Why a Bernstein analyst disagrees with bulls on Tesla
Bernstein analyst Toni Sacconaghi says Tesla’s stock has a downside of 34% because its software performance is not as strong as some believe.
An analysis found the company’s software attributes about 1.3% of total company revenues. That amounts to about $290 million per quarter.
Sacconaghi is in the minority in calling Tesla an underperformer, as only 10% of analysts see it as that or a buy, according to FactSet. Meanwhile, 61% see it is a buy or overperformer and 29% a hold.
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— Alex Harring
Big Tech suffers worst five-day stretch ever, Goldman Sachs says
Big Tech has had a terrible five-day stretch, with companies encompassing the group losing nearly $1 trillion in market cap, according to Goldman Sachs. That’s the biggest-ever market cap loss for the group over that time period.
The losses come after a slew earnings-driven sell-offs for companies such as Meta Platforms, Alphabet, Microsoft and Amazon.
— Fred Imbert, Michael Bloom
Stocks making the biggest moves midday: Tupperware, Chegg, Paramount
These are some of the companies making big moves in midday trading:
Tupperware Brands — Shares of the household storage products maker plunged 42% after a third-quarter earnings miss. The company also said it may not be able to comply with the covenants in its credit agreement, raising “substantial doubt” about its “ability to continue as a going concern,” the earnings release said.
Chegg — The education stock surged more than 22.2% after the company beat estimates on the top and bottom lines for the third quarter. Adjusted gross margin and subscribers both grew year over year.
Paramount Global — Shares of the media company dropped more than 11% after quarterly results missed expectations, as it suffered from cord-cutting and a drop in advertising revenue. Paramount said revenue for its TV media segment was down 5% compared to the previous quarter, as pay-TV subscriber numbers declined.
For more big midday movers check out our full list here.
— Tanaya Macheel
Evercore ISI says Block is tactically underperforming
Evercore ISI called Block a tactical underperformer and said there are reasons to sell ahead of its third-quarter earnings Thursday.
The firm set a target price of $49 for the stock, which would be a 16.9% decrease compared to its last closing value.
Evercore ISI said the company would likely struggle to sustain the rapid pace of innovation that previously drove Cash App growth. The firm expects its compound annual growth rate in seller growth profit to slow to 21%.
Increasing competition and foreign exchange challenges were also headwinds for the company, the firm said.
The stock is down 63.5% this year.
— Alex Harring
Seasonality could help rally continue, Bank of America says
The market’s rally has reached a strong seasonal period that could propel stocks even higher, Bank of America’s Savita Subramanian said in a note to clients on Tuesday evening.
“Seasonality is favorable for stocks into year end, with December historically being the strongest month of the year (+2.3% avg. & 79% positive hit rate),” the note said. “But risks remain: our bull market signposts continue to show few signs of a market bottom.”
One issue for stocks is that the equity risk premium fell to a four-year low last month, according to Bank of America. The metric usually climbs during recessions, which represents investors adjusting to an expected decline in earnings.
— Jesse Pound, Michael Bloom
Chart analyst Katie Stockton sees relief rally into the year end
Katie Stockton, founder and managing partner at Fairlead Strategies, believes the stock market could extend the relief rally for several weeks into the end of 2022.
“We’re looking for a retest of the 200-day moving average, but really adhering to that short-term momentum indicator to help us know if we need to start managing risk again,” Stockton said on CNBC’s “Squawk Box” Wednesday.
She said volatility is likely not going to pick up until the new year, and October has the potential to be a killer of this bear market.
— Yun Li
Chegg surges after earnings beat
Shares of education company Chegg soared 24% after a stronger-than-expected third quarter report.
Chegg’s adjusted earnings were 21 cents per share on $164.7 million of revenue. Analysts surveyed by Refinitiv were expecting 14 cents per share on $158.3 million of revenue.
The company’s adjusted gross margin rose to 73.0% from 61.2% a year ago, according to StreetAccount, and subscribers jumped 9% year over year.
Piper Sandler analyst Arvind Ramnani, who has a neutral rating on the stock, said in a note that the company is showing an ability to raise prices.
“The reaction to price increases for Chegg Study that was initiated back in mid-July (prices rose from $14.95 to $15.95 for monthly subscribers) has been favorable. Management notes that it has not seen a reduction in conversion for new customers, an immaterial number of non-renewals of the existing base and an increase in bundle additions.”
Boeing jumps after favorable comments about full-year positive free cash flow
Shares of Boeing jumped as much as 5.5% as Wall Street cheered comments made at the company’s investor day about full-year positive cash flow.
The company said that it expects to have free cash flow of $10 billion by 2025-2026, according to StreetAccount. After 2026, it expects to return cash to shareholders and will not need equity to get there. Boeing is forecasting that in will return to $100 billion in revenue with 10% margins in 2026, and that deliveries will have picked back up.
It’s also focusing on mitigating risk as its MAX aircraft returns to service, as well as liquidity and fixed price development programs.
—Carmen Reinicke
Tech stocks slide ahead of Fed rate hike
Tech stocks bared the brunt of Wednesday’s early losses, as traders prepared for another Federal Reserve rate hike and what that means for the growth-oriented sector.
The S&P 500’s information technology, consumer discretionary and communication services sectors tumbled nearly 1% each, while the tech-heavy Nasdaq Composite slid 1%.
Shares of Netflix and Meta Platforms were among the biggest tech laggards, falling more than 2% each. Salesforce’s stock tumbled 3.5%, while Apple, Amazon, Alphabet and Microsoft shares shed at least 1% each.
— Samantha Subin
MetLife, Corteva trading at all-time highs
Two stocks traded near all-time highs during Wednesday’s trading session.
That included MetLife, which rose to levels not seen since it went public in April 2000. Corteva was last trading at highs not seen since its spin-off from DowDuPont in May 2019.
Nine stocks also hit fresh lows, including shares of Paramount, which traded at lows not seen since May 2020.
Other stocks notching fresh lows included:
- Alphabet C share trading at lows not seen since January 2021
- Alphabet A share trading lows not seen since January 2021
- Newell Brand trading at lows not seen since May 2020
- Estee Lauder trading at lows not seen since July 2020
- SVB Financial Group trading at lows not seen since September 2020
- Baxter trading at lows not seen since April 2017
- Zebra Technologies trading at lows not seen since May 2020
- Essex Property Trust trading at lows not seen since November 2020
— Samantha Subin, Chris Hayes
Here’s how the market has done on Fed day during Powell’s tenure
Bespoke Investment Group compiled data on how well the market has done on Fed days during Chair Jerome Powell’s tenure. During that time, the S&P 500 has averaged a 0.29% gain on Fed days, “leaving him behind Bernanke but ahead of Yellen and Greenspan.”
Fed days have been volatile in 2022, with the S&P 500 posting moves of more than 1% in five of the last six.
— Fred Imbert
Decliners lead advancers 3-1 at NYSE
Market breadth was negative in early trading, with roughly three New York Stock Exchange-listed stocks declining for every advancer. Overall, 2,006 NYSE-listed names fell, while just 746 advanced.
— Fred Imbert
Energy leading stocks lower
The S&P 500 energy sector lagged in early trading Wednesday, falling about 1.7%, as traders braced for the Fed’s latest monetary policy decision. Real estate also fell more than 1%.
Overall, every S&P 500 sector traded lower on the day.
— Fred Imbert
A ‘data dependent’ Fed on future hikes could move markets higher, Cramer says
The market is already pricing in a 75 basis point hike from the Federal Reserve, but it could rally if Chair Jerome Powell indicates future increases will be based on economic data, CNBC’s Jim Cramer said Wednesday.
“Three-quarters and data dependent, I think we are home free, but three-quarters and more vigilant, then I think we have a sell-off,” Cramer said on “Squawk Box.”
While there hasn’t been data to support the theory that the economy is cooling off, Cramer hopes the central bank takes a wait-and-see approach.
“Tech has been bad, but non-tech has been good,” Cramer said. “I would hate to see non-tech join tech in the decline.”
— Michelle Fox
Rogers shares tumble as DuPont deal collapses
Shares of Rogers Corp, the engineering materials maker, tumbled on Wednesday after a planned $5.2 billion sale of the company to DuPont De Nemours was terminated.
“Rogers is currently evaluating all options to determine the best path forward in response to DuPont’s notice,” the company said in a statement.
DuPont said after the close on Tuesday that the companies have been unable to obtain clearance from all required regulators in a timely manner. The deal was first announced on Nov. 1 of last year.
Rogers shares cratered more than 43%, while DuPont’s stock rose about 6%.
Stocks open lower as market braces for Fed decision
Stocks opened lower as Wall Street awaited the Fed’s lastest policy decision.
The Dow Jones Industrial Average fell 95 points, or roughly 0.3%. The S&P 500 futures and Nasdaq Composite edged down 0.3% and 0.2%, respectively.
— Samantha Subin
As Fed meets, traders are betting it stops hiking rates at just above…
Read More:Stocks fall as Wall Street prepares for Fed rate decision
2022-11-02 17:27:00
