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.
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.
