Daily Market Report 03-05-2024

Daily Market Report

As of 11:00 A.M. EST


Tech Giants Drag Down US Stocks After Torrid Rally: Markets Wrap – Bloomberg, 3/5/2024

  • Stocks came under pressure as a trio of tech heavyweights slid, with traders wading through mixed economic data in the run-up to Jerome Powell’s testimony to Congress.
  • Equities lost traction after a rally spurred concern about high valuations — especially in mega caps, leaving the group vulnerable to heightened moves in the face of bad news.
  • Apple’s iPhone woes in China deepened, while Advanced Micro Devices hit a US roadblock in selling an artificial intelligence chip to the Asian nation.
  • And Tesla extended its slide as its China shipments slumped.
  • Economic data showed growth in the US service sector cooled in February — partly due to a decline in employment — even as orders and business activity quickened.
  • Caution prevailed with Powell heading to Capitol Hill for his semiannual testimony before Congress, where the Federal Reserve chief is expected to reiterate the lack of urgency to cut rates.
  • The S&P 500 kept pushing away from its all-time high, while the tech-heavy Nasdaq 100 dropped over 1%.
  • Treasury 10-year yields slid eight basis points to 4.13%.
  • The so-called Magnificent Seven — comprising Apple, Microsoft, Nvidia, Amazon.com, Meta Platforms, Alphabet, and Tesla — have powered the S&P 500 to all-time peaks this year, partly fueled by the frenzy around AI.
  • The gains have left strategists scrambling to lift their end-2024 targets for the broader market.
  • The largest five equities in the S&P 500 trade at less than half the multiples of the “Four Horsemen”—Intel, Cisco Systems, Microsoft, and Dell Technologies—in March 2000, which surpassed 80x on a forward price-to-earnings basis, according to BI.
  • Target’s fourth-quarter profit beat estimates as the retailer continued its inventory management improvements and said its traffic decline slowed.
  • Nio’s annual loss widened last year as the Chinese electric vehicle maker faced fierce competition in the world’s biggest EV market.
  • Novo Nordisk’s diabetes drug Ozempic cut the risk of a range of harmful health outcomes linked to kidney disease by 24%, less than analysts had expected.
  • Bayer forecasted another year of falling profit and opted to stick with its conglomerate structure as it works to get on top of billions of dollars of legal woes that threaten the company’s long-term future.

Target Earnings Top Estimates on More Inventory Improvements – Bloomberg, 3/5/2024

  • Target’s fourth-quarter profit beat estimates as the retailer continued its inventory management improvements and said its traffic decline slowed.
  • Comparable sales declined 4.4%, slightly beating estimates but falling for the third consecutive quarter.
  • Store and digital traffic was down 1.7%, better than the 4.1% slide in the third quarter.
  • The company’s digital sales decline narrowed, and lower freight and supply-chain costs helped boost profits.
  • The company reported adjusted earnings of $2.98 a share, above Wall Street’s estimate.
  • Target said it reduced inventory by about 12% for the fourth quarter, better than analysts expected, meaning the retailer has less risk associated with markdowns.
  • Target said it expects comparable sales to range from unchanged to up 2% for the entire year, reversing a lengthy slump.
  • The company projects adjusted earnings of $8.60 to $9.60.
  • Both forecasts are roughly in line with estimates.

GitLab’s weak earnings guidance is punishing its stock – Market Watch, 3/5/2024

  • GitLab’s stock dropped in after-hours trading Monday after the company posted quarterly results that topped analysts’ estimates but issued weak guidance.
  • Revenue climbed 33% to $163.8 million from $122.9 million in the year-ago quarter.
  • Adjusted earnings were 15 cents a share.
  • Analysts surveyed by FactSet had expected an average net income of 8 cents a share on revenue of $157.9 million.
  • GitLab projected full-year adjusted earnings of 19 cents to 23 cents a share, while FactSet analysts forecast 35 cents a share.
  • In a conference call with analysts, GitLab Chief Financial Officer Brian Robins chalked up conservative guidance to churn and contraction among customers.

Target Starts $49 Membership Program to Compete With Amazon, Walmart – Bloomberg, 3/5/2024

  • Target is launching a new paid membership program to catch up with rivals whose own subscription plans are well established.
  • The new program, Target Circle 360, will feature unlimited free same-day delivery for orders over $35 in as little as an hour, along with free two-day shipping on orders from Target.com, the company said Tuesday during presentations to investors in New York.
  • It launches April 7 at a promotional rate of $49 a year through May 18, when it rises to $99 for members without a Target credit or debit card.
  • Target Circle 360 is the paid tier of an expanded version of the existing Target Circle loyalty program.
  • The company is rebranding its Target RedCard credit and debit cards as Target Circle Card, offering perks such as 5% off purchases.
  • It’s also retaining the free-to-join Target Circle membership.
  • Target said it would add further benefits to Target Circle 360, such as exclusive partnerships and experiences.

Boeing, Spirit AeroSystems Audit Finds ‘Multiple’ Quality Lapses, FAA Says – Bloomberg, 3/5/2024

  • US aviation safety regulators found Boeing Co. failed to comply with manufacturing quality control requirements on “multiple” occasions, according to an audit launched in response to a harrowing near-disaster involving a new Alaska Airlines 737 Max 9 jet in January.
  • The shortfalls were found at Boeing and Spirit AeroSystems Holdings, which makes most of the 737’s fuselage, the Federal Aviation Administration said on Monday.
  • Their findings were released days after the FAA issued a scathing review of deficiencies in Boeing’s safety culture, and the agency gave the company 90 days to draft a comprehensive plan to fix those shortcomings.
  • “The FAA identified non-compliance issues in Boeing’s manufacturing process control, parts handling and storage, and product control,” the agency said in the release.
  • The agency didn’t release the full audit report or details of the alleged violations, citing its ongoing probe of quality issues linked to the dramatic incident.

Jeff Bezos Surpasses Elon Musk as World’s Richest Person – Wall Street Journal, 3/5/2024

  • Jeff Bezos is back on top.
  • The Amazon founder is once again the world’s richest person, eclipsing Elon Musk and jumping atop the Bloomberg Billionaires Index for the first time since the fall of 2021.
  • Bezos’ net worth was $200 billion on Monday, according to Bloomberg.
  • Musk, Tesla’s chief executive, had a personal wealth of $198 billion, and LVMH chief Bernard Arnault’s was $197 billion.


US Services Growth Cools While Orders, Business Activity Pick Up – Bloomberg, 3/5/2024

  • Growth in the US service sector cooled in February, partly due to a decline in employment even as orders and business activity quickened.
  • The Institute for Supply Management’s composite gauge of services slipped 0.8 points to 52.6 last month.
  • The median estimate in a Bloomberg survey of economists called for 53.
  • The ISM measure of services employment fell back into contraction territory last month to 48.
  • The gauge of supplier deliveries dropped 3.5 points to 48.9, the lowest since October and indicating improved delivery times.
  • The gauge of new orders placed with service providers — a proxy of future demand — increased to 56.1, the highest since August.
  • Fourteen service industries reported growth last month, led by construction, retail trade, and public administration.
  • The group’s business activity index parallels ISM’s factory output gauge, which climbed to a five-month high 57.2.
  • The index of prices paid by service providers fell 5.4 points, the most since July 2022, to 58.6 in February.


Apple’s iPhone Woes in China Deepen With a 24% Sales Plunge – Bloomberg, 3/5/2024

  • Apple’s iPhone sales in China fell by a surprising 24% over the first six weeks of this year, according to independent research that may stoke fears about worsening demand for the marquee but aging device.
  • The figures from Counterpoint Research add to the pressure on the iPhone, which has struggled to replicate its usual success in the world’s largest smartphone arena.
  • To stimulate demand, Apple rolled out rare discounts on its web store in January, and online resellers are now cutting prices by as much as $180.
  • On Tuesday, iPhone assembly partner Hon Hai Precision Industry reported an 18% slump in sales over the first two months of the year.
  • The handset accounts for more than half of Apple’s sales and a substantial proportion of the Taiwanese firm’s income.

China Sets GDP Goal That Needs Policy Support ‘From All Fronts’ – Bloomberg, 3/5/2024

  • China set its annual growth target at around 5%, an ambitious goal that will pressure the nation’s top leaders to unleash more stimulus as they try to lift confidence in an economy hampered by a property slump and entrenched deflation.
  • Premier Li Qiang acknowledged the challenges facing the world’s second-largest economy as he delivered his first work report to the national parliament at its opening Tuesday.
  • “It is not easy for us to realize these targets,” he told thousands of delegates assembled at the Great Hall of the People in Beijing.
  • “We need policy support and joint efforts from all fronts.”
  • Analysts in a separate Bloomberg survey forecast that the economy would likely expand by 4.6% this year, underscoring policymakers’ challenges as they resist significant stimulus.

Nio Loses Another $2.9 Billion as China’s EV Battle Heats – Bloomberg, 3/5/2024

  • Nio’s annual loss widened last year as the Chinese electric vehicle maker faced fierce competition in the world’s biggest EV market.
  • < UNK> According to a statement Tuesday, • The Shanghai-based company’s net loss of 5.4 billion yuan in the fourth quarter brought its annual deficit to 20.7 billion yuan ($2.9 billion).
  • Gross margins for the fourth quarter came in at 7.5% compared to the 10.2% the market was looking for.
  • Nio now sees revenue of as much as 11.1 billion yuan for the current quarter, significantly below analyst expectations.
  • Nio now expects to ship as many as 33,000 cars in the first quarter, down from 50,045 vehicles in the previous three-month period.

Amer Sports losses narrow as China sales fuel holiday-quarter revenue growth – CNBC, 3/5/2024

  • Shares of Amer Sports, the maker of Wilson tennis rackets and Lousiville Slugger baseball bats, fell about 9% Tuesday after the company reported strong sales in China but a slowdown in wholesale orders.
  • Sales rose to $1.32 billion, up about 10% from $1.2 billion a year earlier.
  • In the three months ended December 31, the company reported a net loss of $94.9 million, or 25 cents per share, compared with $148.3 million, or 39 cents per share, a year earlier.
  • In 2023, sales in Europe, the Middle East, and Africa represented about 33% of total revenue, down from 36% in 2022.
  • North America made up about 39.5% of sales in 2023, down from 42.4% in 2022.
  • Conversely, China represented about 19% of sales in 2023, compared to 14.8% in 2022.
  • Sales in Amer’s APAC region represented 8% of total revenue in 2023, up from 7% in 2022.
  • For its fiscal first quarter, Amer expects reported revenue to grow between 6% and 8% and its adjusted gross margin to be around 53.5%.
  • It anticipates earnings to range between a loss per share of 1 cent to earnings per share of 2 cents.
  • For the full year, Amer expects sales to grow by a mid-teens percentage, and it anticipates an adjusted gross margin of between 53.5% and 54%.
  • It is forecasting earnings per share between 30 cents and 40 cents.

Novo kidney trial finds Ozempic cuts cardiac risks in people with diabetes – Reuters, 3/5/2024

  • Novo Nordisk’s widely used diabetes drug Ozempic delayed the progression of chronic kidney disease in diabetes patients, a large late-stage study found, cutting the risk of major cardiac events and death by 24%.
  • The trial results indicate that drugs from the GLP-1 class, which suppress appetite by mimicking gut hormones, have medical benefits for conditions beyond type 2 diabetes and weight loss, which are their initial purposes.
  • Around 40% of people with type 2 diabetes have chronic kidney disease, and some 700 million patients are affected globally, according to the Danish drugmaker.
  • Novo stopped the trial in October, almost a year ahead of schedule, because it was clear from an interim analysis that the treatment would succeed.
  • “The trial achieved its primary endpoint by demonstrating a statistically significant and superior reduction in kidney disease progression, major adverse cardiovascular events (MACE), and death of 24% for people treated with semaglutide 1.0 mg compared to placebo,” Novo said in a statement on Tuesday.
  • The trial called FLOW started in 2019. It involved roughly 3,500 patients with type 2 diabetes and moderate to severe chronic kidney disease, who were given 1 milligram (mg) of once-weekly semaglutide in addition to standard care.
  • The 24% reduction in the risk of kidney disease-related events was slightly below some investors’ expectations, analysts from Sydbank and Jefferies said.

Bayer calls off break-up to tackle challenges for up to 3 years – CNBC, 3/5/2024

  • Bayer said on Tuesday it would hold off on plans to break up the diversified group to focus instead on improving the operating performance, resolving litigation, and paying off debt.
  • “Our answer is ‘not now’ – and this shouldn’t be misunderstood as ‘never,’” CEO Bill Anderson said.
  • The cutbacks will reduce annual costs by 2 billion euros from 2026, it added.
  • The company guided that 2024 earnings before interest, taxes, depreciation, and amortization (EBITDA) would slip to between 10.7 billion and 11.3 billion euros on a currency-adjusted basis, down from 11.7 billion in 2023.
  • A consensus posted on the company’s website showed analysts, on average, were expecting this year’s earnings to be at the lower bound of the target range, while last year’s figure was better than expected.
  • About 54,000 cases remain outstanding after 113,000 claims were settled or found not eligible, according to its annual report.
  • Bayer’s net debt at the end of 2023 was up 8.5% to 34.5 billion euros.
  • The company said it would seek to reduce net debt by 1-2 billion this year.

Microsoft, Walmart Back Israel VC’s $500 Million in Fund Raising – Bloomberg, 3/5/2024

  • Israel-based venture capital firm Team8 raised $500 million from investors, including Microsoft, Walmart, and Cisco Systems, for funds focusing on local startups.
  • Moody’s and Temasek Holdings also backed the three new funds and follow-on funding that brings Team8’s assets under management to more than $1 billion, the investment firm said in a statement on Tuesday.
  • The closings come as Israel’s ongoing war with Hamas has shut down large parts of the economy.
  • Venture firms focusing on Israeli tech startups have pulled in more than $1 billion since the war began on October 7.
  • Two funds will focus on seed rounds for cyber, data infrastructure, artificial intelligence, and digital health.
  • The third one will invest in seed, and Series A rounds for a range of technology startups, and about $85 million was raised for follow-on funds.
  • The three new funds will invest in more than 30 startups, according to Team8.

Netanyahu’s War Cabinet Is at War With Itself – Wall Street Journal, 3/5/2024

  • Fearing a breakdown in ties between the White House and Israel over the war in Gaza, Benny Gantz, chief political rival to Israeli Prime Minister Benjamin Netanyahu and a minister in his wartime cabinet, planned a trip to Washington.
  • When Gantz informed Netanyahu about the trip, the prime minister was angry.
  • “There’s only one prime minister,” Netanyahu told Gantz, who defied the prime minister and met with Vice President Kamala Harris on Monday.
  • The move by Gantz to pursue the trip to Washington came days after the third member of the wartime cabinet, Defense Minister Yoav Gallant, demanded the government pass legislation to draft ultra-Orthodox men into the army—a move widely seen as one that could topple Netanyahu’s coalition that relies on two ultra-Orthodox political parties.
  • Gantz, who leads the center-right National Unity party, and Netanyahu, who leads the right-wing Likud party, have been longtime rivals who put aside their differences after the October 7 attack by Hamas that sparked the war in Gaza to form an emergency government.
  • Along with Gallant, they comprise the three-member war cabinet responsible for all political wartime decisions.
  • The three men are a team of rivals, each with their own bitter back story of gripes and slights against each other.
  • Each also has its political ambitions, with most polls showing Gantz would likely trounce Netanyahu if elections were held today.

Alibaba Backs $2.5 Billion AI Firm in Second Big 2024 Deal – Bloomberg, 3/5/2024

  • Alibaba Group Holding is leading a financing round of at least $600 million for Chinese AI startup MiniMax, spearheading its second major deal this year as it unleashes capital in pursuit of growth.
  • The two-year-old firm has secured funds from Alibaba and other investors at a valuation of more than $2.5 billion, according to people familiar with the matter.
  • The fundraising remains in progress, but Alibaba and HongShan, formerly Sequoia China, have committed to the financing, one of the people said, asking not to be identified talking about private discussions.
  • The terms could still change because negotiations with more investors are proceeding, the people added.

China’s BYD Brings $49,400 Sedan to India’s Budding EV Market – Bloomberg, 3/5/2024

  • BYD launched its third electric car in India as the Chinese carmaker seeks to increase its market share in its budding electric vehicle segment.
  • The Shenzhen, Guangdong-based carmaker launched Seal, a premium electric sedan, with the price starting at 4.1 million rupees ($49,458), Sanjay Gopalakrishnan, vice president at BYD’s India unit, told reporters in New Delhi Tuesday.
  • “We’re in the premium category, and we want to be the leader in that,” he said.
  • All of BYD’s offerings in India — Atto 3 sport utility vehicles and E6 multipurpose vehicles — currently cost more than 3 million rupees.
  • BYD sold 1,877 cars in 2023, up 314% from a year earlier, according to the Federation of Automobile Dealers Associations of India.
  • For January alone, the company sold 150 cars locally, 7% more than the same month last year.

Factmonster – TODAY in HISTORY

  • The Boston Massacre, a pre-Revolutionary incident that grew out of anger towards British troops, occurred. Five anti-British rioters were killed. – 1770
  • In the last free elections in Germany until after World War II, the Nazi Party received 44% of the vote. – 1933
  • Winston Churchill delivered his famous Iron Curtain speech, “From Stettin in the Baltic to Trieste in the Adriatic, an Iron Curtain has descended across the continent.” – 1946
  • North and South Korean representatives met for peace talks for the first time in 25 years. – 1997

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