Stocks Fall as Big Banks Kick Off Q1 Earnings, Interest Rate Jitters Linger
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Zoetis Stock Slumps on Report Suggesting Its Arthritis Drugs May Make Pets Sick
23 minutes ago
Zoetis (ZTS) shares tumbled in intraday trading Friday following a Wall Street Journal report suggesting that the animal pharmaceutical firm’s arthritis treatment may have led to pet illnesses and deaths.
The article noted some pet owners pointed to the company’s Librela for dogs and Solensia for cats for making their animals sick. Librela and Solensia were the first antibody drugs for pets approved by the Food and Drug Administration (FDA).
The paper noted that regulators in the U.S. and Europe have received thousands of reports of side effects from the medications, and are conducting reviews.
In an email to Investopedia, Zoetis said that the drugs are “both safe and effective.” It added that more than 18 million doses have been distributed, and it has “continued to see low rates of adverse events with only 0.18% reported for Librela and 0.3% for Solensia.”
Zoetis shares plunged 8.5% to $148.92 Friday afternoon, their lowest level in more than a year.
Treasury Yields Retreat as Wall Street Adjusts Expectations
1 hr 4 min ago
Treasury yields retreated from yesterday’s highs even as markets and analysts significantly recast their expectations for interest rates this year.
The yield on the benchmark 10-year Treasury note slid throughout the morning, dropping as low as 4.49% after hitting nearly 4.6% yesterday.
Nonetheless, yields are well above where they started the week. That’s due largely to Wednesday’s Consumer Price Index, which showed headline inflation reaccelerated in March and progress on core inflation, which excludes volatile food and energy prices, stalled.
Bank of America analysts on Friday pushed back their forecast of when the Federal Reserve would begin cutting interest rates and raised their estimate of the terminal rate.
“Following another upside surprise to inflation in March, we now expect Fed rate cuts to start in December rather than June,” analysts led by Michael Gapen wrote. As a result,” they added, “we push our terminal rate estimate higher to 3.5-3.75%, versus 3.0-3.25% previously.”
In light of Wednesday’s data, the firm raised its end-of-year core PCE forecast to 2.8% from its prior estimate, given on April 5, of 2.6%.
Wells Fargo analysts were slightly more optimistic, seeing Wednesday’s data as evidence of the bumpy road to the Fed’s 2% inflation target; though they still lowered their expectations this week. The firm now sees the Fed first cutting rates in September and then again in December.
Intel, AMD Stocks Fall as China Reportedly Tells Telecom Firms to Phase Out Foreign Chips
2 hr 39 min ago
Shares of Intel (INTC) and Advanced Micro Devices (AMD) tumbled Friday morning on a report that China has told its telecom companies to phase out chips made outside the country, including those by American companies.
The Wall Street Journal said the order from the Ministry of Industry and Information Technology earlier this year directed China’s biggest telecoms to eliminate foreign processors that are core to their networks by 2027.
People familiar with the matter told the Journal the decision would affect Intel and AMD the hardest since the two U.S. firms have provided the bulk of the core processors used in China and the world in recent years.
Neither Intel nor AMD immediately responded to requests for comment.
AMD shares were down 4.2% early Friday afternoon, while Intel stock shed 3.9%.
Oil Climbs to 2024 Highs as Middle East Tensions Overshadow Weakened Economic Outlook
3 hr 20 min ago
Oil prices surged on Friday as tensions in the Middle East outweighed concerns about slowing global demand growth and delayed interest rate cuts.
Brent crude futures climbed more than 2% to trade at a 6-month high above $92 a barrel on Friday, while West Texas Intermediate broke out above $87 a barrel.
The surge came amid reports Israel was expecting a direct attack by Iran in the coming days as retaliation for a suspected Israeli airstrike on the Iranian embassy in Syria on April 1. That strike killed several Iranian military officers, for which Tehran has vowed to exact revenge.
The threat that escalated fighting in the Middle East could disrupt global oil supply overshadowed an International Energy Agency report Friday in which the organization lowered its forecast for global oil demand growth in 2024, citing “exceptionally weak” delivered in OECD countries and muted demand in China.
Interest rate concerns have also weighed on oil in recent days. Hotter-than-expected inflation data on Wednesday increased the odds interest rates remain near 23-year highs well into 2024, putting pressure on economic activity and, subsequently, oil demand.
State Street Beats Revenue Estimates as Fees Climb; Stock Rises
4 hr 12 min ago
State Street (STT) was one of the few S&P 500 stocks in the green Friday morning after the financial services provider posted better-than-expected first-quarter revenue on higher fees.
The bank reported overall first-quarter revenue rose 1.2% to $3.14 billion, beating estimates. Fee revenue was up 3.7% to $2.42 billion. Earnings per share (EPS) of $1.37 was slightly below forecasts.
State Street’s assets under custody/administration (AUC/A) climbed 16.7% to $43.9 trillion, and assets under management (AUM) jumped 19.8% to $4.3 trillion. Both were record highs.
Fee revenues rose for servicing (+1%), management (+12%), and software and processing (+25%). They declined for currency trading (-3%) and securities finance (-12%).
State Street shares were up 0.6% to $74.35 late Friday morning but remain nearly 4% lower in 2024.
JPMorgan Chase Stock Slumps as Net Interest Income Misses Estimates
4 hr 51 min ago
JPMorgan Chase (JPM) shares fell over 4% Friday morning following the release of its first-quarter earnings report, which showed the bank beat estimates for earnings and revenue, but its net interest income was below expectations.
JPMorgan reported adjusted net income of $14 billion or $4.63 per share, on total revenue of $41.9 billion, above analyst estimates compiled by Visible Alpha, as well as last year’s Q1 figures.
However, net interest income (NII) came in below expectations at $23.2 billion, and well below the record number it set of $24.1 billion in the final quarter of fiscal 2023. CEO Jamie Dimon attributed the decline to “deposit margin compression and lower deposit balances.”
“Looking ahead, we expect normalization to continue for both NII and credit costs,” he added in the bank’s earnings release.
Earlier this week, Dimon told investors in his annual letter that he saw the chances of a “soft landing” dimming and that the bank would be prepared for a higher-for-longer-interest rate scenario.
“There seems to be a large number of persistent inflationary pressures, which may likely continue,” Dimon said in JPM’s earnings release. “And finally, we have never truly experienced the full effect of quantitative tightening on this scale. We do not know how these factors will play out, but we must prepare the Firm for a wide range of potential environments to ensure that we can consistently be there for clients.”
With Friday’s declines, JPMorgan stock has risen just over 9% so far this year, and about 45% in the last 12 months.
Stocks Making the Biggest Moves Premarket
5 hr 48 min ago
Gains:
- Globe Life (GL): The insurer’s stock jumped 17% after the company denied allegations of fraud leveled yesterday in a short seller report that sent its stock plummeting more than 50%.
- Mobileye (MBLY): Shares of the autonomous driving software company rose 1% after Wolfe Research upgraded the stock, citing the presence of no clear competitor to some of its products.
- BlackRock (BLK): Shares of the asset manager ticked up after it reported better-than-expected first-quarter earnings and record assets under management of $10.5 trillion.
Losses:
- Zoetis (ZTS): Shares of the animal health company fell more than 4% after the Wall Street Journal reported regulators were investigating the possible side effects of its new arthritis drug, Librela.
- JPMorgan Chase (JPM): Shares of the banking giant slipped more than 3% after its net interest income in the first quarter fell short of Wall Street estimates.
- Intel (INTC): Shares of the chipmaker fell more than 2% after the Wall Street Journal reported Chinese officials earlier this year ordered the country’s telecom systems to phase out chips from American companies. Advanced Micro Devices (AMD), another major chip supplier, also fell more than 2%.
Stock Futures Dip as Big Banks Kick Off Earnings Season
6 hr 28 min ago
Futures contracts connected to the Dow Jones Industrial Average were down about 0.3% in premarket trading on Friday.
S&P 500 futures fell 0.4%.
Nasdaq 100 futures were off 0.5% about an hour before markets opened.
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