Oil settles higher but is still down 4% for the week
Oil settled slightly higher on Friday but is still down 4% for the week after a sell-off on concerns that the global economy is on the verge of a slowdown that will hit demand.
Brent crude contracts for January rose $1.42, or 1.77%, to settle at $81.43 a barrel, while West Texas Intermediate gained $1.43, or 1.89%, to settle at $77.71 a barrel.
Oil sold off earlier in the week as traders grew confident that the Israel-Hamas war would not spread in the near term to disrupt supply. Instead, markets began to worry that troubling economic data out of Europe and China signaled a global slowdown is on the horizon.
But the very real risk of a broader Middle East war was emphasized Thursday when Iran’s foreign minister said the it was all but inevitable that the conflict would spread. OPEC+ could also decide to cut supply to support prices at the group’s next meeting scheduled for Nov. 26.
— Spencer Kimball
A lack of a resolution to a looming government shutdown could stoke volatility next week, Calamos’ Joseph Cusick says
Wall Street will be closely watching for a looming government shutdown next week and what it means for stocks, according to Calamos Investments senior vice president Joseph Cusick.
“[A]ttention is on Washington, where the government has until next Friday to devise a solution and avert a potential shutdown,” Cusick said. “While this story garnered more attention a few months ago, another continuing resolution is expected to be adopted, but watch volatility early next week, and see if we get a pop if a solution is not promising.”
Cusick added that the S&P 500 will come into focus after climbing on Friday and recovering from a selloff a day earlier, at specifically the 4,400 level.
“As the week concludes, [this] question is the key: whether the market holds or whether the S&P 500 can break and sustain 4,400, a critical technical level,” he added.
— Brian Evans
These tax-loss selling candidates could see a bounce, Bank of America says
Fall is the season for investors to scan their portfolio for losing positions they can sell – but a few of these discounted names could rebound as the year winds down.
Tax-loss harvesting is a maneuver that individual and institutional investors can use to offload portfolio holdings that saw big declines during the year and then apply these realized losses to offset capital gains elsewhere. Done properly – that is, without violating the IRS’s wash sale rule – the move can help investors save on taxes.
Several stocks may have seen a rough year through October, but they may be due for a bounce from November through January as investors snap them up, according to Bank of America’s Savita Subramanian. This week, the firm issued a list of its favorite buy-rated names that are also overweighted by long-only funds.
Click here to read the CNBC Pro story with the details.
–Darla Mercado, Michael Bloom
Tech stocks lift Dow this week
The Dow is on pace for a winning session and week, thanks in part to strong performances from technology shares.
The blue-chip average has climbed around 0.8% in Friday’s session. It’s on track to close the week about 0.3% higher.
Microsoft and Apple, another Big Tech stock, are poised to see the biggest gains this week, with both rallying more than 4%. Entertainment giant Disney and software provider Salesforce were the next best performers on the week, posting advances of more than 3% and 2.5%, respectively.
On the other hand, Walgreens helped restrict gains for the Dow this week. The drugstore chain’s stock is slated to end the week more than 7% in the red. Johnson & Johnson and Chevron were the next biggest losers, with both names poised to finish down by more than 3%.
— Alex Harring
Stocks making the biggest moves midday
Wynn Resorts — The resort-and-casino stock dropped 7.3% as analysts focused on EBDITAR, which includes restructuring, tied to its operations in Macao. This overshadowed an otherwise strong report, with the company outperforming Wall Street expectations on both lines.
Diageo — Shares slid 13.7% after the U.K.-based drink manufacturer forecasted a challenging environment ahead. Diageo said growth should slow in the first half of the fiscal year due to softness in Latin America and the Caribbean.
Illumina — The beaten-down biotechnology stock plunged 13.6% after it slashed its adjusted earnings guidance for the full year to a range of 60 cents to 70 cents per share. Analysts had estimated 80 cents per share, according to LSEG. Illumina’s revenue also came out lower than analysts’ estimates, although the company had beat on adjusted earnings per share in the third quarter.
Read the full list here.
— Brian Evans
Markets will remain unsteady as growth headwinds persist, Barclays says
Markets will likely remain unsteady as worry over economic growth persists, according to Barclays.
“Rates relief but angst about the strength of growth contribute to yet more rotation within the market,” analyst Venu Krishna wrote in a Friday note.
Krishna added that the firm remains positively rated on value equities due to their “favorable exposure to higher-for-longer yields.”
— Brian Evans
Plug Power shares lose nearly a third in value
Plug Power shares tumbled 44% Friday to hit a new 52-week low, following the company’s disappointing third-quarter results. The company also warned that it needs additional capital to finance its operations.
RBC Capital Markets downgraded the clean energy company to sector perform from outperform, citing “unprecedented challenges” and a lower revenue forecast for 2023.
Plug Power shares
Market is seeing ‘déjà vu,’ Wolfe Research says
The end of winning streaks for the S&P 500 and Nasdaq Composite amid hawkish Federal Reserve commentary and a bond auction has been a focus if investors this week. But Wolfe Research’s Rob Ginsberg said oil shouldn’t be overlooked.
“The truth is, the action beneath the surface has been deteriorating over the past few days, with the action in oil of particular concern,” he told clients on Thursday. “A fresh 1-month high would be a welcomed development, as each of the past two oversold rallies since the July peak have failed to signal this momentum confirmation and improvement of trend.”
It’s “starting to feel like déjà vu all over again,” Ginsberg added.
— Alex Harring
Sentiment down, long-term inflation outlook highest in 15 years, consumer survey shows
Consumer sentiment slumped in November as inflation expectations rose, according to the latest University of Michigan survey.
The headline sentiment index showed a reading of 60.4, down 5.3% from 63.8 in October and below the Dow Jones estimate for 63.7. The current conditions index fell 6.9% from a month ago.
On inflation, expectations continued to climb. The one-year outlook rose to 4.4%, the highest since April, while the five-year expectation climbed to 3.2%, tied for the highest since June 2008.
Trade Desk shares tumble after poor revenue guidance
Trade Desk shares tumbled 18% on Friday. The digital marketing company on Thursday issued disappointing fourth-quarter revenue guidance even as it topped third-quarter earnings and revenue expectations.
The company forecasted revenue of $580 million in the fourth quarter, far lower than the $610 million anticipated by analysts polled by LSEG, formerly known as Refinitiv.
Trade Desk CEO Jeff Green cited “cautiousness around certain advertisers,” specifically in industries hit by strikes such as the auto industry.
— Sarah Min, Jonathan Vanian
These are the stocks making the biggest moves premarket
Check out the companies making headlines before the bell.
- Wynn Resorts — The casino juggernaut slipped more than 5% after reporting a beat on the top and bottom line in the third-quarter. Wynn notched an adjusted 99 cents per share on $1.67 billion in revenue, while analysts polled by LSEG forecast 75 cents and $1.59 billion. Some analysts were less encouraged by EBITDAR results from the company’s Wynn Macau segment, however.
- Diageo — The UK-based drink manufacturer dropped 14.5% in Friday early morning trading after the company said it expects growth to slow in the first half of its fiscal year, due to weakness in Latin America and the Caribbean, cutting guidance for the short and medium term.
- Illumina — Shares of the biotechnology company plunged 12.5% after it slashed its adjusted earnings guidance for the full year to a range of 60 cents to 70 cents per share, while analysts’ estimated 80 cents per share, according to LSEG. Illumina’s revenue was lower than analysts’ estimates, although the company had beat on adjusted earnings per share in the third quarter.
For the full list, read here.
— Pia Singh
Oil prices are down for the week but are set to consolidate, Citi says
Oil prices rose slightly Friday but are down for the week after a sell-off in response to signs that demand is wavering and as fears of a broader Middle East War ease.
Brent crude contracts for January rose Friday by 87 cents, or 1.09%, to $80.88 per barrel, while West Texas Intermediate contracts for December were up 75 cents, or .99%, at $76.50.
Oil futures are down 5% on the week after China reported falling exports and as U.S. crude consumption is expected to decline for the year. Israel has agreed to daily humanitarian pauses in Gaza, according to the White House.
Citibank wrote that prices should stabilize after this week’s selloff, though upside risks do remain .
“From current levels we now expect prices to consolidate, and we maintain our near-term price forecasts,” analyst Maximillian Layton wrote in a note Thursday.
“Indeed, upside risks abound from current levels, with the potential for OPEC+ to look to act to defend prices (the next meeting is in just over 2 weeks), while supply risks in the Middle East remain elevated,” Layton wrote.
— Spencer Kimball
Recession not priced into analyst 2024 estimates, DataTrek says
Nicholas Colas of DataTrek Research noted that, while there’s growing chatter of a possible recession next year, those concerns aren’t reflected in analyst forecasts.
“There is no recession baked into either Wall Street analysts’ S&P 500 2024 earnings estimates or current stock prices,” he said in a note. “The Street is looking for 11 percent earnings growth (from $221/share this year to $246/share), not a 30 percent contraction.”
“The S&P trades for 18x analysts’ 2024 estimates, but 28x a 30 percent decline from this year’s earnings. The latter number seems unrealistically high if the US really is heading into a recession next year,” Colas said.
— Fred Imbert
China’s largest chipmaker SMIC posts a 80% drop in third-quarter profit, shares slide
China’s largest chipmaker SMIC on Thursday posted a 80% drop in third-quarter profit as global demand weakness hit foundries hard.
Hong Kong-listed shares of SMIC slid 5.98% by midday trading.
Net income for the quarter plunged 80% compared to a year ago — larger than the 64% drop posted in second quarter 2019, according to company figures.
SMIC or Semiconductor Manufacturing International Co., posted revenue of $1.62 billion in the third quarter of the year, down 15% year-on-year. Net income for that period was $93.98 million, far below analysts’ expectations of $165.1 million.
— Sheila Chiang, Shreyashi Sanyal
Wynn Macau shares slide in Hong Kong trading
Hong Kong-listed shares of casino operator Wynn Macau slid 9.33% to their lowest in nearly a year.
The company posted a smaller quarterly net loss of $6.2 million versus the previous year’s quarterly loss of $242.0 million.
The results come as Wynn Macau’s controlling shareholder, Wynn Resorts faces a strike in Las Vegas if it does not reach a deal with workers before the union’s 5 a.m. PT Friday deadline. The Associated Press reported the casino operator could see 5,000 workers walk out if it misses the deadline.
Wynn Resorts also reported third-quarter earnings overnight. During the earnings call, Chief Financial Officer Julie Cameron-Doe referenced $10 million in one-time charges that included “accrual to the anticipated increases associated with a new union contract.”
— Shreyashi Sanyal
SoftBank shares plunge on $6.2 billion quarterly loss amid WeWork collapse
Shares of Japan’s SoftBank Group plunged 7.39% in early trading, hitting their lowest level since early June.
SoftBank booked another loss during the second quarter of 931.1 billion yen ($6.2 billion) versus LSEG estimates of a loss of 114.1 billion yen.
Quarterly net sales were 1.67 trillion Japanese yen versus expectations of 1.6 trillion yen.
SoftBank’s losses were driven by the investment and financial support it provided to co-working space firm WeWork, which filed for Chapter 11 bankruptcy protection in the U.S. this week.
The company said that its Vision Fund booked an investment gain of 21.3 billion yen, its second straight quarter of gains. It was driven by a gain arising from the sale of shares in chipmaker Arm to a subsidiary of SoftBank.
Japan’s blue-chip Nikkei 225 fell 1.09% in the first hour of trading.
CNBC Pro: Eli Lilly and more: Strategist names 5 stocks set for ‘significant’ earnings growth
Rising rates and the possibility of a recession on the horizon have created a “mixed picture” for equity markets, according to one strategist — but several companies can look forward to markedly stronger earnings growth in the next year.
“When you look at what companies are saying about next year, they’re not really being overly cautious or overly bullish … So, you get a sense that into next year, earnings will be robust in terms of steady year-on-year [growth],” Rahul Ghosh, portfolio specialist, equity division at T. Rowe Price, told “Street Signs Asia” on Thursday.
“But, if you’re looking for significant earnings expansion, I suspect, at a market level, that’s probably less likely. You really have to dig into individual companies and sectors.”
Ghosh is looking favorably at three sectors — and named some of his favorite stocks.
— Amala Balakrishner
Apple to pay $25 million to settle DOJ discrimination case
Apple has agreed to pay $25 million in back pay and civil penalties to settle charges from the Department of Justice accusing it of discrimination in its hiring practices under the Immigration and Nationality Act.
The Department of Justice said Apple was not advertising positions that it wanted to fill through a federal program called Permanent Labor Certification Program or PERM, which allows U.S. companies to recruit workers who can become permanent U.S. residents after completing a number of requirements.
Per the settlement agreement, Apple contests the agreement and said it believed it was following Department of Labor regulations.
Shares of Apple were flat during after hours trading Thursday.
— Hakyung Kim, Kif Leswing
Stocks making the biggest moves after hours
Check out the companies making headlines in extended trading.
Wynn Resorts — Shares fell 5.1% following the casino operator’s third-quarter earnings. Wynn managed to post a beat on both top and bottom lines, but reported a decline in revenue from the prior year for its Encore Boston Harbor.
Illumina — The stock dropped more than 8%. The biotechnology company cut its adjusted earnings guidance for the full year to a range of 60 cents to 70 cents per share, compared to analysts’ estimates of 80 cents per share, according to LSEG. Despite beating on adjusted earnings per share in the third quarter, revenues were lower than analysts’ estimates
Synaptics — Shares of the computer hardware company rallied nearly 10% after fiscal first-quarter earnings and revenue both came above Wall Street’s expectations. Synaptics posted per-share adjusted earnings of 52 cents on revenue of $238 million. Analysts had estimated earnings of 40 cents per share on $233 million in revenue, according to LSEG.
The full list can be found here.
— Hakyung Kim
Stock futures open little changed Thursday
U.S. stock futures opened little changed Thursday night.
Dow Jones Industrial Average futures inched up 20 points, or 0.06%.
Futures tied to the S&P 500 were unchanged. Meanwhile, Nasdaq 100 futures fell 0.09%.
— Hakyung Kim