Wall Street’s main benchmarks rose Tuesday morning despite another red-hot inflation print as investors weighed news some Russian military units will start returning to their permanent bases after completing drills near the Ukrainian border.
The S&P 500 jumped 1.1%, or 48.56 points, to 4,450.23, while Dow Jones Industrial Average was up 1%, or 389 points to 34,915.25. The Nasdaq Composite advanced 1.63%, or 224.42 points, to 14,009.32 after the escalating threat of a Russian invasion of Ukraine in coming days had weighed on markets as investors already grapple with the prospect of swifter monetary tightening by the Federal Reserve. Meanwhile, oil retreated from its highest price since 2014, falling 3.76% to $91.87 per barrel.
U.S. producer prices recorded another monthly gain in January amid continued supply chain disruptions, serving as yet another indicator of persisting inflationary pressures and reiterating calls on the Fed to raise interest rates.
“Factories are producing more inflation than goods at this point and with supply and labor shortages not going away, inflation is going to stay on the front burner of Federal Reserve officials’ concerns for now,” FWDBONDS chief economist Christopher S. Rupkey said in a note. “The Fed is going to start moving up interest rates to curb economic demand, but if inflation keeps going, consumers will stop buying all on their own because they can’t afford it.”
On the geopolitical front, fears that the Kremlin will green light a move to force in on Ukraine as soon as this week have created a new headwind for global markets worried the conflict could exacerbate inflation and spur other economic disruptions. The Wall Street Journal reported on Monday the U.S. was closing its embassy in Kyiv and destroying networking and computer equipment as a Russian military attack becomes increasingly imminent.
“The escalation of Russia and Ukraine tensions come at a time when the stock market is already vulnerable given inflation worries and the potential for Federal Reserve tightening,” Sanders Morris Harris Chairman George Ball said in a note. “If an armed conflict between Russia and Ukraine is somehow avoided, a short-lived relief rally is likely, but there are still too many worries on the horizon for any type of longer lasting upward move higher in stocks.”
The geopolitical tensions add to the uncertainty around central bank policy that has dominated market sentiment in recent months. Last week, the Labor Department reported the Consumer Price Index (CPI) notched a steeper-than-expected 7.5% increase over the year ended January to mark the largest annual jump since 1982.
The surge heightened calls for the Federal Reserve to intervene more aggressively than anticipated to rein in soaring price levels, even raising the possibility of an emergency hike before the bank’s next policy meeting in March.
“You have everything laid out perfectly for the market to go lower,” he said, pointing to higher interest rates, slow earnings, and slow economic growth around the globe. “There’s no good reason to see this market go higher.”
Comerica Wealth Management Chief Investment Officer John Lynch pointed out in a note that despite recent volatility in interest rates and equities, areas of the fixed-income markets have exhibited less turbulence. With corporate credit stress limited for investment grade and high-yield bonds, 10-year breakeven inflation expectations remain contained.
“We believe it is important for investors to focus on market signals, rather than headlines, while also respecting traditional patterns for prices, interest rates, and equity valuations,” Lynch said.
Although earnings season is slowly winding down, investors will tune in this week for another docket of corporate results to weigh against monetary and geopolitical conditions.
Investors can expect reports from companies including Marriott International (MAR), ViacomCBS (VIAC), and Airbnb (ABNB) on Tuesday.
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11:05 a.m. ET: Intel, Nvidia and AMD power semiconductor rally
Shares of semiconductor companies advanced in morning trading, contributing to broad-based gains across the technology sector.
Intel (INTC) was up +1.34% to $48.22 per share as of 10:54 a.m. ET after the company agreed to purchase Tower Semiconductor in a $5.4 billion deal. Tower Semiconductor (TSEM) was up 42% to $47.05 per share.
Other semiconductor peers also traded higher early Tuesday. Shares of Nvidia (NVDA) gained 7.08% to $259.84 a piece. The company is scheduled to report fourth quarter results on Wednesday. Analysts at Piper Sandler expect “a significant beat and raise” on strong performance in its gaming and data center businesses.
Advanced Micro Devices (AMD) was up 2% to 116.58 per share after the company closed its acquisition of Xilinx on Monday in a record deal for the chipmaker industry valued at $50 billion.
“There’s tremendous investment that’s happening across the semiconductor industry, whether you’re talking about on the wafer side or on some of the substrates or the back-end assets, so we are making progress,” AMD CEO Dr. Lisa Su said in an interview with Yahoo Finance Live. “I do believe that the first half of this year will continue to be quite tight, but the second half of this year, I think things will get a little bit better.”
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9:30 a.m. ET: US stocks advance as investors weigh PPI, pullback of Russian troops
Here were the main moves in markets as of 9:30 a.m. ET:
Gold (GC=F): -$13.40 (-0.72%) to $1,856.00 per ounce
10-year Treasury (^TNX): +3.7 bps to yield 2.0330%
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8:30 a.m. ET: Producer prices surge hotter-than-expected 1% in January
U.S. producer prices recorded another monthly jump in January amid continued supply chain disruptions, serving as yet another indicator of persisting inflationary pressures.
The U.S. Bureau of Labor Statistics reported its Producer Price Index (PPI) for final demand rose 1% during the month of January, seasonally adjusted. Economists had forecasted an advance of 0.5%, according to Bloomberg consensus estimates.
Final demand prices moved up 9.7% on an unadjusted basis for the 12 months ended January 2022. Economists polled by Bloomberg called for a 9.1% year-over-year advance.
PPI gauges the average fluctuation in selling prices by manufacturers to business and serves as a leading measure of consumer inflation.
The jump in producer prices last month follows advances of 0.4% in December 2021 and 0.9% in November.
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8:23 a.m. ET: Burger King, Tim Hortons lead Restaurant Brands’ sales beat
Restaurant Brands International Inc. (QSR) reported fourth quarter results on Tuesday that beat estimates on revenue and profit, powered by a surge in online sales and a recovery in demand at its Burger King and Tim Hortons chains as consumers increasingly dine out.
The company’s global digital sales rose more than 65% to $10 billion in 2021 on the heels of efforts by Restaurant Brands and its fast-food chain peers to boost investment in e-commerce as more people ordered their food online during the pandemic.
With more Americans vaccinated and COVID restrictions easing, consumers have also increasingly returned to in-person dining after the virus kept people away from eating out.
Tim Hortons, which typically accounts for the greater half of Restaurant Brands’ revenue, saw an 11.3% increase in comparable sales in Canada, while same-store sales at Burger King in the United States rose nearly 2%.
Shares were up more than 3% to $58.95 a piece in pre-market trading.
UNITED KINGDOM – 2021/07/29: Shoppers walk past the Burger King Hot Food Store in Donegall Place, Belfast. (Photo by Michael McNerney/SOPA Images/LightRocket via Getty Images)
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7:00 a.m. ET: Contracts on S&P, Dow, and Nasdaq surge after Russia pulls back troops
Here were the main moves on Wall Street in pre-market trading Tuesday:
Gold (GC=F): +$3.80 (+0.20%) to $1,873.20 per ounce
10-year Treasury (^TNX): +4.1 bps to yield 1.9960%
A general view shows a Wall Street sign outside the New York Stock Exchange (NYSE) in New York, New York on January 24, 2022. (Photo by Ed JONES / AFP) (Photo by ED JONES/AFP via Getty Images)
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Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc
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.
