Stocks fell on Monday, pulling back from record levels as geopolitical and growth concerns weighed on risk appetite.
The S&P 500 declined just after market open after logging yet another record high on Friday. The Dow and Nasdaq each also dipped, and the benchmark 10-year Treasury yield fell back below 1.3%. U.S. West Texas intermediate crude oil futures sank by more than 1% to trade around $67 per barrel.
The moves came as jitters over the pace of global economic growth and risks to the outlook increased, with new economic data out of China disappointing on multiple fronts. Retail sales and industrial production each slowed more than expected in the world’s second-largest economy in July, suggesting a more marked growth deceleration in the second half of the year as the country tries to contain fallout from the latest resurgence in coronavirus cases.
Elsewhere, disorder in Afghanistan weighed further on global markets, with chaos reported at the Kabul airport as civilians tried to flee from the country swiftly overtaken by the Taliban.
Lingering worries about the Delta variant have also been at play for investors, offset only partially by optimism over what has been to-date an exceptionally strong corporate earnings season. This week, a handful of additional S&P 500 index components will report quarterly results, with retail names like Walmart (WMT), Target (TGT) and Home Depot (HD) set to be among the most closely watched.
“I think it’ll be very key to hear from U.S. retail companies to see not only if this Delta variant surge is having any impact to consumer behavior, but also to what their projections are for the rest of the year, given that we’re in the back to school spending season,” Margaret Reid, senior portfolio manager at Union Bank, told Yahoo Finance. “And we’ll also get July retail sales … so a lot of incremental data points in the coming week with ties to the Delta variant.”
As of Friday afternoon, 91% of S&P 500 companies had reported second-quarter earnings results, and 87% of these had topped consensus estimates on earnings per share, according to FactSet. The expected overall growth rate for S&P 500 earnings stands at 89.3%, which would be the fastest increase since the fourth quarter of 2009.
According to many pundits, the robust rebound in corporate profits has been and will likely continue to be fuel for the market going forward, helping to counterbalance concerns over an inevitable deceleration in growth as the recovery matures.
“In an earnings season with many surprises – including the highest frequency of EPS [earnings per share] beats in our 22-year data history – one of the most notable was the surge in corporate buyback activity,” David Kostin, chief U.S. equity strategist for Goldman Sachs, wrote in a note on Monday. “Strong corporate equity demand is one reason we forecast a 5% return to our S&P 500 year-end target of 4700.”
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Over the past month, the financials, materials and healthcare sectors have been the outperformers in the S&P 500, as cyclical stocks with earnings tied to the economic recovery caught another bid higher despite ongoing concerns over the Delta variant.
According to one strategist, three key factors have been behind the latest rotation.
“The U.S. data’s been fairly strong despite some of the Delta risk,” Stuart Kaiser, UBS head of equity derivatives, told Yahoo Finance. “We got through earnings. Typically during earnings, large-cap tech performs really well and that higher quality stock does a bit better because they’re reporting really strong results. So I think getting through earnings helped people get the confidence to get into those lower quality cyclicals.”
“And then the third part would be on the rates side, it looks like yields have bottomed a bit and started to rise a touch, and that tends to be generally positive for cyclicals,” he added. “I think a combination of those three things as well as a lot of people have cited data out of the UK showing that the Delta variant hasn’t completely disrupted their economy … so maybe that trims the tail risk as well.”
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The New York Federal Reserve’s closely watched Empire State manufacturing activity index pulled back more than expected in August, signaling a sharp deceleration in the goods-producing sector after July’s record surge.
The Empire State index dipped to 18.3 in August from 43.0 a month earlier, according to the new report Monday morning. Consensus economists were looking for a print of 28.5, according to Bloomberg data. Readings above 0 indicate expansion in a sector.
Supply chain issues continued to be a major source of pressure on the manufacturing sector, both in the state and nation-wide. However, indexes tracking future new orders and shipments each increased during the month, as did manufacturing firms’ assessments of the six-month outlook.
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Here’s where markets were trading Monday morning:
S&P 500 (^GSPC): -13.48 (-0.3%) to 4,454.52
Dow (^DJI): -117.44 (-0.33%) to 35,397.94
Nasdaq (^IXIC): -48.87 (-0.33%) to 14,774.03
Crude (CL=F): -$1.99 (-2.91%) to $66.45 a barrel
Gold (GC=F): +$5.30 (+0.3%) to $1,783.50 per ounce
10-year Treasury (^TNX): -4.7 bps to yield 1.25%
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Shares of Tesla (TSLA) declined by more than 1.5% on Monday after U.S. regulators said they opened a formal safety investigation into Tesla’s Autopilot system following a string of crashes.
The National Highway Traffic Safety Administration (NHTSA) said it had identified 11 crashes since January 2018 during which Tesla models struck vehicles involved in first responder scenes. As a result, the agency said it had opened a probe evaluating the Autopilot in Tesla vehicles made between 2014 and 2021.
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Here’s where markets were trading Monday morning:
S&P 500 futures (ES=F): -13.00 points (-0.29%) at 4,449.50
Dow futures (YM=F):-103.00 points (-0.29%) to 35,317.00
Nasdaq futures (NQ=F): -44.00 points (-0.29%) to 15,081.75
Crude (CL=F): -$1.22 (-1.78%) to $67.22 a barrel
Gold (GC=F): -$5.20 (-0.29%) to $1,773.00 per ounce
10-year Treasury (^TNX): -1.7 bps to yield 1.28%
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Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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Alberta’s minister of forestry and parks said the RCMP national security investigation team is involved in a probe looking into what caused a pipeline to rupture and catch fire west of Edmonton earlier this week.
On Tuesday, a wildfire was sparked following a natural gas pipeline rupture about 40 kilometres northwest of Edson, Alta. The fire has since been deemed under control.
“We have no indication of any kind of cause on that fire yet; the investigation is happening,” Forestry and Parks Minister Todd Loewen said at a wildfire-related news conference Thursday morning. “The national security investigation team of the RCMP are investigating the cause.
“My understanding, since the cause was unknown, that’s standard practice for them to come in on anything that’s unknown.”
RCMP said as of Tuesday, initial reports had shown no signs of foul play.
Global News has reached out to the RCMP for more information. On its website, the RCMP states it has a wide range of national security-related mandates and responsibilities. It says its national security criminal investigations program involves critical infrastructure protection and critical incident management.
Officials say the investigation into what caused the TC Energy pipeline to break could take months or even years.
The Canada Energy Regulator had investigators on site on Wednesday. The Transportation Safety Board of Canada is also investigating the incident.
The rupture sparked a blaze that could be seen for kilometres, sending large flames and plumes of smoke into the air.
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No injuries were reported, and officials said the fire was never a threat to any surrounding communities.
“I want to commend the Yellowhead County Fire Department, industry and our wildfire team for the timely manner that this fire was brought under control,” Loewen said Thursday.
“Fast information sharing between all parties facilitated an effective wildfire response.”
The wildfire sparked by the pipeline rupture is located about 28 kilometres northeast of Obed Lake. More than 30 firefighters were expected to be in the area Thursday to continue working on the wildfire.
— with files from The Canadian Press
— more to come…
© 2024 Global News, a division of Corus Entertainment Inc.
A St. John’s woman says she won’t be paying many more visits to Tim Hortons, after an email from the coffee chain led her to believe that she’d won a new boat — when she hadn’t won anything at all.
“I go to Tim’s quite a lot, seven days a week. I’m afraid now that’s going to change to no days a week,” Carol Evans told CBC News on Thursday.
Evans said she received an email from Tim Hortons on Wednesday afternoon while on a break from her work as an licensed practical nurse.
The email recapped the prizes she’d won in the annual Roll Up the Rim to Win contest, but there was one extra prize included — a brand new boat and trailer, valued at about $55,000.
Unfortunately, the excitement was over by the time she got home from work.
“I was just so excited, really excited. I thought I really won a boat and a trailer, $55,000 worth, and to find out at five to six, I had an email from them come in telling me it was a technical error,” she said.
“I don’t get my boat and I don’t get my trailer.”
Carol Evans of St. John’s was elated when she got an email from Tim Hortons saying she won $55,000 worth of prizes. Another email from the coffee giant a few hours later, telling her it was an error, had her crushed — and fuming.
Evans said her win was the talk of her co-workers.
“I work with about a hundred people in the run of a day, and more than that outside the OR, and everybody was so happy for me. They couldn’t believe it, I finally won something in my life,” she said.
“But to find out a few hours later I didn’t, it was disappointing, very disappointing.… I cried, it was so sad.”
Although she may not have taken it out on the water, Evans said winning would have meant a lot to her, like helping fund her retirement after more than five decades in nursing.
“I could have sold the boat and trailer and had some money, paid off some bills, probably could have, who knows, retired after 55 years of work,” she said.
In an emailed statement to CBC News on Thursday, Tim Hortons said the message was meant to show what each customer won over the course of the contest — and the boat was included by mistake.
“We developed a Roll Up To Win recap email message with the best intentions of giving our guests a fun overview of their 2024 play history.
“Unfortunately there was a human error that resulted in some guests receiving some incorrect information in their recap message.”
The company didn’t disclose how many people across the country received the email, but CBC News spoke to another person in western Newfoundland who got it.
Others in Edmonton, Hamilton and Brampton, Ont., were also told they’d won the boat.
By Wednesday afternoon, a Facebook group had formed with more than 200 people expressing outrage about the mistake and threatening to file lawsuits.
Tim Hortons sent the affected customers a letter, telling them to disregard that winning email and that it was sent as a result of “technical errors.”
“Unfortunately, some prizes that you did not win may have been included in the recap email you received. If this was the case, today’s email does not mean that you won those prizes,” the letter read.
“We apologize for the frustration this has caused and for not living up to our high standards.”
It’s a familiar story for Tim’s, however, as last year, its app mistakenly informed users they’d won $10,000.
Evans said two years of big mistakes just isn’t fair. She’d like to see Tim Hortons move away from the Roll Up to Win smartphone app and back to paper cups.
“It’s not fair to the public who spend their hard-earned money to go into Tim’s and buy their coffee every day, buy their lunch, and then think they won a prize and all of a sudden you learn, three hours later, you didn’t win a prize, and it’s not fair.”
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The new regulations will take effect in Bowen Island, Tofino, Pemberton and 14 other communities on Nov. 1
Published Apr 18, 2024 • Last updated 2 hours ago • 5 minute read
With less than two weeks before B.C.’s short-term rental restrictions take effect, visitors staying at an Airbnb, Vrbo or other short-term rental homes are told to check with their hosts to make sure they are not staying in illegal accommodations.
Guests should ask hosts if they are compliant with the new rules, said B.C.’s housing minister, even as he reassured guests they won’t be on the hook.
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“The responsibility to comply with the rules fall with the hosts and the short-term rental platforms,” said Ravi Kahlon at a news conference with Premier David Eby in Langley on Thursday. “We encourage people to continue to explore beautiful British Columbia, and stay in legal short-term rental accommodations.”The new regulations set to take effect on May 1 would restrict short-term rentals to principal residences and either a secondary suite or a laneway home/garden suite on the property.
They apply to more than 60 B.C. communities with populations of more than 10,000 people, as well as 17 smaller communities, including Bowen Island, Tofino, Osoyoos, Pemberton, and Gabriola Island, which have decided to opt in. For these communities, the rules will take effect on Nov. 1.
The new legislation carries penalties of $500 to $5,000 a day per infraction for hosts and reach as high as $10,000 a day for platforms.
Eby said the province’s principal residence requirement is meant to crack down on speculators while allowing homeowners to rent out spaces in their principal residences if they choose to do so.
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He acknowledged the restrictions could put some property owners’ investment and retirement plans into disarray, but made no apologies, saying people with money to invest should put their money elsewhere.
“Do not compete with individuals and families who are looking for place to live with your investment dollars,” Eby said, adding the government will “tilt the deck every single time toward that family.”
The government has set up a provincial enforcement unit, currently staffed by four people, to conduct investigations into alleged non-compliant units.
The enforcement will be largely done digitally and includes the use of a short-term rental data portal that’ll help local governments monitor and enforce regulations.
Municipalities with their own short-term rental restrictions can upload non-compliant properties to the portal, said Kahlon. Platforms will have five days to verify whether the units are on their sites. Local governments without short-term rental licensing can report properties they believe are not compliant.
The platforms will be required to remove non-compliant listings at the request of local or the provincial governments and provide the province with a monthly update of short-term listings on their sites, said Kahlon.
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Companies such as Expedia and Booking.com are working to get ready for the new rules, and he’s hopeful other platforms will follow suit by May 1.
Airbnb said it has been in discussions with the provincial government for months and plans to comply with the new rules, but predicts they will harm the province’s tourism sector by taking extra income away from residents and limiting accommodation options for people, while doing little to improve the housing crunch for residents.
“They’re doing this because they say there’s going to be an impact on housing, that this will free up more housing for people,” said Nathan Rotman, Airbnb’s policy lead in Canada. “That is just not true.”
Despite several years of Airbnb restrictions in Vancouver, for example, rents have gone up while vacancies stayed low, he said.
Kahlon said the pending rules are already having a positive impact on housing availability with short-term rentals being converted to long-term use or being put up for sale.
In March, more than 19,000 entire homes in B.C. were listed as short-term rentals for most of the year, said the province. Even if half of those units are returned to the long-term market, that’ll make a “substantial difference” in communities, said Kahlon.
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Eby said there has been a “massive upswing” in hotel construction in key tourist areas as an unintended result of the new policies.
Bowen Island, a small community of 4,200 whose council voted in March to opt into the province’s short-term rental regulations, has seen increased pressure from tourists and housing demand in recent years.
The decision was council’s way “to balance what is appropriate use in residentially-zoned neighbourhoods while still allowing property owners to still do what they want with their properties,” said Mayor Andrew Leonard.
The principal residence requirement still allows for Airbnb and other short-term rentals on the island, he pointed out. “The vast majority of short-term rental operations are unaffected. This just keeps it in the homes of homeowners instead of speculators.”
Some communities, including Parksville’s Resort Drive area, were granted an exemption last month under the province’s exemption for strata hotel or motels. The area was purpose-built as tourism accommodation more than two decades ago.
The new legislation is being challenged in B.C. Supreme Court by Victoria-based groups and the Westcoast Association for Property Rights, who are calling for a review of the new rules and compensation for financial losses.
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According to Airbnb, Airbnb bookings and related spending generated around $2.5 billion in B.C. in 2023 and created 25,000 jobs.
The company says that for every $100 spent on an Airbnb booking, guests also spent about $229 on other travel spending.
More than three quarters of hosts polled by the company say they use their Airbnb earnings to cover rising costs of living, especially housing.
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