FINANCE

Stock market news live updates: S&P 500 posts worst one-week loss since March as virus concerns resurge

Published

4 years ago

October 30, 2020

Stocks fell sharply on Friday, bringing each of the three major indices to post steep weekly and monthly declines.

The S&P 500 posted a weekly decline of 5.6%, after a rally on Thursday did little to offset major drops earlier in the week and on Friday. This marked the index’s worst one-week slump since March, at the height of the pandemic. The Dow fell more than 6% for the week. The Nasdaq fared just slightly better, dropping 5.5% over last week. Each of the three major indices also posted monthly declines.

Shares of heavily weighted Big Tech companies dropped after leading the market higher during Thursday’s regular session. Though most reported third-quarter results that topped expectations, traders had set their expectations exceptionally high for these names following their strong run of outperformance against the broader market this year.

Facebook (FB) shares fell after the company reported a quarterly decline in users in the U.S. and Canada, despite posting a 12% jump in daily active users globally during the period and growing sales by a better-than-expected 22%. Advertising sales also picked back up at Twitter (TWTR), though the company reported weaker daily active user growth than expected following a surge in the preceding quarter. Alphabet (GOOGL) managed to reverse an advertising sales decline from the second quarter, and shares jumped following the results.

Elsewhere, Amazon (AMZN) also posted a major beat on third-quarter results as revenue grew 37% to more than $96 billion. Its guided toward holiday quarter sales of as much as $121 billion, though its profit guidance came in light as the company projected $4 billion in costs related to COVID-19, or double the amount the company guided toward for the third quarter. Apple (AAPL) posted record fiscal fourth-quarter Mac and services sales and topped estimates, but weak iPhone and China sales weighed on the stock in late trading.

Traders largely looked beyond a pair of much better than expected economic data reports from Thursday morning. Third-quarter U.S. gross domestic product rose by a record 33.1% on an annualized basis, and new weekly jobless claims improved by a greater than expected margin.

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4:04 p.m. ET: Stocks end the week, month lower as virus concerns resurge

Here’s where the three major indices settled at the end of equity trading on Friday:

S&P 500 (^GSPC): -40.08 points (-1.21%) to 3,270.03

Dow (^DJI): -157.51 points (-0.59%) to 26,501.60

Nasdaq (^IXIC): -274.00 points (-2.45%) to 10,911.59

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1:58 p.m. ET: Cruise stocks jump after CDC lifts no-sail order

The Centers for Disease Control and Prevention said in a new announcement Friday that it will allow U.S. cruise ships to begin a phased approach to resume sailing in U.S. waters starting this Sunday.

“After expiration of CDC’s No Sail Order (NSO) on October 31, 2020, CDC will take a phased approach to resuming cruise ship passenger operations in U.S. waters,” according to the CDC’s newly published “Framework for Conditional Sailing Order for Cruise Ships.”

Cruise stocks including Carnival Corporation (CCL), Norwegian Cruise Line Holdings (NCLH) and Royal Caribbean (RCL) spiked immediately following the announcement.

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1:34 p.m. ET: Stocks hold onto losses as session continues

The three major indices remained sharply lower in afternoon trading on Friday as tech stocks continued to lead to the downside.

Here were the main moves in markets, as of 1:34. p.m. ET:

S&P 500 (^GSPC): -61.76 points (-1.87%) to 3,248.35

Dow (^DJI): -385.49 points (-1.45%) to 26,273.62

Nasdaq (^IXIC): -320.45 points (-2.87%) to 10,864.52

Crude (CL=F): -$0.83 (-2.29%) to $35.34 a barrel

Gold (GC=F): +$12.00 (+0.64%) to $1,880.00 per ounce

10-year Treasury (^TNX): +1.7 bps to yield 0.853%

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11:07 a.m. ET: Fed lowers minimum loan size for Main Street Lending Program to try and attract more borrowers

The Federal Reserve on Friday announced it lowered the minimum loan size for the Main Street Lending Program to $100,000 from $250,000 previously, and that “fees have been adjusted to encourage the provision of these smaller loans,” according to the Fed’s statement.

Uptake for the Main Street Lending Program has been weak so far, with the Fed having offered just 400 loans totaling $3.7 billion as of Friday, out of a total $600 billion capacity. As many pundits have pointed out, many small- and mid-sized businesses have stayed on the sidelines from taking on more loans that they would eventually need to pay back during the pandemic.

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10:33 a.m. ET: Stock selloff picks up steam; Dow sheds 350+ points or 1.4%

The three major indices added to losses mid-morning on Friday. The Dow shed more than 350 points, or 1.4%, as shares of Apple slumped more than 5% after reporting earnings results after market close on Thursday. Big Tech stocks as a cohort were under pressure on Friday, leading the Nasdaq to underperform. The tech-heavy index fell more than 2% intraday, while the S&P 500 fell about 1.5%.

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10:01 a.m. ET: University of Michigan sentiment index ticks up to 81.8 from 81.2 in final print

Consumer sentiment ticked up at the end of October, with the University of Michigan’s final monthly index rising to 81.8 from 81.2 in the advance print. In September, the index had been at 80.4.

A subindex tracking consumer expectations for the future rose to 79.2 from 75.6 in September, while an index tracking consumers’ assessments of current economic conditions edged lower to 85.9 from 87.8.

“Consumer sentiment remained virtually unchanged from the first half of October (+0.6 points) and was insignificantly different from last month’s figure (+1.4 points). Fear and loathing produced this false sense of stability. Fears were generated by rising COVID infection and death rates, and loathing was generated by the hyper-partisanship that has driven the election to ideological extremes,” Richard Curtin, Surveys of Consumers chief economist, said in a statement Friday. “Moreover, the impact of the COVID virus and the extremes of hyper-partisanship will continue long past next week’s election, with the potential to permanently alter the economic and political landscape.”

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9:43 a.m. ET: Chevron surprises with a quarterly profit, Exxon Mobil warns of write downs

Chevron (CVX) on Friday posted a surprise third-quarter profit, with aggressive cost-cutting helping the oil major eke out earnings despite a steep virus-related drop in crude oil demand. Adjusted earnings of 11 cents per share were much better than the adjusted loss of 27 cents per share anticipated. The company’s revenue, however, was still down 26% over last year to just under $27 billion.

Still, CEO Mike Wirth highlighted that, ““The world’s economy continues to operate below pre-pandemic levels, impacting demand for our products which are closely linked to economic activity.”

“We remain focused on what we can control – safe operations, capital discipline and cost management,” Wirth added “Compared to last year’s third quarter, organic capital expenditures and operating expenses were down 48% and 12%, respectively.”

Exxon Mobil (XOM), meanwhile, posted a third-quarter loss that was better than feared, but said it may take write downs of between $25-$30 billion on long-lived assets including natural gas fields due to weakened energy demand during the pandemic. The company’s quarterly loss came out to 15 cents per share, versus the loss of 25 cents per share loss consensus analysts were anticipating.

Exxon’s earnings also come just following the company’s announcement Thursday that it planned to cut about 14,000 positions across contractors and employees, or about 15% of its global workforce. The cuts are expected to impact about 1,900 positions in the U.S.

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9:31 a.m. ET: Stocks open lower as indices head for weekly losses

Here were the main moves in markets, as of 9:31 a.m. ET:

S&P 500 (^GSPC): -15.7 points (-0.47%) to 3,294.41

Dow (^DJI): -93.87 points (-0.35%) to 26,565.24

Nasdaq (^IXIC): -92.54 points (-0.74%) to 11,102.41

Crude (CL=F): -$0.37 (-1.02%) to $35.80 a barrel

Gold (GC=F): +$20.90 (+1.12%) to $1,888.90 per ounce

10-year Treasury (^TNX): +0.2 bps to yield 0.838%

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9:13 a.m. ET: Under Armour shares surge after company shows signs of sales stabilization, announces MyFitnessPal sale

Under Armour (UAA) shares jumped in pre-market trading after the company posted third-quarter sales that were flat over last year, after posting two straight quarters of steep declines previously. The company also raised its fourth-quarter guidance to see revenue down at a low-teen percentage rate, versus the previous guidance for a sales drop of as much as 25%.

Sales for the quarter ended in September were $1.4 billion, or better than the $1.2 billion expected. Online ordering was the major sales driver, with direct-to-consumer revenue up 17% to $540 million and helping offset a decline in wholesale.

The company also announced it agreed to see its MyFitnessPal fitness-tracking app to the private equity firm Francisco Partners for $345 million. Under Armour purchased the platform about 5 years ago.

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8:34 a.m. ET: Personal income, spending rise more than expected in September

Americans’ personal income rose by a greater than expected 0.9% in September following a 2.5% drop during the previous month, according to the Bureau of Economic Analysis’ Friday report. A pick-up in employment and augmented jobless payments President Donald Trump authorized in August helped offset a decline in other federal benefits relating to the pandemic. Consensus economists were looking for income to rise by 0.4% for the month, according to Bloomberg data.

Personal spending also increased more than expected with a 1.4% rise in September. Consensus economists expected the spending rate to remain unchanged month over month at 1.0%.

The personal savings rate declined for a fifth straight month, but at 14.3%, remained above the 8.3% rate in February before the pandemic.

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7:17 a.m. ET Friday: Futures point to a lower open as stocks look to close out a week of deep losses

Here were the main moves in markets, as of 7:17 a.m. ET Friday:

S&P 500 futures (ES=F): 3,284.00, down 18.25 points or 0.55%

Dow futures (YM=F): 26,404.00, down 153 points or 0.58%

Nasdaq futures (NQ=F): 11,229.25, down 113.5 points or 1.00%

Crude (CL=F): +$0.11 (+0.30%) to $36.28 a barrel

Gold (GC=F): +$6.80 (+0.36%) to $1,874.80 per ounce

10-year Treasury (^TNX): -0.9 bps to yield 0.827%

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6:04 p.m. ET Thursday: Stock futures open lower

Here were the main moves in markets, as of 6:04 p.m. ET:

S&P 500 futures (ES=F): 3,271.5, down 30.75 points or 0.93%

Dow futures (YM=F): 26,330.00, down 227 points or 0.85%

Nasdaq futures (NQ=F): 11,216.25, down 126.5 points or 1.12%

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FINANCE

German central bank issues warning on economy

Published

1 month ago

September 20, 2024

The San Francisco Telegraph

Germany’s GDP could stagnate or even decline in the third quarter, Bundesbank has warned

The German economy has been shrinking over the past two years and will remain stagnant for the rest of the year as it continues to grapple with economic malaise, Bloomberg reported on Friday.

According to a survey conducted by the outlet, the EU’s top economy has been stalling in the three months through September, marking a deeper-than-expected decline.

Economists have already started downgrading their forecasts for this year, with some now seeing protracted stagnation or even another downturn.

“While we expect the market to see a mild recovery at the end of 2024 and in 2025, much of it will be cyclical, with downside risks remaining acute,” Martin Belchev, an analyst at FrontierView told Bloomberg.

He warned that the faltering automotive sector will further exacerbate downward pressures on growth as the top four German carmakers have seen double-digit declines.
Thousands of EU automotive jobs at risk – Bloomberg

The country’s central bank said on Thursday in its monthly report that the German economy may already be in recession. According to the Bundesbank, gross domestic product (GDP) “could stagnate or decline slightly again” in the third quarter, after a 0.1% contraction in the second quarter.

Economic sentiment in the country has suffered due to weak industrial activity, Budensbank President Joachim Nagel said on Wednesday.

“Stagnation might be more or less on the cards for full-year 2024 as well if the latest forecasts by economic research institutes are anything to go by,” he said.

German industry is struggling amid weak demand in key export markets, shortages of qualified workers, tighter monetary policy, the protracted fallout from the energy crisis, and growing competition from China, Bloomberg noted.

The Eurozone’s largest economy has been falling behind its peers over the past years, largely due to a prolonged manufacturing downturn. Germany was the only Group of Seven economy to contract in 2023.

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FINANCE

Thousands of EU automotive jobs at risk

Published

2 months ago

September 11, 2024

The San Francisco Telegraph

A third of the region’s major car plants are currently operating at half capacity or less, according to a report

European auto makers are facing more plant closures as they struggle to keep up with the electric vehicle (EV) transition amid slowing demand and growing competition, Bloomberg reported on Wednesday.

According to the outlet’s analysis of data from Just Auto, nearly a third of the major passenger-car plants from the five largest manufacturers – BMW, Mercedes-Benz, Stellantis, Renault and VW – were underutilized last year. The auto giants were producing fewer than half the vehicles they have the capacity to make, the figures showed.

Annual sales in Europe are reportedly around 3 million cars below pre-pandemic levels, leaving factories unfilled and putting thousands of jobs at risk.

The report pointed out that sites shutting down would add to concerns that the region is facing a protracted downturn after falling behind key competitors, the US and China.

“More carmakers are fighting for pieces of a smaller pie,” Matthias Schmidt, an independent auto analyst based near Hamburg, told Bloomberg. “Some production plants definitely will have to go,” he warned.

VW announced last week it was considering closing factories in Germany for the first time in its near nine-decade history. The automaker said it was struggling with the transition away from fossil fuels.

BMW has warned that tepid demand in China poses a further threat to sales and profits.

Volkswagen planning major cutbacks in Germany

The threat of factory closures in Europe has worsened in recent years amid skyrocketing energy prices and worker shortages that have driven up labor costs.

“Failure to turn things around would deal a blow to the region’s economy,” Bloomberg wrote, pointing out that the auto industry accounts for over 7% of the EU’s GDP and more than 13 million jobs.

Car-assembly plants often are “anchors of a community,” securing work at countless nearby businesses, from suppliers of engine parts and trucking companies to the local bakery delivering to the staff cafeteria, the report said.

Closing plants is usually “the last resort” in a region where unions and politicians have a strong hold over corporate decision-making, concluded Bloomberg.

There’s “massive consolidation pressure” for auto plants in Europe, Fabian Brandt, an industry expert for consultancy Oliver Wyman, said. “Inefficient factories will be evaluated, and there will be other kinds of plants that shut down,” he claimed.

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FINANCE

Global debt balloons to record highs

Published

1 year ago

May 25, 2023

The San Francisco Telegraph

It’s now $45 trillion higher than its pre-pandemic level and is expected to continue growing rapidly, a top trade body has warned

The global debt pile increased by $8.3 trillion in the first quarter of the year to a near-record high of $305 trillion amid an aggressive tightening of monetary policy by central banks, the Institute of International Finance (IIF) has revealed.

According to its Global Debt Monitor report on Wednesday, the reading is the highest since the first quarter of last year and the second-highest quarterly reading ever.

The IIF warned that the combination of such high debt levels and rising interest rates had pushed up the cost of servicing that debt, prompting concerns about leverage in the financial system.

“With financial conditions at their most restrictive levels since the 2008-09 financial crisis, a credit crunch would prompt higher default rates and result in more ‘zombie firms’ – already approaching an estimated 14% of US-listed firms,” the IIF said.

Despite concerns over a potential credit crunch following recent turmoil in the banking sectors of the United States and Switzerland, government borrowing needs to remain elevated, the finance industry body stressed.

According to the report, aging populations and rising healthcare costs continue putting strain on government balance sheets, while “heightened geopolitical tensions are also expected to drive further increases in national defense spending over the medium term,” which would potentially affect the credit profile of both governments and corporate borrowers.

“If this trend continues, it will have significant implications for international debt markets, particularly if interest rates remain higher for longer,” the IIF cautioned.

The report showed that total debt in emerging markets hit a new record high of more than $100 trillion, around 250% of GDP, up from $75 trillion in 2019. China, Mexico, Brazil, India and Türkiye were the biggest upward contributors, according to the IIF.

As for the developed markets, Japan, the US, France and the UK posted the sharpest increases over the quarter, it said.

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