Wall Street traders booked profits on Monday, giving back part of last week’s gains, as the sudden unwinding of a hedge fund ricocheted across markets.
On Friday, the S&P 500, Dow and Nasdaq closed higher by more than 1%, with the broader market posting its best in three weeks. However, traders were watching several big stocks like Viacom (VIA) and Discovery (DISC), after a volatile session on Friday saw several names take a hit linked to liquidation by Bill Hwang, a fund manager and the ex-head of Tiger Management’s family office.
Bloomberg News reported that Hwang’s firm, Archegos Capital Management, was forced by its banks to sell more than $20 billion worth of shares after some positions moved against him. In a related move, Swiss banking giant Credit Suisse (CS) warned that the volatility stemming from the firm’s liquidation would force the bank to take a “highly significant” hit to its first quarter results.
Markets were largely calm amid news that the massive ship marooned in the Suez Canal was finally dislodged after nearly a week, which should pave the way for ending the blockage that’s created a shipping traffic jam in one of the world’s most important shipping lanes. Efforts there had put upward pressure on oil and natural gas prices, given that the canal is a busy thoroughfare for energy exports.
The past couple weeks have been marked by choppy equity trading, especially heading into some of the final sessions of the first quarter. But overall, the cyclical energy, financials and industrials sectors – or the biggest under-performers of 2020 – have outperformed strongly for the year-to-date, while last year’s leading technology companies have lagged. Signs of improving economic growth have trickled in, with Thursday’s bigger-than-expected drop in new unemployment claims to a pandemic-era low among the latest positive reports.
A prevailing concern for many investors, however, has in fact been centered on the pace of economic expansion, and whether the stimulus-aided post-pandemic recovery might barrel forward even more vigorously than expected and stir up rapid inflation. In the wake of passing a $2 trillion stimulus package, the Biden administration is gearing up for even more spending — and the likelihood of higher taxes.
“You can be sure the spending with have a multiplier less than zero and tax increases are always an economic drag with the extent the only difference,” noted Peter Boockvar, Chief Investment Officer at Bleakley Advisory Group.
Still, Federal Reserve policymakers have recently tried to assuage market participants’ fears over a sharp rise in inflation. On NPR’s Morning Edition Thursday, Fed Chair Jerome Powell reaffirmed that the Fed remained strongly committed to targeting 2% average inflation over time, and said that any eventual pullback in Fed support would be done “gradually, over time, and with great transparency.”
—
12:15 p.m. ET: Stocks sag as fund’s margin call, profit-taking weigh
11:00 a.m. ET: CDC: Pfizer, Moderna COVID shots highly effective
A new study shows that the two leading COVID-19 vaccines are highly effective against blocking the coronavirus after one shot — and are even more so after the booster. The CDC report of vaccinated health care workers showed that two doses are better than one — with the efficacy rate jumping from 80% to 90% two weeks after the 2nd dose.
Pfizer’s stock (PFE) was modestly higher in Monday morning trade, with Moderna’s shares (MRNA) edging lower.
—
10:45 a.m. ET: Will the housing market suffer a rate shock? It depends
The team over at Bankrate is mulling whether the run-up in benchmark Treasury rates will spell the end of the housing boom. The answer, like a Facebook relationship status update, is complicated:
Housing experts say an uptick in mortgage rates won’t cool this hot housing market — but a more pronounced increase, say to 4 percent or higher, could slow price appreciation.
“Unless rates go massively up, I don’t see a massive effect on prices,” says Ziggy Jonsson, head of financial products at mortgage company Better.com.
Mortgage rates fell below 3 percent in 2020, and home prices jumped more than 10 percent for the year, according to the S&P CoreLogic Case-Shiller index. In theory, rising rates could slow the pace of home price appreciation, says Daryl Fairweather, chief economist at real estate brokerage Redfin.
“That’s because even small upticks in the cost of borrowing tend to decrease the number of people looking to purchase,” she says.
Ship Ever Given, one of the world’s largest container ships, is seen after it was fully floated in Suez Canal, Egypt March 29, 2021. REUTERS/Mohamed Abd El Ghany
Per Reuters, the dislodging of the Ever Given — the hapless ship that was beached in the Suez Canal for nearly a week — has allowed the resulting traffic jam to clear, the canal authority said in a statement on Monday:
A Reuters witness saw the ship moving and a shipping tracker and Egyptian TV showed it positioned in the center of the canal.
—
9:30 a.m. ET: Stocks open to the downside as margin call bites
TORONTO – Roots Corp. may have built its brand on all things comfy and cosy, but its CEO says activewear is now “really becoming a core part” of the brand.
The category, which at Roots spans leggings, tracksuits, sports bras and bike shorts, has seen such sustained double-digit growth that Meghan Roach plans to make it a key part of the business’ future.
“It’s an area … you will see us continue to expand upon,” she told analysts on a Friday call.
The Toronto-based retailer’s push into activewear has taken shape over many years and included several turns as the official designer and supplier of Team Canada’s Olympic uniform.
But consumers have had plenty of choice when it comes to workout gear and other apparel suited to their sporting needs. On top of the slew of athletic brands like Nike and Adidas, shoppers have also gravitated toward Lululemon Athletica Inc., Alo and Vuori, ramping up competition in the activewear category.
Roach feels Roots’ toehold in the category stems from the fit, feel and following its merchandise has cultivated.
“Our product really resonates with (shoppers) because you can wear it through multiple different use cases and occasions,” she said.
“We’ve been seeing customers come back again and again for some of these core products in our activewear collection.”
Her remarks came the same day as Roots revealed it lost $5.2 million in its latest quarter compared with a loss of $5.3 million in the same quarter last year.
The company said the second-quarter loss amounted to 13 cents per diluted share for the quarter ended Aug. 3, the same as a year earlier.
In presenting the results, Roach reminded analysts that the first half of the year is usually “seasonally small,” representing just 30 per cent of the company’s annual sales.
Sales for the second quarter totalled $47.7 million, down from $49.4 million in the same quarter last year.
The move lower came as direct-to-consumer sales amounted to $36.4 million, down from $37.1 million a year earlier, as comparable sales edged down 0.2 per cent.
The numbers reflect the fact that Roots continued to grapple with inventory challenges in the company’s Cooper fleece line that first cropped up in its previous quarter.
Roots recently began to use artificial intelligence to assist with daily inventory replenishments and said more tools helping with allocation will go live in the next quarter.
Beyond that time period, the company intends to keep exploring AI and renovate more of its stores.
It will also re-evaluate its design ranks.
Roots announced Friday that chief product officer Karuna Scheinfeld has stepped down.
Rather than fill the role, the company plans to hire senior level design talent with international experience in the outdoor and activewear sectors who will take on tasks previously done by the chief product officer.
This report by The Canadian Press was first published Sept. 13, 2024.
VANCOUVER – Mediated talks between the union representing HandyDART workers in Metro Vancouver and its employer, Transdev, are set to resume today as a strike that has stopped most services drags into a second week.
No timeline has been set for the length of the negotiations, but Joe McCann, president of the Amalgamated Transit Union Local 1724, says they are willing to stay there as long as it takes, even if talks drag on all night.
About 600 employees of the door-to-door transit service for people unable to navigate the conventional transit system have been on strike since last Tuesday, pausing service for all but essential medical trips.
Hundreds of drivers rallied outside TransLink’s head office earlier this week, calling for the transportation provider to intervene in the dispute with Transdev, which was contracted to oversee HandyDART service.
Transdev said earlier this week that it will provide a reply to the union’s latest proposal on Thursday.
A statement from the company said it “strongly believes” that their employees deserve fair wages, and that a fair contract “must balance the needs of their employees, clients and taxpayers.”
This report by The Canadian Press was first published Sept. 12, 2024.
MONTREAL – Travel company Transat AT Inc. reported a loss in its latest quarter compared with a profit a year earlier as its revenue edged lower.
The parent company of Air Transat says it lost $39.9 million or $1.03 per diluted share in its quarter ended July 31.
The result compared with a profit of $57.3 million or $1.49 per diluted share a year earlier.
Revenue in what was the company’s third quarter totalled $736.2 million, down from $746.3 million in the same quarter last year.
On an adjusted basis, Transat says it lost $1.10 per share in its latest quarter compared with an adjusted profit of $1.10 per share a year earlier.
Transat chief executive Annick Guérard says demand for leisure travel remains healthy, as evidenced by higher traffic, but consumers are increasingly price conscious given the current economic uncertainty.
This report by The Canadian Press was first published Sept. 12, 2024.
