US FINANCIAL MARKET
Wall Street Traders on Hold Before Powell’s Speech: Markets Wrap – Bloomberg, 12/1/2023
- Stocks, bonds and the dollar saw small moves, with traders unwilling to make any significant bets as they await Jerome Powell’s remarks for clues on the outlook for the Federal Reserve’s next steps.
- The S&P 500 wavered after notching one of its best November rallies on record.
- The Nasdaq 100 fell 0.4%. The Dow Jones Industrial Average rose 0.2%.
- The megacap space once again underperformed, with Tesla and Microsoft down at least 1.5%.
- The yield on 10-year Treasuries declined two basis points to 4.3%.
- The Bloomberg Dollar Spot Index was little changed.
- A measure of US factory activity shrank for a 13th straight month in November as high interest rates continue to hammer the goods-producing side of the economy.
- Fed Bank of Chicago President Austan Goolsbee voiced confidence that inflation is still on track to return to the US central bank’s 2% target, praising the latest data that showed receding price pressures.
- Short-sellers were caught flat-footed as the S&P 500 roared back from a three-month slump with the strongest gain since July 2022, hammering them with mark-to-market losses of over $80 billion, according to data from S3 Partners.
- Elsewhere, oil held losses after OPEC+’s promised further output cuts but was hazy on details.
- Pfizer’s second weight-loss setback this year is a warning sign that breaking into the lucrative obesity market isn’t going to be easy.
- Dell Technologies reported revenue that declined more than expected, buffeted by continued sluggish corporate demand for personal computers.
- Marvell Technology’s fourth-quarter revenue forecast fell short of expectations and its third quarter also missed estimates.
- Ulta Beauty, a cosmetics retailer, reported forecast-beating comparable sales growth in the third quarter.
- The Stoxx Europe 600 rose 0.9%.
Ulta Beauty shares pop as sales climb 6% – CNBC, 12/1/2023
- Shares of Ulta Beauty rose in after-hours trading Thursday, as the company said its third-quarter sales rose while shoppers showed once again they’re willing to spend on fragrances, skin care and more even when the budget is tight.
- Revenue: $2.49 billion vs. $2.47 billion expected.
- Comparable sales, a metric that tracks Ulta stores open at least 14 months along with online sales, increased 4.5% year over year.
- Transactions went up by nearly 6% and average ticket declined by 1.4% compared with the year-ago period.
- Sales in the makeup category were flat, as mid-single-digit growth in mass brands of makeup offset a decline in prestige makeup, he said.
- Sales in the hair segment decreased in the low single-digit range, as customers bought fewer hair tools.
- Earnings per share: $5.07 vs. $4.95 expected.
- It said it expects net sales for the fiscal year to be between $11.10 billion and $11.15 billion, and comparable sales to range from 5.0% to 5.5%.
- It said adjusted earnings per share for the year will range from $25.20 to $25.60.
Dell Sales Miss Estimates With Corporate PCs Still Lagging – Bloomberg, 12/1/2023
- Dell Technologies reported revenue that declined more than expected, buffeted by continued sluggish corporate demand for personal computers.
- Fiscal third-quarter sales fell 10% to $22.3 billion, the company said Thursday in a statement.
- Analysts, on average, estimated $23 billion.
- The client solutions group, which includes corporate and consumer PC sales, dropped 11%, far short of analysts’ expectations.
- Revenue will be about $22 billion in the period ending in January, Chief Financial Officer Yvonne McGill said on a conference call after the results were released.
- Analysts, on average, projected $23.9 billion.
- The PC unit will see sales decline in the “low single-digits sequentially,” McGill said, although “we’re seeing pockets of stability in CSG demand that have yet to see a broader recovery in the PC market.”
Marvell Stock Drops After Earnings. Analysts Say Be Patient on the AI Story. – Barron’s, 12/1/2023
- The semiconductor company’s earnings and guidance looked to have disappointed the market but analysts remained confident that Marvell will gain from investments in artificial intelligence.
- Sales came to $1.42 billion, down 8%.
- Analysts polled by FactSet had expected earnings of 40 cents a share on sales of $1.4 billion.
- Marvell earned an adjusted 41 cents a share for the October quarter quarter, down 28% from the same period a year earlier.
- Marvell forecast adjusted earnings in the fourth quarter of 46 cents a share on sales of $1.42 billion, the midpoint of its guidance.
- Analysts had been looking for earnings of 49 cents a share on sales of $1.46 billion.
- Marvell—which designs data storage and networking chips—was boosted earlier this year when it said it expected AI-related revenue to be around $400 million in its current fiscal year and double again the next fiscal year.
UiPath’s stock soars after profit, revenue and ARR rise above forecasts – Market Watch, 12/1/2023
- Shares of UiPath soared late Thursday after the automation-software company reported fiscal-third-quarter earnings and revenue that rose above expectations, amid strength in the licenses and subscription-services businesses.
- Total revenue grew 24% to $325.9 million, above the FactSet consensus of $315.6 million.
- Licenses revenue jumped 25.3% to $148.1 million, well above the FactSet consensus of $137.5 million, and subscription-services revenue climbed 28.7% to $167.5 million to top expectations of $166.9 million.
- Meanwhile, professional services and other revenue dropped 28.4% to $10.3 million, to miss forecasts of $11.2 million.
- Annual recurring revenue increased 24% to $1.38 billion, above the FactSet consensus of $1.36 billion.
- Excluding nonrecurring items, such as stock-based compensation expenses, adjusted earnings per share rose to 12 cents from 5 cents to beat the FactSet consensus of 7 cents.
- For the fourth quarter, the company expects revenue of $381 million to $386 million, which surrounds the FactSet consensus of $383 million.
North Face Owner VF Lays Off 500 Employees During Turnaround – Bloomberg, 12/1/2023
- North Face owner VF laid off about 500 salaried employees amid a new transformation plan that includes cost cutting and debt reduction.
- Denver-based VF has been working to turn the business around as sales slump in North America, due largely to struggles at its Vans brand.
- In October, VF withdrew its guidance for the fiscal year and said it will replace the president of Vans.
- It also introduced the transformation plan, which is expected to drive $300 million of cost savings.
- VF had 33,000 total employees as of April, 60% of whom work full time.
Apple and Paramount Discuss Bundling Their Streaming Services – Wall Street Journal, 12/1/2023
- Apple and Paramount Global have discussed bundling their streaming services at a discount, the latest attempt by rival entertainment giants to team up as they look to make their offerings more affordable and attractive.
- The companies have talked about offering a combination of Paramount+ and Apple TV+ that would cost less than subscribing to both services separately, according to people familiar with the discussions.
- The discussions are in their early stages, and it is unclear what shape a bundle could take, they said.
- Both Apple TV+ and Paramount+ had a customer-defection rate—known in the industry as churn—of more than 7% in October, a higher rate than the 5.7% average for the streaming industry as a whole, according to Antenna data.
Pfizer pulls the plug on twice-daily obesity pill as study disappoints – Reuters, 12/1/2023
- Pfizer said on Friday it would not advance a twice-daily version of oral weight-loss drug danuglipron into late-stage studies after most patients dropped out of an earlier trial with high rates of side effects such as nausea and vomiting.
- Although Pfizer has a once-daily version of the weight-loss pill in the works, the decision still marks a blow to its ambition of entering a booming market that analysts expect to be worth $100 billion by the end of the decade.
- Pfizer said the drug cut weight by as much as 13% at 32 weeks in adults with obesity and without type 2 diabetes in a mid-stage trial.
- That compares with 15% for Eli Lilly’s experimental oral drug at 36 weeks at a high dose.
- Pfizer said it would now focus on a once-daily, modified release version of danuglipron and that it was “gathering the data to understand its potential profile.”
- Data on how this version interacts with the human body is expected in the first half of next year.
- Pfizer said while the common side effects in the twice-daily version study were mild, it saw high rates of those events in the trial.
- High discontinuation rates, greater than 50%, were seen across all doses, compared with about 40% with placebo.
- It said that up to 73% of patients in the trial had nausea; up to 47% vomiting and up to 25% diarrhea.
Tesla’s Cheapest Cybertruck Will Cost $60,990 and Be Available in 2025 – Bloomberg, 12/1/2023
- After two years of delays and production snags, Tesla has finally handed the first Blade Runner-esque Cybertrucks over to customers.
- Chief Executive Officer Elon Musk delivered a handful of vehicles Thursday at Tesla’s Austin headquarters to their new owners, including Reddit co-founder Alexis Ohanian.
- The handovers were part of a live-streamed launch event on X, the social media platform Musk owns.
- The vehicles will start at $60,990, excluding savings, which Tesla estimates could take the purchase price down to $49,890.
- The battery range for those rear-wheel drive Cybertrucks, available in 2025, is 250 miles.
- The most expensive of the three models, the so-called Cyberbeast, will reach up to 320 miles and be available next year.
- Cybertrucks can tow up to 11,000 pounds and have a 2,500-pound payload capacity.
Occidental Jet Visits Buffett’s Hometown as Oil Driller Considers Shale Deal – Bloomberg, 12/1/2023
- Occidental Petroleum’s private jet touched down in Omaha this week, home to its biggest investor Warren Buffett, as Chief Executive Officer Vicki Hollub considers a shale oil deal worth at least $10 billion.
- The plane flew from Houston, where Occidental’s headquarters are located, to Eppley Airfield in Omaha on Nov. 27 and stayed grounded for about three hours, according to ADS-B Exchange, a flight tracking website.
- It then flew to New York for a brief stop before returning to Houston just after midnight.
- The trip came just days before it was reported that Occidental is considering buying CrownRock, one of the Permian Basin’s biggest privately owned oil producers, in a deal valued above $10 billion.
- It’s the second time Oxy’s jet visited Omaha this month, having not previously made the trip since May, the flight data show.
- Berkshire Hathaway, Buffett’s conglomerate, owns 25.9% of Occidental after building up the stake during the last three years.
Neiman Marcus Rejects $3 Billion Takeover Bid by Saks – Wall Street Journal, 12/1/2023
- Saks Fifth Avenue wants to buy rival Neiman Marcus.
- Neiman is open to a deal.
- But the two luxury retailers can’t agree on the terms of a marriage.
- This week, Neiman rejected Saks’s most recent takeover offer, which valued the upscale chain at close to $3 billion, according to people familiar with the situation.
- Neiman objected to the deal’s structure, a significant portion of which wasn’t in cash, some of the people said.
- The two companies have been negotiating for months, the latest round of on-again, off-again talks that date back more than a decade.
- The talks are continuing, but a deal, if one is reached, is unlikely to come before early next year, the people continued.
- Both companies are controlled by investor groups.
Panera Bread reportedly files to go public again through IPO – CNBC, 12/1/2023
- Panera Bread has confidentially filed to go public again, the Financial Times reported.
- The restaurant chain, known for its soups, sandwiches and bagels, has been signaling for months that it’s looking to go public through an initial public offering.
- In May, Panera announced a CEO transition and said the leadership changes were “in preparation for its eventual IPO” — amid a two-year IPO drought that ended in the fall.
- Mediterranean restaurant chain Cava, whose chair is Panera founder Ron Shaich, was among the trickle of companies that went public this year.
- Investors had mixed reactions to the slate of offerings.
US ECONOMY & POLITICS
U.S. Factory Activity Stays Sluggish in November — ISM – Morningstar, 12/1/2023
- Activity among U.S. goods manufacturers contracted at unchanged pace in November as production fell back.
- The index of manufacturing activity remained at 46.7, the same rate as in October, the Institute for Supply Management said Friday.
- This was weaker than the slightly higher reading of 47.7 expected by economists in a poll conducted by The Wall Street Journal.
- A reading above 48.7 over a period of time in the ISM index generally indicates expansion in the U.S. economy.
- Production contracted over the month after booking a slight increase in October, with the index measuring output falling to 48.5 as demand slowed, Fiore said.
- New orders continued to contract, albeit at a slower rate, while new exports orders dropped more sharply than the month before.
- Order backlogs also remained in strong contraction territory.
- Two of the six largest manufacturing industries nonetheless booked growth in November, namely food, beverages and tobacco as well as transportation equipment.
- All other sectors registered declining activity, with electrical equipment, computers and apparel among them.
- A strike in the automotive sector also is still hurting industry, said a respondent from the fabricated-metals sector.
Republicans Move Toward Biden Impeachment Inquiry Vote Next Week – Bloomberg, 12/1/2023
- House Republicans are preparing to vote to formally authorize an impeachment inquiry against President Joe Biden as early as next week.
- The vote would require all House lawmakers to go on the record as supporting or opposing the impeachment inquiry conservative Republicans have been pursuing for months, something the 18 Republicans representing areas Biden won in 2020 could be reluctant to do.
- Rules Committee Chairman Tom Cole said GOP leaders are expecting to send to his panel legislation by Wednesday justifying a impeachment inquiry — and that a vote on the House floor could occur by next Friday.
- Three House committees are currently working on impeachment authorizations without a formal vote in the House.
EUROPE & WORLD
Israel Says Hamas Violated Terms of Cease-Fire as Truce Lapses – Bloomberg, 12/1/2023
- Israel and Hamas resumed their war in the Gaza Strip on Friday morning after a week-long truce ended with the two sides failing to agree on the release of more hostages held by the militant group.
- Israeli jets struck Hamas targets in Gaza soon after the cease-fire finished at 7 a.m. local time.
- The army also dropped leaflets on southern parts of the enclave, including around the city of Khan Younis, telling people to evacuate and signaling an expansion of Israel’s ground offensive beyond the north.
- Dozens of rockets were fired at Israel, mainly from Gaza and injured five soldiers, according to the military.
- Israel said Hamas, designated a terrorist group by the US and European Union, didn’t free all the kidnapped women it promised to in the latest group to be released.
- It added that Hamas had violated the agreement by firing missiles at Israel.
- The Palestinian Islamist group accused the Israeli government of refusing all its hostage-exchange offers on Thursday night.
- US Secretary of State Antony Blinken was in Tel Aviv when the cease-fire ended.
- He left shortly after as scheduled.
Canada’s Economy Shrank 1.1% With Rates Denting Spending – Bloomberg, 12/1/2023
- Canada’s economy unexpectedly contracted in the third quarter and consumption flatlined, confirming the central bank’s aggressive interest-rate hikes have slammed the brakes on growth.
- Even as preliminary data from Statistics Canada suggest gross domestic product rose 0.2% in October, after a better-than-expected 0.1% expansion the month before, Thursday’s report points to an economy that has substantially weakened.
- Third-quarter GDP fell at a 1.1% annualized pace, missing the 0.1% rise expected by economists and the Bank of Canada’s forecast of 0.8%. Outside of the pandemic, household spending hasn’t been this weak since 2009, in the aftermath of the global financial crisis.
- The surprise contraction nearly wiped out all the growth from an upwardly revised 1.4% increase in the second quarter.
- It’s a rapid reversal from the robust 2.5% expansion in the first three months of this year.
- Business spending in non-residential structures, machinery and equipment, and on intellectual property all declined.
- Investment in residential construction rose 8.3% annualized, the first increase since the beginning of 2022.
BYD Has Tesla in Its Sights as EV and Hybrid Sales Hit Record – Bloomberg, 12/1/2023
- BYD’s sales of electric and plug-in hybrid vehicles hit a record in November, helped by price cuts as the Chinese company tries to meet its annual target and topple Tesla in worldwide quarterly deliveries.
- Still, last month’s sales of 301,378 passenger electric and hybrids were relatively flat compared with October, even as they registered a 31% increase from a year earlier, according to a company filing Friday.
- China’s biggest auto brand sold 170,150 fully electric vehicles in November, taking its total for the first two months of the October-December quarter to 335,655.
- Tesla, which doesn’t release monthly numbers, sold 435,059 EVs in the July-September quarter.
Ukraine’s Zelensky Orders Construction of Defenses to Hold Back Russia – Wall Street Journal, 12/1/2023
- Ukrainian President Volodymyr Zelensky ordered the construction of an extensive network of fortifications aimed at holding back Russian forces, signaling a switch to the defensive posture after a monthslong Ukrainian counteroffensive yielded only small gains.
- Zelensky’s message in a video address late Thursday is the clearest official acknowledgment that Ukraine faces a hard winter defending the territory it holds, with little immediate prospect of major advances against the nearly 20% of its land occupied by Russia.
- Instead, as the war approaches a third year, Ukraine is digging in just as winter starts to bite, with Russia pursuing grinding military offensives in the east and northeast.
- Zelensky’s announcement came after a day traveling the northeast and southeast for meetings with military commanders and soldiers, as well as a tour of schools operating from underground bomb shelters and subway stations because of the threat of Russian shelling.
Factmonster – TODAY in HISTORY
- The presidential election between John Q. Adams, Andrew Jackson, William Crawford, and Henry Clay was turned over to the House of Representatives due to the lack of an electoral-vote majority. – 1824
- Rosa Parks was arrested for refusing to give up her front-section bus seat to a white man in Montgomery, Ala. – 1955
- Twelve nations, including the United States, signed a treaty setting aside Antarctica as a scientific preserve free from military activity. – 1959
- Representatives from more than 150 countries gathered at a global warming summit in Kyoto, Japan, and over the course of ten days forged an agreement to control the emission of greenhouse gases. President Bush pulled the U.S. out of the Kyoto Protocol in 2001. – 1997
- Exxon and Mobil agreed to merge, creating the world’s largest corporation. – 1998
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