Stocks sink, yields tumble, oil prices steady: Stock market news today | Canada News Media
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Stocks sink, yields tumble, oil prices steady: Stock market news today

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U.S. stocks sank and oil prices held steady Tuesday as new data showed fresh signs of labor market cooling and declining factory orders from businesses.

The S&P 500 (^GSPC) declined nearly 0.6%, and the Dow Jones Industrial Average (^DJI) slipped around the same amount. The technology-heavy Nasdaq Composite (^IXIC) slid 0.5%.

Oil prices steadied, with WTI crude oil — the U.S. benchmark — wavering around $80 a barrel. After big gains Monday, oil was back in its four-month trading range after OPEC+ announced it would slash output by 1.16 million barrels per day.

On the economic front, vacancies at U.S. employers fell to 9.93 million from 10.5 million, a bigger fall than expected. On the other hand, quits were up and layoffs were down, data from the Bureau of Labor Statistics showed. Separately, factory orders fell 0.3%, also lower than anticipated.

Some economists view the slowdown in the number of open job positions as “progress” to reaching the Fed’s goal of an equilibrium between supply and demand in the labor market.

“While the Fed will welcome the softening in the data, officials will put much more stock in Friday’s employment report and will continue to raise rates at the coming meetings to ensure further progress is made toward softer labor market conditions and lower inflation,” Matthew Martin, U.S. economist at Oxford Economics, wrote in a note to clients on Tuesday.

As Martin noted, another data print on which Wall Street will be keeping a close eye is Friday’s jobs report. Economists surveyed by Bloomberg expect the report to show 240,000 jobs created last month. This would be lower than the average job gains of 343,000 over the last six months.

Bond yields moved downward after the data prints. The yield on the benchmark 10-year U.S. Treasury note dipped to 3.35% Tuesday.

Tuesday’s moves came after the Dow rose and the S&P 500 closed up 0.4% on Monday but the Nasdaq 100 lagged, falling 0.3%. Bond yields were down as manufacturing activity slumped to the lowest level since May 2020, signaling further declines could be coming as credit conditions tighten.

Meanwhile, Federal Reserve Bank of St. Louis President James Bullard said Monday that the continued strength in the labor market gives the Fed room to fight inflation. Bullard also commented on OPEC’s decision to cut output, suggesting it could potentially make the Fed’s job of lowering inflation more challenging as oil prices increase.

Separately, Federal Reserve Governor Lisa Cook also highlighted the continued tightness in the labor market.

“We are still going to see inflation from that, but we’ve seen wage gains moderating quite a bit,” she said.

Still, the Federal Reserve has stuck with inflation as its top concern, even amid the recent banking turmoil that has shown signs of easing.

“The Fed rate expected for the next meeting was largely flat against this backdrop, climbing a modest 1.6 basis points to 4.973% with a 63% chance priced in for a 25 basis-point hike next month,” Jim Reid and colleagues at Deutsche Bank wrote in a note to clients.

However, the recent banking troubles triggered by the failures at Silicon Valley Bank and Signature Bank are “not over yet,” JPMorgan Chase CEO Jamie Dimon said Tuesday.

Jamie Dimon, CEO of JPMorgan Chase, testifies during the Senate Banking, Housing, and Urban Affairs Committee hearing on Thursday, September 22, 2022. (Tom Williams/CQ-Roll Call, Inc via Getty Images)

In his closely watched annual letter to shareholders, Dimon outlined the damages of financial system turmoil on all banks and urged lawmakers to not “overreact” with more regulation.

Elsewhere, Credit Suisse chairman Axel Lehmann apologized for the bank’s failure to save the institution as the firm had been draining deposits for months.

Meanwhile, under the current backdrop, the rally in equities will likely waver given the recent bank failures. The oil surprise and a slowdown in growth could send stocks back to their low levels seen in 2022, said JPMorgan strategist Marko Kolanovic.

In single-stock moves, shares of AMC Entertainment Holdings (AMC) plunged Tuesday after a settlement would allow AMC to convert APE preferred shares into common AMC stock.

And Disney’s feud with Florida Gov. Ron DeSantis escalated. CEO Bob Iger called the governor’s retaliation “anti-business” and “anti-Florida.” Shares of Disney (DIS) ticked down Tuesday.

Shares of Virgin Orbit Holdings, Inc. (VORB) sank after the company filed for bankruptcy late Monday after laying off about 85% of its staff in March.

C3.ai, Inc. (AI) shares fell about 26% Tuesday after Kerrisdale Capital, a firm that holds a short position in AI stock, said it has sent a letter to the software maker’s auditor.

Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter @daniromerotv

 

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Netflix’s subscriber growth slows as gains from password-sharing crackdown subside

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Netflix on Thursday reported that its subscriber growth slowed dramatically during the summer, a sign the huge gains from the video-streaming service’s crackdown on freeloading viewers is tapering off.

The 5.1 million subscribers that Netflix added during the July-September period represented a 42% decline from the total gained during the same time last year. Even so, the company’s revenue and profit rose at a faster pace than analysts had projected, according to FactSet Research.

Netflix ended September with 282.7 million worldwide subscribers — far more than any other streaming service.

The Los Gatos, California, company earned $2.36 billion, or $5.40 per share, a 41% increase from the same time last year. Revenue climbed 15% from a year ago to $9.82 billion. Netflix management predicted the company’s revenue will rise at the same 15% year-over-year pace during the October-December period, slightly than better than analysts have been expecting.

The strong financial performance in the past quarter coupled with the upbeat forecast eclipsed any worries about slowing subscriber growth. Netflix’s stock price surged nearly 4% in extended trading after the numbers came out, building upon a more than 40% increase in the company’s shares so far this year.

The past quarter’s subscriber gains were the lowest posted in any three-month period since the beginning of last year. That drop-off indicates Netflix is shifting to a new phase after reaping the benefits from a ban on the once-rampant practice of sharing account passwords that enabled an estimated 100 million people watch its popular service without paying for it.

The crackdown, triggered by a rare loss of subscribers coming out of the pandemic in 2022, helped Netflix add 57 million subscribers from June 2022 through this June — an average of more than 7 million per quarter, while many of its industry rivals have been struggling as households curbed their discretionary spending.

Netflix’s gains also were propelled by a low-priced version of its service that included commercials for the first time in its history. The company still is only getting a small fraction of its revenue from the 2-year-old advertising push, but Netflix is intensifying its focus on that segment of its business to help boost its profits.

In a letter to shareholder, Netflix reiterated previous cautionary notes about its expansion into advertising, though the low-priced option including commercials has become its fastest growing segment.

“We have much more work to do improving our offering for advertisers, which will be a priority over the next few years,” Netflix management wrote in the letter.

As part of its evolution, Netflix has been increasingly supplementing its lineup of scripted TV series and movies with live programming, such as a Labor Day spectacle featuring renowned glutton Joey Chestnut setting a world record for gorging on hot dogs in a showdown with his longtime nemesis Takeru Kobayashi.

Netflix will be trying to attract more viewer during the current quarter with a Nov. 15 fight pitting former heavyweight champion Mike Tyson against Jake Paul, a YouTube sensation turned boxer, and two National Football League games on Christmas Day.

The Canadian Press. All rights reserved.

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