Dow Dips and Nasdaq Gains; Disney Defeats Peltz
[ad_1]
Equity Indexes Wrap: Paramount Soars on Buyout Talks; AI Stocks Rebound From Tuesday Sell-Off
April 03, 2024 04:15 PM EDT
The Dow
Industrials led the index, with Caterpillar (CAT) rising 3% and Dow (DOW) gaining 1.2%.
Amazon (AMZN) rose 1% after it said it would lay off hundreds of employees in its Amazon Web Services unit.
Intel (INTC) tumbled 8.2% as analysts and investors mulled yesterday’s announcement that its foundry business recorded a $7 billion operating loss in 2023.
Disney (DIS) slipped 3.1% after shareholders reelected all 12 of its existing directors, ending a months-long proxy fight between CEO Bob Iger and activist investor Nelson Peltz.
The S&P 500
Paramount Global (PARA) stock surged 15% amid reports its board had agreed to enter exclusive merger talks with Skydance Media.
GE Aerospace (GE) climbed 6.7% on its second day of trading as a pure-play aerospace company following yesterday’s spin-off of its energy business as GE Vernova (GEV).
Ford (F) gained 3% after reporting sales increased 7% in the first quarter amid strong demand for hybrid vehicles.
Energy stocks continued to gain as the price of oil climbed to year-to-date highs. Marathon Petroleum (MPC) gained 1.7% and Phillips 66 (PSX) advanced 1.5%.
Ulta Beaty (ULTA) tumbled 15.3% after its CEO said at a retail conference that the company had seen a broad slowdown in sales so far this year. Cosmetics and beauty peers Estée Lauder (EL) and Bath & Body Works (BBWI) fell 4.2% and 3.7%, respectively.
Food stocks slipped, led by J.M. Smucker (SJM) and Hershey (HSY), both down 2.9%.
The Nasdaq 100
The AI trade made a comeback after yesterday’s sell-off. Micron (MU) climbed 4.3%, while Meta (META) and Broadcom (AVGO) advanced 1.9% and 1.8%, respectively.
Moderna (MRNA) slumped 2.3% after a U.S. district judge issued a judgment that could strengthen the case of Arbutus, the biotech currently in a patent dispute with Moderna over its blockbuster Covid-19 vaccine.
Disney Shareholders Back Iger, Rebuff Peltz
April 03, 2024 03:44 PM EDT
Shareholders on Wednesday voted to elect all 12 board members nominated by Disney, including CEO Bob Iger, bringing an end to a months-long proxy battle between the company and activist investors.
The Disney-recommended board was elected by “a substantial margin,” while Nelson Peltz and Jay Rasulo nominated by the Trian Group and the three candidates nominated by Blackwells Group were not elected.
“Now that this distracting proxy contest is behind us, we’re here to focus 100% on our most important priorities, growth and value creation for our shareholders, and creative excellence for our consumers,” Iger said.
Read more about Disney’s shareholder meeting, including Iger’s estimate of when streaming will turn a profit and what the company’s doing with its amusement parks.
Ulta Beauty Warns of a Business Slowdown, and Stock Tanks
April 03, 2024 02:54 PM EDT
Ulta Beauty (ULTA) shares sank in intraday trading Wednesday after the beauty products retailer warned of a significant decline in business.
Chief Executive Officer (CEO) Dave Kimbell told a retail conference that in the first two months of its fiscal year the company has seen “a slowdown in the total category across price points and segments.” He said the broad-based decline came earlier and was somewhat bigger than anticipated.
If the slowdown continues, Ulta expects current-quarter comparable store sales to be at the low end of its previous guidance of a low-single-digit percentage gain, he said.
With Wednesday’s 14.8% tumble, Ulta shares fell into negative territory for 2024. The comments also dragged down shares of others in the sector, including Estee Lauder (EL) and Bath & Body Works (BBWI), which were down 4.2% and 3.3%, respectively.
Spotify Stock Surges on Report It Plans Price Hikes, Subscription Plan Changes
April 03, 2024 02:01 PM EDT
Spotify Technology (SPOT) shares rose to their highest level since Nov. 2021 on Wednesday following a report that the streaming audio provider will be boosting prices in several key markets and changing its subscription plans.
The company will raise prices by about $1 to $2 per month in five countries, including Australia and the U.K., by the end of the month, and they will go up in the U.S. later this year, Bloomberg reported.
Spotify has lost money every year since it went public in 2018 because some 70% of its revenue goes toward royalties it pays for the rights to music, according to the report.
Shares of Spotify were up 6.5% at $287.21 Wednesday afternoon, and are more than 50% higher this year.
Oil Hits 2024 Highs as OPEC Maintains Production Cuts
April 03, 2024 01:00 PM EDT
Oil prices rose to their highest level this year on Wednesday, and odds are they’ll climb even higher this summer, according to Bank of America analysts.
Brent crude futures contracts traded just cents shy of $90 a barrel on Wednesday morning. The price of Brent’s American counterpart, West Texas Intermediate, crossed $86 for the first time since October.
On the supply side, prices have been buoyed this year by production cuts totaling 2.2 million barrels per day by the Organization of the Petroleum Exporting Countries (OPEC), which decided on Wednesday to maintain those cuts.
On top of that, geopolitical tensions have both curbed supply and increased demand. Attacks on merchant ships in the Red Sea have disrupted supply and, by lengthening global trade routes, boosted oil demand by an estimated 150,000 barrels per day. And Ukrainian attacks on Russia’s refining infrastructure are threatening to reduce the supply of fuel.
At the same time, robust U.S. economic data point to stronger-than-expected demand throughout the summer.
All of these factors could cause an oil deficit of up to 450 thousand barrels per day in the second and third quarters, Bank of America analysts predict. “Thus, we increase our average Brent and WTI price forecast for 2024 to $86 and $81/bbl, respectively and see prices peaking at around $95/bbl this summer,” the analysts wrote.
BofA’s warning echoes that of the International Energy Agency, which surprised markets last month when it predicted global supply would fall short of demand by an average of 300,000 barrels per day this year.
Dave & Buster’s Stock Surges on Profit Metric Beat, Buyback
April 03, 2024 12:08 PM EDT
Shares of Dave & Buster’s Entertainment (PLAY) jumped Wednesday after the game-themed restaurant chain posted a better-than-expected key profit metric and announced an increase in its stock buyback program.
Dave & Buster’s reported fourth-quarter earnings before interest, taxes, depreciation, and amortization (EBITDA) of $151.8 million, an increase of 9.7% from the year before and above analysts’ estimates. CEO Chris Morris said the company’s turnaround plan is working.
In addition, the company said it was boosting its current share repurchase plan by $100 million, bringing the total value of shares it is authorized to buy back to $200 million.
The upbeat EBITDA number offset Dave & Buster’s lackluster fourth-quarter financial results. Earnings per share (EPS) came in at $1.03, with revenue up 6.3% to $599.1 million. Both missed forecasts. Same-store sales dropped 7%. Executives blamed bad weather in January for reducing restaurant traffic.
Dave & Buster’s shares were trading up 11% at $68.72 each midday Wednesday and are up more than 25% this year.
Paramount Reportedly Considering Exclusive Sale Talks With Skydance
April 03, 2024 10:54 AM EDT
Paramount Global (PARA) is considering making its sale negotiations exclusive with Skydance Media, according to a New York Times report.
The Times reported Tuesday that Skydance founder David Ellison, son of tech billionaire Larry Ellison, had met with the Paramount board in the last month to discuss his vision for a potential deal. A deal would reportedly involve Skydance acquiring National Amusements, the holding company that owns Shari Redstone’s controlling shares in Paramount, and then merging with Paramount.
Making the negotiations exclusive would suggest the sides are closer to a deal than previously thought. It would also cut out previous possible investors Paramount had negotiated with, including media entrepreneur Byron Allen, Warner Bros. Discovery, and several private equity firms like Apollo Global Management and RedBird Capital Partners.
Paramount and Skydance did not immediately respond to requests for comment on the negotiations.
Paramount stock, down about 20% this year, initially rose on the news, but gave up those gains and was little changed late in the morning Wednesday.
Intel Stock Drops as Loss Widens and Sales Decline in Chipmaker’s Foundry Business
April 03, 2024 10:13 AM EDT
Shares in legacy chipmaker Intel (INTC) slumped in early trading Wednesday after the company disclosed a widening loss and declining sales in its semiconductor manufacturing business, also known by investors as its foundry business.
Intel’s foundry division generated an operating loss of $7 billion on sales of $18.9 billion last year, the company said in a filing late Tuesday. By comparison, in 2022, the unit recorded a loss of $5.2 billion on sales of $27.5 billion.
The chipmaker, which named Lorenzo Flores as chief financial officer (CFO) of Intel Foundry, expects losses in the foundry business to peak this year before breaking even midway between now and the end of 2030. “Intel Foundry is going to drive considerable earnings growth for Intel over time. 2024 is the trough for foundry operating losses,” Gelsinger said Tuesday, CNBC reported.
Intel shares were down 6% at $41.27 early in the session Wednesday. They have lost about 18% of their value so far this year.
Stocks Making the Biggest Moves Premarket
April 03, 2024 09:26 AM EDT
Gains:
- Dave & Busters Entertainment Inc. (PLAY): Shares of the entertainment and dining venue operator jumped 7% after its board authorized an additional $100 million in share repurchases, overshadowing lower-than-expected fiscal fourth-quarter sales and earnings.
- Cal-Maine Foods Inc. (CALM): Shares of the egg producer rose more than 5% after beating earnings estimates with its quarterly results.
- Paramount Global (PARA): Shares rose about 2% after the New York Times reported the entertainment company was considering entering exclusive talks with Skydance for a potential deal.
Losses:
- Intel Corp. (INTC): Shares of the chipmaker fell more than 5% after the company reported its foundry business booked a $7 billion operating loss in 2023.
- Taiwan Semiconductor Manufacturing Co. (TSM): Shares of the chip giant slipped a little more than 1% after a major earthquake in Taiwan forced the company to pause work and evacuate factories.
- Tesla Inc. (TSLA): The electric vehicle maker’s shares slipped another 1% after tumbling nearly 5% yesterday when it reported its first decline in quarterly deliveries since the early days of the pandemic.
Stock Futures Slump Following ADP Payroll Data
April 03, 2024 08:59 AM EDT
Futures contracts connected to the Dow Jones Industrial Average were down a little more than 0.1% in premarket trading.
S&P 500 futures were off about 0.2%.
Nasdaq 100 futures traded nearly 0.4% lower an hour before markets opened.
[ad_2]
Read More: Dow Dips and Nasdaq Gains; Disney Defeats Peltz