news

S&P 500 Notches Fifth Day of Losses as Traders Consider Recession Odds, Yields Fall

CNBC

The S&P 500 fell for a fifth day as traders weighed the possibility of a recession, and the likelihood of a longer-than-expected hiking cycle from the Federal Reserve.

The S&P slipped 0.19% to end the session at 3,933.92. The Dow Jones Industrial Average eked out a gain of 1.58 points, roughly flat, to finish the session at 33,597.92. The Nasdaq Composite fell 0.51% to end at 10,958.55.

Bond yields also fell, with the rate on the 10-year Treasury note at one point touching a low of 3.402%.

Stocks wavered between gains and losses in choppy trading, with the S&P rising as much as 0.41%. At its lows, the benchmark index fell 0.47%.

"The market's kind of bobbing and weaving and finding its breath after the big rally off the October lows," said Ryan Detrick, chief market strategist at the Carson Group. He expects markets to continue this trend until investors receive more clarity from the Fed's December policy meeting and November's consumer price index report.

Next week, the central bank is widely expected to deliver a 50 basis point rate hike. While the move would be a smaller one compared to the previous four rate hikes, concerns are swirling over whether the Fed can engineer a so-called soft landing while successfully tamping down inflation.

Worries about a recession in 2023 have spooked some investors in recent days.

"All told, financial indicators point to a recession on the horizon," wrote Wells Fargo's Azhar Iqbal in a note to clients Wednesday. "The S&P 500 has peaked ahead of recessions with an average lead time of four months over the past few business cycles.

Investors await more economic data this week for clues on what to expect from the Fed, with jobless claims data due out Thursday. November's producer price index and preliminary consumer sentiment data for December are slated for Friday.

Stocks are on pace for weekly losses, with the Dow down 2.42%. The S&P and Nasdaq are off by 3.38% and 4.39%, respectively.

Lea la cobertura del mercado de hoy en español aquí.

Stocks close mostly lower

Stocks closed mostly lower Wednesday, with the S&P 500 slipping 0.19% to close at 3,933.92.

The Dow Jones Industrial Average closed flat, or 1.58 points higher, to finish the session at 33,597.92. The Nasdaq Composite fell 0.51% to end at 10,958.55.

— Samantha Subin

Property technology, online auto experiencing 'most significant' layoffs, Jefferies says

Layoffs, or news of workforce reductions, have hit the technology sector in recent weeks, but certain sectors are clearly feeling more pain than others, Jefferies says.

Areas suffering the most in this shakeup include property technology and online auto stocks, wrote analyst Brent Thill in a note to clients Wednesday. That includes names like Carvana, which laid off 8% of its workforce last month, and Redfin. Advertising is also experiencing solid declines as companies navigate a slowdown.

"Our proprietary scrape of job listings shows a decline in job openings across our coverage as headcount reductions accelerate into the end of the year," he wrote.

The sector layoffs come in response to the over-hiring companies partook in during the pandemic, with many technology bellwethers now facing slower-than-expected growth as the consumer weakens and a downturn looms.

Within Jefferies' coverage, a proprietary scrape of data suggests Microsoft's experienced an 85% decline in active job listings since the start of 2022. Listings at Snap, meanwhile, are down 84%.

— Samantha Subin

Pending economic data could launch a rally into next year, says Morgan Stanley's Slimmon

Don't be surprised if economic data coming out over the next week kicks off a rally into the end of the year and potentially 2023, according to Andrew Slimmon, Morgan Stanley Investment Management's senior portfolio manager.

The key period of data releases begins Friday with the producer price index, followed by November's consumer price index and another likely rate hike from the Federal Reserve next week.

"The last time those were released they all led to rallies in the stock market because we had better inflation prints," he said.

Like many investors, Slimmon expects a downturn ahead, given the inverted yield curve, but does not anticipate the "big earnings collapse," or downturn, many people are predicting in the first quarter.

This is in part due to the fact that many consumers have beefed up savings in recent years given the proximity of the most recent recession.

"The message of this year is that the economy has proven far more resilient than many people expect and I don't think next quarter is going to be the end of that," he said.

— Samantha Subin

Deutsche Bank raises Lululemon earnings expectations

Deutsche Bank said it expects Lululemon to beat third quarter estimates when it reports its financial results on Thursday, thanks to better-than-expected revenues, particularly in North America.

"LULU's customer base remains relatively healthy and we think improved inventory flow along with new product launches (and  the membership program) likely led to robust sales trends despite the challenging macro environment," analyst Gabriella Carbone said in a note Wednesday.

The firm also raised its forecast for fourth-quarter earnings.

"We expect the company to guide closer to our revised forecast, but see the opportunity for upside as we are currently modeling a deceleration in the company's three-year top-line CAGR," she added.

— Tanaya Macheel

Stocks slightly lower as final hour of trading begins

Stocks were slightly lower as the final hour of trading kicked off.

The S&P 500 last traded down 0.2%. The Dow Jones Industrial Average traded flat, and Nasdaq Composite shed 0.5%.

— Samantha Subin

Utility of bonds 'restored' after rough year, CIO says

This year has been a rough one for investors with significant fixed income holdings, but the end result is that bonds may now be more attractive than at any point last decade.

Steve Foresti, the chief investment officer for asset allocation and research at Wilshire, said there is now "fuel in the tank" for high quality bonds after Federal Reserve rate hikes drove yields higher, potentially making fixed income a more important part of portfolios.

This is in stark contrast to the low rate environment that followed the financial crisis and then again at the start of the pandemic, when the Fed cut rates to near zero.

"Especially for investors who reduced allocations, I think this is an opportunity to revisit that decision and maybe slide back down on the risk curve a bit," Foresti said.

Foresti added that the expected return for core bond holdings has doubled over the course of this year, given high rates now and Wilshire's expectation that inflation will decline going forward.

— Jesse Pound

Karen Firestone says now isn't the time to give up on tech names

Even though technology companies have had a rough year in the stock market, it's not time to throw in the towel on the sector, according to Karen Firestone, CEO of Aureus Asset Management.

Instead, she said that investors should look at multiples of technology names compared to other industries, such as consumer stocks, and determine what they'd rather own.

It's also an opportunity to pick up stocks poised for growth, she said.

"Don't give up on tech now - buy low, sell high," she said.

—Carmen Reinicke

Bank of America upgrades SolarEdge as outlook improves

Bank of America sees both short and long-term gains on the horizon for SolarEdge.

Analyst Julien Dumoulin-Smith upgraded the solar stock to buy from neutral and increased his price target to $367, which presents an upside of 22.8% from where it closed Tuesday. The stock could rise even higher beyond the 12 months, he said.

"We acknowledge credit where it's due and highlight tangibly clearer visibility over the near to medium term," Dumoulin-Smith said in a note to clients.

CNBC Pro subscribers can read the full story here.

The stock is up more than 3% in trading Wednesday.

— Alex Harring

Carvana plummets on growing bankruptcy concerns

Shares of online used car retailer Carvana cratered more than 30% Wednesday on news that the company's largest creditors have signed a cooperation agreement to last at least three months.

The pact, first reported by Bloomberg, includes creditors such as Apollo Global Management and Pacific Investment Management that hold around $4 billion of Carvana's unsecured debt, or about 70% of the total outstanding.

In the past, similar agreements have helped prevent creditor fights that have complicated other debt restructurings.

— Michael Wayland, Samantha Subin

Ned Davis Research expects S&P 500 to end 2023 at 4,300

The S&P 500 should end 2023 about 9.1% higher than where it closed Tuesday, according to Ned Davis Research.

Downward pressure on the index should ease by the end of 2023, leading the index to around 4,300 points. That's about 350 points higher than where it last closed.

"Heading into 2023, the macro headwinds are largely still in place," Ed Clissold, the firm's chief U.S. strategist, said in a note to clients. "The key difference is that by the end of next year, many cycles should have rotated once again to being friendly to risk assets."

CNBC Pro subscribers can read the full story here.

— Alex Harring

Stocks making the biggest moves midday

Check out the companies making headlines in midday trading.

  • Carvana — Shares of the online car dealership fell more than 32% after Carvana's largest creditors signed an agreement to negotiate together with the company. Bankruptcy concerns around Carvana have grown since the company reported disappointing third-quarter results last month. The pact between the creditors was first reported by Bloomberg.
  • MongoDB — The database platform surged almost 22% following the company's quarterly results. Mongo posted better-than-expected revenue for the most recent quarter and issued upbeat fourth-quarter revenue guidance, according to Refinitiv.
  • State Street — Shares of the asset manager jumped more than 8% after the company announced a new buyback plan. The company said it now intends to buy back up to of $1.5 billion of its common stock in the fourth quarter of 2022, $500 million more than the amount announced previously.

Read the full list here.

— Sarah Min

Stocks making the biggest moves midday

Check out the companies making headlines in midday trading.

  • Carvana — Shares of the online car dealership fell more than 32% after Carvana's largest creditors signed an agreement to negotiate together with the company. Bankruptcy concerns around Carvana have grown since the company reported disappointing third-quarter results last month. The pact between the creditors was first reported by Bloomberg.
  • MongoDB — The database platform surged almost 22% following the company's quarterly results. Mongo posted better-than-expected revenue for the most recent quarter and issued upbeat fourth-quarter revenue guidance, according to Refinitiv.
  • State Street — Shares of the asset manager jumped more than 8% after the company announced a new buyback plan. The company said it now intends to buy back up to of $1.5 billion of its common stock in the fourth quarter of 2022, $500 million more than the amount announced previously.

Read the full list here.

— Sarah Min

Morgan Stanley cuts iPhone shipment estimates again

Morgan Stanley, once again, is cutting shipment forecasts for the latest iPhone in the December quarter.

The bank trimmed its estimates by another 3 million units, accounting for slowing production in China. Last month, analysts at the investment bank cut estimates by 6 million units.

The new expectations anticipate the technology giant will ship about 75.5 million iPhones.

Shares slumped about 1.5% midday.

— Ashley Capoot, Samantha Subin

Stocks seesaw during midday trading

Stocks wavered between gains and losses during midday trading Wednesday.

The Dow Jones Industrial Average traded as high as roughly 178 points, or 0.53%, and as low as about 93 points, or 0.28%.

The S&P 500 traded between a 0.47% decline and a 0.41% gain. At one point, the Nasdaq Composite traded nearly 1% lower. At its highs, the tech-heavy index was up by 0.23%.

— Samantha Subin

Campbell Soup Company, Conagra Brands among S&P 500 stocks notching news high

Several stocks notched fresh 52-week and record highs on Wednesday.

Campbell Soup Company's stock surged 5% Wednesday to trade near levels not seen since March 2020, while Conagra Brands hovered near levels not seen since June 2021.

These stocks also hit fresh highs:

  • General Mills trading at all-time highs back through its history to 1927
  • J.M. Smucker Company trading at levels not seen since August 2016
  • Travelers trading at all-time highs back to its spin-off from Citi in 2002
  • Cigna trading at all-time high levels back to its IPO in 1972

Some stocks also hit new lows, including Salesforce, which traded near levels last seen in April 2020.

These stocks also notched new lows:

  • Signature Bank trading at lows not seen since December 2020
  • SVB Financial Group trading at lows not seen since May 2020
  • Zions Bancorporation trading at lows not seen since February 2021
  • Generac trading at lows not seen since May 2020
  • Boston Properties trading at lows not seen since February 2010
  • NRG Energy trading at lows not seen since June 2021

— Samantha Subin, Chris Hayes

Travel names fall across the board, airline stocks drop

Travel names fell as a group during midday trading, with many airline stocks declining.

Online travel stocks dropped after Wolfe Research downgraded the sector to market underweight from market weight, citing trouble ahead as investors weigh the likelihood of a recession. The firm named a worse outlook for names such as Booking HoldingsAirbnbTripAdvisor and Expedia.

Airline stocks declined as well, with shares of Southwest Airlines falling more than 5%. Shares of Delta Air Lines and American Airlines declined more than 4%. Alaska Air Group and United Airlines Holdings each slipped more than 3%.

— Sarah Min

Bear market hasn't bottomed ahead of a downturn since World War II

If history is any guide, don't expect this bear market to bottom as soon as a recession hits.

That's according to data from the Carson Group, which found that the eight bear markets connected to a recession since World War II continued even after a downturn ensued.

On average, these bear markets ended nine months after the start of a recession, wrote Ryan Detrick, the firm's chief market strategist in a tweet.

Data from Bank of America earlier this month highlighted a similar observation, with technical research strategist Stephen Suttmeier saying in a note to clients that the March 1945 to October 1945 recession marked the only instance where the S&P 500 rallied before and during a downturn.

— Samantha Subin

Carvana downgraded by Wedbush as bankruptcy fears mount

Wedbush downgraded Carvana as the user car seller faces yet another blow this year, this time raising concerns a bankruptcy could be on the horizon.

The downgrade to underperform from neutral came after Bloomberg News reported that a group of creditors including Apollo and Pimco agreed to unify in restructuring agreements. Analyst Seth Basham said the move will help quell any infighting among stakeholders, which he said has plagued similar negotiations at other companies.

The stock dropped 35.2% in Wednesday trading, hitting a 52-week low. It's down 98.1% compared with the start of the year.

He gave a price target of $1 to the stock. CNBC Pro subscribers can read more here.

— Alex Harring

Home Depot and 3M boost the Dow

Shares of 3M and Home Depot gained 2% and 1.4% respectively, boosting the Dow Jones Industrial Average by more than 160 points around 11 a.m. ET.

Merck, American Express, and UnitedHealth also added more than 1% each, contributing to the Dow's gains.

— Samantha Subin

Citi's Chronert sees S&P 500 leadership shifting to industrials, materials

Don't be surprised if tech's reign in the S&P 500 comes to an end in the not-too-distant future, according to Scott Chronert, Citi's U.S. equity strategist.

"What we're suggesting is that the valuation paradigm supporting big mega-cap tech over the past decade probably fades," he told CNBC's "Squawk on the Street" on Wednesday, saying that over time it becomes increasingly difficult for companies to maintain their earnings growth trajectories.

Over the next two to five years he sees tech's weight in the S&P 500 coming down by 18% to 20%. As tech's weighting falls, industrials and materials will likely shift into leadership positions and to a "certain degree" energy, he said.

— Samantha Subin

Tesla may need more price cuts to keep demand strong, Bernstein says

Tesla may need more price cuts to buoy demand, according to Bernstein's long-time bear analyst.

Analyst Toni Sacconaghi reiterated his underperform rating on the stock and lowered his fourth-quarter and 2023 estimates. He said that the company needs to further cut prices to boost demand, but the company may be able to offset at least some of those losses through tailwinds elsewhere.

"Tesla increasingly appears to have a demand issue," he said in a note to clients Wednesday. "The company has responded by cutting prices in China and the US (for December deliveries), and purportedly reducing production in China."

Tesla was last down 3.2% in trading Tuesday. The stock has shed 50.6% so far this year.

CNBC Pro subscribers can read more about Sacconaghi's call here.

— Alex Harring

Tech stocks fall

Tech stocks lagged Wednesday as growth concerns mounted on Wall Street.

The Nasdaq Composite fell 0.4% while tech-heavy S&P 500 sectors like information technology and communication services shed more than 0.5% each.

Salesforce, Apple and Alphabet dipped about 1% each, while Tesla dropped roughly 3% as longtime bear Toni Sacconaghi said the company needs to lower prices to deal with falling demand.

— Samantha Subin

Cathie Wood says the Fed is making a serious mistake

Ark Invest's Cathie Wood called out the Federal Reserve again Wednesday, saying the central bank is making a policy mistake by aggressive rate hikes as deflation looms.

The innovation investor pointed to the so-called yield-curve inversion. The yield curve inverts when shorter-term Treasury rates rise above longer-term yields. Many economists view the 2-year and 10-year part of the yield curve as more predictive of a potential recession.

— Yun Li

Stocks open lower

Stocks opened lower Wednesday.

The Dow Jones Industrial Average dipped 34 points, or 0.1%, while the S&P 500 futures lost 0.2%. The Nasdaq Composite traded lower by 0.4%.

— Samantha Subin

Wolfe Research downgrades Chewy and Shopify, cites premium valuations

Wolfe Research downgraded shares of both Chewy and Shopify in a note to clients Tuesday, citing valuation concerns and a weakening consumer threatening to weigh down growth.

"Across our coverage universe, SHOP and CHWY are among the handful of stocks that are still trading on revenue/ [gross profit] multiples," wrote analyst Deepak Mathivanan. "We think growth deceleration under a weakening macro could have high sensitivity on multiples for these two stocks."

Mathivanan expects inflationary tailwinds to subside for Chewy going forward, viewing deceleration in customer growth as a potential concern ahead.

"Without solid customer adds, net revenue growth could decelerate further in FY23," he said. "At 1.6x FY23 revenues, CHWY shares are currently at a premium valuation that could be pressured with top-line deceleration."

Meanwhile, t recent rally in Shopify, with shares up about 21% over the last month, prices the stock at a premium to its expected growth trajectory, Mathivanan wrote.

The firm maintained its outperform ratings on both Amazon and MercadoLibre.

— Samantha Subin

Labor costs less than expected, productivity stronger in the third quarter

Productivity in the third quarter was better than originally thought while unit labor costs were considerably less, according to revised Labor Department data Wednesday.

Unit labor costs, a measure of hourly pay compared to production, rose 2.4% for the period, a substantial downward revision from the initially reported 3.5%. That came thanks to a 0.5 percentage point upward revision in productivity and a 0.6% downward change in compensation costs.

Productivity increased 0.8%, coming up from 0.3% as the result of a 0.5 percentage point upward move in output along with a 0.1 percentage point increase in hours worked.

Both numbers were better than expected. Dow Jones estimates had put productivity at 0.7% and unit labor costs at 3.1%.

Stock market futures eased some losses following the news as investors continue to keep a close watch on inflation-related figures.

—Jeff Cox

U.S-listed China stocks lower

U.S.-listed China stocks were lower during Wednesday's premarket despite news of some easing restrictions in the country.

The KraneShares CSI China Internet ETF fell by about 4%, along with shares of Pinduoduo and Alibaba. Chinese electric vehicle stocks Nio and Xpeng also dropped more than 4% each.

Casino stocks connected to Macao, including MGM Resorts, Wynn and Melco, were also lower.

— Samantha Subin, Nicholas Wells

Morgan Stanley downgrades Airbnb

Airbnb shares fell more than 4% in the premarket after Morgan Stanley downgraded the short-term home rental stock to underweight from equal weight. The analyst cited a potential slowdown in listings growth as a key reason for the downgrade.

"While active listings have grown at a 12% '18-'22 [compound annual growth rate], we see this slowing to a 7% '22-'25 CAGR going forward due to scale and law of large numbers," Morgan Stanley said.

CNBC Pro subscribers can read more here.

— Fred Imbert

Airbnb, Carvana among stocks making the biggest moves premarket

These are some of the stocks making the biggest moves before the bell:

Airbnb – Airbnb fell 3.8% in premarket trading after Morgan Stanley downgraded the stock to underweight from equal-weight.

Carvana – Carvana creditors, including Apollo Global Management and Pimco, signed a cooperation agreement and will work together as the online used car seller goes through a debt restructuring process. Carvana tumbled 20.7% in premarket trading.

MongoDB – MongoDB shares soared 26.6% in premarket trading after the database software company reported a surprise quarterly profit and forecast another profit for the current quarter.

Dave & Buster's – Dave & Buster's shares slid 6.8% in premarket action even though its quarterly profit matched analyst estimates. The restaurant and entertainment venue's revenue beat consensus.

— Samantha Subin

Campbell Soup rises on solid quarterly results

Campbell Soup's stock was up more than 2% during Wednesday's premarket after posting a top and bottom line beat for the recent fiscal quarter.

The company posted earnings of $1.02 a share on $2.58 billion in revenue, surpassing analysts' expectations of 88 cents a share on revenues of $2.45 billion.

Campbell slightly upped its guidance for the fiscal year, saying that it expects earnings per share to range between $2.90 and $3. Previous estimates called for earnings to fall between $2.85 and $2.95 a share.

The company also expects revenue growth to range between 7% and 9% year over year, up from previous expectations of 4% to 6% growth.

— Samantha Subin

Mortgage demand declines despite drop in rates

Mortgage demand declined last week, with application volume falling 1.9% over the previous despite a drop in rates, according to the Mortgage Bankers Association's seasonally adjusted index.

It came even as the average contract interest rate for 30-year fixed-rate mortgages with both conforming loan balances and a 20% down payment, fell.

Mortgage applications to buy a home dipped 3% for the week, which marked a 40% decline over the same week last year.

— Diana Olick, Samantha Subin

China trade data outweighs reopening hope

Stock futures fell overnight despite investors getting what they've been hoping for in the form of China easing Covid measures. That's because some poor China trade data raised fears about a global recession.

China's dollar-denominated exports fell 8.7% last month on an annual basis, much more than the 3.5% decline economists were expecting in a Reuters survey. Imports in U.S.-dollar terms declined 10.6% for the month compared to a year ago, also much more than expected.

The Hang Seng Index ended the session lower by 3.2% and the Shanghai Composite fell 0.4% following the trade data.

— John Melloy, Jihye Lee

China lifts negative test requirement for cross-region travelers

Cross-region travelers in China will no longer need to show Covid-negative test results, according to a National Health Commission release.

Areas that are not designated as high-risk cannot halt work or production, the notice said.

Covid patients without symptoms can also choose to isolate at home for five days, it said.

– Evelyn Cheng

CNBC Pro: 'A gift to investors': BlackRock says it's time to rethink bonds

It's time to rethink bonds, according to the BlackRock Investment Institute, which said "the lure of fixed income is strong" right now.

"Higher yields are a gift to investors who have long been starved for income. And investors don't have to go far up the risk spectrum to receive it," Philipp Hildebrand, vice chairman of BlackRock, and Jean Boivin, head of the BlackRock Investment Institute, wrote in a note last week.

They outlined their top ways to cash in.

Pro subscribers can read more here.

— Zavier Ong

CNBC Pro: UBS says shares in this global airline are set to soar by 55%

Shares of a global airline are set to soar by 55% over the next year, according to UBS.

The investment bank raised its price target after the pan-European airline said it expects to see bumper demand during Christmas.

CNBC Pro subscribers can read more here.

— Ganesh Rao

MongoDB, Dave & Buster’s among stocks making this biggest moves after hours

These are the stocks making the biggest moves after hours.

  • MongoDB — The database platform surged about 26% in extended trading after reporting better-than-expected revenue for the most recent quarter and upbeat fourth-quarter revenue guidance, according to Refinitiv.
  • Dave & Buster's — Shares of the restaurant and video arcade operator dropped 5% after the company reported pro forma walk-in comparable store sales decreased 2.4% versus the comparable period in 2021.
  • Signature Bank — The bank to crypto businesses saw shares fall 3% following a report that the company is looking to offload up to $10 billion of its crypto-related deposits, representing about 23% of the company's total deposits.

For further details and more movers check out our full list here.

— Tanaya Macheel

Stock futures open flat

Stock futures were barely changed to begin trading Tuesday evening, after falling in the regular session.

Dow Jones Industrial Average futures opened just 2 points higher, or 0.01%. S&P 500 futures were up 0.03% and Nasdaq 100 futures added 0.05%.

— Tanaya Macheel

Copyright CNBC
Contact Us