Update (Sept. 14, 2023): For today's live market coverage, see here.
U.S. stocks ended the day mixed Wednesday after inflation data showed price increases accelerating in August, giving the Fed reason to keep its options open for another rate hike this year.
The Consumer Price Index (CPI) rose 0.6% in August, an increase that can primarily be attributed to rising energy prices. The index has risen 3.7% in the last 12 months, up from 3.2% in July. Core inflation, which excludes volatile food and energy prices, rose 0.3% last month, a slight uptick from July's reading of 0.2%. However, the annual core inflation rate fell to 4.3% from 4.7% last month.
Stocks fell yesterday after Apple's (AAPL) iPhone 15 release failed to impress investors and the Justice Department's antitrust case against Google (GOOG)—the biggest case against big tech in decades—went to civil court.
The S&P 500's Biggest Gains and Losses Today
Here are the S&P 500 stocks that gained and lost the most today:
Inflation Data Douses Dow’s Morning Rally
After initially shrugging off August’s bigger price increases, the Dow Jones Industrial Average slipped into the red this afternoon and declined 0.2%, or about 70 points, falling for the second straight session.
Microsoft (MSFT) shares gained 1.3% after the U.S. Army placed an order for VR headsets that could lead it to pay Microsoft $22 billion over a decade for training goggles and services.
Honeywell (HON) gained 1.3%, marking four straight winning sessions for the conglomerate, while Goldman Sachs (GS) moved up 1.2%. Shares of Walgreens Boots Alliance (WBA) increased by 0.8%, its second day of gains following seven straight losing sessions.
Shares of 3M (MMM) plunged more than 5.7% after its CEO said he saw 2024 being a “slow growth environment,” and forecasted weakness ahead for its electronics and consumer segments.
Could Citi's Latest Restructuring Turn the Stock's Fortunes Around?
Citigroup (C) on Wednesday launched a restructuring effort, changing its organizational structure and cutting jobs as part of CEO Jane Fraser's effort to simplify the banking giant, in a move intended to provide a much-needed boost to shareholders.
It's an effort motivated by the bank's declining financial performance and profitability. The bank's profit for the quarter ended in June tumbled 36% from a year ago, driven by higher expenses and credit costs.
Shares have lost almost a third of their value since CEO Jane Fraser took over in February 2021. They have been the worst performers—by a wide margin—among the four biggest U.S. banks over this period, a group that also includes JPMorgan Chase (JPM), Bank of America (BAC), and Wells Fargo (WFC).
Citigroup has been the second-worst performing stock in the S&P 500 Index over the past 25 years as of April, faring only slightly better than insurance giant AIG (AIG), another financial institution heavily affected during the 2008 financial crisis.
Midday Market Movers
Citigroup Inc. (C): Shares of the bank gained more than 2% after CEO Jane Fraser announced a reorganization intended to simplify the bank’s structure and eliminate layers of management.
Frontier Group Holdings Inc. (ULCC): Shares of the budget airline fell more than 9% after it, along with industry peers like American Airlines (AAL) and Spirit Airlines (SAVE), cut its third-quarter guidance on a jump in fuel costs.
3M Co. (MMM): Shares of the industrial conglomerate fell more than 5% after it warned of “a slow growth environment” and weakness in its consumer and electronics business.
U.S. Bancorp (USB): The bank’s shares fell 4% after Chief Financial Officer John Stern said at a conference that he expected net interest income to come in below the midpoint of the company’s guidance for the third quarter.
VinFast Eyes World Markets, Plans Third EV Plant by 2026
VinFast Auto Ltd. (VFS) will expand into several new markets, including Indonesia, where the Vietnamese electric vehicle (EV) maker will establish a plant by 2026, according to a Tuesday filing with the U.S. Securities and Exchange Commission (SEC).
In its SEC filing, Vinfast said the company plans to establish its own distributor in markets including Vietnam, North America (U.S. and Canada) and Europe (France, Germany, the Netherlands), and seven additional market clusters in Asia (including India, Indonesia and Malaysia), the Middle East, the rest of Europe, Africa, and Latin America.
VinFast will invest $200 million in the proposed Indonesian plant, which would produce between 30,000 and 50,000 EVs per year once operational. The company projects its long-term investment in Indonesia will total $1.2 billion, including plant costs.
VinFast shares fell 2.5% to $16.81 Wednesday. The stock debuted on the Nasdaq in August and within weeks surged fourfold to a high of $93 on Aug. 28 as speculative buyers snapped up the few stocks available to trade.
Airline Stocks Sink as American, Spirit Cut Forecasts on Higher Fuel Costs
American cut its current quarter earnings per share (EPS) outlook to between $0.20 and $0.30, down from its previous estimate of $0.85 to $0.95. The carrier indicated that fuel prices “have increased considerably” since its initial guidance in July. In addition, American said the new labor deal made with its pilots will reduce operating margin by about 1.7 percentage points and EPS by $0.23.
Along with greater outlays for fuel, Spirit said that during the last few weeks, it has seen “higher promotional activity with steep discounting." Because of that, the airline reduced its guidance for third-quarter revenue to a range of $1.25 billion to $1.26 billion, down from $1.30 billion to $1.32 billion.
American shares fell about 4% in midday trading, while Spirit was down about 2.5%.
Along with American and Spirit, shares of other major carriers including Delta Air Lines (DAL) were lower as well Wednesday afternoon.
Cocoa: One of This Year's Hottest Assets?
Cocoa futures contracts jumped more than 2% Wednesday, continuing their relentless climb higher as traders bet poor weather conditions in major producers will hamstring harvests.
Cocoa futures traded at $3,725, their highest level since the late 1970s and a 43% increase from the start of the year. As an asset, cocoa's year-to-date return competes with household name growth stocks, including Apple (AAPL; +35%), Microsoft (MSFT; +40%); and Alphabet (GOOGL; +53%).
Poor weather, including heavy rains that could increase the impact of diseases, has led officials to project a much tighter supply than growers and buyers are used to. The Ivory Coast, the world’s largest cocoa producer, is projecting output in the 2023/24 harvest to be 20% lower than in recent years.?
“We will have to fight for every bean because the situation is unprecedented," one director of a European cocoa company told Reuters on the condition of anonymity.
China Says There Is No iPhone Ban
China has not banned government workers from using iPhones, but does have concerns about security issues related to the Apple (AAPL) product, Chinese Foreign Ministry Spokesperson Mao Ning said on Wednesday, countering reports of a government ban that contributed to a 6% drop in Apple's share price last week.
“China did not issue any law, regulation or policy document that bans the purchase and use of cellphones of foreign brands,” Chinese Foreign Ministry spokesperson Mao Ning said, rebutting reports that officials were barred from using iPhones at work.
The supposed ban, which was reportedly to reduce China’s reliance on foreign technology and improve cybersecurity, was first reported by the Wall Street Journal on Sept. 6, citing people familiar with the matter.
Shares of Apple took a hit following the news and lost 6% of their value last week. The stock fell 0.8% Wednesday morning but was still up 35% year-to-date.
Amazon Invests $450 Million to Boost Pay and Benefits for Contract Delivery Drivers
Amazon (AMZN) plans to boost wages and other benefits for contract drivers through a $450 million investment this year in its delivery service partners (DSP) program, the company announced on Wednesday.
Amazon said the pay increases would start in mid-October, and that delivery associates will earn an average of $20.50 per hour or more plus benefits, once the changes are rolled out. Amazon also said it would offer a 401(k) plan and that DSPs will receive about $60 million over the first year to help small businesses match employee contributions.
Shares of Amazon climbed 1% in early trading on Wednesday and were up close to 70% year-to-date.
Stocks Making the Biggest Moves Premarket
- Sigma Lithium Corp. (SGML): Shares of the Canadian lithium miner rose 10% after its board of directors said it was considering “multiple strategic proposals” from “global industry leaders in the energy, auto, batteries and lithium refining industries.” Lithium is a critical mineral in electric vehicle batteries, causing a flurry of consolidation in the industry in recent years.
- Moderna Inc. (MRNA): The biotech company’s shares gained more than 6% after it said its mRNA-based flu shot provoked a stronger immune response against several strains of the flu virus than currently available vaccines.
- Ford Motor Co. (F): Shares rose nearly 2% after the carmaker unveiled its new Ford F-150 pickup truck and said it plans to double production of the hybrid version.
- American Airlines Group (AAL): The airline’s shares fell more than 3% after it cut its third-quarter profit outlook, citing higher fuel costs and a new labor contract. Spirit Airlines (SAVE) also cut its outlook, sending shares 3% lower.
- XPeng Inc. (XPEV): The Chinese electric vehicle maker’s American depositary receipts (ADRs) lost 3% after the European Commission said it would investigate whether China’s government subsidies are artificially deflating the prices of the country’s EVs. Other Chinese automakers Nio Inc. (NIO) and Li Auto Inc. (LI) also fell on the news.
5 Things to Know Before Markets Open
Here's what investors need to know to start their day:
- Headline inflation rose to 3.7% from 3.2% in July as energy prices jumped. Core inflation, the figure the Federal Reserve is most concerned with because it strips out volatile food and energy prices, rose 0.3% month-over-month, a slight acceleration from July's 0.2% increase.
- American depositary receipts (ADRs) of Chinese electric vehicle makers fell in premarket trading after the European Commission said it would launch an investigation into Chinese EVs and whether government subsidies are keeping their prices artificially low.
- ADRs of oil giant BP (BP) rose 2% in premarket trading after falling 1.3% yesterday following the news that CEO Bernard Looney resigned following an investigation of personal relationships with colleagues which he had not disclosed.
- Rocket Pharmaceuticals (RCKT) shares jumped 19% in premarket trading after the company said it reached alignment with the Food and Drug Administration for its Phase 2 trial for the treatment of Danon disease.
- Shares of Ford (F) rose nearly 2% in premarket trading after it said it plans to double production of the hybrid version of its F-150 pickup truck in response to slower-than-expected sales of its all-electric vehicles.
Stock Futures In a Holding Pattern Ahead of CPI Report
Futures contracts connected to the Dow Jones Industrial Average were down just less than 0.1% in premarket trading on Wednesday.
S&P 500 futures were effectively unchanged.
Nasdaq 100 contracts were also flat.