Market Update
Movers: Arch Capital, FactSet Research, General Mills, Loews Corp, Lucid, Newmont Mining, Steelcase
Scott Peters
20 Dec, 2022
New York City
Arch Capital Group increased 2.8% to $62.25 after the Bermuda-based insurance company expanded its share repurchase program to $1 billion.
The insurance company has repurchased $596.4 million of its stock as of September's end.
FactSet Research Systems Inc declined 2.9% to $407.41 after the financial data and analytics company reported weaker than expected revenues and earnings.
General Mills, Inc declined 4.2% to %83.44 despite the company reporting higher sales and earnings in the last quarter.
Revenue in the fiscal second quarter ending in November rose 4% to $5.22 billion after volume impacted sales negatively by 12 percentage points and price and mix change lifted sales by 17 percentage points.
In North America, revenues were negatively impacted by volume decline of 8 percentage points and price increase of 19 percentage points, leading to 11 percentage point increase in sales.
Net income increased 1% to $605.9 million from $597.2 million and diluted earnings per share rose to $1.01 from 97 cents a year ago.
Loews Corp increased 2.2% to $56.15 after the diversified company said Delaware Supreme Court has reversed an award of $690 million plus interest to minority unitholders in its Boardwalk Pipelines subsidiary.
This award was in connection with Loews
L3Harris Agreed to Acquire Aerojet Rocketdyne for $4.7 Billion
Scott Peters
19 Dec, 2022
New York City
Aerojet Rocketdyne Holdings Inc increased 1.6% to $55.77 after the company agreed to be acquired by rival L3 Harris Technologies for $58 a share.
Aerojet agreed to pay $4.7 billion in cash including net debt.
Aerojet generated $2.2 billion revenues in 2021 and earned $143.7 million or $1.75 a diluted share.
L3Harris annual revenue in 2021 declined 2% to $17.8 billion and $1.8 billion or $9.09 a diluted share.
In 2019, L3 Technologies merged with Harris Corp and strengthened military communication capabilities in networking and surveillance that are used in F-16, F-118 and F-35 fighter jets.
Aerojet has a funded backlog of $3.1 billion and an unfunded backlog of $3.7 billion of orders totaling $6.8 billion.
Aerojet Rocketdyne delivers a broad range of capabilities to support hypersonics, including solid rocket motor boosters, scramjets, warheads and missile defense technologies, according to the company website.
L3Harris decreased 3.5% to $205.76.
Lockheed Martin led the list of six largest defense contractors followed by Raytheon, Boeing, Northrop Grumman and General Dynamics and the top six contractors generated at least $12 billion in annual revenues from defense contracts.
The latest merger between L3Harris and Aerojet is the continuation of the merger between mid-tier contractors or large contractors snapping up mid-size companies following the growing military spending and stocks trading multi-year highs.
Steelcase Estimated Flat Revenues In Q4 Despite Price Hikes
Scott Peters
20 Dec, 2022
New York City
Steelcase Inc soared 12.3% to $7.02 after the furniture maker reported earnings and sales near the bottom-end of its guidance.
Revenue in the fiscal third quarter ending in November increased 12% to $826.9 million from $738.2 million a year ago.
Net income in the quarter increased 18.8% to $11.4 million from $9.6 million and diluted earnings per share rose to 10 cents from 8 cents a year ago.
Gross margin increased 120 basis points to 28.8% after the company implemented additional price increases.
The company had guided third quarter revenue between $825 million and $850 million and GAAP earning between 8 cents and 12 cents a share.
Segment Breakdown
of total revenues, Americas was 71.9% and Europe, the Middle East and Africa was 19.1% and Australia and Indo Pacific nations was 9.0%.
Revenue in the Americas increased 19% and EMEA region fell 6% and other region rose 7%.
Order Backlog
The company said order backlog at the end of the third quarter increased 3.0% from a year ago to $854 million.
Orders through the first three weeks of the fourth quarter declined approximately 6% compared to the prior year.
Outlook and Guidance
The company guided fourth quarter fiscal 2023 revenues in the range of $740 million and $765 million, compared to $753.1 million a year ago.
The company also estimated earnings per share between 5 cents and 9 cents in the fiscal fourth quarter, compared to a loss of 2 cents in the quarter a year ago.
Dividends
The board of directors approved 10 cents per share dividends on or before January 13, 2023 to shareholders on record January 3, 2023.
Housing Starts and Permits Fell but Completions Rose In November
Brian Turner
20 Dec, 2022
New York City
U.S. housing starts declined 0.5% to a seasonally adjusted 1.427 million annual rate after dropping downwardly revised 2.1% in October, the U.S. Census Bureau reported Tuesday.
Single family housing starts declined 4.1% to an annual pace of 828.000 and multi-family starts jumped 4.8% to 584,000.
Housing market is struggling under rising mortgage rates and record home prices, keeping many first time buyers away from the market.
Building Permits
November building permits declined 11.2% to a seasonally adjusted annual rate of 1.342 million from October and 22.4% below 1.792 million a year ago.
Housing Completions
November completions increased 10.8% to a seasonally adjusted annual rate of 1.49 million from the revised October estimate of 1.345 million and 6.0% higher than 1.406 million rate a year ago.
U.S. Stocks Meander and Bond Yields Rise
Barry Adams
20 Dec, 2022
New York City
Stocks on Wall Street opened lower and bond yields inched higher after a selloff in the global bond market.
The worldwide bond selloff was sparked by a surprise move by the Bank of Japan in lifting the upper limit of the government bond yield, though a technical move, but caught the market by surprise.
The Bank of Japan also left its key lending rate at -0.1% but the widening of the yield range confirmed the central bank's readiness in ending six years of loose monetary policy.
The Bank of Japan is the last major central bank to adjust rate policy, following a hike in rates by more than 20 central banks.
Despite the multiple rate hikes, real rates are still negative in G7 countries and not restrictive in limiting economic activities.
Moreover, investors are anticipating downward earnings revision as central banks are looking to dampen economic activities and tame 4-decade high inflation in the Euro Area and in the United States.
In addition, China is battling the fallout from the strict zero-Covid restrictions and the property sector is in deep financial malaise.
Market Indexes Drop
The S&P 500 index declined 0.4% to 3,803.89 and the Nasdaq Composite index fell 0.7% to 10,476.41.
Crude oil inched up 61 cents to $76.03 a barrel and natural gas futures prices declined 44 cents to $5.41 a thermal unit.
The yield on 2-year Treasury notes increased to 4.30%, 10-year Treasury notes rose to 3.68% and 30-year Treasury bonds edged up to 3.70%.
Housing Starts Edged Lower
U.S. housing starts declined 0.5% to a seasonally adjusted 1.427 million annual rate after dropping downwardly revised 2.1% in October, the U.S. Census Bureau reported Tuesday.
Single family housing starts declined 4.1% to an annual pace of 828.000 and multi-family starts jumped 4.8% to 584,000.
Housing market is struggling under rising mortgage rates and record home prices, keeping many first time buyers away from the market.
European Markets Wavered, Natural Gas Volatile After Pipe Explosion
European markets pared losses and investors continue to assess the hawkish stance from the central banks and worry that rising rates and elevated inflation are likely to drag the economy into a recession.
The DAX index dropped 0.5% to 13,869.66, the CAC-40 index declined 0.4% to 6,445.00 and the FTSE 100 index inched up 2.45 points to 7,363.93.
Natural gas prices were volatile and traded as low as
European Markets Lacked Direction, Natural Gas Volatile
Bridgette Randall
20 Dec, 2022
Frankfurt
European markets pared losses and investors continue to assess the hawkish stance from the central banks and worry that rising rates and elevated inflation are likely to drag the economy into a recession.
The DAX index dropped 0.5% to 13,869.66, the CAC-40 index declined 0.4% to 6,445.00 and the FTSE 100 index inched up 2.45 points to 7,363.93.
Natural gas prices were volatile and traded as low as
Nikkei Drops 2.5% After Bank of Japan Widens Yield Target Range
Arjun Pandit
20 Dec, 2022
Mumbai
Asian markets closed lower after the Bank of Japan widened the upper end of the 10-year government bond yield to 0.5% from 0.25%.
The central bank said the range gap widening was designed to facilitate smoother functioning of the bond market.
The surprising move lifted the 10-year Japanese government bonds yield to 0.43% and spiked bond yields worldwide.
The Nikkei plunged 2.5% and the yen surged 3% to 132.24 against the U.S. dollar.
The Nikkei index fell 2.46% to 26,568.03, the Shanghai Composite index declined 1.1% to 3,073.77, the Hang Seng index fell 1.3% to 19,094.80 and the Sensex index eased 0.17% to 61,702.29.
Japan's Trade Deficit Rises 16th Month In a Row
Brian Turner
19 Dec, 2022
New York City
Japan's trade deficit rose for the 16th month in a row in November, the longest period since 2015 on rising costs of energy and mineral fuels and chemicals.
Trade deficit in November increased to 2,027.4 billion from a shortfall of 973.6 a year ago.
Exports in the month increased 20.0% to 8,837.5 billion yen after rising 25.3% in October. Exports increased for the 21st month in a row but at the slowest pace since July.
imports to Japan increased 30.3% to 10,864.9 billion after advancing 53.5% in October. Imports rose in double digits for the 19th month in a row but the increase slowed the most since April.
Trade deficit in the first eleven months surged to 18.4 trillion yen from a surplus of 415.4 billion a year ago.
Rate and Earnings Worries Drag U.S. Indexes Lower, European Markets Rebound
Barry Adams
19 Dec, 2022
New York City
Market indexes on Wall Street closed sharply lower as hopes Santa rally faded amid growing worries of 2023 recession and earnings revisions.
U.S. stocks attempted to rebound after two weeks of decline amid growing worries of slowing economic activities and earnings downgrade in the upcoming year.
Markets are also shifting away from the economic soft landing scenario after the Federal Reserve's commitment in fighting high inflation and admission that it will take a while before price stability returns.
Investors are increasingly worried that the Fed's plan of more rate increases in 2023 may dip the slowing economy into a recession and also negatively impact labor market expansion.
Markets are awaiting the data on PCE Price Index, personal income and spending, durable goods report and consumer confidence.
The S&P 500 index declined 0.9% to 3,840.47 and the Nasdaq Composite index dropped 1.5% to 10,546.03.
Energy Markets Advance
Natural gas prices extended losses in the third week and dropped near a 5-month low of $5.55 a thermal unit on the expectations of milder weather and lower demand of heating energy.
Moreover, markets are awaiting the restarting of Freeport LNG terminal near Houston, Texas towards the year-end after six months of outage and resume exports to Europe.
Crude oil futures increased $1.54 to $75.85 a barrel and natural gas futures fell 77 cents to $5.82 a thermal unit.
Bond Yields Inched Higher
Treasury yields inched higher as investors worried that the inflationary forces are stronger than anticipated despite the ongoing fall in energy prices.
Markets also focused on the broadening of inflation from goods to services sector and noted the Fed's commitment in continuing its campaign of raising rates in early 2023.
The yield on 2-year Treasury notes edged up to 4.26%, 10-year Treasury notes inched higher 3.58% and 30-year bonds increased to 3.64%.
U.S. Stock Movers
Aerojet Rocketdyne Holdings Inc increased 1.6% to $55.77 after the company agreed to be acquired by rival L3 Harris Technologies for $58 a share.
L3Harris decreased 3.5% to $205.76.
Sinclair Broadcast Group Inc declined 2.8% to $15.43 on a report from the New Yoro Post that the company's, Diamond Sports Group, regional sports network of 21 channels is likely to initiate bankruptcy proceedings.
Tesla Inc dropped as much as 4% in pre-market trading to $146.45 on the worries that chief executive Elon Musk may be distracted from running the electric vehicle maker and distracted by his recent purchase of Twitter Inc.
Mesa Air Group Inc increased 12.8% to $1.32 after the company said it is close to finalizing its deal with United Airlines.
American Airlines is said to terminate its relationship with Mesa for its regional flights on the worries that Mesa may not have operational and financial resources to run the regional network.
Mesa said in a statement that the airline is looking to sell more planes and parts to raise capital but the regional carrier is struggling with nationwide pilot shortage after the sharp rebound in travel demand after two years of pandemic.
Investors are awaiting earnings results from 107 companies including the list of following companies.
BHP Group, Carnival Corporation, Cintas, FactSet Research, FedEx, General Mills, Micron Technology, Nike, Steelcase and Titan Pharma.
European Markets Attempt to Rebound After 3% Weekly Sell-0ff
Benchmark indexes in Europe gained following a brutal market selloff in the previous week after the European Central Bank lifted ley rates and signaled more rate hikes in 2023.
Market indexes rebounded after the German business confidence index advanced for the third week in a row.
Germany's Ifo Business Climate Index in December increased to 88.6 from the revised 86.4 in November.
Moreover, market sentiment was bolstered after policymakers in China pledged to relax and improve coronavirus controls and consider additional support for the property market.
The DX index advanced 0.4% to 13,942.87, the CAC-40 index rose 0.3% to 6,473.29 and the FTSE 100 index added 0.4% to 7,361.31.
Labor Market Slack Remained Stable
The employment rate in the European Union was stable in the third quarter at 74.7% compared to the second quarter, according to the data released today by Eurostat.
The labor market slack also remained stable at 11.5% of the extended labor force aged between 20 and 64 years, the statistical office also noted today.
Euro Area Wage Growth Slows to one-Year Low
Wages and salaries in the Euro Area rose at the slowest pace in a year of 2.1% in the third quarter, Eurostat reported Monday.
The second quarter wage growth was downwardly revised to 3.2% from the preliminary estimate.
The non-wage component of total wage and salaries rose 5.3% in the third quarter from a year ago.
Wages rose for the fifth quarter in a row but at the slowest pace since the second quarter 2021.
Among large economies in the region, wages rose at the fastest pace in the third quarter among large economies in the region in France at 4.4% followed by 2.5% in Spain and 1.9% in Italy.
However in the European Union, wages rose the fastest in Hungary 16.6 % and Bulgaria 16.3 %.
Four more EU Member States recorded an increase above 10 %: Lithuania (13.9%), Poland (13.3%), Greece (11.6%) and Romania (10.9%).
While wages in Germany declined 1.5% after rising 3% in the second quarter.
Natural Gas Price Eases, EU Approves Price Cap
Oil prices advanced after Chinese policymakers vowed to boost consumption at a key meeting on Monday, lifting hopes of higher demand for energy from the second largest economy.
Moreover, U.S. President Biden's administration is also looking to replenish crude oil reserves starting with 3 million barrels.
After a year of unprecedented oil depletion, the U.S. government is looking to rebuild its oil
The U.S. has been depleting the reserve to fight high energy prices for about a year and the White House had estimated to release in total 180 barrels of oil.
Brent crude oil increased $1.05 to $80.04 a barrel and Dutch TTF natural gas inched fell 6% to
European Markets Rebounded After German Business Confidence Improved, Labor Markets Stable
Bridgette Randall
19 Dec, 2022
Frankfurt
Benchmark indexes in Europe gained following a brutal market selloff in the previous week after the European Central Bank lifted ley rates and signaled more rate hikes in 2023.
Market indexes rebounded after the German business confidence index advanced for the third week in a row.
Germany's Ifo Business Climate Index in December increased to 88.6 from the revised 86.4 in November.
Moreover, market sentiment was bolstered after policymakers in China pledged to relax and improve coronavirus controls and consider additional support for the property market.
The DX index advanced 0.4% to 13,942.87, the CAC-40 index rose 0.3% to 6,473.29 and the FTSE 100 index added 0.4% to 7,361.31.
Labor Market Slack Remained Stable
The employment rate in the European Union was stable in the third quarter at 74.7% compared to the second quarter, according to the data released today by Eurostat.
The labor market slack also remained stable at 11.5% of the extended labor force aged between 20 and 64 years, the statistical office also noted today.
Euro Area Wage Growth Slows to one-Year Low
Wages and salaries in the Euro Area rose at the slowest pace in a year of 2.1% in the third quarter, Eurostat reported Monday.
The second quarter wage growth was downwardly revised to 3.2% from the preliminary estimate.
The non-wage component of total wage and salaries rose 5.3% in the third quarter from a year ago.
Wages rose for the fifth quarter in a row but at the slowest pace since the second quarter 2021.
Among large economies in the region, wages rose at the fastest pace in the third quarter among large economies in the region in France at 4.4% followed by 2.5% in Spain and 1.9% in Italy.
However in the European Union, wages rose the fastest in Hungary 16.6 % and Bulgaria 16.3 %.
Four more EU Member States recorded an increase above 10 %: Lithuania (13.9%), Poland (13.3%), Greece (11.6%) and Romania (10.9%).
While wages in Germany declined 1.5% after rising 3% in the second quarter.
Natural Gas Price Eases, EU Approves Price Cap
Oil prices advanced after Chinese policymakers vowed to boost consumption at a key meeting on Monday, lifting hopes of higher demand for energy from the second largest economy.
Moreover, U.S. President Biden's administration is also looking to replenish crude oil reserves starting with 3 million barrels.
After a year of unprecedented oil depletion, the U.S. government is looking to rebuild its oil
The U.S. has been depleting the reserve to fight high energy prices for about a year and the White House had estimated to release in total 180 barrels of oil.
Brent crude oil increased $1.05 to $80.04 a barrel and Dutch TTF natural gas inched fell 6% to
Movers: Aerojet Roketdyne, L3Harris, Mesa Air, Steelcase, Tesla
Scott Peters
19 Dec, 2022
New York City
Aerojet Rocketdyne Holdings Inc increased 1.6% to $55.77 after the company agreed to be acquired by rival L3 Harris Technologies for $58 a share.
Aerojet agreed to pay $4.7 billion in cash including net debt.
Aerojet generated $2.3 billion revenues in its latest full-year and L3Harris annual revenue was $17 billion.
Aerojet Rocketdyne delivers a broad range of capabilities to support hypersonics, including solid rocket motor boosters, scramjets, warheads and missile defense technologies, according to the company website.
L3Harris decreased 3.5% to $205.76.
Sinclair Broadcast Group Inc declined 2.8% to $15.43 on a report from the New Yoro Post that the company's, Diamond Sports Group, regional sports network of 21 channels is likely to initiate bankruptcy proceedings.
Tesla Inc dropped as much as 4% in pre-market trading to $146.45 on the worries that chief executive Elon Musk may be distracted from running the electric vehicle maker and distracted by his recent purchase of Twitter Inc.
Mesa Air Group Inc increased 12.8% to $1.32 after the company said it is close to finalizing its deal with United Airlines.
American Airlines is said to terminate its relationship with Mesa for its regional flights on the worries that Mesa may not have operational and financial resources to run the regional network.
Mesa said in a statement that the airline is looking to sell more planes and parts to raise capital but the regional carrier is struggling with nationwide pilot shortage after the sharp rebound in travel demand after two years of pandemic.
Investors are awaiting earnings results from 107 companies including the list of following companies.
BHP Group, Carnival Corporation, Cintas, FactSet Research, FedEx, General Mills, Micron Technology, Nike, Steelcase and Titan Pharma.
Steelcase Inc dropped 5.3% to $6.25 ahead of the furniture maker's third quarter earnings call on Tuesday December 20.
In the second quarter ending in August, revenue increased 19% to $863.3 million from $724.8 million a year ago and net income declined to $19.6 million from $24.7 million or earnings per share dropped to 17 cents from 21 cents a year ago.
The company had guided third quarter revenue between $825 million and $850 million and GAAP earning between 8 cents and 12 cents a share.
U.S. Stocks Lack Direction, Busy Week of Economic and Earnings Releases
Barry Adams
19 Dec, 2022
New York City
Stocks on Wall Street opened nearly unchanged after a week of selloff and markets are awaiting more data on inflation later in the week.
U.S. stocks attempt to rebound after two weeks of decline amid growing worries of slowing economic activities and earnings downgrade in the upcoming year.
Markets are also shifting away from the economic soft landing scenario after the Federal Reserve's commitment in fighting high inflation and admission that it will take a while before price stability returns.
Investors are reassessing earnings and economic outlook after Fed Chairman Jay Powell forcefully reiterated the central bank's commitment to lower rates and forecasted higher rates for a prolonged period of time.
Markets are awaiting the data on PCE Price Index, personal income and spending, durable goods report and consumer confidence.
After thirty minutes of volatile trading, The S&P 500 index declined 0.3% to 3,840.47 and the Nasdaq Composite index dropped 0.7% to 10,633.23.
Energy Markets Advance
Natural gas prices extended losses in the third week and dropped near a 5-month low of $5.55 a thermal unit on the expectations of milder weather and lower demand of heating energy.
Moreover, markets are awaiting the restarting of Freeport LNG terminal near Houston, Texas towards the year-end after six months of outage and resume exports to Europe.
Crude oil futures increased $1.25 to $75.55 a barrel and natural gas futures fell 54 cents to $6.05 a thermal unit.
Bond Yields Inched Higher
Treasury yields inched higher as investors worried that the inflationary forces are stronger than anticipated despite the ongoing fall in energy prices.
Markets also focused on the broadening of inflation from goods to services sector and noted the Fed's commitment in continuing its campaign of raising rates in early 2023.
The yield on 2-year Treasury notes edged up to 4.22%, 10-year Treasury notes inched higher 3.56% and 30-year bonds increased to 3.62%.
U.S. Stock Movers
Aerojet Rocketdyne Holdings Inc increased 1.6% to $55.77 after the company agreed to be acquired by rival L3 Harris Technologies for $58 a share.
L3Harris decreased 3.5% to $205.76.
Sinclair Broadcast Group Inc declined 2.8% to $15.43 on a report from the New Yoro Post that the company's, Diamond Sports Group, regional sports network of 21 channels is likely to initiate bankruptcy proceedings.
Tesla Inc dropped as much as 4% in pre-market trading to $146.45 on the worries that chief executive Elon Musk may be distracted from running the electric vehicle maker and distracted by his recent purchase of Twitter Inc.
Mesa Air Group Inc increased 12.8% to $1.32 after the company said it is close to finalizing its deal with United Airlines.
American Airlines is said to terminate its relationship with Mesa for its regional flights on the worries that Mesa may not have operational and financial resources to run the regional network.
Mesa said in a statement that the airline is looking to sell more planes and parts to raise capital but the regional carrier is struggling with nationwide pilot shortage after the sharp rebound in travel demand after two years of pandemic.
Investors are awaiting earnings results from 107 companies including the list of following companies.
BHP Group, Carnival Corporation, Cintas, FactSet Research, FedEx, General Mills, Micron Technology, Nike, Steelcase and Titan Pharma.