September 22, 2023

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Dow finishes more than 250 points higher, Nasdaq climbs 1.9% after Fed Chair Powell says inflation is declining

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Stocks finish Tuesday up

The three major indexes finished Tuesday in the green after bouncing around for much of the day as investors digested comments from Fed Chair Jerome Powell.

The technology-heavy Nasdaq Composite led the way, adding 1.9%. The S&P 500 and Dow followed, gaining 1.3% and 0.8%, respectively.

— Alex Harring

Meta Platforms making significant progress in taking share from TikTok, UBS says

Meta Platforms is making strides in the ongoing battle to return time spent back to its Instagram platform, and take share from TikTok, according to UBS.

“Commentary on the 4Q EPS call around short-form video engagement supports prior indications that META is taking share in this space (we flagged here) and we estimate that every 10% reduction in the 18 minute spent gap in FY22 between Instagram and TikTok represents a 1.4ppts tailwind to consolidated revenue growth,” said analyst Lloyd Walmsley in a Monday note to clients.

While it could take time to mend this gap, and the company’s Reels product may note attain profitability until the end of 2023 or early 2024, data shows that Meta is making significant progress, Walmsley said.

That’s evident in the fact that global time spent in January for Instagram rose 5% year over year, while declining 6.4% year over year for TikTok.

— Samantha Subin

AI mentions jump on Big Tech earnings, Ark Invest says

There’s been an increase in mentions of artificial intelligence (AI) during earnings calls from a few megacap technology companies, according to Ark Invest.

Notably, Alphabet, Meta and Microsoft all experienced a jump in the mentioning of the advanced technology on their fourth-quarter earnings calls over the past few weeks, the firm said.

Stocks up entering final hour of trading

After ricocheting as investors digested Federal Reserve Chair Jerome Powell, the three major indexes remained in the green — but off highs — heading into the final hour of trading.

The Dow traded up 204 points, or 0.6%. The 30-stock index was able to recover from a 256 points loss earlier in the session, but cooled off its session high of 278 points up.

The S&P 500 advanced 1.1%. During the session, it traded as low as 0.6% down and as high as 1.3% up.

And the technology-heavy Nasdaq Composite, which market observers predicted could be especially sensitive to Powell’s statement given growth stocks’ relationship to interest rates, was up 1.5%. It dipped as low as 0.4% in the red and as high as 1.8% in the green earlier in the session.

— Alex Harring

Stocks saw ‘something of a round trip’ after Powell’s comments, Morgan Stanley’s global chief economist says

Stocks bounced around as investors followed Federal Reserve Chair Jerome Powell’s latest comments on inflation, making ‘something of a round trip,’ according to Seth Carpenter, global chief economist at Morgan Stanley.

“I think if people came into it looking for a hawkish reset after the jobs report, they didn’t get it initially,” Carpenter said Tuesday on CNBC’s “The Exchange.”

“He came through, he continued to be measured the way he was at the press conference saying, ‘Look, we take it very seriously. We have a … significant way to go in order to bring inflation down.’ And so, I think the market ended up getting back to perhaps roughly where it started,” he added. 

The S&P 500 ticked higher through afternoon trading Tuesday. The broader market index initially popped following Powell’s comments on declining inflation, and then cooled, before turning up again.

— Sarah Min

Indexes give up ground after Powell’s speech

The major indexes turned red as investors continued digesting Fed Chair Jerome Powell’s remarks.

The Dow traded down around 230 points, or 0.7%, after gaining more than 275 points mid-conversation.

The S&P 500 and Nasdaq Composite were in the red 0.4% and 0.3%, respectively, despite trading in the green during his conversation. At session highs, the S&P 500 and Nasdaq Composite were up 1.3% and 1.8%, respectively.

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The three indexes

Powell warns that economic surprises could push rates higher

Federal Reserve Chairman Jerome Powell cautioned Wednesday that surprisingly strong economic data like last week’s jobs report could push the central bank into raising interest rates more than markets expect.

“The reality is we’re going to react to the data,” he said during an appearance at the Economic Club of Washington, D.C. “So if we continue to get, for example, strong labor market reports or higher inflation reports, it may well be the case that we have do more and raise rates more than is priced in.”

Markets currently expect the Fed to raise rates a quarter percentage point each at the March and May meetings, then pause and possibly cut before the end of the year.

—Jeff Cox

Powell likens his term ‘disinflation’ to ‘declining inflation’

Federal Reserve Chair Jerome Powell has used the term “disinflation” numerous times to reporters this week, saying that we’re in the “early stages of disinflation” and that the “disinflationary process” of tamping down inflation with ongoing rate hikes is underway.

In today’s remarks, Powell clarified the term and said: “I would call it declining inflation too.”

— Pia Singh

Powell says Fed can’t save economy if Congress fails to raise the debt ceiling

Federal Reserve Chairman Jerome Powell said the central bank cannot shield the U.S. economy if Congress fails to act to raise the $31.4 trillion debt ceiling.

The nation hit its statutory debt limit last month, but Republican lawmakers have held off on raising the limit in order to push for spending cuts. So far, Treasury Secretary Janet Yellen has been able to take steps to avoid default, and buy extra time.

In comments at an event in Washington, D.C. Tuesday, Powell said there is only one way to resolve the issue.

“This is something that Congress has to do,” he said.

The U.S. has never defaulted on its debt, and officials say doing so would have a severe economic and financial impact.

—Christina Cheddar Berk

Powell says he’s not seeing disinflation in the services sector

Federal Reserve Chair Jerome Powell said he’s seeing disinflation in the goods sector, and expects to see it in the housing services sector. However, he’s not seeing it in the services sector just yet.

“There is 56% of the economy, which is the rest of the services sector. It’s the biggest part, obviously, and we’re not seeing disinflation there yet. And that’s going to take some time,” Powell said during an event at the Economic Club in Washington, D.C..

“We need to be patient, and we think we’re going to need to keep rates at a restrictive level for a period of time before that comes down,” Powell said.

— Sarah Min

Economy is in the very early stages of disinflation, Powell says

The process of getting inflation down has begun, but has a long way to go, Federal Reserve Chair Jerome Powell said.

“These are the very early stages of disinflation,” he said.

It has begun in the goods sector, but the services sector – except for housing services – is not showing any signs of disinflation yet, Powell said. The process will take some time, he added.

“It’s not going to be, we don’t think, smooth. It is probably going to be bumpy and so we think that we’re need to do further rate increases, as we said, and we think we’ll need to hold policy at a restricted level for a period of time,” Powell said.

— Michelle Fox

Dow reverses course as Powell speaks

The Dow turned positive and traded up 180 points after declining as much as 186 points earlier in the session as Fed Chair Jerome Powell spoke.

The S&P 500 and Nasdaq Composite also gained steam, with each trading up more than 1% mid-speech.

Powell said early in the speech that the disinflationary process has begun but still has a long way to go.

“The disinflationary process, the process of getting inflation down, has begun and it’s begun in the goods sector,” Powell said. “But it has a long way to go. These are the very early stages of disinflation.”

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The Dow

Zoom Video shares jump nearly 8% after announcing layoff plans

Shares of Zoom Video surged nearly 8% midday after the company announced plans to cut about 1,300 employees, or 15% of its workforce. The stock is up more than 24% so far this year.

CEO Eric Yuan wrote in a blog post shared to the company’s website that as the world continues to adjust to life after the pandemic, the company needs to adapt to the “uncertainty of the global economy” as well as “its effect on our customers.” Read more here.

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Shares were up more than 7.5% during midday trading.

— Pia Singh, Ashley Capoot

Stocks making the biggest moves in midday trading

These stocks are among those making the biggest moves in midday trading:

  • Pinterest — Pinterest shares tumbled 5% after the image discovery company posted mixed quarterly results with an adjusted earnings per share greater than analysts’ estimates, but revenue that fell short of expectations. Companies that rely on ad revenue have struggled with demand amid a macro downturn.
  • Oak Street Health — Shares surged more than 30% after the Wall Street Journal reported CVS Health was close to an agreement to buy the primary-care provider for $10.5 billion.
  • Sweetgreen — Shares fell about 6% after Cowen downgraded the salad chain’s stock to market perform from outperform, citing “deteriorating value perceptions.”
  • Chegg – Chegg’s shares dropped more than 19% after sharing revenue guidance for the full year and first quarter that fell short of analyst expectations. The company also said it’s facing subscriber growth challenges.

Click here to see more stocks making midday moves.

— Pia Singh

Energy leads S&P 500 sectors

Energy performed the best of the 11 S&P 500 sectors on Tuesday, up 1.9%.

Here’s where the remaining 10 stand, in order from best to worst:

  • Information technology (1%)
  • Communication services (0.9%)
  • Financials (0.5%)
  • Materials (0.2%)
  • Health care (-0.4%)
  • Industrials (-0.7%)
  • Utilities (-0.9%)
  • Real estate (-1%)
  • Consumer staples (-1.1%)
  • Consumer discretionary (-1.3%)

— Alex Harring

Royal Caribbean stock jumps on quarterly report, stronger 2023 guidance

Shares of Royal Caribbean popped more than 2% on Tuesday after the cruise operator posted its fourth-quarter results.

The company reported a per-share loss of $1.12, narrower than the loss of $1.34 per share anticipated by analysts, according to Refinitiv. However, revenue came up short of expectations, with the company posting $2.60 billion, compared to the $2.61 billion estimated by analysts.

Beneath the surface, the outlook seems rosy for Royal Caribbean, however. The company gave guidance on 2023 per-share earnings of $3.00 to $3.60, excluding items. The company’s results also put to rest any concerns investors may have had about softening bookings, with gross revenue totaling $2.6 billion compared to $982 million in the prior year. Booking volumes during the fourth quarter of 2022 were also higher than the corresponding period in 2019 – before the pandemic put the brakes on travel.

 The company has also been able to raise prices, Royal Caribbean Group CEO Jason T. Liberty said on the earnings call with analysts Tuesday morning. “We’re able to raise prices across these different products and really not seeing a pullback from the consumer as we continue to do so,” he said, according to a transcript on FactSet. 

China cruising is also emerging as a 2024 opportunity, but two impediments have emerged, according to Michael Bayley, CEO of Royal Caribbean International. “One of them is that there’s still a ban technically on cruising and group travel in China,” he said on the analyst call. “And also, there’s a requirement from the Japanese that Chinese tourist have to test and potentially could be quarantined.” He added that the company expects both conditions to “drop away at some point during this first half.”

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Royal Caribbean

 —Darla Mercado, Seema Mody

Credit Suisse upgrades Lockheed Martin

Lockheed Martin can return to growth this year as the outlook for the defense sector strengthens, providing a “meaningful” opportunity for earnings to surprise to the upside, according to Credit Suisse. 

Analyst Scott Deuschle upgraded the arms company to outperform from underperform. Deuschle also raised his target price to $510 from $427, which implies shares could rise 11% from the stock’s closing price on Monday.

“LMT has now reported three consecutive quarters with book-bill>1.0x, with [trailing 12 months] book:bill accelerating to 1.08x in Q3 and hitting 1.22x in Q4. We view this acceleration as a powerful signal that the rationale for our prior rating no longer holds,” Deuschle wrote Monday in a note to clients. 

CNBC Pro subscribers can read more about his upgrade here.

— Hakyung Kim

Watch the Nasdaq Composite to see how market reacts to Powell remarks, DFD Partners’ CEO says

Those looking to see if investors find Fed Chair Jerome Powell’s remarks scheduled for Tuesday afternoon more hawkish or dovish should watch the Nasdaq Composite, according to Devon Drew, CEO of DFD Partners.

Drew said the technology-heavy index will likely move depending on how Powell’s remarks are received because it is comprised of mainly high-growth stocks.

Growth stocks are typically more sensitive to interest rate hikes, he said, so investors who take Powell’s comments to indicate more rate hikes to come, or for longer, will likely sell off. On the other hand, Drew said investors will likely increase exposure to Nasdaq components if they believe Powell indicated lower interest rates could be on the horizon.

“Long-duration stocks and higher rates — they just don’t jive,” he said in an interview with CNBC.

The Nasdaq Composite has fluctuated between trading above and below the flatline Tuesday.

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The Nasdaq Composite

Ron Baron says Tesla could hit $1,500 a share by 2030

Longtime investor Ron Baron, who runs one of the best-performing mutual funds, said he’s standing by his growth darlings, unfazed by the volatility in the stock market, especially in the tech sector.

“I’m not really worried about the stock market,” Baron said on CNBC’s “Squawk Box” Tuesday. “I don’t worry about the market. I don’t worry about the economy.”

The veteran investor said he’s seeing unprecedented demand for Tesla’s vehicles, predicting the stock to skyrocket to $1,500 by 2030. Elon Musk’s Tesla has a 30% portfolio weighting in Baron’s fund, the biggest holding in the portfolio.

— Yun Li

2 S&P 500 stocks hit new 52-week highs, while 2 hit new lows

Two stocks in the S&P 500 hit new highs not seen in over a year on Tuesday, while another two reached new lows.

TransDigm Group, an aerospace and defense company that went public in 2006, is at an all-time high. And financial technology company Fiserv notched a high the stock hasn’t traded at since September 2021.

On the other hand, Centene and CVS Health traded at lows not seen since November and October of 2021, respectively.

— Alex Harring, Chris Hayes

Powell comments could drive the next short-term market trend

Fed Chair Jerome Powell’s comments at the Economic Club of Washington, D.C., later today could decide the next near-term stock market trend.

Scott Redler, partner with, said he’s watching the 4,093 level on the S&P 500, which is the low from Monday and also the 8-day moving average. The 8-day is the average of the last eight closing prices and is a short term momentum indicator.

“If we hold that, chances are maybe this trend we’ve been in through most of January continues,” said Redler, who watches short-term technicals. “If we break below it, the active bears have the ball a little more in their court.” 

The S&P 500 broke above 4,100 in an important move last week and then edged close to 4,200. The S&P 500 gave back some of those gains and closed at 4,111 Monday. It was trading just below 4,100 early Tuesday.

“Today’s going to be a very big day for short-term direction,” said Redler. “If you want clues, watch Tesla, which has been strong. Watch Meta, which has been strong, and AMD,” he said. AMD and Tesla were slightly higher in early trading, while Meta was lower.

Powell sparked a massive rally Wednesday, after his comments were taken as dovish by the market. Some Fed watchers expect Powell to repeat the more hawkish comments he’s been making, like the Fed intends to raise rates and hold them there for a while. The futures market has been pricing in a rate hike for the end of the year. 

“It’s going to be interesting to see if he’s a little bit more hawkish than he was Wednesday. The debate is not the ceiling, the debate is the duration,” Redler said.

—Patti Domm

Dow down more than 100 points as trading kicks off

The Dow was down more than 100 points as the trading day began with investors bracing for Fed Chair Jerome Powell’s speech slated for the afternoon.

The 30-stock index lost 110 points, or 0.3%, shortly after open. The S&P 500 and Nasdaq Composite were down 0.2% and 0.1%, respectively.

— Alex Harring

Goldman Sachs likes Pinterest despite fourth-quarter revenue miss

Pinterest is still on track for gains despite posting mixed fourth-quarter results, according to Goldman Sachs.

Analyst Eric Sheridan reiterated his buy rating on Pinterest after its earnings announcement on Monday. He noted that while Pinterest’s overall reported monthly active users missed estimates, it still managed to reach its highest level of engagement. The company’s long-term revenue outlook is also promising for investors, according to the analyst. 

“While overall reported MAUs missed our estimates, the company’s efforts to stimulate engagement seem to be bearing fruit with disclosure that its WAU-to-MAU ratio hit an all-time high,” Sheridan wrote in a Tuesday client note. 

The stock lost 0.9% in premarket trading Tuesday after advancing nearly 1.5% Monday ahead of the report.

CNBC Pro subscribers can read more about the buy rating here.

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Pinterest stock

U.S. trade deficit smaller than expected in December

The U.S. trade deficit came in smaller than economists expected for December.

December’s data showed the trade deficit at $67.4 billion. That’s a smaller deficit than the $68.5 billion expected by economists polled by Dow Jones.

But it still marks an increase from November’s $61 billion shortfall, according to FactSet data.

The data, which estimates the difference in transactions between the U.S. and foreign countries, is published by the Census Bureau and the U.S. Bureau of Economic Analysis.

— Alex Harring

Stocks making the biggest moves premarket

These companies are making headlines before the bell:

  • Chegg — Shares dropped 22.7% following its earnings report Monday . The company gave first-quarter and full-year revenue guidance that was below analyst expectations, according to Refinitiv. Chegg noted subscriber growth challenges and concerns related to the health of the broader economy.
  • Baidu — Shares surged more than 13% after Baidu said it would launch its own artificial intelligence chatbot that will be called “Ernie Bot” in English.
  • Bed Bath & Beyond — Shares plunged 30% after Bed Bath & Beyond announced a public offering to raise roughly $1 billion.

Read the full list here.

— Sarah Min

Goldman Sachs downgrades Tyson Foods

Goldman Sachs analyst Adam Samuelson downgraded Tyson Foods to neutral from buy and slashed his price target on the stock, following the release of lackluster earnings on Monday.

“Fundamentally, results revealed a sharp deterioration in profitability across the organization, most notably in Chicken, that undermines our confidence that the cumulative effect of recent operational and strategic changes could sustainability improve margins and earnings for the company,” Samuelson wrote in a note to clients.

— Hakyung Kim

Kashkari tells CNBC the Fed has not made enough progress yet

Minneapolis Federal Reserve President Neel Kashkari said early Tuesday that he is not lowering his rate outlook and that the central bank has not made enough progress against inflation to “declare victory.”

“We have a job to do. We know that raising rates can put a lid on inflation,” Kashkari told CNBC’s “Squawk Box.” “We need to raise rates aggressively to put a ceiling on inflation, then let monetary policy work its way through the economy.”

Kashkari warned inflation may not decline as quickly as the market is currently anticipating and that the jobs market is still too strong.

The data “tells me that so far we’re not seeing much of an imprint of our tightening to date on the labor market. There’s some evidence that it’s having some effect, but it’s pretty muted so far,” Kashkari said.

“I haven’t seen anything yet to lower my rate path, but I’m obviously keeping my eyes open and we’ll see how the data comes in,” he said.

—John Melloy, Jeff Cox

BP posts record 2022 earnings to join Big Oil profit bonanza

Oil major BP on Tuesday reported record annual profits, more than doubling last year’s total as fossil fuel prices soared following Russia’s full-scale invasion of Ukraine.

The British energy giant posted underlying replacement cost profit, used as a proxy for net profit, of $27.7 billion for 2022. That compared with $12.8 billion for the previous year.

Read the full story here.

— Sam Meredith

Goldman raises short-term market outlook, expects flat earnings growth in 2023

Goldman Sachs raised its 3-month S&P 500 target to 4,000 from 3,600, but expects its year-end forecast to stay put at 4,000. The broad index on Monday closed at 4,111.08, and it’s up about 7% this year.

“A soft landing — and in fact above-trend growth — is already priced in U.S. equities,” David Kostin, Goldman’s chief U.S. equity strategist, said in a note to clients Friday. “Valuations are elevated vs. history and will be constrained by an eventual rise in interest rates. Even avoiding recession, earnings are unlikely to grow substantially in 2023.”

Goldman noted that cyclical industries have outperformed defensives by 12 percentage points this year. Companies that are more vulnerable to economic volatility would benefit from this rotation. 

The firm also believes earnings expectations are too high, and anticipates flat earnings growth this season and just 5% growth in 2024. That’s below the 1% and 12% growth consensus estimates call for in 2023 and 2024.

Read more about Goldman’s outlook here.

— Pia Singh

Dollar rises to four-week high against euro on Monday, buoyed by U.S. jobs data

The dollar rose to four-week high against the euro Monday, propelled by last week’s U.S. jobs report raising the prospects of the Federal Reserve continuing its interest rate hikes to fight ongoing inflation.

The dollar index was up 0.7% on the day against a basket of currencies at 103.64.

The euro fell 0.6% against the dollar to $1.0724, its lowest since Jan. 9, following a 1% drop on Friday. The euro is not too far off its 10-month high of $1.1034, which it hit last week.

The yen also fell more than 1% against the U.S. dollar on Monday after the Nikkei newspaper reported that Bank of Japan Deputy Governor Masayoshi Amamiya was approached to be the next governor.

— Pia Singh

Pinterest shares fall on weak outlook, revenue miss

Pinterest shares fell 4% in extended trading after the social media company shared light guidance for the current quarter and posted a fourth-quarter revenue miss.

The company shared earnings of 29 cents a share on revenue of $877 million. Analysts had anticipated EPS of 27 cents on $886 million in revenue.

Pinterest also said it expects revenues to grow in the low single digits for the first quarter over last year, slightly below the 6.9% growth expected by analysts.

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Pinterest shares fall on revenue miss, weak guidance

— Samantha Subin, Jonathan Vanian

Skyworks Solutions, Chegg, ZoomInfo among stocks moving the most after hours

These are some of the stocks moving the most during after-hours trading.

Skyworks Solutions — The semiconductor stock gained about 3% in extended trading after announcing a $2 billion share buyback program. It came despite an earnings miss and light guidance for the current quarter.

Chegg — Chegg shares sank 21% in extended trading after sharing weaker-than-expected first-quarter and full-year revenue guidance, according to Refinitiv. The company cited economic uncertainties and subscriber growth concerns.

ZoomInfo – Shares of the software company dipped about 5.5% after the company’s revenue outlook for the first quarter and full year were lower than what analysts expected. ZoomInfo reported better-than-expected earnings and revenue, according to FactSet.

Read the full list of stocks moving in extended trading here.

— Samantha Subin

Stock futures open flat

Stock futures opened flat on Monday evening.

Futures tied to the Dow Jones Industrial Average traded 0.04%, or 12 points lower, while S&P 500 futures were flat. Nasdaq-100 futures inched 0.04% lower.

— Samantha Subin