U.S. stocks sank Thursday after economic data showed continued tightness in the labor market that’s likely to keep the Federal Reserve on track for higher interest rates. Investors also look ahead to tomorrow’s key monthly jobs report.
The S&P 500 (^GSPC) plopped 1.2%, while the Dow Jones Industrial Average (^DJI) shed 340 points, or 1.0%. The technology-heavy Nasdaq Composite (^IXIC) tumbled by 1.5%.
The ADP National Employment report showed private payrolls grew by 235,000 jobs in December. Economists surveyed by Bloomberg called for an increase of 150,000.
Elsewhere in economic data, filings for unemployment insurance also fell to 204,000, the lowest since September, in the week ended Dec. 31 from the prior week’s downwardly revised reading of 223,000, the Labor Department said Thursday.
The reports were the latest to reflect strong demand for workers, even as the Federal Reserve presses on with aggressive monetary tightening to rein in inflation. ADP’s data and weekly jobless claims follow a separate measure Wednesday that found job openings fell less than expected last month and remained high. The Labor Department’s monthly nonfarm payrolls survey due out Friday morning remains the most important reading for Fed officials and investors attempting to predict the next policy move.
“While we will get a better overall picture of the jobs market tomorrow, private payrolls beating expectations and jobless claims coming in below are indications that the labor market remains resilient,” Morgan Stanley Global Investment Office Head of Model Portfolio Construction Mike Loewengart said in a note. “These come on the heels of big-name companies announcing sizable job cuts so there is no doubt the market’s pressures are weighing on companies, but it remains to be seen when hiring will slow demonstrably.”
Amazon (AMZN) CEO Andy Jassy said in a note late Wednesday the company’s planned job cuts will now impact at least 18,000 employees, significantly more than previously indicated. Jassy’s memo came after the Wall Street Journal reported the news. Shares fell 2.4% on Thursday.
The figure marks the highest workforce reduction by a tech company in recent months as a growing number of names in the sector lay off workers to cut costs amid more challenging market conditions. Amazon lost roughly $834 billion in market value in 2022.
Bed Bath & Beyond (BBBY) said in a statement published Thursday that it is facing bankruptcy as it grapples with continued financial struggles. Shares tanked 30%.
Shares of crypto-focused Silvergate Capital (SI) cratered 42.6% after The Wall Street Journal reported Thursday the bank was forced to sell assets at a sizable loss to cover $8.1 billion in withdrawals following the bankruptcy of FTX. The plunge comes after the stock rallied 27% Wednesday.
In other crypto stock moves, Coinbase (COIN) shares fell 11.1% following a downgrade from Cowen to Market Perform from Outperform, citing a “fairly consistent drawdown” in trading volumes and risk from probable regulatory enforcement action after the collapse of FTX.
“There is low visibility per stabilization in retail trading volumes in 2023 following further December deterioration,” the firm said. “Potential SEC enforcement action is elevated post-FTX with regulatory certainty unlikely until 2024.”
Shares of T-Mobile (TMUS) rose 3.2% after the mobile service provider reported fourth-quarter subscriber growth slightly above estimates. The company added 927,000 new phone customers in the period, compared to analyst calls for 921,000.
In other markets, oil prices rebounded after plunging nearly 10% over the past two days. West Texas Intermediate (WTI) crude futures, the U.S. benchmark, rose 1% to around $73 per barrel.
Screens on the trading floor at New York Stock Exchange (NYSE) display Federal Reserve Chair Jerome Powell during a news conference, December 14, 2022. REUTERS/Andrew Kelly
Federal Reserve Bank of St. Louis President James Bullard said Thursday that interest rates are nearing a high enough level to bring down inflation but still maintained “the policy rate is not yet in a zone that may be considered sufficiently restrictive,” despite getting closer.
Stocks closed higher on Wednesday following a volatile session swayed by a readout of minutes from the Federal Reserve’s December meeting and economic data that, in addition to the higher-than-expected job openings, showed a dropoff in manufacturing activity for a second-straight month.
Fed minutes Wednesday showed officials opposing an “unwarranted” easing of financial conditions, even as they welcomed cooling inflation, and the need to maintain a “restrictive policy stance” until data is more promising.
“The minutes of the December meeting show that FOMC members remain focused on current inflation and inflation risks, with fear of overkill on monetary policy receiving very little attention,” Pantheon Macroeconomics Chief Economist Ian Shepherdson said in a note.
“Don’t expect them to soften their inflation line until it becomes obvious that a serious shift in the data is underway,” he added.
HALIFAX – Ottawa is negotiating a $500-million bailout for Nova Scotia’s privately owned electric utility, saying the money will be used to prevent a big spike in electricity rates.
Federal Natural Resources Minister Jonathan Wilkinson made the announcement today in Halifax, saying Nova Scotia Power Inc. needs the money to cover higher costs resulting from the delayed delivery of electricity from the Muskrat Falls hydroelectric plant in Labrador.
Wilkinson says that without the money, the subsidiary of Emera Inc. would have had to increase rates by 19 per cent over “the short term.”
Nova Scotia Power CEO Peter Gregg says the deal, once approved by the province’s energy regulator, will keep rate increases limited “to be around the rate of inflation,” as costs are spread over a number of years.
The utility helped pay for construction of an underwater transmission link between Newfoundland and Nova Scotia, but the Muskrat Falls project has not been consistent in delivering electricity over the past five years.
Those delays forced Nova Scotia Power to spend more on generating its own electricity.
This report by The Canadian Press was first published Sept. 16, 2024.
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.
