Tag: Wall Street

New record for S&P 500, Dow Jones; Nasdaq jumps 3% fueled by Nvidia

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The S&P 500 surged to new highs on Thursday led by a blowout quarter from Nvidia, which propelled the broader market and the entire tech sector.

The benchmark index gained 2.11%, its best day since January 2023 to close at 5,087.03. UBS has set the highest target on the S&P 500 for the year, at 5,400.

Nvidia’s results also led the Nasdaq higher, with the index advancing over 3% overnight, marking its best single day gain since February 2023. The Nasdaq is just 15 points away from its own record high.

The Dow Jones crossed the 39,000 mark for the first time, gaining 1.2% overnight.

Nvidia’s shares surged 16% overnight, adding $277 billion to its market value in a single day, surpassing Meta’s record of $197 billion just 20 days prior. Other tech stocks also rallied in lieu of Nvidia’s performance. Meta and Amazon’s shares gained close to 4% each, while Microsoft and Netflix rose 2%.

Phillip Colmar of MRB Partners noted equities are benefiting from earnings growth and firmer economic activity than was expected. He said, however, that stocks could still drop if economic growth eventually becomes priced into higher bond yields.

“The mega cap U.S. stocks, or the ‘Magnificent 7,’ they are frothy. They have very elevated earnings expectations and very elevated valuations that doesn’t give any room for disappointment,” Colmar said. He noted that the Nvidia-fueled market rally still carries “inherent risk” to it, given the cyclical nature of semiconductor stocks.

(With Inputs From Agencies.)

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Goldman Sachs lifts S&P 500 target to 5,200 on profit expansion

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Just months after setting a 2024 target for the S&P 500 Index, Goldman Sachs Group Inc. strategists have boosted their forecast for a second time as the stock market eclipsed the significant 5,000 milestone this month.

“Increased profit estimates are the driver of the revision,” a team led by David Kostin wrote in a note to clients dated Friday.

Kostin now sees the S&P 500 rising to 5,200 by the end of this year, raising his forecast by about 2% from the 5,100 level he predicted in mid-December. The new target implies a 3.9% jump from Friday’s close.

In November, he initially projected the S&P 500 would hit 4,700 by the end of this year.

Goldman’s 5,200 price target for the S&P 500 in 2024 is now among the highest on Wall Street, joining the ranks of Wall Street bulls including Tom Lee of Fundstrat Global Advisors and Oppenheimer Asset Management chief strategist John Stoltzfus, who both hold a similar year-end outlook.

The firm’s strategists upgraded their earnings-per-share forecast for the year to $241 and $256 in 2025, from $237 and $250 previously. That reflects their expectation for “stronger economic growth and higher profits” for the information technology and communication-services sectors, which contain five of the so-called Magnificent Seven stocks including Apple Inc., Microsoft Corp., Nvidia Corp., Alphabet Inc. and Meta Platforms Inc. The new estimate sits above the median top-down strategist forecast of $235.

The firm’s strategists expect valuation multiples for both the S&P 500 and its equal-weight brethren to remain close to current levels — at 20 and 16 times earnings, respectively, “making earnings growth the primary driver of remaining upside this year.”

The S&P 500 Index has climbed 4.9% this year, fueled by expectations of a dovish policy shift by the Federal Reserve and as artificial intelligence optimism lifted technology stocks. Profits in the 500-member gauge are expected to grow 8.8% in 2024 from a year ago, data compiled by Bloomberg Intelligence show.

The S&P 500 topped its all-time peak for the first time in two years in January, while the Nasdaq 100 hit its first record in a similar span back in December after the Fed signaled that its aggressive rate hikes to contain inflation are likely over and cuts are on the table for 2024.

Wall Street peers like those at Bank of America Corp. have signaled their willingness to potentially raise their year-end targets as well on the idea that investors aren’t optimistic enough. The median S&P 500 target by nearly a dozen equity strategists tracked by Bloomberg currently sits at 4,950 through mid January.

“The biggest risk to the S&P 500 in the near term is upside,” Savita Subramanian of Bank of America said on Bloomberg TV earlier this month. “Our target of 5,000 is probably too low in the near term.”

Even Morgan Stanley’s Michael Wilson — among the most prominent bearish voices on Wall Street — is now expecting gains in the US equity market to broaden into less loved corners than the big tech companies that have dominated the rally so far. His 2024 target remains 4,500, implying a roughly 10% drop from Friday’s close.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

S&P 500 closes five points away from 5,000 after making a high of 4,999.85

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The historic rally in US stocks continued to power ahead, with the S&P 500 closing within a striking distance of 5,000.

Gains on Wednesday were fueled by a renewed surge in big tech and a strong sale of 10-year Treasuries that dimmed supply concerns. While bonds barely budged, equities extended their bull run on prospects that a solid economy will continue fueling corporate profits. In late trading, Walt Disney Co. and Arm Holdings Plc jumped on upbeat outlooks.

Traders shrugged off concerns about lofty valuations, February’s weak seasonality and cautious commentary from Federal Reserve officials — with stocks hitting fresh records. That positive tone in equities continued to prevail after the US government sold a record $42 billion of 10-year Treasuries at a lower-than-anticipated yield.

“The market continues to climb the wall of worry, including shifting Fed expectations, geopolitical tension, and overbought market conditions,” said Mark Hackett at Nationwide. “We are entering a sluggish seasonal period, but the market has strong momentum.”

February has the reputation of being a “digestion month” for the S&P 500, according to Sam Stovall at CFRA. However, when both January and February registered gains, the gauge saw a positive full-year total return 100% of the time, rising an average of 24%.

“Even though past performance is no guarantee of future results, this, along with other early-year indicators — such as posting all-time highs in January and February — point to an overwhelming probability of a good year following a great one,” Stovall said. “Brace for heightened volatility, however.”

Defying concerns about narrow market breadth, the “Magnificent Seven” technology companies — Alphabet Inc., Amazon.com Inc., Apple Inc., Meta Platforms Inc., Microsoft Corp., Nvidia Corp. and Tesla Inc. — continued to power gains this month.

Bets on a soft landing pushed US stocks to their first record in two years in January — marking a crucial milestone in the equity-market resurgence.

“Our base case is still for a soft landing where growth slows throughout the year, but remains healthy overall, while inflation does not prove to be overly sticky,” said Solita Marcelli at UBS Global Wealth Management. “And we do believe this environment will allow the Federal Reserve to start cutting rates by May, and by 100 basis points through year-end.”

Following the steps of all major US equity benchmarks, the MSCI World Index of developed-market shares also rose to a record.

Resilient economic growth in the US and an expected rebound in Europe are likely to support equities — even as some parts of the stock market look “frothy,” according to Barclays strategists led by Emmanuel Cau.

While one of the world’s largest exchange-traded funds sits at a crucial inflection point following a torrid rally since late October, further gains may be in store in the coming weeks. The Invesco QQQ Trust Series 1 (QQQ), which that tracks the Nasdaq 100, is trading near key resistance levels from three years ago relative to the broader SPDR S&P 500 ETF, better known by its ticker SPY.

If resistance from February 2021 is decisively pierced, the QQQ/SPY ratio is poised to rally more from here, with bullish confirmation for QQQ on absolute basis climbing to a new high, according to Anthony Feld at Bloomberg Intelligence.

Also on Wall Street’s radar on Wednesday was a raft of central bank speakers — all showing no rush to cut rates as already signaled by Fed Chair Jerome Powell.

At $42 billion, the 10-year Treasury sale eclipsed the $41 billion high-water mark reached in November 2020. With the latest changes to Treasury auction sizes announced last week, three of its seven notes and bonds, including the two- and five-year, are scheduled to hit record sizes in the February-to-April quarter.

The sale was one of three big tests for the market this week. Tuesday’s $54 billion auction of three-year notes also drew a lower yield than the one that had been predicted by trading at the bidding deadline, a positive sign. The US Treasury will complete its quarterly debt refunding Thursday with the sale of $25 billion of 30-year bonds.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

S&P 500 falls most in five months, Nasdaq slumps 2% post Fed decision

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Stocks saw their biggest decline on a Federal Reserve day since last March after Jerome Powell said officials want to keep their options open instead of rushing to cut interest rates.

Speaking after the Fed decision, Powell said he doesn’t think it’s likely the central bank will ease policy in March 2024. In a sign that officials are not in a hurry to lower rates, the central bank also said it “does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2%.”

“If stock bulls expected a rate cut in March, Powell seems to have closed the door on that,” said Oscar Munoz at TD Securities.

The S&P 500 fell 1.6%, the most since September. Microsoft Corp. and Alphabet Inc. slumped after disappointing investors betting that an artificial-intelligence bonanza would quickly fuel results. After the close, Qualcomm Inc. warned that some customers are still working through gluts of chip inventory even as the industry begins to recover.

Treasuries rose as fresh concerns about regional lenders added to economic worries after New York Community Bancorp’s surprise loss.

Data Wednesday showed a broad gauge of US labor costs cooled by more than forecast in a fresh sign of easing inflation pressures that give Fed officials room to cut interest rates this year. A separate report from the ADP Research Institute showed companies added a smaller-than-expected 107,000 jobs in January, and worker pay growth slowed.

The market has been too quick to dismiss the threat posed by inflation after a “miraculous” decline toward central bank targets, said Greg Peters at PGIM Fixed Income. He’s worried that the hardest part of the fight against inflation is still ahead, implying plenty more market volatility and a potential wake-up call for bondholders betting on deep interest-rate cuts this year.

Despite Wednesday’s losses, the S&P 500 capped its third straight monthly advance.

As goes January, so goes the year. That’s the theory of a phenomenon known as the “January Barometer” — Wall Street folklore positing that if stocks rise in January, they’ll be poised to finish the year higher, and vice versa. Since 1938, the January Barometer has been right about 74% of the time, with the next 11 months higher 67% of the time, according to the Stock Trader’s Almanac.

One of Wall Street’s most prominent bears is now expecting gains in the US equity market to broaden into less loved corners than the big tech companies that have dominated the rally so far.

Morgan Stanley’s Mike Wilson, who stuck with his prediction of a stock market decline last year while the S&P 500 Index surged 24%, sees opportunities in names outside the so-called Magnificent 7 companies that have powered equity gains through much of 2023. He’s urging investors to buy high-quality, growth names that can generate pricing power.

“In the stock world, I think once again, it’s going to be idiosyncratic — I don’t think it’s going to be as narrow as last year,” Wilson said Tuesday afternoon at the iConnections Global Alts conference in Miami Beach. “The big index is full, it’s priced. For all intents and purposes, the value is not there. The value is underneath the market.”

Meantime, the US Treasury boosted the size of its quarterly issuance of longer-term debt for a third straight time, and suggested that no more increases are likely until next year. Relief from further boosts to auction sizes for longer-term securities may help support demand for Treasuries. Investors for several months now have been particularly sensitive to news on the overall supply of federal debt, at a time when the Fed has been steadily shrinking its own holdings of US securities.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

S&P 500 tops 4,900, closes at a fresh record as yields fall on treasury news

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Wall Street’s busy week kicked off with gains in both stocks and bonds, with the Treasury surprising several traders after cutting its quarterly borrowing estimate to $760 billion.

The news came a few days before the Treasury’s quarterly refunding announcement and drew investors’ attention amid all the concern about a widening budget deficit. Treasury yields fell, lifting the tech-heavy Nasdaq 100 up 1% ahead of results from five megacaps that have a combined market value of more than $10 trillion. Aside from the deluge of earnings this week, investors are also awaiting the Federal Reserve’s rate decision and a raft of data from consumer confidence to jobs.

“This week could be key,” said Chris Larkin at E*Trade from Morgan Stanley. “If the market is going to sustain its latest breakout, it may need to avoid earnings disappointments from this week’s big-tech lineup, get encouraging news from the Fed on interest rates, and see jobs numbers that are solid, but not too hot.”

The S&P 500 topped 4,900, with Tesla Inc. leading gains in megacaps. Amazon.com Inc. abandoned its planned $1.4 billion acquisition of iRobot Corp., sinking shares of the Roomba maker. Treasury 10-year yields dropped seven basis points to 4.07%. Oil fell after last week’s rally pushed futures into overbought territory. At the same time, ample crude supplies outweighed military escalation in the Middle East.

This week also marks the busiest this season for earnings, with results from Microsoft Corp., Alphabet Inc., Apple Inc., Amazon.com Inc. and Meta Platforms Inc. As most of the megacaps remain in record territory, there are concerns that investors are over- exposed to just a handful of stocks, which could open the door for some pain if quarterly results underwhelm.

The next few days will be crucial to determine whether stock valuations — particularly those of megacap US technology companies — are sustainable given that investors are pricing in significant earnings growth expectations in anticipation of rate cuts coming sooner than Fed officials project, according to JPMorgan Chase & Co.’s Marko Kolanovic.

“The 800-pound gorillas all report this week,” said Paul Nolte at Murphy & Sylvest Wealth Management. “Expect to see some market volatility around those earnings. Combined with a Fed meeting, this week could be a wild ride as we head into February.”

After a bit of a rocky start to the year, the S&P 500 went on to cap a third straight weekly advance — and is now up almost 20% since late October.

In the week through January 23, a ratio of bulls to bears identified in an Investors Intelligence survey of newsletter writers was hovering at the highest since 2021, when stocks neared a prior peak before the 2022 bear market, Yardeni Research analysis shows. Another signal of elevated bullishness was evident in a weekly survey of retail investors by the American Association of Individual Investors.

Dan Wantrobski at Janney Montgomery Scott is on the watch for further “profit-taking” or “consolidation” in leadership areas — which remain overbought on a short-term basis, according to him.

Going into this week’s two-day Fed policy meeting, investors are assigning roughly even odds to the prospect that the central bank will start lowering borrowing costs at its next decision in March.

That makes Fed Chair Jerome Powell’s press conference, and any signal he may or may not choose to send, of critical importance. It all comes down to how officials have been reading the recent spate of economic data. On one hand, inflation numbers continue to surprise to the downside. On the other, consumer spending continues to be surprisingly robust.

“The Fed could justifiably signal a March cut,” said Robert Teeter at Silvercrest Asset Management. “Nonetheless, we expect the Fed to back away from taking action in March, while simultaneously laying the groundwork for future cuts predicated on the removal of excessively restrictive rates.”

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Deutsche Bank’s global CIO believes US stocks ripe for a 10% drop

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The US stock market may suffer a correction in coming months as the economy slows, according to Deutsche Bank AG.

The world’s largest economy may post 0.8% annual growth this year, down from a forecast of 2.3% for 2023, said Christian Nolting, Deutsche Bank’s global chief investment officer. As that deceleration seeps into the stock market, a drop of 5% to 10% from current levels is likely to occur in the near term, he said.

“There’s literally no discussion about recession in the US at all,” Nolting said in an interview in Singapore. “There’s a reality check coming this year” for equities.

US stocks haven’t shown many signs of a slowdown lately. The S&P 500 and Nasdaq 100 both closed at all-time highs on Tuesday. Equity investors have largely shrugged off caution by Federal Reserve officials that their expectations of interest-rate cuts are too premature and confident.

Swap contracts tied to the Fed’s meetings at the moment price in as many as six cuts for 2024, with the first reduction projected in May. Nolting — who correctly predicted no cuts at all by the Fed last year — expects to see only three.

Deutsche Bank isn’t alone in questioning the endurance of the US stock market rally. Citigroup Inc. warns that Nasdaq 100 futures positioning is near the highest in three years, with investors appearing to favor growth stocks into the earnings season.

“Profit levels, in particular for Nasdaq, are the growing concern, with positioning and profits extended,” a team of Citi quantitative strategists led by Chris Montagu wrote in a note. “The average long position is near 5% in profit, elevating the risk of profit-taking unwinds and creating a potential headwind for a continued rally in the near term.”

Still, there are plenty of believers in the rally’s staying power. Options traders have been betting on further gains by the S&P 500. Strategists tracked by Bloomberg have a median forecast of 4,950 for year-end, implying about a 2% advance from current levels.

Investors will get more clues as to the strength of US economy with the fourth-quarter gross-domestic-product data due on Thursday and the Fed’s preferred gauge of inflation on Friday.

Deutsche Bank, meanwhile, forecasts the stock-market slowdown will hit after the current earnings season ends — but sees it bringing a potentially useful entry point as well.

“The good news for us is that we think even if there’s a recession in the US, it’s a small or short one,” Nolting said. “If there’s volatility coming up in the market, that’s an opportunity then to buy the market for us.”

On China, where shares have rallied this week as authorities announced new support measures, Nolting is taking a wait-and-see approach.

“To really add to the portfolios again, I want to see flows into China,” he said. “Just being cheap is not a reason for a market to perform.”

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

US stocks close at a new record high as inflation expectations hit the lowest in over 3 years

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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S&P 500, a benchmark index for US stocks, closed at an all-time high on Friday (January 19) after economic data stoked hopes that there’s room for the US Federal Reserve to cut interest rates in 2024.

Inflation expectations in the US for the year ahead fell to 2.9%, the lowest since December 2020. The yield on the 10-year benchmark bonds in the US slipped to 4.13%.

Yields on the 10-year bond drop when investor confidence is high, and when investor confidence drops, the bond prices rise, and yields fall.

The tech index gained 2.35% on Friday, and more than 4% for the week, making it the S&P 500′s best-performing sector for the week.

Nasdaq, another benchmark index, which has a big concentration of tech stocks like Apple, Amazon and Microsoft,  is still 4% below its all-time high.

CME Group data indicates that traders on Wall Street expect less than a 50% chance of a rate cut by the US Federal Reserve in March. and see improved chances of of five rate cuts this year by the American central bank.

Shares of Meta hit a new record high on Friday, adding to the 200% rally in the stock last year. The stock has gained 3.59% in value, adding over $3 billion to investor wealth, just in the last five trading days.

Meta investors are excited with founder Mark Zuckerberg’s revelation that the tech giant will have 350,000 Nvidia’s H100 graphics cards by the end of the year, reinforcing the confidence among investors that the company’s investing big money to further its ambitious projects in artificial intelligence.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Nasdaq 100 hits record high in tech-fueled rebound

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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A rally in some of the world’s largest technology companies fueled a rebound in stocks, with traders also weighing the latest economic data and Fedspeak for clues on the US central bank’s next steps.

After a back-to-back slide, the S&P 500 rose as bond-market volatility abated. The Nasdaq 100 closed at an all-time high as Apple Inc. climbed on an analyst upgrade and Taiwan Semiconductor Manufacturing Co.’s outlook lifted chipmakers on hopes for a global tech recovery in 2024.

Stock traders were unfazed by data underscoring labor-market strength at a time when Fed officials are looking for signs of a slowdown as they contemplate cutting rates. Fed Bank of Atlanta President Raphael Bostic urged policymakers to proceed cautiously given the potential impacts of unpredictable events from elections to global conflicts. His Philadelphia counterpart Patrick Harker said he expects inflation to keep ebbing toward the target.

“Given the underlying strength of the US economy, it’s difficult to get too bearish at this point,” said Chris Zaccarelli at Independent Advisor Alliance. “The pervasive pessimism and doubt about the stock market and economy is a contrarian signal and one of the best reasons to push against the crowd. Once the last skeptic has been converted, the market will be again vulnerable to a large shock, but we aren’t at that point yet.”

The S&P 500 closed around 4,780, while the Nasdaq 100 added 1.5%. A gauge of chipmakers gained almost 3.5%. Treasury two-year yields remained around 4.35%. Oil topped $74 a barrel. Bitcoin slid below $41,000.

The rebound in stocks suggests things are calmer, but that’s not to say conditions will remain that way, according to Fawad Razaqzada at City Index and Forex.com. He cited a growing perception that big central banks might not lower rates as much or as soon as the market thought they would.

“There’s clearly a desperate desire to cling on to the optimism that enabled such a strong end to the year, but unlike in that period, the data isn’t really playing ball,” said Craig Erlam at Oanda. “The releases we’ve seen so far this month have been fine and in the main, perfectly in keeping with the expectations people had coming into 2024. But is that enough?”

Meantime, Blackstone Inc. Chief Executive Officer Steve Schwarzman said he expects the Fed to lower rates and sees “animal spirits” returning to the markets as more investors make that bet too. The Fed’s timing on rate declines won’t be clear, creating a “baffling effect” among investors, he told Bloomberg Television on the sidelines of the World Economic Forum.

Coming off its best winning streak in two decades, the S&P 500 has run into a roadblock in 2024, with its all-time closing record set two years ago remaining elusive. But a technical gauge that measures the momentum to buy or sell stocks signals that bulls are still stepping in to snap up shares.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Boeing stock sinks on concerns Max blowout will slow deliveries

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Boeing Co. shares extended their 2024 rout after analysts and a key customer voiced concerns that scrutiny of planemaker’s manufacturing since a Jan. 5 near-disaster with a 737 Max 9 could ripple through to aircraft deliveries.

Boeing shares fell as much as 8.4% in New York trading on Tuesday, while Spirit AeroSystems Holdings Inc, which builds most of the 737 Max frame, declined as much as 7.5%. The drop brought Boeing’s year-to-date slide to around 23%, the largest among the 30-member Dow Jones Industrial Average.

Meanwhile, the planemaker announced that retired Admiral Kirkland Donald is serving as special adviser to Boeing Chief Executive Officer Dave Calhoun, effective immediately — another step in Boeing’s efforts to shore up confidence in its manufacturing prowess after the accident on Alaska Airlines Flight 1282. Donald will lead a “thorough assessment” of Boeing’s quality management system for commercial airplanes.

Investors have erased a late-2023 gain in Boeing shares as concerns grow about the longer-term implications from the Alaska Airlines mid-air structural failure. Analysts at Wells Fargo downgraded Boeing to equal-weight from overweight, citing an increased risk that regulatory checks into the company’s manufacturing quality will drag on deliveries — particularly the inventory of hundreds of already-built Max.

Similar concerns were voiced separately by Ryanair Holdings Plc Chief Executive Officer Michael O’Leary — one of the biggest customers for the 737 Max — at an event in London on Monday.

“I think the risk is that there will be further delivery delays, that Boeing management will get distracted in Seattle or there’ll be new processes or something,” O’Leary said in an interview.

The Federal Aviation Administration has grounded most Max 9 jets, a measure it intends to keep in place until extensive inspections are complete. The air-safety agency is investigating manufacturing practices at Boeing in the wake of the accident, when a door-sized fuselage panel tore off of the Alaska Airlines flight shortly after takeoff.

The FAA also said it will increase monitoring of so-called “in-service events” on the Max 9, and plans to audit Boeing’s production line as well as those of its suppliers.

“Given BA’s recent track record, and greater incentive for FAA to find problems, we think the odds of a clean audit are low,” Wells Fargo’s Matthew Akers wrote in a note to clients.

Also Read: Next Republican debate cancelled after Nikki Haley says she’ll only participate if Donald Trump does

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Wall Street is slipping Tuesday and giving back some of its big gain from the day before

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The S&P 500 was 0.5% lower in early trading, coming off its best day in nearly two months. The Dow Jones Industrial Average was down 240 points, or 0.6%, as of 9:40 a.m. Eastern time, and the Nasdaq composite was 0.6% lower.

Eversource Energy tumbled 5.9% for one of the worst losses in the S&P 500 after it said it could take a hit of up to $1.6 billion against its results for the end of 2023. It’s negotiating the sale of its stake in several offshore wind projects, and it may need to account for a lower value for them due to several challenges.

Tech stocks were also back to sinking, a day after helping to lead the market. Microchip Technology fell 1% after it said it expects to report a worse drop in revenue than it expected for the end of 2023 from the prior quarter. It said a “weakening economic environment” pushed customers and distributors to receive fewer shipments and pull out of inventories instead.

Another tech company, Unity Software, sank 3.8% after it said it would cut about a quarter of its workforce or 1,800 positions.

Also Read: US Steel sale may deserve serious scrutiny, says White House

Boeing was falling again, but not as much as on Monday, the first trading day after one of its jets flying for Alaska Airlines suffered an in-flight blowout over Oregon. Its stock was down 1.9% after tumbling 8% Monday. Spirit AeroSystems, which makes fuselages and other parts for Boeing, fell 1.4%.

Elsewhere in the airline industry, JetBlue Airways lost 6% after its chief executive, Robin Hayes, said he will step down for health reasons. He will be replaced by JetBlue’s current president, Joanna Geraghty, who will become the first woman to lead a major U.S. airline.

Financial markets have had a slow start to the year after roaring into the end of 2023. The S&P 500 had leaped to nine straight winning weeks to close out the year, mostly on rising hope that the US economy will remain resilient and the Federal Reserve will cut interest rates sharply through 2024.

Some mixed data recently has bolstered criticism saying Wall Street may have gotten too optimistic about the number of rate cuts coming. The Federal Reserve has already raised its main interest rate to the highest level since 2001, hoping to grind down the economy and investment prices to get inflation under control.

With inflation down considerably from its peak, the Fed has indicated it may cut rates three times through 2024. That would give investment prices a boost and relax the pressure on the economy and financial system.

Also Read: US GDP growth in third quarter falls short of expectations at 4.9%

But traders are still betting on a better than 50% probability for at least six cuts, or double the Fed’s projection, according to data from CME Group. Critics say such a high number is unlikely unless the economy falls into a recession.

Treasury yields have already slid on anticipation of rate cuts, and they were holding relatively steady on Tuesday. The yield on the 10-year Treasury was holding at 4.01%.

In the oil market, crude prices clawed back some of their sharp losses from the day before, when Saudi Arabia made moves hinting at weakening demand. A barrel of benchmark US crude rose 1.2% to $71.59. Brent crude, the international standard, gained 1.4% to $77.22.

This week’s headline events for Wall Street are likely to come toward the end of it. On Thursday, the US government will give its latest monthly update on inflation at the consumer level. Continued progress there could show whether Wall Street’s hopes for rate cuts are justified or fanciful.

On Friday, big companies in the S&P 500 will begin reporting their results for the final three months of 2023. The broad expectation is for companies in the index to report modest growth in earnings per share from a year earlier.

Also Read: US jobless claims inch up, but remain historically low amidst Fed’s tightening

In stock markets abroad, Japan’s Nikkei 225 rose 1.2% to notch its highest close since 1990. Indexes elsewhere had more modest moves, with many edging lower.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow