Stocks close lower for the day and the month
The major averages fell on Tuesday to round out a tough month for the stock market.
For the month, the Dow ended 4.19% lower for the month and has dipped 1.48% year to date. The S&P 500 and Nasdaq Composite lost about 2.61% and 1.11% in February, respectively, but are still higher year-to-date.
— Tanaya Macheel
Gold and silver close out worst months in more than a year
Gold and silver posted their worst monthly performances in more than a year.
Gold closed down 5.58% for February. That’s the worst month for the metal since June 2021, when it lost 7.02%.
Silver had its worst month since 2020, ending February down 11.6%. It last saw a bigger monthly drop in September 2020, when the metal tumbled 17.84%.
— Gina Francolla, Alex Harring
Morgan Stanley says noninvasive health monitoring has huge potential for Apple
Apple is making progress in monitoring blood glucose levels without a blood sample, according to a recent Bloomberg report. If the tech giant is successful, Morgan Stanley said the development has the potential to be a huge disruptor.
“Disruption will likely take time, but given Apple has form in displacing incumbents in fields with large [total addressable markets], we will continue to watch this technology and its speed of miniaturisation,” Morgan Stanley analysts wrote in a research note.
The system reportedly uses lasers and measures the light coming back to the sensors to gauge the amount of glucose in the body’s interstitial fluid. One of the biggest obstacles is how the components of the system can be shrunk down to be included inside an Apple Watch.
The companies with the most on the line are Abbott Laboratories, DexCom and Medtronic. All three make continuous glucose monitors, but DexCom is more intensely focused on the diabetes and health management market. Its stock tumbled last week when the news broke and in recent trading sessions it has yet to recoup all of its losses.
—Christina Cheddar Berk
Investors should look at credit markets, according to Insight Investment
While high interest rates are rattling the equity market, fixed-income credit markets could have their moment, according to Gautam Khanna, co-head of U.S. Multi Sector Fixed Income at Insight Investment.
“With peak Fed rates arriving and becoming entrenched this year, equity markets will have to wait even longer for the ‘Fed put’ to return as central banks focus on keeping financial conditions tight,” Khanna wrote on Tuesday. “While high rates will make life difficult for equities, it potentially creates a sweet spot for fixed income.”
Khanna added that compelling yields are now achievable on lower and higher risk credit assets.
“Investment Grade Credit looks attractive – particularly the front end,” he continued. “We believe an active approach can push this up to north of 6%. The inverted yield curve offers value at the front end.”
— Hakyung Kim
Buybacks below seasonal trends over the past month, BofA says
Stock buybacks are one of the core tenets of a bullish case for the market in 2023, as some expect buybacks to top $1 trillion for the first time.
However, corporate America will have to pick up the pace to set a new record, according to Bank of America strategist Jill Carey Hall.
“Corp. client buybacks accelerated but have been below typical seasonal trends for the last four weeks. Due to a strong start in Jan., corp. client buybacks YTD as a % of S&P 500 mkt. cap (0.044%) are tracking just below ’22 records at this time (0.046%). But new buyback announcements have still been sparse,” Carey Hall said in a note to clients on Tuesday.
One area where buyback announcements have been strong is the energy sector, where Occidental Petroleum on Monday announced a new $3 billion authorization for buybacks and a dividend hike.
Analysts stay neutral on Zoom after earnings report
Earnings for the quarter came in at $1.22 per share, adjusted, which is above the consensus estimate of 81 cents from analysts polled by Refinitiv. Revenue also came in above expectations at $1.12 billion compared with the $1.1 billion anticipated by analysts.
While Zoom management issued a strong earnings outlook for the year, it also said growth would continue to slow as the company moves further away from its pandemic era boom.
“While the top-line story remains weak, things appear to have stopped getting worse,” said UBS analyst Karl Keirstead in a note to clients Tuesday. “We remain Neutral-rated.”
Just under 70% of analysts were neutral on the stock as of Tuesday, according to FactSet. Just over a quarter of analysts rate the stock as overweight or a buy, while just 6% recommend being underweight or selling. That’s little changed from where analysts stood in January.
Credit Suisse was also neutral on the stock coming off the report, citing conflicting signals. The firm pointed to the company’s contact center, phone business and potential within the artificial intelligence space as areas that could help shift the company’s narrative positively in 2024.
“ZM continues to face the aftermath of the pandemic related pull forward of demand, particularly in the Online business,” said analyst Fred Lee in a note to clients Tuesday. “But owing to the company’s deep culture of innovation, ZM now has several potentially game-changing products in the market.”
Morgan Stanley also remained equal weight, with analyst Meta Marshall noting the international business, free cash flows and enterprise as areas to watch going forward.
— Alex Harring
UBS says Fed’s rate hikes are creating “downside risks” for markets
The U.S. Federal Reserve’s rate hikes have weighed on equity markets, according to UBS Financial Services.
“We judge that the economy is in late-cycle, with the Fed continuing to hike rates and growth likely to slow. Tighter policy creates downside risks for markets,” UBS senior U.S. economist Brian Rose wrote in a note to clients on Monday.
The firm anticipates the S&P 500 will finish the year close to current levels, with better upside potential in cyclical markets outside of the U.S., specifically in emerging markets and Germany.
“We prefer value over growth,” Rose wrote.
According to Rose, financial conditions have not tightened in line with the Fed’s rate hikes. The Fed raised interest rates by 25 basis points on February 1, and suggested there will be further rate hikes in the months ahead.
— Pia Singh
Stephanie Link says Target is ‘de-risked’ following earnings
Target is still worth buying coming off its earnings report, according to Stephanie Link, chief investment strategist and portfolio manager at Hightower.
The big-box retailer topped analyst expectations for its quarter for the first time in a year. The company also gave a conservative full-year outlook, noting changing consumer habits.
“I bought some this morning, I’m going to be continuing to buy,” Link said on CNBC’s “Halftime Report.” “Good quarter, and I think it’s de-risked.”
The stock was up nearly 3% in Tuesday’s session.
Morgan Stanley reiterates underweight rating for Fisker
Morgan Stanley reiterated its underweight rating for Fisker shares following the electric vehicle maker’s disappointing fourth-quarter earnings.
“Among an ever increasing range of EV manufacturers, what attracts us to Fisker is the company’s focused strategy on design and engineering and supply chain,” analyst Adam Jonas wrote in a Monday client note.
“While we like the story and strategy, a need for capital, the re-balancing of supply and demand in the EV space, and the ongoing deterioration in the macro environment drives our UW,” he continued.
The analyst maintained his price target of $4, implying a 48% downside from Monday’s closing price.
Fisker shares have gained more than 6% in 2023, but have dropped 37% during the past 12 months.
— Hakyung Kim, Michael Bloom
Shares of Arconic soar nearly 20% on reports it will be acquired by Apollo
Apollo submitted a bid in February and has debt financing in place, according to the Journal’s sources. The Pittsburgh-based company has a market value of about $2.2 billion. It also has a debt load of more than $1.5 billion, suggesting the deal would carry a “significant premium” if it goes through, the Journal reported.
Earlier Tuesday, Goldman Sachs downgraded Arconic to sell from neutral, citing a weak European demand outlook. The company’s stock price is up more than 26% so far this year.
Canaccord Genuity, Mizuho Bank reiterate buy ratings on Tesla
Canaccord Genuity and Mizuho Bank reiterated their buy ratings on Tesla ahead of the electric vehicle maker’s Analyst Day on Wednesday.
Canaccord Genuity maintained its price target of $275, which suggests an upside of 32.4% from Monday’s close.
Mizuho also maintained its buy rating and a $250 price target on the automaker, adding that it sees continued strength in Tesla’s market share in the near term. The bank noted, however, that cheaper competitor EV makers could be “potentially dilutive” to Tesla’s share in the U.S. EV market.Competitor Rivian Automotive is reporting earnings after the closing bell today, and Chinese EV startup Nio is reporting on March 1.
Mizuho managing director Vijay Rakesh said the bank is looking to Tesla’s potential announcements of updates to its existing products, new announcements of a potential robotaxi and last-mile delivery van, updates on its battery and energy storage business, and progress on FSD Beta, the live-testing phase of Tesla’s self-driving software.
– Pia Singh
Bernstein expects strong earnings report from Costco
Costco Wholesale has delivered exceptional results across all of its key performance indicators over the last two years, and Bernstein expects that strong, stable performance to continue.
The warehouse club reports its fiscal second-quarter earnings on Thursday. Bernstein, which has an outperform rating on Costco, adjusted its net sales growth estimates down to 7%, 11 basis points below consensus, after December and January’s results came in at 7% and 6.9%, respectively. The firm also anticipates some margin recovery in the quarter.
“Negative surprises would be … surprising,” analyst Dean Rosenblum wrote in a note Monday. “COST is less exposed to inventory-related risks, and TGT/WMT-type news seems unlikely. Plus we have the benefit of monthly sales releases, which give us advance insight into the quarter.”
Meanwhile, Credit Suisse, which has a neutral rating on the stock, is forecasting earnings per share to come in at $3.11, versus the FactSet consensus of $3.21. It raised its comparable same-store sales estimate, excluding gas and currency, to 6.8% from 5%.
“We are raising our sales est. for FY2Q23, given traffic and sales strength seen in the company’s December and January sales results, but we are cautious on flow-through, due to the elevated cost environment in general,” analyst Karen Short wrote in a Monday note.
— Michelle Fox
Goldman Sachs downgrades Arconic, cites murky demand outlook
Shares of aluminum products maker Arconic fell nearly 5% following a downgrade to sell from a neutral rating by Goldman Sachs.
Analyst Emily Chieng cited a weakening demand outlook in Europe and the postponement of growth projects among the reasons for the downgrade.
Read more on the downgrade here.
Arconic shares fall on Goldman Sachs downgrade
Oaktree Capital is raising $10 billion for leveraged buyout fund
Oaktree Capital Management announced Tuesday it’s raising $10 billion for a new fund focused on leveraged buyout lending.
The manager plans to offer senior secured loans of $500 million or more to private equity-owned U.S. companies, typically with over $100 million in EBITDA, the company said in a release.
“The need for this type of lending is significant, but we anticipate limited competition given the retreat of banks from this area and the dearth of nonbank lenders with the requisite scale, flexibility and credit expertise,” Howard Marks, Co-Chairman of Oaktree, said in a statement.
Oaktree said it believes this area of the market is especially attractive now because there’s limited debt capital to finance large leveraged buyouts and there are record-high levels of committed private equity capital yet to be deployed.
— Yun Li
Citi downgrades Dick’s Sporting Goods
Dick’s Sporting Goods‘ stock slumped 2% following a downgrade to neutral from a buy rating by analysts at Citi.
“With DKS up against difficult multi-year comparisons in 2023 (esp 2H), it’s tough to see how they can sustainably grow sales/EPS, particularly if demand slows in key categories of apparel/footwear (~55% of sales),” said analyst Paul Lejuez in a Tuesday note to clients.
Read more on the call from Citi here.
— Samantha Subin
Stocks making the biggest moves in midday trading
These stocks are among those making the biggest moves in midday trading:
- Dish — Shares of the satellite provider lost 7.3% after the company disclosed that a previously disclosed “network outage” was the result of a cybersecurity breach. Bank of America also double-downgraded the stock to the stock to underperform from buy. The bank said Dish could fall nearly 20% as the company’s timeline for its wireless network service build-out extends.
- Norwegian Cruise Line Holdings — The cruise company fell 12% after reporting a wider-than-expected loss for the fourth quarter. Norwegian lost an adjusted $1.04 per share on $1.52 billion of revenue. Analysts surveyed by Refinitiv had forecast an 85 cents per share loss on revenue of $1.5 billion.
- Advance Auto Parts — The automotive aftermarket parts company gained 3.3% after reporting better-than-expected revenue and fourth-quarter earnings of $2.88 per share, topping StreetAccount’s estimate of $2.41.
Click here to see more stocks making midday moves.
— Pia Singh
Bond yields are close to a major psychological level that could really spook the stock market
The benchmark 10-year Treasury yield is hovering close to a key level that strategists say could give stock investors a fright.
The 10-year Treasury yield broke through resistance in recent sessions and is now a hair below the important 4% level. Yields, which move opposite price, have been rising through February after sliding in January. The yield was at 3.94% in late morning trading.
For stocks, a move to 4% could create more volatility.
— Patti Domm, Tanaya Macheel
Cybersecurity, chip stocks outperform in February
With one trading day left in February, two sub sectors of the tech industry have notably outperformed this month.
- The Global X Cybersecurity ETF (BUG) is up almost 2% in February, on track for its second-straight positive month. Palo Alto Networks, Rapid7 and Crowdstrike have all risen at least 15% this month.
- The iShares Semiconductor ETF (SOXX) is up 1.4% in February, on track for its second-straight positive month. Nvidia, Monolithic Power, and Silicon Labs are all up at least 12% this month.
Outside of tech, transports has been another positive sector in February, with big gains from Avis Budget and FedEx.
— Jesse Pound, Gina Francolla
Dish Network shares fall on Bank of America double downgrade
Shares of Dish Network fell more than 6% after Bank of America double-downgraded the stock to underperform from a buy rating.
“Over the past 12 months, the company has had to navigate a prolonged period of expected and unexpected technological challenges and would not likely hit cruising speed until 2024, by our estimate,” wrote analyst David Barden.
Read more on the call from the Wall Street firm here.
Dish Network shares fall
Stock market this year may defy March’s usual history of positive gains
March is most often a positive month for the stock market, but this year it may bring more of the same turbulence that rattled investors in February.
Stocks are set to exit February with steep losses, with the S&P 500 down 2.3% for the month through Monday. The index is still up 3.7% for the year so far.
“February is the second worst month of the year, posting an average decline of 0.21%, which is the second worst after September,” said Sam Stovall, chief investment strategist at CFRA. “However, March on average posts a gain of 1.1%, rising 64% of the time.” March is the fifth-best month for the S&P 500, according to CFRA data going back to 1945.
— Patti Domm, Tanaya Macheel
U.S. 10-year hits highest level since November
The yield on the 10-year U.S. Treasury note hit a high of 3.983% on Tuesday, its highest level since Nov. 10, when the note yielded as high as 4.117%. It was last higher by about 3 basis points at 3.955.
Treasury yields added to their sharp February gains as traders continued weighing the prospects of higher tighter monetary policy for longer than expected.
— Gina Francolla, Tanaya Macheel
Worries about the economy grew in February, Conference Board says
Consumers grew more pessimistic in February as worries over the longer-term outlook for the economy diminished, according to a Conference Board report Tuesday.
The board’s Consumer Confidence Index fell to 102.9 for the month, down from 106 in January and below the 108.5 estimate from Dow Jones.
Though the Present Situation Index actually ticked up slightly to 152.8, the Expectations Index slid to 69.7, down from 76 in January. A reading below 80 in the expectations side is considered consistent with a recession in the next 12 months.
“Expectations for where jobs, incomes, and business conditions are headed over the next six months all fell sharply in February,” said Ataman Ozyildirim, senior director, economics, at The Conference Board.
Dow falls to start the final trading day of February
The Dow traded more than 100 points in early Tuesday trading, as traders wrapped up a tough month for stocks. The S&P 500 and Nasdaq hovered around the flatline.
— Fred Imbert
Indicators point to 10-year Treasury yield above 4%, says Katie Stockton
The yield is currently hovering near 3.94%. Yields move inversely to prices.
“The next resistance that’s meaningful is at the October 2022 high and that’s about 4.34[%] for yields. We do think there’s going to be progress towards that resistance level,” the founder and managing partner of Fairlead Strategies said.
“If you look at bitcoin versus resistance, it’s still in that 25,200 area. It needs to clear that level in order to look better because that would resolve the trading range to the upside and tell us that range is more likely a reversal pattern vs. a continuation pattern,” she said.
— Michelle Fox
Bitcoin and ether on track for a positive February, despite mid-month slide
Bitcoin and ether rose slightly Tuesday morning and were on pace to end the month higher, despite slipping earlier in the month.
Bitcoin and ether in February
Investors were spooked earlier in the month after what appeared to be the beginning of a potential regulatory crackdown on crypto businesses in the U.S. — including the Securities and Exchange Commission’s enforcement action against Kraken, its Wells Notice of a future settlement against Paxos and the New York State Department of Financial Services’ ordering Paxos to stop minting the Binance USD (BUSD) stablecoin.
However, crypto investors are Fed watch like much of the rest of the market, and economic data remains the biggest driver of cryptocurrency prices.
— Tanaya Macheel
Stocks making the biggest premarket moves
Here are some of the stocks making the biggest moves in premarket trading.
- Dish Network — The satellite company dropped 6.3% amid its multi-day service outage and double-downgrade from Bank of America. Dish Network shares are down 13.5% in 2023 amid a 61.8% drop during the past 12 months.
- Dick’s Sporting Goods — The sporting-good retailer dropped about 2% after being downgraded to neutral from buy by Citi. The firm said it expects near-term gross margin pressure to continue.
- Celsius Holdings — The energy-drink maker gained 3.9% after being upgraded by Credit Suisse to outperform from neutral. The Wall Street firm said the distribution agreement with Pepsi is going well and the long-term potential is high.
To see more premarket movers, read the full story here.
— Michelle Fox
Target rises after earnings
Target shares were higher by 1% in early trading after the retailer said earnings per share for the fiscal fourth quarter was $1.89, well above the $1.40 consensus of analysts gathered by Refinitiv. Revenue came in at $31.4 billion, also above the $30.72 billion Wall Street consensus estimate from Refinitiv. Target also said holiday-quarter sales rose about 1% from a year ago.
The gain was muted as Target said it expects full-year earnings per share to be in a range of $7.75 to $8.75. Wall Street analysts were expecting a consensus $9.23 per share, according to StreetAccount estimates.
Global market breadth remains solid despite February pressure, BofA says
Bank of America chart analyst Stephen Suttmeier noted that, while stocks have been under pressure this month, global breadth is holding up well.
“Strong market breadth for global equity indices suggests a broad-based rally, which is bullish in the face of a challenging market for equity investors in February,” Suttmeier said in a note Monday.
“The weekly advance-decline (A-D) line of 73 country indices hit new highs in February. Sustaining this move to new highs would rhyme with past bullish breakouts for this A-D line from November 2020, March 2019, December 2016, January 2013 and March 2010,” he said.
Global stocks were slated to end February with a loss. The iShares MSCI ACWI ETF — which tracks the All Country World Index — was down 2.8% for the month through Monday’s close. The S&P 500, meanwhile, has lost 2.3% in February.
ACWI in February
CNBC Pro: Semiconductors, A.I. and more: These top-rated ETFs offer a way to play tech’s hottest trends
Two tech themes have taken Wall Street by storm so far this year.
One is the return of semiconductor stocks, as demand bounces back for chips; the other is artificial intelligence, following the buzz surrounding chatbot ChatGPT.
CNBC Pro screened for the highest-rated ETFs with exposure to semiconductor and/or AI-related stocks (among others) using Morningstar data. The resulting funds all received a four- or five-star rating by Morningstar, and have performed well over the past three years.
— Weizhen Tan
CNBC Pro: ‘Pretty bearish on Tesla’: Market pro says price cuts will hit the EV giant’s share price
Occidental Petroleum shares decline on earnings miss
Occidental Petroleum‘s stock slipped 1% after the bell after posting a miss on the top-and-bottom lines for the fourth quarter.
The energy giant reported adjusted earnings of $1.61a share on $8.33 billion in revenue. Refinitiv estimates called for EPS of $1.80 on revenues of $8.66 billion.
The company also hiked its dividend by more than 38% to 18 cents a share and announced a $3 billion share buyback plan.
Occidental Petroleum’s stock falls on earnings miss
Where the major averages stand ahead of final trading day of February
This is where all the major averages stand as February trading nears an end.
Dow Jones Industrial Average:
- Down 3.5% in February
- Down 0.8% so far this year
- 11% % of record high
- 80.57% % off pandemic low
- Down 2.3% this month
- Up 3.7% in 2023
- 17.36% off record high
- 81.68% off pandemic low
- Down 1% in February
- Up 9.6% year to date
- 29.27% off record high
- 72.92% off pandemic low
— Samantha Subin
Zoom shares pop on strong fourth-quarter results
The video communications company reported earnings of $1.22 a share on $1.12 billion in revenue. Analysts surveyed by Refinitiv had expected earning of 81 cents per share on revenues of $1.10 billion.
Despite expectations for slowing growth this year, Zoom also shared better-than-expected guidance for the current period.
Zoom shares rise on earnings results
— Samantha Subin, Jordan Novet