Market Update
KB Home Sales Jump 19% and Home Backlog Value Soars 43%
Scott Peters
22 Jun, 2022
New York City
KB Home sales and earnings rose despite supply chain disruption challenges and rising mortgage rates.
Consolidated sales in the second quarter ending in May increased 19% to $1.72 billion and net income soared 47% to $210 million.
Diluted earnings per share surged 55% to $2.32 from $1.50 a year ago.
The home builder delivered 3,469 homes, matching the deliveries in the quarter a year ago and average selling price increased 21% to $494,300.
Price increase played a key role in lifting gross margin 390 basis points to 25.3% offset by higher construction cost and elevated lumber prices and increased expenses to support current operations.
Selling, general and administrative expenses as a percentage of housing revenues improved 30 basis points to 9.8%, primarily reflecting lower external sales commissions and increased operating leverage from higher revenues, partly offset by higher expenses to support growth.
Operating income margin Improved 410 Basis Points to 15.4% and net order value increased 4% to $2.12 Billion and ending backlog value soared 43% to $6.12 Billion.
Regional Sales
Average sales price in the West Coast region increased to $739,800 from $622,000, in the Southwest region rose to $424,000 from $360,900, in the Central region advanced to $387,000 from $317,000, and in the Southeast region escalated to $359,000 from $293,000.
The home builder delivered 1,029 homes in the West Coast region, 685 in the Southeast region, 1,117 in the Central region, and 638 in the Southeast region.
The company delivered a total of 3,469 homes compared to 3,504 a year ago.
The home builder received 1,088 new home orders in the West Coast region, 719 in the Southwest region, 1,300 in the Central region, and 807 in the Southeast region.
The company received a total of 3,914 new home orders totaling $2.12 billion compared to 4,300 totaling $2.04 billion a year ago.
Total home order backlog increased to 12,331 homes valued at $6.1 billion compared to 10,034 homes valued at $4.3 billion.
Guidance and Outlook
The home builder guided sales in the fiscal year between $7.3 billion and $7.5 billion and average home selling price of $500,000.
In the fiscal year 2022, the company guided homebuilding operating income as a percentage of revenues in the range of 16.0% to 16.6%, housing gross profit margin in the range of 25.6% to 26.2%, assuming no inventory-related charges.
Selling, general and administrative expenses as a percentage of housing revenues are estimated in the range of 9.3% to 9.7%.
The home builder also guided for a tax rate of 25.0% and return on equity to exceed 27%.
Company and Stock
KB Home is headquartered in Los Angeles, California and has built 655,000 homes in the company's 65-year history.
In regular trading hours before the release of earnings news, KB Home stock increased 2.4% to $26.23.
In the year so far, KB Home stock has declined 39.2% to $26.23.
Stocks Lacked Direction as Powell Testifies to Congress
Barry Adams
22 Jun, 2022
New York City
Stocks in volatile trading struggled to advance after the Fed Chairman reiterated the central bank's commitment to fight inflation.
Fears of an economic recession weighed on investor sentiment after the Fed Chairman Jerome Powell reaffirmed central banks commitment in fighting inflation.
"We are strongly committed to bringing inflation back down, and we are moving expeditiously to do so.
We have both the tools we need and the resolve it will take to restore price stability on behalf of American families and businesses," Powell told Congress on Wednesday.
Though the Fed expressed its strong commitment to fight inflation, prices have been rising at a faster pace for more than a year.
The consumer price index has been rising at more than the Fed's target rate of 2% for the last seventeen months in a row.
The S&P 500 fell 0.1% to 3,759.89 and the Nasdaq Composite declined 0.1% to 11053.08.
The popular market indexes opened lower and managed to climb above the flatline after one hour of trading.
For the next two hours, the indexes registered gains in the session but began to waver around mid-day and dipped briefly in the negative territory but quickly rebounded.
For the next three hours indexes advanced in choppy trading and near the close began to lose momentum. In the final five minutes of the session, the indexes sank and closed down for the day.
The yield on 10-year Treasury notes declined 14 basis points to close at 3.164%.
Futures of crude oil fell 3.8% to $105.34 a barrel and natural gas rose a fraction to $6.81 a unit.
On Wednesday, President Joe Biden is expected to ask Congress to drop federal gasoline and diesel taxes for three months.
Weaker oil prices dragged down stocks in the energy complex.
Chevron and Marathon Oil dropped more than 4%, Exxon Mobil declined 4%. Schlumberger NV fell 6% after president Biden's administration urged Congress to drop federal tax on gasoline and diesel sales for the next three months.
Federal tax on regular gasoline is 18 cents and diesel 24 cents a gallon.
Lower tax at the pump could provide relief to consumers but it can also lift the fuel demand worsening tight supply.
After the market closed today, KB Home reported sales in the second quarter ending in May increased 19% to $1.72 billion and net income soared 47% to $210 million.
The home builder delivered 3,469 homes, matching the deliveries in the quarter a year ago and average selling price increased 21% to $494,300.
The home builder guided sales in the fiscal year between $7.3 billion and $7.5 billion and average home selling price of $500,000.
European Markets Accelerate Declines
European markets accelerated declines after the U.K. inflation surged more than expected.
Consumer price index rose 9.1% in May from 9.0% in April, according to the latest data from the Office for National Statistics.
Month to month price increase slowed to 0.7% from 2.5% in April, the report stated.
The DAX index fell 1.1% to 13,144.28, the CAC-40 index declined 0.8% to 5,916.68, and the FTSE 100 index dropped 0.9% to 7,089.22.
Oil companies traded lower after crude oil prices declined 6% in the region.
BP Plc fell 3.1%, Shell Plc decreased 3.6%, and Repsol S.A. declined 4.3%.
BASF SE declined 5.8% to 43.56 euros after the chemical company said business in the second-half is likely to face considerable downturn.
Asian Markets Turn Lower
Markets in Asia closed lower following weak commodities prices and European markets.
Crude oil prices in Asia declined 4% and natural gas prices dropped between 2% and 3% on the global recession worries.
The Nikkei index in Tokyo declined 0.4% to 26,149.55 and indexes in Hong Kong dropped 2.6% to 21,008.34 and in Shanghai fell 1.2% to 3,267.20.
The Sensex index lost 709.54 or 1.4% to 51,822.53 and the Nifty 50 index dropped 225.50 or 1.44% to 15,413.30.
Movers: Altria, Airbnb, Coinbase, Kohl's, La-Z-Boy, Revlon
Barry Adams
22 Jun, 2022
New York City
Altria Group plunged 9.1% to $41.56 after the President Biden's administration is planning to place a maximum nicotine limit in cigarettes.
Separately, the Food and Drugs Administration is preparing to order Juul Labs to remove its e-cigarettes off the shelves from the U.S. market. The news was first reported by the Wall Street Journal.
Airbnb Inc declined 1.3% to $100.99 and the stock was downgraded to "market perform" from "market outperform" by JMP Securities citing current price reflects the post-pandemic travel rebound.
BASF SE declined 5.6% to $11.48 after the chemical company said business in the second-half is likely to face considerable downturn.
Carlsberg AS declined 1.6% to $24.43 after the alcoholic beverage maker said CFO Heine Dalsgaard has resigned to move to another company backed by a private-equity firm.
Dalsgaard will remain in the position till the end of 2022.
Clariant AG declined 3.7% to $18.78 Swiss francs after the company said it plans to trim its business divisions from five to three.
Coinbase Global dropped 7.5% to $53.20 after the rival cryptocurrency exchange Binance.US dropped the spot bitcoin trading fee.
Binance.US charged 0.1% spot bitcoin trading fee and Coinbase charged 0.5% for trading fees plus a flat fee of up to $2.99 per trade.
Credit Agricole SA declined 0.9% to $4.83 and the French-banking group released its strategic roadmap with a target of one million new retail customers and net income of 6 billion euros by 2025.
Hugo Boss gained 3.0% to $10.66 and the U.K. based Frasers Group increased its stake in the fashion designer and retailer.
The company has 3.425 million shares of common stock, representing 4.9% and 18.289 million shares of common stock via the sale of put options, representing 26.0% of Hugo Boss's total share capital, the investment group said in a press release today.
Kohl's Corporation dropped 9.5% to $38.23 after CNBC reported Franchise Group is said to lower its acquisition offer price closer to $50 a share from $60 a share citing higher inventories forcing the retailer to markdown more items.
LA-Z-Boy Incorporated surged 9.01% to $24.78 after the furniture retailer said fourth quarter revenues in the quarter ending in April soared 32% to $685 million and net income jumped 53.4% to $57.5 million.
Diluted earnings per share increased to $1.33 from 81 cents a year ago.
Mowi ASA dropped 4.8% to $22.22 Norwegian krone after the company repurchased its own 994,692 shares to meet the requirement to complete option remuneration to senior executives granted at 157.53 Norwegian krone.
The seafood company operates farms in Norway, Ireland, U.K., Canada, and Chile.
Revlon Inc soared 38.9% to $8.49 and extended its rally since the company filed to go public last week.
Movers: BASF, Carlsberg, Clariant, Credit Agricole, Hugo Boss, Mowi
Bridgette Randall
22 Jun, 2022
New York City
European markets traded lower on recession worries and rising inflation in the region.
The DAX index fell 2.0% to 13,027.62, the CAC-40 index declined 1.8% to 5,859.51, and the FTSE 100 index dropped 1.5% to 7,045.08.
Oil companies traded lower after crude oil prices declined 6% in the region.
BP Plc fell 3.6%, Shell Plc decreased 3.6%, and Repsol S.A. declined 4.8%.
BASF SE declined 5.6% to 43.30 euros after the chemical company said business in the second-half is likely to face considerable downturn.
Credit Agricole SA declined 2.2% to 9.19 euros and the French-banking group released its strategic roadmap with a target of one million new retail customers and net income of 6 billion euros by 2025.
Hugo Boss gained 0.7% to 48.70 euros and Frasers Group increased its stake in the fashion designer and retailer.
The company has 3.425 million shares of common stock, representing 4.9% and 18.289 million shares of common stock via the sale of put options, representing 26.0% of Hugo Boss's total share capital, the company said in a press release today.
Clariant AG declined 1.5% to 17.98 Swiss francs after the company said it plans to trim its business divisions from five to three.
Mowi ASA dropped 7.2% to 219.70 Norwegian krone after the company repurchased its own 994,692 shares to meet the requirement to complete option remuneration to senior executives granted at 157.53 Norwegian krone.
The seafood company operates farms in Norway, Ireland, U.K., Canada, and Chile.
Carlsberg AS declined 1.2% after the company said its CFO Heine Dalsgaard has resigned to move to another company backed by a private-equity firm.
Dalsgaard will remain in the position till the end of 2022.
European Markets Declined After UK Inflation Accelerated and Oil Fell
Bridgette Randall
22 Jun, 2022
New York City
European markets accelerated declines after the U.K. inflation surged more than expected.
Consumer price index rose 9.1% in May from 9.0% in April, according to the latest data from the Office for National Statistics.
Month to month price increase slowed to 0.7% from 2.5% in April, the report stated.
The DAX index fell 2.0% to 13,027.62, the CAC-40 index declined 1.8% to 5,859.51, and the FTSE 100 index dropped 1.5% to 7,045.08.
Oil companies traded lower after crude oil prices declined 6% in the region.
BP Plc fell 3.6%, Shell Plc decreased 3.6%, and Repsol S.A. declined 4.8%.
BASF SE declined 5.6% to 43.30 euros after the chemical company said business in the second-half is likely to face considerable downturn.
Credit Agricole SA declined 2.2% to 9.19 euros and the French-banking group released its strategic roadmap with a target of one million new retail customers and net income of 6 billion euros by 2025.
Hugo Boss gained 0.7% to 48.70 euros and Frasers Group increased its stake in the fashion designer and retailer.
The company has 3.425 million shares of common stock, representing 4.9% and 18.289 million shares of common stock via the sale of put options, representing 26.0% of Hugo Boss's total share capital, the company said in a press release today.
Clariant AG declined 1.5% to 17.98 Swiss francs after the company said it plans to trim its business divisions from five to three.
Asian Markets Turn Lower
Markets in Asia closed lower following weak commodities prices and European markets.
Crude oil prices in Asia declined 4% and natural gas prices dropped between 2% and 3% in the region on the worries of a global recession.
The Nikkei index in Tokyo declined 0.4% to 26,149.55 and indexes in Hong Kong dropped 2.6% to 21,008.34 and in Shanghai fell 1.2% to 3,267.20.
The Sensex index lost 709.54 or 1.4% to 51,822.53 and the Nifty 50 index dropped 225.50 or 1.44% to 15,413.30.
Stocks Turned Lower On Recession Worries
Barry Adams
22 Jun, 2022
New York City
Stocks turned lower after rallying in the previous session and investors refocused on rising inflation and elevated energy prices.
Fears of an economic recession weighed on investor sentiment after the Fed Chairman Jerome Powell reaffirmed central banks commitment in fighting inflation.
"We are strongly committed to bringing inflation back down, and we are moving expeditiously to do so.
We have both the tools we need and the resolve it will take to restore price stability on behalf of American families and businesses," Powell told Congress on Wednesday.
Though the Fed expressed its strong commitment to fight inflation, prices have been rising at a faster pace for more than a year.
The consumer price index has been rising at more than the Fed's target rate of 2% for the last seventeen months in a row.
The S&P 500 rose 0.9% to 3,731.83 and the Nasdaq Composite fell 0.7% to 10,985.52.
Futures of crude oil fell 6.2% to $107.51 a barrel and natural gas fell 10 cents to $6.70 a unit.
On Wednesday, President Joe Biden is expected to ask Congress to drop federal gasoline and diesel taxes for three months.
Weaker oil prices dragged down stocks in the energy complex.
Chevron and Marathon Oil dropped more than 5%, Exxon Mobil declined 4%. Schlumberger NV fell 6%.
After the market closes today, KB Home, Worthington Industries, and Steelcase are scheduled to release earnings.
European Markets Accelerate Declines
European markets accelerated declines after the U.K. inflation surged more than expected.
Consumer price index rose 9.1% in May from 9.0% in April, according to the latest data from the Office for National Statistics.
Month to month price increase slowed to 0.7% from 2.5% in April, the report stated.
The DAX index fell 2.0% to 13,027.62, the CAC-40 index declined 1.8% to 5,859.51, and the FTSE 100 index dropped 1.5% to 7,045.08.
Oil companies traded lower after crude oil prices declined 6% in the region.
BP Plc fell 3.6%, Shell Plc decreased 3.6%, and Repsol S.A. declined 4.8%.
BASF SE declined 5.6% to 43.30 euros after the chemical company said business in the second-half is likely to face considerable downturn.
Asian Markets Turn Lower
Markets in Asia closed lower following weak commodities prices and European markets.
Crude oil prices in Asia declined 4% and natural gas prices dropped between 2% and 3% on the global recession worries.
The Nikkei index in Tokyo declined 0.4% to 26,149.55 and indexes in Hong Kong dropped 2.6% to 21,008.34 and in Shanghai fell 1.2% to 3,267.20.
The Sensex index lost 709.54 or 1.4% to 51,822.53 and the Nifty 50 index dropped 225.50 or 1.44% to 15,413.30.
S&P 500 and Nasdaq Rebound 2.5% After Volatile Week
Barry Adams
21 Jun, 2022
New York City
Stocks rebounded sharply after a week when the S&P 500 declined the most in two years and bargain hunters stepped up buying.
The S&P 500 rose 2.5% to 3,764.79 and the Nasdaq Composite advanced 2.5% to 11,069.30.
Futures of crude oil rose 0.9% to $110.59 a barrel but natural gas fell 9 cents to $6.85 a unit.
The yield on 10-year Treasury notes increased a fraction to 3.302%.
The sharp rally on Wall Street was viewed as a dead cat bounce and market indexes have jumped more than 2% at least 11 times in the last three months.
The S&P 500 and the Nasdaq Composite have fallen in 10 of the last 11 weeks.
Last week, Investors worried that the Fed is so far behind in taming inflation with record negative rates (the difference between inflation and 10-year Treasury note yield) above 5%.
Inflation has been accelerating and reached a 4-decade high of 8.6% in May, surpassing Fed's target rate of 2% for more than 17 months in a row.
The Fed's aggressive rate hike by 75 basis points last week to a new range to 1.5% and 1.75% was welcomed by investors but a day after investors worried that faster rate hike may plunge the U.S. economy into a recession.
Seasonally adjusted existing home sales in May declined 3.4% from a year ago and April home sales were revised lower as well, the National Association of Realtors said today.
Homes for sale in May increased 12.6% from April but still 4.1% lower than a year ago.
The median home price sold in May increased 14.8% to $407,600, a record high since data keeping began about 40 years ago, said the NAR.
Home prices have been advancing for 123 months in a row, the longest streak of price increase on record.
Lennar Corp gained 4.5% to $67.53 after the home builder reported better-than-expected sales and higher-than-expected adjusted earnings of $4.69 a share.
The home builder said that the home demand began to soften towards the end of the quarter by higher home prices and rising mortgage rates.
Airline stocks were in focus today on summer travel surge.
Spirit Airlines advanced 8% after JetBlue lifted its offer price to $33.50 a share as the company board discusses its merger plans with Frontier Air.
Kellogg Company gained 2.1% to $69.07 after the food products maker said it plans to split into three separate companies and separate its domestic and international cereal businesses and plant-based snack and food unit.
European Markets Extend 2-Day Advance
European markets extended gains for the second day in a row powered by gains in New York and Asian markets.
Bargain hunters stepped up for the second day in a row despite the lingering worries of inflation and global economic slowdown.
The DAX index gained 0.2% to 13,292.49, the CAC-40 index advanced 0.8% to 5,964.66, and the FTSE 100 index rose 0.4% to 7,152.08.
Futures of crude oil increased 1.5% to $115.40 a barrel and European natural gain advanced 3.6% to 125.40 euros a unit.
Ocado Group decreased 4.2% to 840.80 pence after the online grocery delivery company completed a secondary offering and raised
Mondelez to Acquire Clif Bar & Company for $2.9 Billion
Scott Peters
21 Jun, 2022
New York City
Mondelez International Inc gained 1.3% to $59.57 after the company agreed to acquire Clif Bar & Co. for $2.9 billion and additional earnings contingent payouts.
Clif Bar & Company will continue to operate its business from its headquarters in Emeryville, CA and company will also continue to manufacture its products in its facilities in Twin Falls, Idaho, and Indianapolis, Indiana.
Movers: Clif Bar, Kellogg, Lennar, Mondelez, Spirit Air, Tesla, Valneva
Barry Adams
21 Jun, 2022
New York City
Kellogg Company gained 2.6% to $69.30 after the food products maker said it plans to split into three separate companies.
North America cereal company with about total sales of $2.4 billion covering the U.S, Canada, and Caribbean.
Global snacking company with about total sales of $11.4 billion covering international markets for cereals and North American frozen food businesses.
Plant Co with about total sales of approximately $340 million focus on plant faced food and anchored with the MorningStar Farms brand.
Lennar Corp jumped 2.5% to $66.41 after the home builder reported better-than-expected sales and higher-than-expected adjusted earnings of $4.69 a share.
The home builder said that the home demand began to soften towards the end of the quarter by higher home prices and rising mortgage rates.
Mondelez International Inc gained 1.3% to $59.57 after the company agreed to acquire Clif Bar & Co. for $2.9 billion and additional earnings contingent payouts.
Clif Bar & Company will continue to operate its business from its headquarters in Emeryville, CA and manufacture its products in its facilities in Twin Falls, Idaho, and Indianapolis, Indiana.
Spirit Airlines advanced 7% after JetBlue lifted its offer price to $33.50 a share as the company board discusses its merger plans with Frontier Air.
Tesla Inc soared 11.4% to $724.79 after CEO Elon Musk confirmed in an interview with Bloomberg News that the automaker is planning to cut 10% salaried staff or 3.5% of total over the next three months.
Valneva SE ADR soared 89.5% to $25.98 after Pfizer agreed to acquire 8.1% stake in France-based specialty vaccine maker for $95 million.
Movers: Airbus, Air Liquid, DS Smith, Nordex, Ocado
Bridgette Randall
21 Jun, 2022
New York City
Ocado Group decreased 4.2% to 840.80 pence after the online grocery delivery company completed a secondary offering and raised
S&P 500 Jumps 2.6%, Record Existing Home Price In May
Barry Adams
21 Jun, 2022
New York City
Stocks in the early morning bounced back after a 3-day weekend and bond yields advanced.
The S&P 500 rose 2.2% to 3,759.33 and the Nasdaq Composite rose 2.8% to 11,101.50.
Futures of crude oil rose 1.9% to $111.69 a barrel and natural gas fell 26 cents to $6.69 a unit.
The sharp rally on Wall Street was viewed as a dead cat bounce and market indexes have jumped more than 2% at least 11 times in the last three months.
The S&P 500 and the Nasdaq Composite have fallen in 10 of the last 11 weeks and investor sentiment has been pessimistic with growing skepticism that the Fed can tame inflation and avoid a recession.
Inflation has been accelerating and stayed above the Fed's target range of 2% for more than 17 months and reached a 4-decade high of 8.6% yet interest rates are near 1.75%.
Seasonally adjusted existing home sales in May declined 3.4% from a year ago and April home sales were revised lower as well, the National Association of Realtors said today.
Homes for sale in May increased 12.6% from April but still 4.1% lower than a year ago.
The median home price sold in May increased 14.8% to $407,600, a record high since data keeping began about 40 years ago, said the NAR.
Home prices have been advancing for 123 months in a row, the longest streak of price increase on record.
Lennar Corp gained 4.5% to $67.53 after the home builder reported better-than-expected sales and higher-than-expected adjusted earnings of $4.69 a share.
The home builder said that the home demand began to soften towards the end of the quarter by higher home prices and rising mortgage rates.
Airline stocks were in focus today on summer travel surge.
Spirit Airlines advanced 7% after JetBlue lifted its offer price to $33.50 a share as the company board discusses its merger plans with Frontier Air.
Kellogg Company gained 2.1% to $69.07 after the food products maker said it plans to split into three separate companies.
European Markets Extend 2-Day Advance
European markets extended gains for the second day in a row powered by gains in New York and Asian markets.
Bargain hunters stepped up for the second day in a row despite the lingering worries of inflation and global economic slowdown.
The DAX index gained 0.1% to 13,189.19, the CAC-40 index advanced 0.2% to 5,896.14, and the FTSE 100 index rose 1.5% to 7,117.38.
Futures of crude oil increased 1.5% to $115.40 a barrel and European natural gain advanced 3.6% to 125.40 euros a unit.
Ocado Group decreased 4.2% to 840.80 pence after the online grocery delivery company completed a secondary offering and raised
European Indexes Extend 2-Day Rally
Bridgette Randall
21 Jun, 2022
New York City
European markets extended gains for the second day in a row powered by gains in New York and Asian markets.
Bargain hunters stepped up for the second day in a row despite the lingering worries of inflation and global economic slowdown.
The DAX index gained 0.1% to 13,189.19, the CAC-40 index advanced 0.2% to 5,896.14, and the FTSE 100 index rose 1.5% to 7,117.38.
Futures of crude oil increased 1.5% to $115.40 a barrel and European natural gain advanced 3.6% to 125.40 euros a unit.
Ocado Group decreased 4.2% to 840.80 pence after the online grocery delivery company completed a secondary offering and raised
French President Macron Loses Control of Parliament, Historic Gains for Far Right and Left Groups
Bridgette Randall
20 Jun, 2022
Frankfurt
French President Emanuel Macron's party and allies lost their absolute majority in the National Assembly after the second and final round of election.
Grinding war in Ukraine, a sharp jump in food and energy prices and general voter discontent drove many to parties on the far right and far left.
The coalition led by president Macron, Ensemble!, won 245 of 577 legislative seats, leading all other parties and coalitions, according to a report released by the French interior ministry .
President Macron won a second term in April and will be the first president without a parliamentary majority since 2000 putting his legislative agenda of business and pension reforms in jeopardy.
Voters showed little interest in the legislative election and about 53% abstained from voting in the second round.
President Macron's centrist alliance enjoyed a substantial majority of 350 seats in 2017 but parties on the hard-let and the hard-right were successful in shrinking that to 245 in the latest election on June 19.
The latest parliamentary election results are highly unusual in France where the seating president generally enjoys a majority in parliament and governs with a free hand.
Macron is not known for sharing power or consulting with other parties as he governed top-down in the first term and largely used parliament as a president's rubber-stamp turning off voters.
Moreover, Macron's first term was marred by several crises starting with the "yellow vest" protests in rural France and spreading nationwide against the fuel tax in 2018, followed by coronavirus pandemic in 2020 and Ukraine war in 2022.
France holds the presidency of the Council of the European Union for six months till the end of June and that also distracted him during the last week of election.
Far-right National Party led by Marine Le Pen increased from a handful 8 seats to 89 and an alliance of leftist parties Nupes led by Jean-Luc Melenchon won 131 seats becoming the largest opposition party.
Historic gains for the parties on the left and right are going to force Macron's second term with more participation from the parliament.
European Markets Advance In Cautious Trading
Bridgette Randall
20 Jun, 2022
New York City
European markets rebounded after falling sharply in the previous week.
The DAX index gained 0.1% to 13,189.19, the CAC-40 index advanced 0.2% to 5,896.14, and the FTSE 100 index rose 1.5% to 7,117.38.
French President Emmanuel Macron's party and allies lost their absolute majority in the National Assembly after the second and final round of election.
The coalition, Ensemble!, won 245 of 577 legislative seats, leading all other parties and coalitions but fell short of the absolute majority, according to a report released by the French interior ministry .
President Macron won a second term in April and will be the first president without a parliamentary majority since 2000 putting his legislative agenda of business and pension reforms in jeopardy.
ECB President Christine Lagarde reaffirmed the central bank's commitment in raising rates two times this summer and fighting the widening interest rate spreads in the region.
The central bank will "ensure that inflation stabilizes at our 2% target over the medium term," Lagarde said while addressing the European Parliament in Brussels.
German producer prices in May surged a record 33.6% after rising at 33.5% in April, according to the latest data released by Destatis in Germany.
On a monthly basis, prices rose 1.6% after rising 2.8% in April, the report noted.
Airbus SE increased 0.95% to 95.01 euros on news that the aviation company has entered into talks with Qatar Airways to resolve A 350 passenger plane legal and safety dispute.
Valneva SE rose 25.2% to 9.96 euros after the U.S. based Pfizer agreed to acquire a 8.1% stake in the French specialty vaccines maker for 90.5 million euros.
SThree jumped 6.4% to 339.50 pence after the specialty staffing company said profit in the full-year ending in November is expected to be ahead of expectations by 5%.
Revenues in the first-half increased 25% to 203.1 million pounds and revenues in Germany rose 22%, in the U.S. increased 21%, and in the Netherlands surged 41%.
S&P 500 Logs Worst Weekly Loss Since March 2020, Oil Drops 6%
Barry Adams
17 Jun, 2022
New York City
Stocks closed higher in volatile trading but ended down after a tumultuous week.
Investors cheered on Wednesday after the Federal Reserve took strong action and lifted rates more than advertised but a day after reality of higher rates began to set in.
The Fed's 75-basis-point rate hike is the most aggressive step since 1994 but the Fed is still lagging behind by a wide margin when inflation is running near 9% and showing no sign of ebbing.
The Fed is also powerless in changing the trajectory of energy prices and in eliminating pandemic related supply chain disruptions.
In addition, most companies are raising prices more than cost increases fueling inflation higher.
In other words, the Fed's rate action may not impact inflation rooted in energy prices by much but most likely will slowdown the economy and increase unemployment rate.
The Fed can only impact demand and hope that lower demand will trend inflation downward but will not be able to root it out completely.
This outcome is not what investors were looking for when they were cheering for the larger and faster rate hikes.
The Fed is in a tough spot because fighting elevated inflation while keeping the economic engine humming is a delicate balance with many factors outside its control.
Skeptical investors are opting that the Fed may pursue faster rate hikes in future but that will certainly slow the economy faster too turning the Fed's expectation of 1.7% economic growth in 2022 largely out of reach.
Historically, the Fed has never managed to tame inflation above 6% without dipping the economy into a recession, meaning a profit recession and lower stock valuations.
Only time will tell if we will end up in a recession, soft landing, or just a slow down, but one thing is sure, rising rates almost always lower stock valuations.
At least today, tech stocks were in favor after a week of selling and bargain hunters were ready to add more stocks.
The yield on 10-year notes declined a fraction to 3.23% but mortgage rates remained elevated, inching closer to 6%.
The 30-year fixed-rate mortgage rates jumped to 5.78% for the week ending June 16, an increase of more than half a percentage point and the largest increase on a weekly basis since 1987, according to the survey conducted by Freddie Mac.
Mortgage rates have jumped little more than two-and-a-half percentage points from the beginning of the year and jumped from 2.93% a year ago.
Oil prices dropped to a four-week low on the growing prospects of economic recession and the U.S. dollar rose against a basket of currencies.
Russia's oil exports are going to increase in 2022 despite Western sanctions and European blockade, according to Tass news agency quoting deputy energy minister Pavel Sorokin.
In addition, oil from Venezuela is expected to reach refineries in Italy and Spain as early as next month, adding more oil supplies in the international markets.
Futures of crude oil declined 6.5% to $109.95 a barrel and natural gas fell 6.1% to $7.00 a unit.
The S&P 500 declined 0.6% to 3,674.98 and the Nasdaq Composite rose 1.4% to 10,798.90.
For the week, the S&P 500 fell 5.8% and registered its worst weekly loss since March 2020.
The Nasdaq Composite fell 4.8% in the week.
Tech stocks led the rebound in trading and Apple, Tesla, Amazon, Meta, Alphabet, and Microsoft rose between 1.0% and 1.5%.
Home Depot, Intel, JPMorgan, and 3M dropped to their new 52-week lows today.
Kroger Co declined 7.7% to $46.20 after the food retailer said sales in the first quarter ending May 21 rose 4.1% to $44.6 billion from a year ago.
Earnings increased to $664 million or 90 cents a share from $140 million or 18 cents in the same period.
The retailer guided comparable sales in the fiscal 2022 to increase between 2.5% and 3.5% and said in the quarter repurchased $665 million of its shares.
Kroger stock fell after the retailer said higher inflation is forcing more customers to select store branded items.