U.S. stocks resumed losses Thursday after economic data out of Washington showed another 40-year high CPI print and talks held between Russia and Ukraine’s foreign ministers failed to make progress on negotiating a ceasefire.
The S&P 500 fell 1% to 4,234.94 and the Dow Jones Industrial Average shed 350 points to 32,928.72. The Nasdaq Composite plunged 1.2% to 13,092.13.
Russian foreign minister Sergei Lavrov held a meeting in Turkey Thursday with his Ukrainian counterpart Dmytro Kuleba to discuss a 24-hour ceasefire across war zone and opening of a corridor in the southern Ukrainian port of Mariupol but Lavrov reportedly did not commit to either.
The declines come after stocks ended a losing streak in the previous session to log their best session in two years as investors looked optimistically toward a possible de-escalation of Russia’s war in Ukraine.
Energy prices fell sharply Wednesday after soaring to a 14-year highs this week following reports Ukrainian president Volodymyr Zelensky was open to discussing a diplomatic solution with Russia. WTI crude oil plunged to around $110 per barrel, while Brent crude fell to trade near $112 per barrel. The S&P 500 Energy sector snapped an 8-day winning streak.
“Markets were priced like the Straits of Hormuz were blockaded, and that was just not reasonable, and it’s not like the Middle East suddenly was offline,” Harris Financial Group managing partner Jamie Cox said in a note. “Markets often have ‘hair on fire’ overreactions to world events which unlocks tremendous value for those who pay attention to the price dislocations.”
“Equity markets have a bid [Wednesday] as the markets [were] clinging to the slightest glimmer of hope of a possible step towards de-escalation when the Ukrainian and Russian finance ministers meet in Turkey tomorrow,” Commonwealth Financial Network global investment strategist Anu Gaggar said in a note. “Markets may also be taking a break from a downtrend and seeing some consolidation due to oversold conditions.”
Russia’s foreign minister Sergei Lavrov addresses the Conference on Disarmament with a pre-recorded video message in Geneva, Switzerland, March 1, 2022. Fabrice Coffrini / Pool via REUTERS
U.S. traders will continue to monitor geopolitical conditions but temporarily shifted their attention to the Bureau of Labor Statistics’ Consumer Price Index (CPI) for the latest gauge on inflation.
Consumers paid more for a variety of goods and services in February compared to the prior month and year as prices levels across the economy continued to surge amid lingering supply and demand disruptions. The latest CPI read notched 7.9% in February compared to last year in the fastest annual jump since 1982, also surpassing January’s previous 40-year high rate of 7.5%. The figure was in line with consensus economist expectations, according to Bloomberg data.
Consensus economists polled by Bloomberg are looking for the CPI to jump by 7.9% in February compared to last year. The figure would mark the fastest annual jump since 1982 and surpass January’s current 40-year high rate of 7.5%.
“Net, net, the inflation fire was already hot and now with war-driven inflation added to the mix, it will grow even hotter, setting off a scramble by the world’s central banks to pull back their stimulus earlier than expected,” FWDBONDS chief economist Christopher S. Rupkey said in a note.
“A spike in inflation rates has preceded economic recessions historically and this time prices have soared to levels that once again pose a threat to growth,” he added. “Markets were cheering this economic recovery and return to strong economic growth, but the cheers will turn to tears if the inflation outbreak pushes businesses and consumers to the brink of recession.”
Meanwhile. Amazon (AMZN) surged as much as 10% in extended trading Wednesday after the e-commerce giant said its board approved a 20-for-1 split of the company’s common stock — the first since 1999 — and authorized a $10 billion share repurchase.
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9:45 a.m. ET: Goldman Sachs to withdraw from Russia in Wall Street’s first bank exit
Goldman Sachs Group Inc. (GS) announced plans to close its operations in Russia, making the financial institution the first major bank on Wall Street to exit in response to the country’s military invasion of Ukraine.
“Goldman Sachs is winding down its business in Russia in compliance with regulatory and licensing requirements,” the company said Thursday in an emailed statement. “We are focused on supporting our clients across the globe in managing or closing out pre-existing obligations in the market and ensuring the well-being of our people.”
The firm will continue to trade corporate debt tied to Russia without the bank itself making bets on price movements.
“In our role as market-maker standing between buyers and sellers, we are helping our clients reduce their risk in Russian securities which trade in the secondary market, not seeking to speculate,” New York-based Goldman Sachs said in the statement.
If shareholders approve of the split, it will begin trading on the new basis on June 6.
“Big tech stalwarts all saw massive strength during the pandemic and the stocks are now ripe for a split. Amazon is following the lead of Apple, Tesla, and Alphabet on the stock split path. These are smart moves as investors positively digest stock splits. We believe tech names are oversold as we seen in five years,” Wedbush tech analyst Dan Ives told Yahoo Finance.
Milton Keynes, UK – A large Amazon filfilment warehouse near the M1 Motorway outside Milton Keynes.
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8:47 a.m. ET: Jobless claims climb more-than-expected but remain near pre-COVID low
Applications for unemployment insurance inched up higher than expected in the latest weekly data but extended a broader trend downward after surging COVID-19 infections earlier this winter briefly disrupted the labor market’s recovery to start the year.
The Labor Department latest weekly jobless claims report reflected 227,000 claims filed in the week ended March 5, compared to the 217,000 economists surveyed by Bloomberg had expected.
Filings for unemployment insurance have mostly fallen lower after a temporary surge mid-January to a print of nearly 300,000, following a rush of U.S. workers applying for benefits amid disruptions from the Omicron coronavirus variant and workforce after the seasonal hiring increase at the end of 2021. Although COVID’s impact on the labor market have appeared to ease, the economic toll the war in Eastern Europe may have remains unclear.
“With seemingly no shortage of sources of turmoil in our world, the U.S. job market has, at least so far, remained a source of relative strength and stability,” Bankrate senior economic analyst Mark Hamrick said in a note. He signaled, however, that although “COVID has relaxed its grip,” inflationary pressures and continuing, and potentially growing supply shocks, will have an “inescapable negative impact on the economy.”
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8:35 a.m. ET: February CPI rises 7.9% over last year to hit fresh 40-year high
U.S. consumers paid more for a variety of goods and services in February compared to the prior month and year as prices levels across the economy continued to surge amid lingering supply and demand disruptions.
The Bureau of Labor Statistics’ Consumer Price Index (CPI) rose 7.9% in February compared to last year in the fastest annual jump since 1982, also surpassing January’s previous 40-year high rate of 7.5%. The figure was in line with consensus economist expectations, according to Bloomberg data.
“Robust pay increases have been no match for the higher costs households are facing on rent, food, electricity, gasoline, and a pervasive list of both goods and services,” Greg McBride, chief financial analyst at Bankrate, said in an email on Tuesday. “The buying power of Americans is being squeezed more and more each day, and you see this reality reflected in the dour consumer sentiment readings.”
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7:00 a.m. ET: Futures falter after Russia-Ukraine peace talks make little progress
Here’s where stocks were ahead of Thursday’s open:
S&P 500 futures (ES=F): -38.25 points (-0.89%) to 4,277.50
Dow futures (YM=F): -179.25 points (-1.31%) to 13,555.50
Nasdaq futures (NQ=F): +29.50 points (+0.21%) to 13,764.25
TOKYO (AP) — Japanese technology group SoftBank swung back to profitability in the July-September quarter, boosted by positive results in its Vision Fund investments.
Tokyo-based SoftBank Group Corp. reported Tuesday a fiscal second quarter profit of nearly 1.18 trillion yen ($7.7 billion), compared with a 931 billion yen loss in the year-earlier period.
Quarterly sales edged up about 6% to nearly 1.77 trillion yen ($11.5 billion).
SoftBank credited income from royalties and licensing related to its holdings in Arm, a computer chip-designing company, whose business spans smartphones, data centers, networking equipment, automotive, consumer electronic devices, and AI applications.
The results were also helped by the absence of losses related to SoftBank’s investment in office-space sharing venture WeWork, which hit the previous fiscal year.
WeWork, which filed for Chapter 11 bankruptcy protection in 2023, emerged from Chapter 11 in June.
SoftBank has benefitted in recent months from rising share prices in some investment, such as U.S.-based e-commerce company Coupang, Chinese mobility provider DiDi Global and Bytedance, the Chinese developer of TikTok.
SoftBank’s financial results tend to swing wildly, partly because of its sprawling investment portfolio that includes search engine Yahoo, Chinese retailer Alibaba, and artificial intelligence company Nvidia.
SoftBank makes investments in a variety of companies that it groups together in a series of Vision Funds.
The company’s founder, Masayoshi Son, is a pioneer in technology investment in Japan. SoftBank Group does not give earnings forecasts.
Shopify Inc. executives brushed off concerns that incoming U.S. President Donald Trump will be a major detriment to many of the company’s merchants.
“There’s nothing in what we’ve heard from Trump, nor would there have been anything from (Democratic candidate) Kamala (Harris), which we think impacts the overall state of new business formation and entrepreneurship,” Shopify’s chief financial officer Jeff Hoffmeister told analysts on a call Tuesday.
“We still feel really good about all the merchants out there, all the entrepreneurs that want to start new businesses and that’s obviously not going to change with the administration.”
Hoffmeister’s comments come a week after Trump, a Republican businessman, trounced Harris in an election that will soon return him to the Oval Office.
On the campaign trail, he threatened to impose tariffs of 60 per cent on imports from China and roughly 10 per cent to 20 per cent on goods from all other countries.
If the president-elect makes good on the promise, many worry the cost of operating will soar for companies, including customers of Shopify, which sells e-commerce software to small businesses but also brands as big as Kylie Cosmetics and Victoria’s Secret.
These merchants may feel they have no choice but to pass on the increases to customers, perhaps sparking more inflation.
If Trump’s tariffs do come to fruition, Shopify’s president Harley Finkelstein pointed out China is “not a huge area” for Shopify.
However, “we can’t anticipate what every presidential administration is going to do,” he cautioned.
He likened the uncertainty facing the business community to the COVID-19 pandemic where Shopify had to help companies migrate online.
“Our job is no matter what comes the way of our merchants, we provide them with tools and service and support for them to navigate it really well,” he said.
Finkelstein was questioned about the forthcoming U.S. leadership change on a call meant to delve into Shopify’s latest earnings, which sent shares soaring 27 per cent to $158.63 shortly after Tuesday’s market open.
The Ottawa-based company, which keeps its books in U.S. dollars, reported US$828 million in net income for its third quarter, up from US$718 million in the same quarter last year, as its revenue rose 26 per cent.
Revenue for the period ended Sept. 30 totalled US$2.16 billion, up from US$1.71 billion a year earlier.
Subscription solutions revenue reached US$610 million, up from US$486 million in the same quarter last year.
Merchant solutions revenue amounted to US$1.55 billion, up from US$1.23 billion.
Shopify’s net income excluding the impact of equity investments totalled US$344 million for the quarter, up from US$173 million in the same quarter last year.
Daniel Chan, a TD Cowen analyst, said the results show Shopify has a leadership position in the e-commerce world and “a continued ability to gain market share.”
In its outlook for its fourth quarter of 2024, the company said it expects revenue to grow at a mid-to-high-twenties percentage rate on a year-over-year basis.
“Q4 guidance suggests Shopify will finish the year strong, with better-than-expected revenue growth and operating margin,” Chan pointed out in a note to investors.
This report by The Canadian Press was first published Nov. 12, 2024.
TORONTO – RioCan Real Estate Investment Trust says it has cut almost 10 per cent of its staff as it deals with a slowdown in the condo market and overall pushes for greater efficiency.
The company says the cuts, which amount to around 60 employees based on its last annual filing, will mean about $9 million in restructuring charges and should translate to about $8 million in annualized cash savings.
The job cuts come as RioCan and others scale back condo development plans as the market softens, but chief executive Jonathan Gitlin says the reductions were from a companywide efficiency effort.
RioCan says it doesn’t plan to start any new construction of mixed-use properties this year and well into 2025 as it adjusts to the shifting market demand.
The company reported a net income of $96.9 million in the third quarter, up from a loss of $73.5 million last year, as it saw a $159 million boost from a favourable change in the fair value of investment properties.
RioCan reported what it says is a record-breaking 97.8 per cent occupancy rate in the quarter including retail committed occupancy of 98.6 per cent.
This report by The Canadian Press was first published Nov. 12, 2024.
