The S&P 500 index closed at its lowest level since June 1 on Tuesday as economic data underscored the view the Federal Reserve may need to keep interest rates high.
Market Snapshot
The Dow Jones Industrial Average fell 430.97 points, or 1.29%, to 33,002.38, the S&P 500 lost 58.94 points, or 1.37%, at 4,229.45 and the Nasdaq Composite dropped 248.31 points, or 1.87%, to 13,059.47.
Market Movers
HP Inc was up 1.8% to $26.13 after the stock was upgraded to Buy from Underperform at BofA and the price target was raised to $33 from $25. BofA analysts said they’re seeing an improving PC market backdrop and the company has been tighter on cost controls. Separately, Warren Buffett’s Berkshire Hathaway (BRK.B) sold another 5.1 million shares of HP in recent days as it continues to reduce its stake in the maker of personal computers and printers. Berkshire now holds 100.9 million shares of HP worth about $2.6 billion based on the current market price of HP shares.
WK Kellogg Co. was initiated with a Sell rating and a price target of $11 by analysts at Goldman Sachs. The stock fell 16% to $11.24. On Monday, WK Kellogg declined 9.1% and Kellanova (K) fell 6% following the spinout of the two companies from the former Kellogg. WK Kellogg houses the North America cereals business, while Kellanova is home to snack brands such as Pringles.
McCormick, the parent of flavor brands such as French’s, Frank’s RedHot and McCormick spices, reported fiscal third-quarter adjusted earnings of 65 cents a share, matching analysts’ estimates, but revenue of $1.68 billion that came up short. The stock fell 8.5%.
ODDITY Tech Ltd., the beauty-products company, said it expects its third quarter “to be our strongest third quarter ever.” Oddity forecast year-over-year net revenue growth for the third quarter of between 29% and 31%, higher than its initial guidance of 18% to 23%. It also said it expects gross margin of 68.5%, about 100 basis points higher than its previous guidance. Analysts at Truist upgraded their recommendation on Oddity to Buy from Hold. The stock rose 5.3%.
Eli Lilly reached an agreement to acquire radiopharmaceutical company POINT BIOPHARMA GLOBAL INC for $12.50 a share or $1.4 billion. Point Biopharma shares surged 85% to $12.36.
Warby Parker Inc. rose 3.4% to $13.72 after shares of the eyeglasses retailer were upgraded to Outperform from In Line with a $20 price target at Evercore ISI.
Clean Energy Fuels rose 3.9% to $3.73 after Raymond James upgraded the stock to Strong Buy from Outperform with an unchanged price target of $6.
Airbnb, Inc. was downgraded to Sector Weight from Overweight at KeyBanc without a price target, with the analysts saying the company’s margins have reached a near-term peak and revenue growth could decelerate to 11% year over year in 2024 as room night and average daily growth rate moderates. The stock declined 6.5%.
Ford and General Motors have laid off roughly an additional 500 workers combined as the continuing strike by the United Auto Workers forces the auto makers to idle more factories. Separately, GM said it received a counteroffer from the UAW to the company’s most recent proposal. A GM spokesman told the Detroit Free Press there was a meeting Monday between the GM and UAW. “The union did present a counter to our proposal from Sept. 21. We are assessing, but significant gaps remain.” Ford declined 2% and GM fell 3.4%.
Krispy Kreme, Inc. rose 0.6% after the firm said it was exploring strategic alternatives including an all-cash sale for Insomnia Cookies. Krispy Kreme bought a majority stake in Insomnia Cookies in 2018 and said it expects revenue of about $230 million in fiscal 2023.
A10 Networks 14% LOWER; expects revenue in the third quarter of 2023 to be between $56.5 million and $58.5M, versus the consensus of $74.65M.
Cal-Maine 12% LOWER; reported Q1 EPS of $0.02, $0.31 worse than the analyst estimate of $0.33. Revenue for the quarter came in at $459.3M versus the consensus estimate of $473.37M.
Palantir Technologies Inc. 3% HIGHER; said to be closing in on the controversial UK Health Data contract, according to Bloomberg.
Intel 3% HIGHER; announced its intent to separate its Programmable Solutions Group (PSG) operations into a standalone business.
B&G Foods Inc 3% LOWER; Piper Sandler downgraded from Neutral to Underweight with a price target of $8.00 (from $14.00).
Market News
Fed's Bostic: No "Urgency" to Raise Rates Again, but Cuts a Long Way off
With the U.S. economy slowing and inflation falling, there is no urgency for the Federal Reserve to raise its policy interest rate again, but it will likely be "a long time" before rate cuts are appropriate, Atlanta Federal Reserve president Raphael Bostic said on Tuesday.
"I am not in a hurry to raise, I am not in a hurry to reduce either," Bostic said at a Metro Atlanta Chamber event that tried to marry caution over any further rate increases with a commitment to the "higher for longer" strategy that the Federal Open Market Committee as a whole has adopted for this phase of its inflation fight.
"I don't think there is an urgency for us to do anything more ... I want us to hold. I think that is the appropriate thing to do for a long time," Bostic said.
UK Regulator to Push for Probe Into Amazon, Microsoft Cloud Dominance
British media regulator Ofcom will this week push for an antitrust investigation into Amazon and Microsoft's dominance of the UK's cloud computing market, according to two sources familiar with the matter.
The recommendation, first issued by Ofcom in April, will remain in the body's final report on the matter, set to be published on Thursday, one of the sources said.
Between them, Amazon and Microsoft enjoy a combined market share of 60-70%. Meanwhile, their closest competitor, Alphabet's Google , has around 10%.
The watchdog previously said it had considered referring the market for investigation by the CMA, the British competition regulator.
Netflix Said to Look at Price Hike After Actors Strike Ends
Netflix will reportedly look to raise its prices after the ongoing actors strike ends, a development that may be imminent after writers resolved their differences with studios.
Hollywood's actors union is set to restart talks with studios on Wednesday. And Netflix is discussing boosting prices a few months after that, the WSJ reported.
Such a price increase could come in several markets but would likely start in the home markets of the United States and Canada, according to the report.
Comments