Stocks open slightly lower
Major averages started lower on Friday, although far from the lows indicated by futures earlier in the morning. The Nasdaq Composite was the worst performer, down around 0.4%.
Traders raise odds of Fed rate cut in December
Traders adjusted their expectations for Federal Reserve actions after a Wall Street Journal report Friday indicating that the central bank will talk about the future pace of rate hikes.
While a 75 basis point rate hike is still highly anticipated at the Fed’s November meeting, traders raised the odds that the December meeting will only see a 50 basis point move. A basis point is one hundredth of a percentage point.
The probability of a 0.75 percentage point move in December fell to 57.4% after the Journal report, from 75.4% at the same time Thursday, according to data from the CME Group. Traders increased the odds of a move by 0.5 percentage points to 39.6% from 24.2%.
Futures contracts rebound after Wall Street Journal report
Futures contracts rebounded from their low after the the wall street journal reported that some Federal Reserve officials were increasingly concerned about the current pace of rate hikes and were beginning to worry about the risks of excessive tightening.
The S&P 500 and Dow futures are now trading nearly flat. Nasdaq 100 futures are down about 0.4%.
Elon Musk’s Twitter deal is a brutal situation for Tesla investors, says Dan Ives
“It’s quite simple, the more investors that bail out of this deal, the more money Musk needs to contribute and therefore sell more Tesla stock,” Ives said in a note on Friday.
Musk is expected to sell some of his sizable stake in Tesla to help fund the closing of the $44 billion private deal. Ives said Musk may need to sell another $5 billion to $10 billion worth of Tesla stock.
“This continues to be a brutal situation for Tesla investors to bear the brunt,” Ives said. “As we’ve discussed, the $44 billion Twitter price is just a train wreck for an asset whose fair value we’re pricing in a best-case scenario of $30 billion amid growing challenges. rising like Everest.”
SVB upgrades Moderna citing long period of underperformance
After falling nearly 54% year-to-date, Moderna is well positioned for investors to take notice and watch for a compelling entry point, according to SVB Securities.
The company upgraded the pharma company from underperformer to market and raised its price target to $101 from $74.
The upgraded rating comes after an “extended period of underperformance” which contrasts sharply with other similar companies covered by the company, including Ionis Pharmaceuticals, up 47% year-to-date and Alnylam Pharmaceuticals, up 14% this year.
Additionally, Pfizer’s comments “signaled significantly higher than expected prices for its COVID-19 vaccine as the market shifts from a largely contracted market to a largely traded market,” analyst Mani Foroohar wrote in a post. Friday note. “Assuming MRNA’s pricing is a rational duopoly, this significantly improves the company’s ability to meet 2023 revenue forecasts.”
It also lacks a clear driving catalyst for bear casting without a guide cut, according to Foroohar.
“Bulls will point to PCV data in 4Q22, on the heels of external validation by partner MRK (OP, Graybosch), while bears question the commercial viability of the flu program, for which final data does not will be available only at the end of 2023<" they said.
The company has also updated its model to reflect adequate Covid pricing.
“As this represents insufficient downside to the current level of MRNA (~$118) near its 52-week low to warrant an underperforming rating, we are stepping away from the sidelines and awaiting a more attractive entry point. on the long side or the short side,” Foroohar said. .
Moderna shares rose more than 3% in premarket trading.
Stocks likely haven’t bottomed yet, UBS’s Haefele says
According to UBS Global Wealth Management’s Mark Haefele, the stock market is likely to fall to new lows until investors grapple with the coming economic downturn and its impact on earnings.
“History tells us that markets don’t find bottoms until investors see Federal Reserve rate cuts or a bottom in economic activity on the horizon, or when valuations are so low that ‘They embed a ‘downside case’ scenario. Today, none of these conditions are in place,” Haefele wrote in a note to clients.
He added that it is unclear when the Fed will start cutting rates, even if the central bank suspends hikes in early 2023. Fed officials have said they could keep rates at a low level. restrictive until inflation falls close to the 2% target level. .
Stocks on track for a winning week
Stocks may be eyeing a third day of losses, but major averages are still up for the week thanks to strong performances on Monday and Tuesday.
Here are the weekly stats as of Thursday’s close:
- The Dow is at 2.36%
- The S&P 500 is up 2.31%
- The Nasdaq Composite is up 2.84%
For all three major averages, it would be their best streak since the one that ended Sept. 9.
Snap plunges after earnings
Snap shares plunged more than 25% in pre-market after the company released its latest quarterly numbers.
Snapchat parent made $1.13 billion in revenue, slightly lacking expectations. Average revenue per user, a key metric for the company, fell 11% to $3.11.
“Our revenue growth continued to slow in the third quarter and continues to be impacted by a number of factors that we have noted over the past year, including platform policy changes, headwinds macroeconomics and increased competition,” Snap said in its statement. letter to investors.
The results led Bernstein analysts to downgrade the stock, noting it’s unclear where stock leaves here.
CNBC Pro: Goldman Sachs Says These Stocks Could Beat an Increasingly Likely Recession
“The macro picture is arguably tougher than it has been in some time,” says Goldman Sachs, which favors a dumbbell strategy for recessionary jitters.
The bank named several stocks listed for buy that it believes could perform well in the current macro environment.
Pro subscribers can find out more here.
— Zavier Ong
US Treasury yields hit new 10-year highs
Sensitive policies Cash 2 years the yield also rose to 4.639%, its highest level in 15 years.
The yield on the Cash 30 years hit a new 11-year high of 4.266%.
Yields and prices move in opposite directions and one basis point equals 0.01%.
European markets: here are the opening calls
The United Kingdom FTSE100 is expected to open 36 points lower at 6,905, according to IG data.
CNBC Pro: Here’s what to invest in as yields rise again, according to BlackRock and others
Yields are rising again and the upward trajectory of interest rates looks set to continue.
For investors, that means they should seize the opportunity now to put their money into bonds or Treasuries – especially those with the shortest durations, analysts said this week.
Wells Fargo said investors should seize the somewhat fleeting nature of this opportunity now.
Revenue drives after-hours movers
Companies that reported profits after Thursday’s bell were among those that moved the most in after-hours trading.
The tech giant Instantaneous dropped 25% after Iall revenues were lower than expected, although the number of daily active users worldwide was higher than expected. Competitors Meta and Alphabet also slipped.
Snap told investors that revenue growth will likely continue to slow in the fourth quarter as platform policy changes, changing economic conditions and increased competition impact the business. He gave no guidance for the fourth quarter.
Robert Half International was down 7.7% after the employment agency failed to meet expectations for higher and lower results. The company reported earnings per share of $1.53 on revenue of $1.83 billion, while analysts polled by StreetAccount expected earnings per share of $1.62 on revenue of $1.92 billion.
CSX, on the other hand, added 4.3% after beating expectations for both revenue and profit. The transportation company reported adjusted earnings per share of 52 cents on revenue of $3.90 billion, beating analysts’ forecasts of earnings per share of 49 cents on revenue of $3. .74 billion dollars.
Dow as Nasdaq 100 drops at open
Stock futures opened mixed at the start of after-hours trading.
The Dow Jones added 51 points, or 0.2%. S&P 500 futures were trading almost flat.
But Nasdaq 100 futures fell 0.3%.