Update (Sept. 18, 2023): For today's live market coverage, see here.
U.S. stocks sank Friday as the enthusiasm for yesterday's Arm IPO waned and the United Auto Workers (UAW) went on strike against Detroit's Big Three automakers.
The Nasdaq dropped 1.6% while the S&P 500 lost 1.2%. The Dow Jones Industrial Average fell 0.8% Friday but eked out a gain of 0.1% for the week. The S&P and Nasdaq lost 0.2% and 0.4%, respectively, this week.
After failing to agree on a contract renewal with General Motors (GM), Ford (F), and Stellantis (STLA), UAW called on 12,700 workers to strike at select plants. It is the first time the union has taken action against all three of America's largest unionized automakers simultaneously.
China's economy showed signs of stabilizing, with industrial production and retail sales both picking up in August according to data released Friday. Still, the country's central bank cut a short-term lending rate, its latest in a series of small stimulus measures.
Stocks jumped yesterday on the chip designer Arm's successful IPO, which saw the company's shares jump 25%. The Dow Jones Industrial Average closed up 1%, breaking a two-day losing streak. The S&P 500 and the Nasdaq both rose 0.8%.
S&P 500's Biggest Gains and Losses Today
Here are the S&P 500 stocks that gained and lost the most today:
Dow Slides Amid Broad Pullback for Stocks
Triple witching may have had something to do with today’s volatility, with stocks dropping even further than they climbed yesterday on Arm’s successful IPO.
Microsoft (MSFT) fell 2.5% to lead the index lower. The tech sector dropped nearly 2% to be the day’s worst-performing sector. Intel (INTC) shares dropped 2%, Salesforce (CRM) fell 1.9% and IBM (IBM) declined 0.9%.
Walt Disney Co. (DIS) was one of only three of the Dow 30 stocks to gain today. It moved up 1.3% after media entrepreneur Byron Allen reportedly offered $10 billion for the ABC broadcast network, local channels, and the FX and National Geographic cable networks. American Express (AXP) added 1.2%, and UnitedHealth Group (UNH) gained 0.6%.
Charles Schwab Stock Slumps on Falling Client Assets
Shares of Charles Schwab Corp. (SCHW) were down 2% near the end of the day after the brokerage reported total client assets fell in August.
Total client assets slipped 2% month-over-month to $8.09 trillion. And core net new assets totaled $4.9 billion, 64% less than in July and 89% less than a year ago.?
“Firmware NNA has been temporarily impacted by asset attrition from clients originating at Ameritrade,” CFO Peter Crawford said in a statement. However, he also said attrition was less significant than the company had forecast when they announced the acquisition in 2019.?
Schwab converted $1.3 trillion in TD Ameritrade-originated assets over Labor Day weekend.
US Consumers Still Feeling Gloomy About the Economy
Stubborn inflation is making Americans feel pretty lousy about their own finances and the economy.
The University of Michigan’s Index of Consumer Sentiment ticked down to 67.7 in September from 69.5 in August, the university said Friday. The index, based on a survey of U.S. adults, has hovered below the historical average of 86 for months.
It’s now about 35% higher than the all-time low it hit in June 2022, when annual inflation was running at a scorching 9.1%, Joanne Hsu, director of the survey, said in a note accompanying its release.
Media Entrepreneur Byron Allen Said To Offer $10B for Some Disney TV Assets
Media entrepreneur, television producer, and comedian Byron Allen reportedly has offered $10 billion to purchase the Walt Disney Co.’s (DIS) ABC network, local stations, and cable channels FX and National Geographic.
Allen is the founder and CEO of Entertainment Studios, also known as Allen Media Group, which owns 36 ABC, CBS, NBC, and Fox TV stations, and 12 HD networks, including The Weather Channel.
Disney is also said to be in talks with TV station operator Nexstar Media Group about purchasing ABC.
Shares of Disney rose about 1% in early trading Friday, although they remain down for 2023.
Midday Market Movers
Estée Lauder Co. (EL): Shares gained about 2% after analysts at Redburn upgraded the beauty company to neutral from sell. “A protracted earnings downgrade cycle is waning,” they said.
Nucor Corp. (NUE): Shares of the steel maker shed 4% after it said lower steel prices would hit its quarterly earnings, which it expects to be between $4.10 and $4.20 a share this quarter, down from $5.81 last quarter.
Charles Schwab Corp. (SCHW): The brokerage’s shares fell 4% after it said the integration of TD Ameritrade caused net new assets to fall in August to $4.9 billion, down 89% from a year ago.
Planet Fitness Inc. (PLNT): Shares of the gym chain plummeted 12% after its board abruptly ousted CEO Chris Rondeau and said it was beginning to search for a replacement.
Adobe's Results and Profit Guidance Beat Estimates on Demand for AI Products
Adobe (ADBE) posted better-than-expected results and profit guidance as the company joined the growing list of tech firms that are benefiting from soaring demand for artificial intelligence (AI) products.
The maker of Acrobat, Photoshop, and other software reported record third-quarter revenue of $4.89 billion, a gain of 10.4% year-over-year. Earnings per share (EPS) came in at $4.09. Both exceeded forecasts.
Adobe anticipates current quarter EPS of $4.10 to $4.15, higher than estimates. Its revenue outlook came in at $4.975 billion to $5.025 billion, compared to estimates of $5.0 billion.
Shares of Adobe were 4% lower as of 12:30 p.m. ET, and lost ground this week after hitting a 21-month high on Monday. They were up over 57% year-to-date.
What Could the UAW Strike Cost Automakers?
The work stoppage, which the union is calling a “stand-up strike,” is currently limited to three assembly plants: a GM plant in Missouri, Stellantis Toledo Assembly Complex in Ohio, and Ford Michigan Assembly Plant.
But the union can turn up the heat and call on thousands more workers to walk off the job. That would bring factories to a standstill and seriously impact the near-term ambitions of the automakers.?
“We believe a strike lasting longer than 4 weeks would be a?body blow?to the EV ambitions of GM and Ford in 1H24 and delay many aspects of this initial important EV push,” wrote Wedbush Securities analysts in a note Thursday.?
The clear winner, they say, is non-union Tesla (TSLA), already a leader in the domestic EV market and likely to benefit from its competitors’ production delays and the cost increases that will inevitably come out of a UAW deal.
The strike could also have a major impact on the economy at large. The Big Three produce more than half the vehicles in the U.S., and a 10-day strike could cost the U.S. economy more than $5 billion in losses, according to an Anderson Economic Group estimate.
Apple to Update iPhone 12 Software in France to Address Radiation Concerns
Earlier this week, France halted sales of the iPhone 12 after tests by its radiation watchdog, Agence Nationale des Frequences, found that the model emitted higher radiation levels than permitted in France. Other European countries also flagged similar concerns.
While welcoming Apple's move, the French authorities suggested the model would be tested again after the software update before allowing sales to resume.
Apple shares were down about 0.6% Friday morning, and have gained 34% year-to-date.
Instacart, Seeing Arm’s Success, Raises IPO Price
Grocery delivery service Instacart, which filed on Monday to IPO on the Nasdaq, raised the price of its share Friday according to a filing with the Securities and Exchange Commission (SEC).
Instacart is now aiming to list its shares at a price of between $28 and $30. It originally expected to IPO at between $26 and $28 a share. The upper end of its new range values the company at about $10 billion.
The move comes after the successful debut of chip designer Arm Holding Plc (ARM) yesterday. Arm shares gained almost 25% on their first day of trading, buoying markets and generating plenty of optimism around upcoming IPOs like Instacart’s.
The IPO market was frozen last year as stocks slumped on rising interest rates. There were 149 U.S. IPOs that raised about $21 billion in 2022. The year before, 908 debuts generated about $283 billion in proceeds.
Arm’s listing, the largest since Rivian’s (RIVN) in 2021, has reawakened the market, prompting Instacart, marketing software company Klaviyo, and shoemaker Birkenstock to jump on the bandwagon. All three are expected to debut in the coming weeks.
Stocks Making the Biggest Moves Premarket
- Unity Software (U): Shares of the software company gained 3%, rebounding slightly from the 2-day, 8% drop that followed its announcement of a new fee it would charge developers using its platform, Unity Engine.
- Arm Holdings Plc. (ARM): Shares of the chip designer rose 3% after soaring 25% yesterday on its first day of trading on the Nasdaq.
- Moderna Inc. (MRNA): The vaccine maker’s shares rose almost 1% after UK regulators approved its updated Covid-19 vaccine.
- Adobe Inc. (ADBE): Shares of the design software maker fell more than 3% despite beating Wall Street’s estimates on the top and bottom lines in its third quarter.
- ASML Holding NV (ASML): Shares of the maker of advanced semiconductor manufacturing tools lost more than 3% after leading chipmaker Taiwan Semiconductor (TSM) told it and other suppliers to delay equipment deliveries. Competitors Applied Materials (AMAT) fell more than 2%.
- Ford Motor Co. (F): The carmaker’s shares slipped 1% after the United Auto Workers (UAW) union called a targeted strike against it, General Motors (GM), and Stellantis NV (STLA) in a move that could delay the rollout of new electric vehicles and significantly raise future costs.
5 Things to Know Before Markets Open
Here's what investors need to know to start their day:
- For the first time, the United Auto Workers union initiated a simultaneous strike against the Big Three Detroit car companies, with nearly 12,700 workers planning to stop working at targeted facilities.
- Shares of Arm Holdings (ARM) were up nearly 2% in pre-market trading after the British chip designer’s initial public offering was a success, with shares rising close to 25% in the company’s first day of trading.
- Shares of used car retailers climbed as negotiations between auto workers and Detroit car makers stalled.
- Content creation software Adobe (ADBE) posted earnings that were slightly ahead of analyst estimates as it promoted a new suite of artificial intelligence (AI) tools for its products.
- The preliminary September reading of the Michigan Consumer Sentiment Index is projected to show a drop to 69.2 from 69.5 a month prior when it is released at 10 a.m. ET.
Stock Futures Mixed Ahead of Market Open
Futures contracts connected to the Dow Jones Industrial Average were up 0.2% in premarket trading Friday.
S&P 500 futures traded 0.1% higher.
Nasdaq 100 contracts slipped about 0.1%.