miami saw the largest year-over-year gain at 24.6% compared with the same month a year ago.
— Alex Harring
Roku shares fall more than 4% amid KeyBanc downgrade citing challenging road to profitability
Roku shares tumbled 4.1% before the bell following a KeyBanc Capital Markets downgrade of the streaming stock to sector weight from overweight.
The firm highlighted a slew of threats to the company’s profitability outlook among the reasons for the sentiment shift.
“Roku appears to be ceding market share, and has greater tech debt in its [advertising technology] stack than we envisioned,” wrote analyst Justin Patterson. “As resolving these issues requires sustained investment, we believe consensus is too optimistic on 2023E/2024E revenue and gross profit growth.”
CNBC Pro subscribers can read the full story here.
— Samantha Subin
Copper on pace for best month in more than a year
Copper prices have gained 8.6% since the start of the month, putting it on track for its best monthly performance since April 2021.
If copper remains positive through the end of November, it would be its first positive month in the last eight.
Meanwhile, nickel has added 20.9% and is poised for its best monthly performance since March, when it gained 32.2%.
Aluminum has gained 7% so far in November, on track for its strongest month since February. That month, it gained 11.5%.
— Alex Harring
Carson Block says systemic failures within crypto is not surprising
Short seller Carson Block said the fallout in the crypto industry didn’t come as a surprise to him.
“This is a whole edifice that was built on a lot of leverage and there are probably just so many cockroaches hidden within the wall,” the CIO of Muddy Waters Capital said on CNBC’s “Squawk Box.” “The fact that you see these systemic failures within the crypto is not surprising to me given how much leverage existed between these firms.”
Distressed crypto firm BlockFi filed for Chapter 11 bankruptcy protection following the implosion of putative acquirer FTX. BlockFi had already halted withdrawals of customer deposits and admitted that it had “significant exposure” to the now-bankrupt crypto exchange FTX and its sister trading house, Alameda Research.
— Yun Li
JPMorgan management’s `central case’ is for modest recession next year, Credit Suisse says
Daniel Pinto, JPMorgan’s chief executive of corporate and investment bank.
Simon Dawson | Bloomberg | Getty Images
JPMorgan Chase is preparing for a recession that starts in 2023 as the most likely current path for the U.S. economy, Credit Suisse analyst Susan Roth Katzke said Tuesday in a research note.
The New York-based bank’s management considers that its “central case” for the upcoming year, with a so-called soft landing or a severe crisis seen as less likely, Katzke said after meeting with JPMorgan President and Chief Operating Officer Daniel Pinto last week.
The recession scenario is likely to either be a mild downturn in 2023 that sees the Federal Reserve’s benchmark lending rate hit about 5%, or a deeper contraction “occurring somewhat later” that would stretch into 2024 and would see the Fed raising rates to as high as 6%, Katzke said.
JPMorgan’s earning power, reserves for loan losses, diverse business lines and moves to lower risk “ought to render JPMorgan well prepared and well positioned to manage through” the expected downturn, she said.
The bottom line is that the bank wasn’t wavering from its target of a 17% return on tangible common equity, said Katzke.
She reaffirmed her “outperform” rating on JPMorgan shares and her $145 price target and kept her EPS estimates unchanged.
Stocks making the biggest early moves: Hibbett, Silvergate Capital and more
These are the stocks making the biggest moves in pre-market trading:
- Hibbett: The sporting goods retailer’s stock slid 5.7% in the premarket after it missed top and bottom line estimates for its latest quarter. The company said it was hit by higher expenses that cut into its profit margins, although the company did reaffirm its full-year forecast.
- Silvergate Capital: The digital assets bank’s shares fell another 2.4% in the premarket, extending yesterday’s 11.1% loss. Yesterday’s decline followed the bankruptcy filing by cryptocurrency lender BlockFi, and the further drop for Silvergate comes despite a statement that it has minimal exposure to BlockFi.
- Chemours: Chemours tumbled 6.1% in premarket trading after the chemical maker said its full-year adjusted earnings were tracking slightly below the low end of its prior guidance range. It pointed to a significant decline in demand for titanium dioxide, particularly in Europe and Asia.
- Generac: Generac fell 2.6% in premarket action after Jefferies downgraded the stock to “underperform” from “hold,” citing the potential impact of electric vehicle bidirectional charging on sales of Generac’s backup power products.
— Peter Schacknow, Alex Harring
Deutsche Bank upgrades UPS
Deutsche analyst Amit Mehrotra upgraded UPS to buy from hold, noting that macro concerns surrounding the stock are now priced in.
“In the near-term, we think market participants are overly focused on volume growth and not on mix and productivity initiatives, which we think can drive positive revenue growth and solid contribution margins despite modestly lower domestic volumes by market participants,” he wrote in a note Monday.
UPS shares rose more than 1% in the premarket.
— Sam Subin
Shares of U.S.-listed Chinese companies rise in pre-market trade
U.S.-listed shares of Chinese technology companies rose in pre-market trade after Chinese health authorities reported a recent uptick in senior vaccination rates.
Hong-Kong listed tech companies also surged after the press briefing by health authorities — the wider Hang Seng Tech index ended its session more than 7.6% higher.
– Jihye Lee
European markets nudge higher as China’s Covid policy takes center stage
European markets were slightly higher on Tuesday as investors continued to monitor news from China over Covid restrictions.
The pan-European Stoxx 600 was up 0.3% in early trade, with basic resources adding 1.6% to lead gains while chemicals fell 0.7%.
Stocks in Hong Kong jumped more than 5% by afternoon trade, leading gains in the Asia-Pacific region alongside Chinese indexes, as Chinese health authorities encouraged the country’s elderly to get vaccinated.
– Elliot Smith
Chinese indexes pop ahead of Covid briefing
Indexes in China jumped more than 2% as investors closely watched for developments in the nation’s zero-Covid policy after seeing losses in the previous session.
Local media reported that the Chinese State Council will hold a press conference on Covid measures at 3 p.m. local time, or 2 a.m. ET.
The nation saw a drop in the number of daily infections for the first time in more than a week.
– Evelyn Cheng, Jihye Lee
CNBC Pro: Asset manager names 9 ‘cheap’ stocks to buy as recession fears grow
It’s “critical” for investors to be looking at valuations right now as a recession is looming and inflation looks likely to continue, said Steven Glass, managing director of Pella Funds Management.
In this environment, Glass selected a list of nine stocks that he said, “look particularly cheap given their growth outlook.”
— Weizhen Tan
CNBC Pro: Goldman Sachs names the global automakers exposed to a China slowdown
Many global companies are heavily exposed to China, including some of the world’s biggest automakers, which generate between 20% and 40% of their worldwide sales in the country, according to Goldman Sachs.
In a note to clients on Nov. 22 — before the latest protests — the investment bank mapped out the global auto industry’s exposure to Chinese consumers.
— Ganesh Rao
Don’t expect dovish language from Federal Reserve Chair Jerome Powell, Trivariate Research’s Adam Parker says
Investors shouldn’t expect a dovish tone out of Federal Reserve Chair Jerome Powell this Wednesday, according to Trivariate Research’s Adam Parker. Powell is scheduled to speak at the Hutchins Center on Fiscal and Monetary Policy at Brookings.
“There’s no way he’s going to get dovish language in the near term, in my view. So we had a fake dovish rally, but we’re not going to get, ‘we’re pivoting here and we’re slowing,'” Parker said Monday on CNBC’s “Closing Bell: Overtime.”
“There’s too many places where they’ve got to try to control inflation,” he added. “I would be surprised if they got dovish.”
— Sarah Min
Investors ramped up bets against crypto-connected firms in November
Investors raised their bets against stocks connected to crypto during the first half of November, according to FactSet data.
As of Nov. 15, short interest in business intelligence company MicroStrategy, which has bought bitcoin, spiked 15% to 3.8 million shares, which is about 40% of their total float. Short interest as a percentage of float refers to the amount of shares available for trading that are being bet against the company.
Meanwhile, short interest in Marathon Digital, which mines cryptocurrencies, rose more than 18% to 38.5 million shares, or about 35% of its total float.
Other companies that experienced a surge in short interest include Beauty Health Company, which saw short interest jump 26% to 32.8 million shares as of mid-November or 32% of float. Meanwhile, short interest in Groupon rebounded 10% to 5.3 million shares or 28% of float. Short interest in the e-commerce name had declined in the latter half of October.
— Sarah Min, Nicholas Wells
Stock futures open flat
U.S. stock futures were flat on Monday night after the major averages came under pressure from Covid protests in China, and as investors anticipated more economic data and commentary from Federal Reserve leaders this week.
Dow Jones Industrial Average futures fell by 11 points, or 0.03%. S&P 500 and Nasdaq 100 futures climbed 0.03% and 0.04%, respectively.
— Sarah Min