Steelcase is booming after beating Wall Street’s earnings expectations
Steelcase rose more than 26% in Wednesday’s session, a day after the furniture maker reported a better-than-expected financial report and earnings outlook.
The Michigan-based company reported second-quarter profit of 31 cents per share, excluding items, on revenue of $854.6 million. Analysts polled by FactSet expected 20 cents per share and $829.2 million.
Steelcase expects earnings per share for the current quarter and full year to be higher than analysts expected. This helped investors overlook the company’s revenue expectations for the current quarter, which were below analysts’ consensus estimate.
Since the start of 2023, shares have risen more than 58%.
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Steelcase, 1 day move
Stellantis shares rise 3% on layoff news
Stellantis shares rose more than 3% after the company warned that recent strikes by the United Auto Workers union could lead to more than 350 layoffs.
The company said it would immediately lay off 68 workers at its Toledo, Ohio, plant. Further measures are likely at two locations in Indiana, which could affect 300 employees.
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Stellantis, 1 day
Tech stocks are following suit in the S&P 500
Technology stocks limited the S&P 500’s gains on Wednesday.
The information technology and communications services sectors lost 0.3% and 0.5%, respectively. They were the only two of the index’s 11 sectors to see declines.
Overall, the broad index rose about 0.2%. Real estate led the nine sectors with a gain of about 1%.
Google parent Alphabet led the losses among communications services stocks, falling more than 1%, while Zebra was the worst performer among information technology stocks, falling more than 4%.
—Alex Harring
Chewy falls after Oppenheimer downgrade
Chewy shares fell more than 4% after Oppenheimer went to the sidelines.
The company downgraded the pet retailer to “outperform” from “outperform” on Wednesday.
“We expect a more challenging environment to continue for at least a few more quarters given recent signs of weakness in the historically resilient pet food category and potentially more muted inflation benefits in fiscal 2024 (January 2025),” wrote analyst Rupesh Parikh in a note for customers.
Current higher interest rates are also putting pressure on stocks, he added. However, Parikh believes Chewy has the ability to gain market share in the long term.
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Tough, 1 day
Goldman forecasts Brent prices at $100 a barrel
Goldman raised its Brent forecast for the next 12 months to $100 a barrel from $93. The commodity has risen 30% since the end of June due to OPEC supply cuts and strong demand. Brent hit a high of $95.96 on Tuesday, its highest since November 2022, before slumping 0.3% to $94.02 on Wednesday morning.
The company also raised its 12-month WTI price forecast from $88 to $95 per barrel. WTI hit $93.74 on Tuesday, its highest level since November 2022. WTI prices remained unchanged at $91.20 a barrel on Wednesday.
Analyst Daan Struyven cited slightly greater inventory depletion as the reason for the forecast increase, a trend he described as “lower longer-term” supply.
CNBC Pro subscribers can read more about the surge here.
– Hakyung Kim
According to RBC, this big tech stock is undervalued and can rise nearly 30%
RBC Capital Markets began coverage on IBM with an Outperform rating and said shares could rise nearly 30%. The company also said the company’s software business is undervalued by investors.
“We believe the company’s software business is misunderstood and undervalued, particularly its role in hybrid environments, AI and spend optimization,” it said in a statement Wednesday.
CNBC Pro subscribers can click here to read the full story.
—Sarah Min
Stocks open higher
Shares opened on Wednesday.
The Dow was up about 0.3% shortly after 9:30 a.m. ET. Meanwhile, the S&P 500 and Nasdaq Composite each rose 0.2%.
—Alex Harring
JPMorgan downgrades Dollar General, citing higher inflation hurting consumers
JPMorgan says it’s time to dump shares of Dollar General as consumers face increasing pressure from higher costs.
Analyst Matthew R. Boss downgraded the stock to “underweight” from “neutral,” saying the company’s core low- to middle-income customer group is under pressure from falling savings and rising inflation. The downgrade comes after JPMorgan recently hosted a fireside chat with Dollar General’s chief financial officer, Kelly Dilts.
Shares fell 1.8% in premarket trading.
CNBC Pro subscribers can read more here.
—Sarah Min
Stocks making the biggest moves before the bell: Pinterest, Instacart and more
These are some of the stocks that moved the most in premarket trading:
- Pinterest – Shares rose more than 3% ahead of the market launch. Management said at the company’s first investor day that it expects year-over-year revenue growth to accelerate after a slowdown in 2022 and 2023.
- Instacart – Shares of the grocery delivery company fell nearly 4% a day after its stock market debut. The stock opened at $42 after its initial public offering, after pricing the offering at $30 a share late Monday.
- Bausch Health – The pharmaceutical stock gained over 5% in premarket trading after Jefferies upgraded the stock to Buy while raising its price target to $16.
The full list of stocks moving can be found here.
—Lisa Kailai Han
Apple and Goldman planned to offer stock trading functionality before the market collapse
Apple and Goldman Sachs had been working on a feature that would have allowed consumers to buy and sell stocks before shelving the idea when the market turned last year, sources told CNBC.
Apple feared criticism from users if people lost money on the stock market that they had invested through an Apple product, the sources said. The companies then focused on a plan to introduce savings accounts.
Representatives for Apple and Goldman Sachs declined to comment.
— Kate Rooney, Hugh Son
Markets need a “directional signal,” says Sanders Chairman Morris Harris
According to George Ball, chairman of Sanders Morris Harris, the gains could end up being a catalyst for markets that goes beyond economic policy decisions.
“Markets are fluctuating and looking for a directional signal other than interest rate hikes or cuts,” Ball said. “That signal is likely to be earnings, which will surprise with their strength. Businesses can thrive in a 5% cost of money environment. They have done that over the past decades and are now showing again that they can do it.”
While Ball expects rates to remain unchanged on Wednesday, he said a November hike is still on the table as inflation shows signs of accelerating. He also warned against expecting too much new insight from Fed officials’ Wednesday comments.
“The Fed’s language in Wednesday’s statement and press conference is probably boringly similar to its recent statements: Inflation is slowing, but not enough yet,” Ball said. “We’ve heard it before and we’ll hear it again. “
—Alex Harring
Treasury yields are falling after the 10-year note hit a near 16-year high
Treasury yields fell on Wednesday, falling a day after the 10-year note hit its highest level in nearly 16 years and the Federal Reserve was poised to announce its latest interest rate decision.
The benchmark note initially fell more than 2 basis points to 4.341%. This downward move came a day after the 10-year note hit its highest level since November 7, 2007. One basis point is equal to 0.01%, with yields moving inversely to price.
Other yields also fell, with the 2-year note, the most sensitive to Fed action, falling nearly 4 basis points to 5.071%.
–Jeff Cox
General Mills rises after profit decline
Shares of General Mills rose 1% after the food company reported fiscal first-quarter results that were slightly above Wall Street expectations.
The company had adjusted earnings per share of $1.09 on revenue of $4.90 billion. Analysts polled by LSEG expected $1.08 per share on revenue of $4.88 billion. Net sales increased 4% year-over-year, although sales in the pet category were flat.
General Mills reiterated its outlook for fiscal 2024.
–Jesse Pound
Weekly mortgage applications, refinances and interest rates are rising
According to the Mortgage Bankers Association’s seasonally adjusted index, mortgage applications to purchase a home rose 2% last week but were still 26% lower compared to the same period last year.
Interest rates on 30-year fixed-rate mortgages also rose to 7.31% from 7.27%, while demand for home refinances rose 13% compared to the previous week.
—Brian Evans
Oil prices fall on Wednesday
Oil prices fell on Wednesday after rising above $92 a barrel on Tuesday.
West Texas Intermediate Crude fell 0.6% to $90.60 at 7:22 a.m. EDT. On Tuesday it reached $93.74, its highest level since November 7, 2022.
Brent crude also fell 0.6% to hit $93.78, down from its Tuesday high of $95.96.
– Hakyung Kim
The 10-year Treasury yield is at a 16-year high
U.S. Treasury yields fell slightly on Wednesday, although the 10-year yield was still hovering around a 16-year peak, as investors awaited the Federal Reserve’s latest interest rate decision and guidance on further policy moves.
At 4:19 a.m. ET, the yield on the 10-year Treasury note fell about a basis point to 4.3567%, reaching levels last seen in 2007. The 2-year Treasury note was most recently more than two basis points lower at 5.0859%. .
Yields and prices have an inverse relationship. One basis point is equal to 0.01%.
European markets open cautiously higher
European markets opened cautiously higher on Wednesday as global investors await the U.S. Federal Reserve’s latest monetary policy decision.
The pan-European Stoxx 600 index opened 0.2% higher, with sectors spread across slightly positive and negative territory. Health care stocks led the gains, rising 0.9%, while oil and gas fell 0.8%.
—Hannah Ward Glenton
China leaves key lending rates unchanged
China left its benchmark one-year and five-year lending rates unchanged at 3.45% and 4.2%, respectively, in September.
The People’s Bank of China last cut the one-year LPR interest rate in August from 3.55% to 3.45%, while the five-year LPR was last cut in June from 4.3% to 4.2%.
Hebe Chen, market analyst at IG International, said: “Today’s reluctance from the PBOC highlights the dilemma the central bank continues to grapple with: save the economy or save the yuan.”
It therefore assumes that the central bank’s “inconsistency” will continue, “due to the lack of an established priority.”
The offshore yuan rose slightly to trade at 7.3028 against the greenback. Recently, the currency hit its all-time low of 7.3650 against the US dollar on September 8th.
—Lim Hui Jie
Japan’s trade deficit fell by two-thirds year-on-year in August
Japan’s trade deficit fell 66.7% in August to 930.5 billion yen ($6.3 billion), compared with the 2.79 trillion yen deficit a year ago.
However, the trade deficit was still larger than the 659.1 billion yen expected by economists polled by Portal.
Both imports and exports to the world’s third-largest economy fell 17.8% and 0.8%, respectively, year-on-year, below Portal expectations of a 19.4% decline in imports and a exports fell by 1.7%.
—Lim Hui Jie
South Korea’s wholesale inflation rate rises for the first time in over a year
South Korea’s producer price index rose 1% year-on-year in August, marking the first increase in the wholesale inflation rate since July 2022.
This is more than the 0.3% year-on-year increase recorded in July. On a monthly basis, the producer price index rose 0.9% in August, compared to a 0.2% increase in the previous month.
The biggest price increase in August was for agricultural, forestry and marine products, with prices rising 3.6% year-on-year and 7.3% month-on-month
The PPI measures the average change in prices of goods and services sold by manufacturers and producers in the wholesale market.
—Lim Hui Jie
The Fed’s “dot plot” could be crucial for traders on Wednesday
The Federal Reserve is widely expected to keep interest rates steady on Wednesday, but central bankers will provide an update on their economic outlook with the Economic Outlook Summary, which includes a key chart that traders will keep an eye on.
The so-called “dot plot” depicting the forecast movement in the Fed’s key interest rate and Chairman Powell’s press conference will give investors a clue as to what happens at the November meeting and in 2024.
“I think they will maintain their bias towards higher interest rates and signal that they are willing to raise the key rate further if the data shows that inflation either does not slow as expected or if the labor market remains too tight said Gus Faucher, chief economist at PNC Financial Services Group.
Read more about the meeting here.
—Jeff Cox, Jesse Pound
The profit situation supports the stock market, says Chris Hyzy
The Federal Reserve’s policy decision on Wednesday will be the first since July 26, which came at the start of second-quarter earnings season.
And while the S&P 500 is down about 2.7% since that day, earnings have largely held up. And that could explain why stock prices are holding up even as interest rates start to rise again.
“The market is resilient because of earnings. That pushes out all the other narratives and all the other stories for now,” Chris Hyzy, CIO at Merrill and Bank of America Private Bank, said on “Closing Bell” Tuesday.
–Jesse Pound
Higher oil prices are a short-term headache for central banks, but do not pose a threat of high inflation
“[G]“With inflation remaining above target, the recent rise in oil prices is a short-term headache for central banks, which they may well express through a hawkish line,” wrote Simon MacAdam, senior global economist at Capital Economics, In a note to clients Tuesday, the theme was: “Higher oil prices are not a determining factor in inflation.”
London-based Capital Economics doesn’t believe higher crude oil prices will pave the way for a “sustained recovery in inflation” or that central banks in developed economies will respond by raising interest rates or even keeping them high for longer, just because this is the case of the energy markets.
“[W]We do not believe that the recent rise in oil prices will prompt central banks in advanced economies to respond by raising interest rates. “For oil prices to impact the monetary policy outlook, central banks would likely need to see higher and sustained price increases amid robust activity and rising inflation expectations,” MacAdam said.
– Scott Schnipper
Stock futures open little changed
Futures were quiet on Tuesday evening as trading reopened at 6:00 p.m. ET. Futures for the Dow, S&P 500 and Nasdaq 100 all moved less than 0.1%.
–Jesse Pound