Dow Rallies Following Powell Remarks
14 hr 6 min ago
After falling early in the session, the Dow Jones Industrial Average rallied to finish higher by 0.7%, or about 247 points, as investors shook off the remarks of Fed Chair Jerome Powell that indicated interest rates could remain high.
For the week, the index ended down about 0.4%, the Dow’s second straight weekly decline.
Boeing (BA) rose 2.8% to recover some of yesterday’s losses on reports it would need to delay deliveries of some 737 Max jets.
Salesforce (CRM) moved up 2% after filings showed it is one of several big tech companies, including Nvidia (NVDA) backing artificial intelligence startup Hugging Face. Other tech stocks helped fuel the index’s rally, including Intel (INTC), which also jumped 2%, and Apple (AAPL), up 1.3%.
Johnson & Johnson (JNJ) shares gained 1.4%, making up for some losses earlier in the week following its share swap with spin-off Kenvue.
Nike (NKE) shares gained 1.2%, breaking an 11-day losing streak—the longest in the company’s history.
Walgreens Boots Alliance (WBA) dipped 0.2%, making it the worst performer of the Dow 30 stocks during a session in which only five components fell. JPMorgan Chase (JPM) and Amgen (AMGN) both slipped 0.1%.
-Terry Lane
Affirm Shares Soar on Higher-Than-Expected Forecast as Delinquencies Decline
14 hr 46 min ago
Affirm (AFRM) shares gained over 30% on Friday after the buy now, pay later provider (BNPL) provider said its revenue rose as delinquencies declined and gave a higher-than-expected forecast for the current quarter.
Affirm reported its net loss widened to $206 million or 69 cents a share for its fiscal fourth quarter, up from $186.4 million or 65 cents a share in the same period a year ago. However, the company’s revenue was up 22% from a year ago at $445.8 million, as its gross merchandise volume jumped 25% to $5.5 billion.
In its guidance for the current quarter, Affirm projected $430 million to $455 million in revenue, above estimates of $430 million.
Affirm said its results were boosted by a decline in delinquencies of more than 30 days, which dropped 30 basis points when compared with the previous quarter and the same period from last year, at a rate of 2.3%.
The earnings report from the BNPL provider comes amid concerns about the health of consumer spending in the face of higher interest rates, including whether they are able to pay back loans. Consumer credit card debt recently reached a record total of $1 trillion but Affirm said that its delinquencies declined in the quarter, dropping below seasonal trends.
-Terry Lane
Midday Market Movers
15 hr 41 min ago
Affirm Holdings Inc. (AFRM): Shares of the buy now, pay later company gained 30% after its second-quarter earnings and revenue beat analysts’ estimates.
Intuit Inc. (INTU): Shares of the financial management software provider gained more than 3% after it beat Wall Street estimates on revenue and earnings.
Gap Inc. (GPS): Shares of the apparel retailer gained 6% after it beat second-quarter earnings expectations despite reporting lower-than-expected sales.
Nordstrom Inc. (JWN): Shares of the department store fell 7% after it reported an 8% year-over-year drop in sales in the second quarter. Nordstrom beat earnings and revenue estimates for the quarter but warned of near-term demand challenges as shoppers tighten their purse strings.
Warner Bros. Discovery Inc. (WBD): Shares of the entertainment company fell more than 4% after it delayed the theatrical releases of three of its largest films of the year—“Dune: Part Two,” “Godzilla x Kong: The New Empire,” and “Lord of the Rings: The War of the Rohirrim”—due to the simultaneous actors and writers strikes.
Wells Fargo to Pay $35 Million to Settle Excessive Advisory Fees Charges
16 hr 21 min ago
Wells Fargo (WFC) agreed to pay a $35 million civil penalty to settle charges brought by the Securities and Exchange Commission (SEC) accusing the bank of overcharging certain investment advisory clients for years.
The SEC alleged that Wells Fargo offered clients reduced advisory fees, but that in certain cases employees entered incorrect fees into the bank’s billing system. The bank is also accused of failing to develop and implement policies for confirming the billing systems of acquired firms contained accurate information.
“Today’s enforcement action underscores the need for firms growing their businesses through acquisition to ensure that their growth does not come at the expense of client protection,” said the director of the SEC’s Enforcement Division, Gurbir S. Grewal.
Shares of Wells Fargo fell 1% Friday.
The Fed is Keeping Its Options Open For More Rate Hikes, Powell Says
17 hr 8 min ago
If you were looking to Federal Reserve Chair Jerome Powell for clues about whether the Fed will raise rates again at future meetings, his most recent speech probably left you in the dark.
“As is often the case, we are navigating by the stars under cloudy skies,” Powell said during a highly anticipated speech at an economics symposium in Jackson Hole, Wyoming. “At upcoming meetings, we will assess our progress based on the totality of the data and the evolving outlook and risks. Based on this assessment, we will proceed carefully as we decide whether to tighten further or, instead, to hold the policy rate constant and await further data.”
Powell’s speech emphasized the difficulty of the Fed’s fight against inflation and the ways it could go wrong. A major risk of the rate hikes is that the economy could slow down so much that there’s a recession and mass layoffs—a danger that Powell acknowledged in his speech.
After digesting Powell’s speech and other ambivalent remarks by Fed officials, the prospect of further rate hikes this year are basically a tossup in November and December, according to the CME Group’s FedWatch tool, which forecasts rate hikes based on fed futures trading data.
-Diccon Hyatt
UAW Members Authorize Possible Strikes
17 hr 59 min ago
Members of the United Auto Workers union voted in favor of possibly walking out on Ford (F), General Motors (GM), and Stellantis (STLA) next month if the automakers and workers can’t agree on a new contract.
The result authorizes UAW leader Shawn Fain to call a strike, but it doesn’t guarantee one. Negotiators could still reach a deal before Sept. 14, the day the current contract expires.
The automakers’ shares were mixed midday Friday, with Stellantis stock up 1% and Ford gaining 0.5%. Meanwhile, GM shares slipped 0.5%.
Nordstrom Shares Tumble After Reporting Sales Drop and Record Theft
19 hr 7 min ago
Nordstrom shares (JWN) fell over 10% in early trading on Friday after the retailer reported a drop in sales amid a broader decline in discretionary spending and executives warned about record levels of retail theft.
Nordstrom reported revenue of $3.77 billion for the second quarter, above expectations of $3.65 billion, and earnings per share of $0.84 compared to estimates of $0.44. However, sales were down 8.3% compared to the same period a year ago, and remained below pre-pandemic levels.
Nordstrom attributed the decline in part to the timing of its anniversary sale and closing stores in Canada. It also said a rise in losses related to theft impacted its results.
With Friday’s losses, shares of Nordstrom were down 6% year-to-date.
-Fatima Attarwala
YCharts
Ulta Beauty Stock Falls Despite Earnings Beat
20 hr 8 min ago
Shares of Ulta Beauty fell 2.5% Friday morning despite the cosmetics retailer topping Wall Street’s estimates for second-quarter earnings and raising its full-year revenue and earnings forecast.
Ulta reported earnings of $6.02 per share on sales of $2.5 billion, beating analysts’ earnings estimates of $5.85 a share.
“The beauty category has continued to deliver healthy growth, as consumers maintain their post-pandemic routines and expand their definition of beauty,” said CEO Dave Kimbell.
Beauty retail has proved resilient in the face of a slowdown in consumer spending as shoppers, whose pandemic savings are shrinking, pull back on discretionary purchases. That led Ulta to raise its full-year forecast for revenue and earnings.
The company now expects net sales of $11.05 billion to $11.15 billion, up from earlier estimates of $11 billion to $11.1 billion. Earnings are forecast at $25.10 to $25.60 a share, up from $24.70 to $25.40 a share.
Stocks Making the Biggest Moves Premarket
21 hr 13 min ago
Gainers:
- Affirm Holdings Inc. (AFRM): Shares of the buy now, pay later computer gained more than 7% after its second-quarter revenue and earnings came in above Wall Street’s estimates. Revenue grew 22% to $446 million.
- Workday Inc. (WDAY): Shares of the cloud-based enterprise management provider rose 4% after it reported solid growth of its top and bottom line in the second quarter. Management also raised the company’s full-year subscription revenue forecast.
- Netflix Inc. (NFLX): The streaming company’s shares climbed almost 2% after an upgrade from Loop Capital, which said it sees the stock climbing 20% from its current level of about $406.
Losers:
- Marvell Technology Inc. (MRVL): Shares of the semiconductor company lost 4% despite delivering slightly better-than-expected earnings and revenue for the second quarter.
- Hawaiian Electric Industries (HE): Shares of the Hawaiian utility fell 20% after Maui County sued the company, alleging its power lines caused the wildfires that devastated the island earlier this month.
- DigitalOcean Holdings (DOCN): The cloud services provider lost 6% after announcing it’s searching for a new CEO.
5 Things to Know Before Markets Open
21 hr 31 min ago
Here’s what investors need to know to start their day:
- Investors will closely follow the words of Federal Reserve Chair Jerome Powell when he speaks at 10:05 a.m. ET at the Jackson Hole Economic Symposium, which follows remarks from other Fed speakers yesterday where some suggested interest rates may be hiked further to curb inflation.
- Marvell Technology (MRVL) shares dropped almost 5% in pre-market trading after its earnings report mostly met analyst forecasts as the data storage and networking chipmaker showed growth in artificial intelligence, 5G, and automotive sales.
- Nordstrom (JWN) beat analyst estimates for its quarterly sales and earnings, but the retailer kept its previously issued full-year outlook steady, signaling concerns of a slowdown in the coming months.
- Affirm Holdings (AFRM) shares surged 8% in pre-market trading after the buy now, pay later company reported a 22% jump in fourth-quarter revenue as its share of credit overdue by 30 days or more declined by 0.3% to 2.3% in the quarter.
- Managers of firms that helped fund WeWork (WE) are exploring a bankruptcy plan for the company that could help it exit from expensive office leases after the company raised concerns earlier this month about its ability to stay in business.
-Terry Lane
Futures Inch Up Ahead of Powell’s Speech
22 hr 1 min ago
Futures contracts connected to the Dow Jones Industrial Average gained 0.4% in premarket trading Friday.
S&P 500 E-mini futures contracts were up 0.3%.
And Nasdaq 100 futures gained 0.2%.
