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Equity Indexes Wrap: Paramount Jumps on Sale Rumors; Discount Retailers Stumlbe
December 08, 2023 04:23 PM EST
The Dow:
Boeing (BA) shares gained 3% after Chinese officials told the jet maker it was welcome to deepen its ties with the Chinese market, a sign the country may lift a four-year ban on the sale of Boeing 737 Max jets following two fatal crashes.
Chevron (CVX) gained 1.3% as oil prices ticked up after falling to a 5-month low earlier this week.
Big banks outperformed, with Goldman Sachs (GS) rising 1.8% and JPMorgan Chase (JPM) up 1.1%.
Tech stocks were comfortably in the green as well. Microsoft (MSFT) climbed 0.9%, Salesforce (CRM) rose 0.8%, and Apple (AAPL) gained 0.7%.
Shares of Honeywell (HON) fell 1.6% after it agreed to pay nearly $5 billion to acquire HVAC and refrigeration company Carrier’s security unit.
Consumer staples faltered. The sector lost 0.5% on Friday. Procter & Gamble (PG) slipped 0.9%, while value-oriented retailer Walmart (WMT) lost 1.1%. McDonald’s (MCD) lost 0.4%.
The S&P 500
Paramount Global (PARA) jumped 12.1% on reports that film producer David Ellison, the CEO of Skydance Media and son of Oracle founder Larry Ellison, and private equity firm RedBird Capital Partners may attempt to acquire a controlling stake in the company.
Carrier Global (CARR) shares rose 4.5% on the aforementioned transaction with Honeywell.
Qorvo Inc. (QRVO) gained 3.6% after Morgan Stanley upgraded the stock to overweight and raised its price target, citing a turnaround for the semiconductor industry.
Dollar General (DG) shares fell 3.9% after CEO Todd Vasos laid out a plan to revitalize the company’s sales and public image, including adding more workers to the front of stores, opening fewer new locations, and improving inventory management. Competitor Dollar Tree (DLTR) also fell 1.8%.
Pool Corp. (POOL) lost 2.6% after Deutsche Bank downgraded the stock, citing risks unreflected in its current valuation.
Crown Castle (CCI) fell 1.3% after the telecommunications real estate investment trust (REIT) said CEO Jay Brown would retire amid pressure from activist investor Elliott Management.
The Nasdaq 100
Shares of Warner Bros. Discovery (WBD) followed competitor Paramount, rising 6% to lead the index higher.
Lululemon (LULU) climbed 5.4% to a record high after reporting better-than-expected earnings on a nearly 20% increase in direct-to-consumer sales.
Micron (MU) rose 1.8% after striking a union deal for the construction of a $15 billion chip plant in Boise, Idaho. The government has said it will give preference to companies that use union labor when it doles out the $100 billion of dollars in subsidies appropriated under last year’s Chips Act.
Other chip stocks gained, led by Broadcom (AVGO), up 2.4%, and Nvidia (NVDA), up 2%.
Shares of Enphase Energy (ENPH) fell 3.9% after a regulatory filing revealed CEO Badri Kothandaraman had exercised 150,000 stock options worth nearly $16 million.
Paramount Global Shares Soar on Reports of a Possible Sale of the Media Giant
December 08, 2023 04:11 PM EST
Paramount Global (PARA) was the best-performing stock in the S&P 500 as reports swirled that the entertainment giant might be sold.
The reports from Deadline and Puck suggested that film producer David Ellison, CEO of Skydance Media, and private equity firm RedBird Capital Partners are considering acquiring the company.
Deadline explained that any effort to buy Paramount likely would require taking control of theater operator National Amusements, which holds 77% of Paramount’s Class A voting shares. Shari Redstone, who is president of National Amusements and non-executive chair of Paramount, is said to be open to selling Paramount if the price is right.
The stories sent shares of Paramount Global to their highest level since May and into positive territory for the year. The stock was up 13% in late trading Friday.
-Bill McColl
TradingView.
Honeywell Buys Carrier Security Unit for Nearly $5B to Boost Building Automation Products
December 08, 2023 03:05 PM EST
Honeywell (HON) agreed to pay $4.95 billion to buy Carrier’s (CARR) Global Access Solutions division in an all-cash deal to enhance Honeywell’s building automation capabilities.
Honeywell CEO Vimal Kapur said that adding Carrier’s automation products will give the firm “a leading security platform with forecasted annual revenue in excess of $1 billion.” The acquisition is expected to close by the end of the third quarter of next year.
Honeywell’s stock price was down 1.9% at $194 as of about 3 p.m. ET, while Carrier’s was up 4.1% at $55.07.
-Bill McColl
Move Over Magnificent 7—Crypto Stocks Came Out on Top in 2023
December 08, 2023 02:25 PM EST
Much has been said about the outsized gains this year of the “Magnificent 7,” a collection of widely held leading technology firms. But their gains on AI hype pale in comparison—at least in terms of investor returns—to the meteoric rise this year of just four crypto stocks.
Bitcoin mining and infrastructure company Riot Platforms Inc. (RIOT) has seen its shares skyrocket 364% in the year, while virtual currency exchange Coinbase Global’s (COIN) stock has climbed 325%. Blockchain ecosystem and crypto mining company Marathon Digital Holdings Inc. (MARA) has surged by 378%. MicroStrategy Inc. (MSTR), a cloud services and mobile software company that has invested heavily in Bitcoin in recent years, is up 306%.
Investopedia
The Magnificent 7 comprises some of the largest mega-cap tech firms: Apple Inc. (AAPL), Amazon.com Inc. (AMZN), Microsoft Corp. (MSFT), Meta Platforms Inc. (META), Google parent Alphabet Inc. (GOOGL), Tesla Inc. (TSLA), and Nvidia Corp. (NVDA).
Granted, these companies, with already massive valuations, have added far more in market value than their crypto peers this year. Nvidia alone has seen its market cap increase by $791 billion this year, while the four crypto stocks have added a comparatively modest $37 billion in value.
-Nathan Reiff
Midday Movers
December 08, 2023 01:04 PM EST
Paramount Global (PARA): Shares jumped more than 13% following a report that Skydance Media and RedBird Capital were attempting to acquire a controlling interest in the entertainment company via its controlling shareholder, National Amusements.
Lululemon Athletic (LULU): Shares of the athletic apparel retailer rose more than 5% to an all-time high after its earnings topped Wall Street estimates and CEO Calvin McDonald said he was “pleased” with the start of the holiday shopping season.
Boeing (BA): Shares rose 2% following reports that Chinese officials told the aircraft maker that it was welcome to deepen its ties with the Chinese market, raising hopes the country could soon lift a four-year ban on the sale of Boeing’s 737 Max jets following two fatal crashes.
Honeywell International Inc. (HON): Shares of the industrial conglomerate fell more than 1% after it said it would buy Carrier Global’s (CARR) security unit for nearly $5 billion.
Alphabet (GOOGL): Shares of the tech giant slipped 1% after jumping more than 5% yesterday following the unveiling of its new AI model, Gemini, a competitor to Microsoft-backed OpenAI’s GTP-4.
Lululemon Hits Record High Despite Soft Holiday Forecast
December 08, 2023 11:47 AM EST
Lululemon Athletica (LULU) gave a soft forecast for the key holiday shopping season, but the athletic wear retailer remained optimistic, and shares hit an all-time high Friday.
Lululemon said current-quarter earnings per share (EPS) would be between $4.85 and $4.93, while analysts were looking for $4.80 to $5.19. The company’s revenue outlook of $3.135 billion to $3.170 billion compared to estimates of $3.18 billion.
Even so, CEO Calvin McDonald was upbeat, saying Black Friday was the single biggest day in the firm’s history, and the company was “pleased with the trends we’ve seen at the start of the holiday season.”
In the third quarter, the company reported EPS of $2.53, more than anticipated, while revenue of $2.19 billion was basically in line with expectations.
After initially declining on the news, shares of Lululemon Athletica moved nearly 5% higher. They’re up more than 50% this year.
-Bill McColl
Consumer Sentiment Soars on Moderating Inflation Expectations
December 08, 2023 10:49 AM EST
The Michigan Consumer Sentiment Index jumped 13% month-over-month to 69.4 in December as near- and long-term inflation expectations improved.
Consumer expectations for inflation in the year ahead fell to 3.1%, their lowest since March 2021 and just shy of pre-pandemic levels. In the two years before the pandemic, one-year inflation expectations ranged from 2.3% to 3%. Long-run inflation expectations dropped to 2.8% from 3.2% in the month prior.
The report’s authors said their survey showed a “broad consensus of improved sentiment across ages, income, education, geography, and political identification.”
RH Stock Falls Victim to High Mortgage Rates
December 08, 2023 10:27 AM EST
Shares of RH (RH), the upscale furniture retailer formerly known as Restoration Hardware, tumbled 14% Friday morning after the company lowered its full-year sales and margin guidance as a deep freeze in the housing market spilled over into furniture sales.
The company reported an adjusted net loss of 42 cents a share for the third quarter after earning $4.26 per share in the same period last year. Revenue declined 14% to $751 million, and operating margins shrank 7.3% from 20.8% a year ago.
The company attributed the narrower margins to higher-than-expected expenses related to its $58 million acquisition of the New York guesthouse property it currently rents and its failed attempts to acquire a Miami Beach property.
But sales have been hit hard by decades-high mortgage rates that have brought the housing market to a standstill.
“With 82% of homeowners having mortgages below 5%, and 62% below 4%, we continue to expect the existing housing market to remain frozen until interest rates and/or home prices fall meaningfully,” the company said in its earnings release. Rates have retreated from their peak of about 8% in October, but remain well above the average existing homeowner’s rate.
That led the company to narrow its full-year sales guidance to a range of $3.06 billion to $3.08 billion from a prior estimate of between $3.04 billion and $3.1 billion. RH also dropped its forecast for full-year operating margin to a range of 13.6% to 14%, down from the prior quarter’s estimate of between 14.5% and 15.5%.
Stocks Making the Biggest Moves Premarket
December 08, 2023 09:19 AM EST
Gains:
Carrier Global Corp. (CARR): Shares of the industrial machinery company rose 5% after it said it would sell its security unit to Honeywell (HON) for $4.95 billion. Honeywell stock fell nearly 3%.
Advanced Micro Devices (AMD): Shares of the semiconductor company rose more than 1%, adding to yesterday’s nearly 10% gain on the release of its Instinct MI300 chip, which it says will compete with AI leader Nvidia’s (NVDA) offerings.
Losses:
RH (RH): Shares of the upscale furniture retailer sank more than 8% after it reported worse-than-expected sales and earnings in the third quarter, citing weakness in the housing market and higher expenses.
Docusign Inc. (DOCU): Shares of the e-signature software provider fell more than 2% despite its quarterly earnings and fourth-quarter sales guidance beating Wall Street estimates.
Lululemon Athletic Inc. (LULU): Shares of the athletic apparel retailer slipped 2% after its holiday-quarter sales guidance fell short of analyst estimates.
Stock Futures Tumble on Jobs Report
December 08, 2023 08:45 AM EST
Futures contracts connected to the Dow Jones Industrial Average were 0.3% lower in premarket trading Friday.
S&P 500 futures also lost 0.4%.
Nasdaq 100 futures fell 0.7%.
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