Daily Market Report 09-11-2023

Daily Market Report

As of 11:00 A.M. EST


Stocks Grind Higher as Dollar Halts Hot Streak: Markets Wrap – Bloomberg, 9/11/2023

  • Stocks advanced ahead of economic readings that will help shape Wall Street’s views on how close the Federal Reserve is from wrapping up its tightening cycle. Bonds were relatively stable. The S&P 500 hovered near the 4,500 mark.
  • The S&P 500 rose 0.5%. The Nasdaq 100 rose 0.6%. The Dow Jones Industrial Average rose 0.2%.
  • Tesla rallied as Morgan Stanley upgraded the company, saying its Dojo supercomputer may boost market value by as much as $500 billion.
  • Qualcomm climbed after Apple extended a deal with the chipmaker.
  • Traders are also gearing up for the iPhone maker’s new product unveiling on Tuesday — with Apple looking to pull out of a sales slump.
  • J.M. Smucker slumped after agreeing to acquire Twinkies maker Hostess Brands for about $5.6 billion.
  • The People’s Bank of China gave a strong warning to speculators to steer clear of destabilizing the yuan, while the head of the Bank of Japan took a more subtle approach in hinting at the possibility of an eventual policy shift, in an interview which sent the yen up about 1%.
  • The monthly consumer-price index report on Wednesday will provide the latest insight into how much further the central bank may need to go to pull inflation back toward its target.
  • With the economy defying gloomy forecasts and energy prices rising, economists are forecasting the biggest monthly jump in 14 months — and the swaps market is pricing in risk that it will come in even higher than expected.
  • T-Mobile US is tapping the US investment-grade bond market on Monday as blue-chip firms rush to raise fresh capital ahead of key inflation data later this week.
  • More than $110 billion in bonds were sold globally last week — the busiest start to September on record — with issuance heavily skewed to debt due in under 10 years.
  • The barrage was led by investment-grade issuers, teeing up a wave of junk, including billions of dollars in buyout funding.
  • RTX’s plan to address the latest flaw in its marquee commercial jet engine will ground hundreds of Airbus SE A320neo aircraft over the next three years, a fresh source of disruption to global airlines’ post-pandemic recovery.
  • The company cut its full-year sales outlook and will take a roughly $3 billion charge in the third quarter tied to the plan to address the flawed parts.
  • Instacart and its backers set the stage for an initial public offering that may value the grocery-delivery business at up to $9.3 billion, less than a quarter of what it was worth at the height of the Covid-19 pandemic.
  • The company and its backers are seeking to raise as much as $616 million.
  • Arm Holdings is considering raising the price range of its initial public offering after meeting investors for what would be the world’s largest listing this year, according to people familiar with the matter.
  • JetBlue Airways agreed to transfer some Spirit Airlines gates and flight slots at three airports to help lessen antitrust concerns over its pending acquisition of the low-cost carrier.
  • The Stoxx Europe 600 rose 0.4%.
  • The Bloomberg Dollar Spot Index fell 0.6%.
  • The yield on 10-year Treasuries advanced two basis points to 4.29%.
  • West Texas Intermediate crude was little changed.
  • Gold futures rose 0.2% to $1,946.50 an ounce.

Qualcomm Inks Deal With Apple to Supply iPhone Chips Through 2026 – Wall Street Journal, 9/11/2023

  • Qualcomm reached a three-year deal with Apple to supply the iPhone maker with 5G communications chips, the latest sign that Apple’s effort to make them in-house has yet to bear fruit.
  • The deal might indicate that Apple’s long-running effort to develop its own modems isn’t making its way into the company’s flagship phones any time soon.
  • Qualcomm said Monday it would supply Apple with the modem chips for smartphone launches in 2024, 2025 and 2026, in a deal with terms similar to a previous arrangement between the companies.

J.M. Smucker to Buy Twinkies Maker Hostess for $4.6 Billion – Wall Street Journal, 9/11/2023

  • J.M. Smucker is buying Twinkies owner Hostess Brands for around $4.6 billion, bringing together two big names in snacks.
  • Smucker said Monday that it will acquire Hostess for $34.25 a share in cash and stock.
  • The deal also includes about $900 million in debt, which Smucker said brings the total value to $5.6 billion.
  • Shares of Hostess, which closed Friday at $28.11, rose 18.8% in morning trading, while shares of Smucker fell 7.3%.
  • The deal is expected to close in the third quarter of Smucker’s current fiscal year, which ends on April 30.
  • Smucker prevailed in a heated competition with General Mills, parent of Cheerios and Betty Crocker.

Generic Drugs Should Be Cheap, but Insurers Are Charging Thousands of Dollars for Them – Wall Street Journal, 9/11/2023

  • The cancer drug Gleevec went generic in 2016 and can be bought today for as little as $55 a month.
  • But many patients’ insurance plans are paying more than 100 times that.
  • CVS Health and Cigna can charge $6,600 a month or more for Gleevec prescriptions, a Wall Street Journal analysis of pricing data found.
  • They are able to do that because they set the prices with pharmacies, which they sometimes own.
  • Once the patent on an expensive medicine runs out, lower-priced copies go on sale, promising significant savings.
  • But certain generic drugs—for cancer, multiple sclerosis and other complicated diseases—are still costing thousands of dollars monthly.
  • Across a selection of these so-called specialty generic drugs, Cigna and CVS’s prices were at least 24 times higher on average than roughly what the medicines’ manufacturers charge, the Journal found.
  • The prices at UnitedHealth Group, which also owns a large health insurer, were 3.5 times as much, according to the analysis of data compiled by 46brooklyn Research, a nonprofit drug-pricing analytics group.

Disney, Charter near deal that would end cable blackout, sources say – CNBC, 9/11/2023

  • The blackout fight between cable giant Charter Communications and Disney appears to be coming to a close.
  • Hours ahead of “Monday Night Football,” which airs on Disney’s ESPN, the companies are expected to reach a deal that would allow millions of Charter cable customers to watch the game, CNBC’s David Faber reported Monday, citing sources.
  • Representatives for Disney and Charter didn’t immediately respond to requests for comment.
  • Terms of what the deal would entail were unclear Monday morning.
  • The dispute has been ongoing since late August when carriage renewal negotiations broke down between the two companies and left millions of customers without Disney TV channels, including ESPN, FX and Disney Channel.

Instacart Kicks Off IPO, Aiming to Sell Stock at $26 to $28 a Share – Wall Street Journal, 9/11/2023

  • Instacart’s much-anticipated IPO officially kicked off Monday, as the grocery delivery company revealed the price it hopes to fetch for its stock in a regulatory filing.
  • The San Francisco company and selling shareholders are aiming to sell 22 million shares at $26 to $28 apiece, raising $572 million to $616 million, the filing shows.
  • With roughly 331 million shares outstanding when including shares to be issued to Instacart employees and executives, that translates to a fully diluted valuation of around $8.6 billion to $9.3 billion, as The Wall Street Journal earlier reported.

RTX Engine Recall to Cut Profit by Up to $3.5 Billion – Wall Street Journal, 9/11/2023

  • RTX said its profit will take up to a $3.5 billion hit from the recall of hundreds of Pratt & Whitney jet engines over the next several years.
  • The company said Monday it would remove about 600 to 700 Pratt engines for inspection over the next three years as a result of the previously disclosed issue, which was related to the powder metal used to make certain parts.
  • Most of those engines will be inspected this year and early next year.
  • The recall has exacerbated the shortage of new, fuel-efficient engines that has sidelined dozens of Airbus and Boeing jetliners worldwide after parts wore out faster than expected.
  • RTX plans to book a roughly $3 billion pretax operating-profit charge in the third quarter related to the issue.
  • The company cut its full-year sales outlook and said the issue will likely reduce its 2025 free cash flow by about $1.5 billion.
  • The company said it is also analyzing the potential impact from the powder-metal issue on other models of its engine, though other models are currently expected to be far less impacted.

Meta Is Developing a New, More Powerful AI System as Technology Race Escalates – Wall Street Journal, 9/11/2023

  • The parent of Facebook and Instagram is working on a new artificial-intelligence system intended to be as powerful as the most advanced model offered by OpenAI, the Microsoft-backed startup that created ChatGPT, according to people familiar with the matter.
  • Meta aims for its new AI model, which it hopes to be ready next year, to be several times more powerful than the one it released just two months ago, dubbed Llama 2.
  • The planned system, details of which could still change, would help other companies to build services that produce sophisticated text, analysis and other output.
  • Meta expects to start training the new AI system, known as a large language model, in early 2024, some of the people said.
  • While Meta joined with Microsoft to make Llama 2 available on Microsoft’s cloud-computing platform Azure, it plans to train the new model on its own infrastructure, some of the people said.

JetBlue Sheds Spirit Gates in Boston, Newark to Ease DOJ Worries – Bloomberg, 9/11/2023

  • JetBlue Airways agreed to transfer some Spirit Airlines gates and flight slots at three airports to help lessen antitrust concerns over its pending acquisition of the low-cost carrier.
  • JetBlue will shift all of Spirit’s holdings at Boston Logan International and Newark Liberty International and part of its assets at Fort Lauderdale-Hollywood International in Florida to Allegiant Travel, according to a statement Monday.
  • JetBlue previously agreed to divest Spirit’s holdings at New York’s LaGuardia Airport to deep discounter Frontier Group Holdings.
  • The US Justice Department is trying to break up the JetBlue-Spirit deal on grounds it would give the combined company too much market power in certain areas and lead to higher fares for consumers.
  • JetBlue says the acquisition is necessary for it to compete with larger carriers that control more than 80% of the US commercial airline market.


Yellen ‘Feeling Very Good’ About Soft Landing for US Economy – Bloomberg, 9/11/2023

  • Treasury Secretary Janet Yellen said she’s increasingly confident that the US will be able to contain inflation without major damage to the job market, hailing data showing a steady slowdown in inflation and a fresh influx of job seekers.
  • “I am feeling very good about that prediction,” Yellen said Sunday when asked about her previous hopes that the US would avoid a recession while still reining in consumer-price gains.
  • “I think you’d have to say we’re on a path that looks exactly like that.”
  • Speaking in an interview on her aircraft en route back from attending the Group of 20 summit in New Delhi, the Treasury chief also played down any risk from China’s efforts to increase the sway from the separate BRICS grouping of major emerging nations.
  • “The G-20 “remains the premier forum for global cooperation,” she said.
  • “Every measure of inflation is on the road down,” Yellen said.
  • Seeing some easing in the labor market is “important and a good thing,” and “it’s a clear plus” that it’s coming through more people looking for work, Yellen said.

Voters Feel Better About the Economy, but Few Credit Biden, Polls Find – Wall Street Journal, 9/11/2023

  • Voters have a slightly rosier view of the economy now that inflation is easing.
  • Few are giving President Biden credit for the improvement.
  • That is the takeaway from the latest Wall Street Journal poll and other surveys that show Americans’ outlook has brightened in recent months.
  • Democrats and independent voters are driving the shift in more positive perceptions of the economy as the Biden campaign highlights ebbing risks that the U.S. will tip into a recession.
  • Yet most voters still don’t like how the president has managed the economy, surveys show.
  • Two-thirds of voters who usually side with Democrats say the economy is in excellent or good condition, up 9 percentage points from December, the latest Journal poll found.
  • Among independents, the share who view the economy favorably also rose 9 points to 36%.
  • Eight percent of Republicans say the same, unchanged from December.
  • At the same time, roughly three in five voters polled by the Journal disapprove of Biden’s handling of the economy, and 63% of voters don’t like how the president has handled inflation.
  • In the Journal poll, roughly 55% of Democratic and Democratic-leaning voters said they believed the economy had improved under Biden.
  • Among all voters, more said the country was moving in the right direction—23% versus 15% in April.

Hurricane Lee Strengthens Back to Category 3 Storm; Path Still Unclear – Wall Street Journal, 9/11/2023

  • Hurricane Lee was upgraded to a Category 3 storm, and is expected to remain a powerful hurricane over the Atlantic Ocean well into the week.
  • It is too early to predict the storm’s exact path, or if it will make landfall.
  • If it does, it won’t happen until late in the week, said Dan DePodwin, AccuWeather’s director of forecast operations.
  • The northern part of the U.S. East Coast, from Massachusetts to Maine, is most at risk for possible wind and rain.
  • The storm could also turn away from the mainland and have little impact on North America.
  • It strengthened into a Category 4 storm before losing some of its intensity over the weekend.
  • By Monday morning, Lee was about 340 miles north of the northern Leeward Islands, the hurricane center said.
  • It is expected to stay north of the Bahamas and stay away from the lower U.S. East Coast as it churns toward New England and possibly Nova Scotia.


Morocco Sees IMF and World Bank Meetings Going Ahead Despite Earthquake – Bloomberg, 9/11/2023

  • Morocco expects the International Monetary Fund and World Bank annual meetings due to take place in Marrakech next month to go ahead despite a major earthquake that’s left about 2,500 people dead.
  • Morocco’s strongest quake in 120 years struck the High Atlas mountains on Sept. 8, tearing across some of its poorest regions and shaking a city that’s among its top tourist destinations.
  • Rescue efforts are ongoing, with the World Health Organization putting the number of people affected at some 300,000.
  • Moroccan officials overseeing preparations for the Oct. 9-15 meetings asked the IMF and World Bank on Saturday for the communication plans they will address to participating delegations in the aftermath of the disaster, a Moroccan government official said.
  • The official declined to be named because they weren’t authorized to discuss the plans with media.
  • Morocco will follow up on those communication plans at the end of a three-day period of national mourning declared on Saturday, the person said.

U.S. Military Exercises in Russia’s Backyard Cause Alarm at the Kremlin – Wall Street Journal, 9/11/2023

  • As Washington seeks to exploit cracks in Russia’s traditional sphere of influence, U.S. forces began joint military exercises with troops from Armenia, the small South Caucasus country that has been a close Russian ally for nearly 200 years.
  • In a possible sign of the geopolitical realignment driven by Russia’s invasion in Ukraine, U.S. forces commenced on Monday 10 days of joint exercises with Armenian soldiers.
  • About 175 Armenian soldiers will train with about 85 soldiers from U.S. Army Europe and Africa Command outside the capital of Yerevan.
  • Since the breakup of the Soviet Union, Armenia has been an important security partner for Russia and houses one of a small handful of military bases the Kremlin maintains on foreign soil.
  • The country has also remained a member of the Collective Security Treaty Organization, a security alliance of former Soviet countries, which Moscow has developed as an answer to the North Atlantic Treaty Organization.
  • But Armenia has increasingly worked to shrug off Russian influence, particularly in the wake of Russia’s invasion of Ukraine.
  • Earlier this year, Prime Minister Nikol Pashinyan directly denied a Russian announcement that the CSTO would host exercises this year in Armenia.
  • He also refused to send troops for those exercises, which were ultimately held in Belarus earlier this month.
  • Last week, Kremlin spokesman Dmitry Peskov expressed “alarm” over the exercises.

Kim Jong Un Travels to Russia, His Bulletproof Train Spotted Ahead of Putin Meeting – Wall Street Journal, 9/11/2023

  • As North Korean leader Kim Jong Un traveled to Russia, he likely did so in the preferred manner of Pyongyang’s ruling family: cloaked in secrecy, self-protection and style.
  • Kim, the third-generation dictator, plans to meet Russian President Vladimir Putin, state media from both countries said on Monday—the first official confirmation of the summit between the two leaders.
  • The reports didn’t specify when or where specifically the exchange will take place.
  • Kim “will meet and have a talk with Comrade Putin,” North Korea’s state media said.
  • Earlier on Monday, Kim’s personal, bulletproof train had left Pyongyang and been spotted en route toward Russia, according to a South Korean government official.
  • U.S. officials had said they expected Kim to soon meet with Putin, where the two could advance talks about a sale of Pyongyang’s munitions to help Moscow replenish its supplies for its war in Ukraine.
  • Putin on Monday and Tuesday is scheduled to travel to Vladivostok, about 750 miles from Pyongyang, and take part in the Eastern Economic Forum, said Kremlin spokesman Dmitry Peskov, in a report carried by Russia’s state-run TASS news agency.
  • Vladivostok, on Russia’s east coast, is close enough for Kim to reach by train in a day.

Alibaba’s Former Chairman Daniel Zhang Steps Down From Last Executive Role at Company – Wall Street Journal, 9/11/2023

  • Alibaba Group Holding’s former chairman Daniel Zhang stepped down as head of the Chinese tech giant’s cloud computing arm, less than three months after he said he would relinquish the company’s top jobs to focus on the unit.
  • Zhang’s resignation also came on the same day he handed over his Alibaba Group CEO and chairman titles to his successors.
  • Eddie Wu, who previously served as chief technology officer in major Alibaba business units, and Brooklyn Nets owner Joe Tsai, a close ally of the company’s iconic co-founder Jack Ma, took over as Alibaba Group’s CEO and chairman respectively on Sunday.
  • Zhang’s departure from his last executive position at Alibaba caught many employees and investors by surprise.
  • Wu has taken over as the acting head of the cloud unit, an Alibaba spokesperson said.
  • According to a letter sent by Tsai to staff on Sunday, Zhang had volunteered to resign from the cloud unit and would set up a fund to support Alibaba’s technology ecosystem and investment.
  • Alibaba plans to invest $1 billion in the fund, Tsai said in the letter, which was viewed by The Wall Street Journal.

Factmonster – TODAY in HISTORY

  • Alexander Hamilton was appointed the first Secretary of the Treasury. – 1789
  • President Franklin Delano Roosevelt dedicated Boulder Dam (now Hoover Dam) in Nevada. – 1936
  • The Beatles recorded their first single, Love Me Do. – 1962
  • Former Soviet leader Nikita Khrushchev died at age 77. – 1971
  • In Scotland, voters approved the establishment of a parliament to run their domestic affairs, after 290 years of union with England. – 1997
  • Two hijacked commercial jets were crashed by terrorists into the north and south towers of the World Trade Center in New York City, causing the collapse of both towers. A short while later, another plane was crashed into the Pentagon, and fourth into a field near Shanksville, Pa. – 2001
  • Armed gunmen stormed the American consulate in Benghazi and killed U.S. ambassador to Libya Christopher Stevens and three other embassy officials. – 2012

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