Tag Archives: Stock Market

Rise in Bankruptcy, Credit Card debt, and weakening stock market: Is the US headed for recession?

US-Bankruptcy-chart

Important Takeaways:

  • The rise of the MEGA bankruptcy: 459 US firms have filed for bankruptcy this year – the most since 2020 – and 16 had more than $1 billion in assets
  • Large-scale corporate bankruptcies are at their highest level since 2020 as elevated interest rates continue to batter businesses.
  • Economists warn large-scale bankruptcies can have devastating consequences
  • Some 459 firms filed for bankruptcy so far this year – already more than in 2021
  • Bed Bath and Beyond, trucking firm Yellow and Silicon Valley Bank among the biggest casualties
  • David’s Bridal have filed for Chapter 11 bankruptcy thanks to a perfect storm of rampant inflation, high rates and supply-chain disruptions.
  • Economists warn the rise in large-scale collapses can have devastating consequences on the economy.
  • For example, the demise of trucking firm Yellow – which reportedly had $2.15 billion in assets at its time of filing – reverberated through domestic shipping and real estate markets to Wall Street.
  • The rise in bankruptcies coupled with a weakening stock market and surge in credit card delinquencies has sparked fears the US is heading for a recession.

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Still no decision on Nation’s Debt Limit; Experts warning of Economic Crisis as soon as June 1st

Revelations 13:16-18 “Also it causes all, both small and great, both rich and poor, both free and slave, to be marked on the right hand or the forehead, so that no one can buy or sell unless he has the mark, that is, the name of the beast or the number of its name. This calls for wisdom: let the one who has understanding calculate the number of the beast, for it is the number of a man, and his number is 666.”

Important Takeaways:

  • Here’s who misses checks if the U.S. hits the debt brink in June
  • Its latest dire projection — delivered hours before President Joe Biden and congressional leaders meet at the White House — follows Treasury Secretary Janet Yellen’s warning last week that the nation could run out of money as soon as June 1, dramatically shortening the timeline for lawmakers to lift the borrowing cap even as the two parties remain deeply at odds over how.
  • While it’s far from certain how, exactly, the Treasury Department would handle a default — including whether it would prioritize certain payments or delay paying the government’s bills — the think tank noted that about $50 billion in Social Security benefits are set to go out in the first half of June, in addition to more than $20 billion in payments to Medicaid providers, $6 billion in federal salaries, $12 billion in veterans benefits and $1 billion in SNAP benefits, also known as food stamps.
  • The distress signals from government and outside forecasters have done nothing to jumpstart talks between the White House, which is insisting on a “clean” debt limit increase, and Republicans, who are demanding spending cuts in exchange for lifting the borrowing cap. The Biden administration has refused to negotiate, vowing to keep government funding on a separate track.
  • A number of Republicans aren’t feeling the pressure either, viewing Yellen’s early June projection as nothing more than a political ploy aimed at squeezing the GOP to swallow a clean debt hike. Akabas said Yellen’s warning is consistent with how the Bipartisan Policy Center is analyzing the situation, however, noting that “no risk is too small a risk to flag.”
  • Pressure from the markets is what may ultimately force action, Zandi said.
  • “I don’t think lawmakers will act until they’re pushed to act by the stock market and the bond market saying, ‘If you guys don’t, this is what’s going to happen’,” Zandi said. “There’s going to be a lot of red on the screen, a lot of 401Ks are going to be diminished and there’s going to be a lot of angry people.”

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Real Estate Crisis could rival the 2008 financial crisis

Revelations 18:9-11 “The kings of the earth who committed fornication and lived luxuriously with her will weep and lament for her, when they see the smoke of her burning, 10 standing at a distance for fear of her torment, saying, ‘Alas, alas, that great city Babylon, that mighty city! For in one hour your judgment has come.’ 11 “And the merchants of the earth will weep and mourn over her, for no one buys their merchandise anymore

Important Takeaways:

  • Investors have sharpened their focus on this sector, given regional banks’ significant share in CRE lending. Even before the banking-industry turmoil, however, CRE was facing risks from long-term trends, with remote work threatening the office sub-sector.
  • What’s more, the sector is now facing a huge “refinancing wall”: More than half of the $2.9 trillion in commercial mortgages will be up for refinancing in the next couple of years. Even if current rates stay where they are, new lending rates are likely to be 3.5 to 4.5 percentage points higher than they are for many of CRE’s existing mortgages.
  • Commercial property prices have already turned down, and Morgan Stanley analysts forecast prices could fall as much as 40%, rivaling the decline during the 2008 financial crisis. These kinds of challenges can hurt not only the real estate industry, but also entire business communities related to it.

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Bad time to retire as stock market slump wipes out $3 TRILLION in savings

Rev 6:6 NAS “And I heard something like a voice in the center of the four living creatures saying, “A quart of wheat for a denarius, and three quarts of barley for a denarius; and do not damage the oil and the wine.”

Important Takeaways:

  • Stock market’s fall has wiped out $3 trillion in retirement savings this year
  • This year’s stock slump is the most severe market downturn since March of 2020, when COVID-19 erupted
  • The selloff has erased nearly $3 trillion from U.S. retirement accounts, according to Alicia Munnell, director of the Center for Retirement Research at Boston College. By her calculations, 401(k) plan participants have lost about $1.4 trillion from their accounts since the end of 2021. People with IRAs — most of which are 401(k) rollovers — have lost $2 trillion this year.
  • “Anybody who has to retire when the market is down is in a bad position,” Munnell said

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Global equities gain, safe havens flat ahead of Fed statement

By David Randall and Lawrence Delevingne

NEW YORK/BOSTON (Reuters) – U.S. stock markets rose and perceived safe-haven assets were steady on Wednesday as investors awaited news from the U.S. Federal Reserve on monetary policy and Congress over additional government stimulus.

The Fed is expected to sound reassuringly accommodative at its policy review later in the day and perhaps open the door to a higher tolerance for inflation – something dollar bears think could squash real yields and sink the currency even further.

Investors are also focused on the U.S. Congress and White House as they clash over new measures to replace enhanced coronavirus unemployment benefits that are due to expire on Friday. U.S. President Donald Trump said on Wednesday that his administration and Democrats in Congress were still far apart in their efforts to agree on a coronavirus relief bill.

The market consensus is that a $1 trillion support package will be agreed, said David Riley, chief investment strategist at BlueBay Asset Management.

Graphic: Global assets – http://fingfx.thomsonreuters.com/gfx/rngs/COMMODITIES-ASSETS/010031B62XZ/index.html

Graphic: Global currencies vs. dollar – http://fingfx.thomsonreuters.com/gfx/rngs/GLOBAL-CURRENCIES-PERFORMANCE/0100301V041/index.html

Graphic: Emerging markets – http://fingfx.thomsonreuters.com/gfx/rngs/WORLD-ECONOMY/0100315T2M2/index.html

Graphic: MSCI All Country Wolrd Index Market Cap – http://fingfx.thomsonreuters.com/gfx/rngs/GLOBAL-MARKETS/010060TL1KC/index.html

“I think that’s a kind of bare minimum and that won’t be the last that will be needed,” he said.

MSCI’s gauge of stocks across the globe <.MIWD00000PUS> gained 0.50% following slight losses in Europe and broader declines in Asia.

In midday trading on Wall Street, the Dow Jones Industrial Average <.DJI> rose 72.13 points, or 0.27%, to 26,451.41, the S&P 500 <.SPX> gained 23.71 points, or 0.74%, to 3,242.15 and the Nasdaq Composite <.IXIC> added 93.57 points, or 0.9%, to 10,495.66.

Among U.S. stocks to gain were Starbucks Corp <SBUX.O>, which saw its business “steadily recovering,” and Advanced Micro Devices <AMD.O>, which surged after it raised its revenue forecast. Boeing <BA.N> shares fell after a bigger-than-expected loss.

Deaths from the novel coronavirus in the United States registered their biggest one-day increase since May on Tuesday, with this month’s spike in infections having forced some states to make a U-turn on reopening their economies.

Asia and Europe have also been hit by new surges in COVID-19 infections, with several countries imposing new restrictions and Britain imposing 14-day quarantines on travelers from Spain.

“Global stock markets appear to be starting to get a little wobbly as the latest earnings numbers start to paint a picture of a global economy that could start to face a challenging time in the weeks and months ahead,” wrote Michael Hewson, chief market analyst at CMC Markets UK.

Traditional safe havens were mixed. Gold paused its rally, down 0.1% at $1,957.39 an ounce.

The dollar index <=USD> fell 0.371%, with the euro <EUR=> up 0.51% to $1.1774. Benchmark U.S. Treasury 10-year notes <US10YT=RR> last rose 1/32 in price to yield 0.579%, from 0.581% late on Tuesday.

Oil prices climbed after a surprise drop in U.S. crude inventories was enough to offset concerns about U.S. fuel demand, though concerns about the record increases in COVID-19 infections kept gains in check.

U.S. crude <CLc1> rose 0.66% to $41.31 per barrel and Brent <LCOc1> was at $43.71, up 1.13% on the day.

(Reporting by David Randall and Lawrence Delevingne; Editing by Bernadette Baum and Nick Zieminski)

Wall Street hits new record high on Disney, Best Buy

Wall Street hits new record high on Disney, Best Buy
By Arjun Panchadar

(Reuters) – Wall Street’s three main indexes hit all-time highs on Tuesday, as gains for Disney and Best Buy countered weak consumer confidence data and a slump in shares of discount store operator Dollar Tree.

Walt Disney Co was the top boost to the Dow Jones with a 1.8% rise, after a report its streaming service was averaging nearly a million new subscribers a day. The stock also propped up the benchmark S&P 500.

Rising hopes of a U.S.-China trade truce, upbeat domestic economic data and a third-quarter corporate earnings season that has largely topped lowered expectations have put the market back on an upward track after a torrid summer.

Beijing said on Tuesday negotiators had reached a consensus on “resolving relevant problems”. Hours later, White House adviser Kellyanne Conway said Washington was getting “really close” to a deal, but sticking points remained.

“They keep talking about the ‘phase one’ deal being done possibly soon, but every day is sort of a ping pong back-and-forth of will they or won’t they,” said Everett Millman, precious metals expert with Gainesville Coins in Tampa, Florida.

A third interest rate cut by the Federal Reserve this year has also played a role in boosting risk appetite, and Fed Chair Jerome Powell said on Monday monetary policy was “well positioned” to support the strong labor market.

However, doubts over the strength of the U.S. consumer linger and data on Tuesday showed the Conference Board’s U.S. consumer confidence index missed analysts’ projections.

At 10:31 a.m. ET, the Dow Jones Industrial Average  was up 20.16 points, or 0.07%, at 28,086.63, while the S&P 500 <.SPX> was up 2.10 points, or 0.07%, at 3,135.74. The Nasdaq Composite was up 11.59 points, or 0.13%, at 8,644.08.

Best Buy Co Inc  jumped 7.4% as it forecast strong holiday-quarter earnings, while discount store operator Dollar Tree Inc tumbled 15% after the company projected holiday-quarter profit below expectations, signaling the fallout from the trade dispute. The stock was the biggest on the S&P and the Nasdaq.

Hewlett Packard Enterprise Co fell 7.9% as the enterprise software maker missed fourth-quarter revenue estimates.

Advancing issues outnumbered decliners by a 1.50-to-1 ratio on the NYSE and by a 1.37-to-1 ratio on the Nasdaq.

The S&P index recorded 25 new 52-week highs and no new lows, while the Nasdaq recorded 78 new highs and 35 new lows.

(Reporting by Arjun Panchadar and Manas Mishra in Bengaluru; Editing by Sriraj Kalluvila)

Wall St. drops on surprise Mexico tariff threat

Traders work on the floor of the New York Stock Exchange (NYSE) shortly after the opening bell in New York, U.S. May 31, 2019. REUTERS/Lucas Jackson

By Chuck Mikolajczak

NEW YORK (Reuters) – U.S. stocks dropped on Friday, putting the S&P 500 on track for its first monthly drop of the year after President Donald Trump’s surprise threat of tariffs on Mexico fueled fears increasing trade wars could lead to a recession.

Washington will impose a 5% tariff from June 10, which would then rise steadily to 25% until illegal immigration across the southern border was stopped, Trump tweeted late on Thursday.

Mexican President Andres Manuel Lopez Obrador responded by urging his U.S. counterpart to back down.

“Mexico would probably like to work something out but I don&rsquo;t think they even know what to work out,” said Tim Ghriskey, Chief Investment Strategist at Inverness Counsel in New York.

“It&rsquo;s impossible to handicap Trump because something can come out of left field like this and something can go away just as quickly.”

The Dow Jones Industrial Average fell 315.97 points, or 1.26%, to 24,853.91, the S&P 500 lost 33.82 points, or 1.21%, to 2,755.04 and the Nasdaq Composite dropped 97.59 points, or 1.29%, to 7,470.12.

Wall Street’s main indexes are down more than 6% in May, as investors have become increasingly worried about deteriorating trade talks between the U.S. and China trade war and have sought safety in government bonds. Technology and energy have been among the hardest hit sectors since May 3 as Trump ramped up tariff threats with Beijing.

U.S. Treasury yields fell to new multi-month lows. Benchmark 10-year yields dropped as low as 2.145 percent, the lowest since September 2017.

The yield curve, as measured in the gap between three-month and 10-year bond yields, remained deeply inverted. An inversion in the yield curve is seen by some as an indicator that a recession is likely in one to two years.

Of the 11 major S&P sectors, only defensive plays utilities and real estate were the two on the plus side while eight were showing drops of more than 1%.

U.S. carmakers and manufacturers were among the worst hit. General Motors Co dropped 4.16% and Ford Motor Co 2.67%, pushing the consumer discretionary sector 1.43% lower.

Adding to the downbeat mood was Beijing’s warning on Friday that it would unveil an unprecedented hit-list of “unreliable” foreign firms, as a slate of retaliatory tariffs on imported U.S. goods was set to kick in at midnight. Tariff-sensitive industrials declined 1.36%.

Data showed U.S. consumer prices increased by the most in 15 months in April, but a cooling in spending pointed to a slowdown in economic growth that could keep inflation pressures moderate.

The report from the Commerce Department supported the Federal Reserve’s contention that recent low inflation readings were transitory.

Among other stocks, Gap Inc tumbled 10.75%, the most among S&amp;P 500 companies, after the apparel retailer cut its 2019 profit forecast.

Constellation Brands, which has substantial brewery operations in Mexico, slid 6.50%.

Declining issues outnumbered advancing ones on the NYSE by a 2.52-to-1 ratio; on Nasdaq, a 3.20-to-1 ratio favored decliners.

The S&P 500 posted 4 new 52-week highs and 52 new lows; the Nasdaq Composite recorded 12 new highs and 210 new lows.

(Reporting by Chuck Mikolajczak; Editing by Chizu Nomiyama)

S&P 500 closes near record high as earnings season begins in earnest

FILE PHOTO: Traders work on the floor at the New York Stock Exchange (NYSE) in New York, U.S., April 9, 2019. REUTERS/Brendan McDermid/File Photo

By Stephen Culp

NEW YORK (Reuters) – U.S. stocks closed near record highs on Friday after the largest U.S. bank, JPMorgan Chase Co, soothed worries that the first-quarter earnings season would dampen Wall Street’s big rally back from last year’s slump.

The S&P 500 is now within a percent of September’s record closing high, and the S&P 500 Total Return Index, which includes reinvested dividends, in fact regained record levels, recovering ground lost after a punishing sell-off in the closing months of the year which brought the benchmark index within a rounding error of bear market territory.

Since then, the three major indexes notched their best quarterly gains in nearly a decade in the first quarter, but have spent April in a holding pattern ahead of first-quarter earnings season.

JPMorgan, effectively jump-starting the quarterly earnings reporting season that will dominate investor sentiment in coming weeks, blew past analyst estimates, easing fears that slowing economic growth could weigh on its results. Its stock rose 4.7% and led a broad rally in bank stocks.

“JPMorgan earnings are important because their operation touches on a wide portion of the economy,” said David Carter, chief investment officer at Lenox Wealth Advisors in New York. “It’s a bellwether for other corporate earnings.”

Analyst now expect S&P 500 companies to show a 2.3% year-on-year decline in earnings, slightly improved from their last reading, per Refinitiv data. But first-quarter profit is still seen logging its first annual contraction since 2016.

However, of the 29 companies in the S&amp;P 500 that have reported thus far, 79.3% have come in above analyst expectations.

Walt Disney Co jumped 11.5% to an all-time high, providing the biggest boost to the Dow and the S&P 500 after pricing its upcoming streaming service.

Streaming rival Netflix Inc slid 4.5%.

The Nasdaq and the Dow are both about 1.5% below their previous record highs.

For the week, both the S&P 500 and the Nasdaq showed their third straight gains, while the Dow posted a nominal weekly loss.

The Dow Jones Industrial Average rose 269.25 points, or 1.03%, to 26,412.3, the S&P 500 gained 19.09 points, or 0.66%, to 2,907.41 and the Nasdaq Composite added 36.81 points, or 0.46%, to 7,984.16.

Of the 11 major sectors in the S&P 500, all but healthcare ended the session in positive territory.

Financials were the largest percentage gainer, rising 1.9% on the back of JPMorgan Chase earnings.

Healthcare stocks extended their slide, with UnitedHealth Group down 5.2%, Anthem Inc dropping 8.5% and Humana Inc off 2.8%. The S&P 500 Healthcare index slipped 1.0%.

In the largest energy deal since 2016, Chevron Corp said it would buy Anadarko Petroleum Corp for $33 billion in cash and stock.

Chevron’s stock dipped by 4.9% following the announcement, while Anadarko shot up 32.0%.

Boeing Co rose 2.6% as the plane maker’s stock recovered ground following its recent sell-off.

The CBOE Volatility Index – Wall Street’s so-called “fear gauge” slipped to a fresh six-month low on Friday, in a sign investors expect the good times to keep rolling.

Advancing issues outnumbered declining ones on the NYSE by a 1.86-to-1 ratio; on Nasdaq, a 1.31-to-1 ratio favored advancers.

The S&P 500 posted 60 new 52-week highs and 3 new lows; the Nasdaq Composite recorded 95 new highs and 38 new lows.

Volume on U.S. exchanges was 6.75 billion shares, compared to the 6.97 billion average over the last 20 trading days.

(Reporting by Stephen Culp; additional reporting by Saqib Ahmed; Editing by Susan Thoma)

Fed policymakers call for caution on further U.S. rate hikes

FILE PHOTO: A police officer keeps watch in front of the U.S. Federal Reserve building in Washington, DC, U.S. on October 12, 2016. REUTERS/Kevin Lamarque/File Photo

By Jonathan Spicer and Howard Schneider

RIVERWOODS, Ill./CHATTANOOGA, Tenn. (Reuters) – Another clutch of U.S. Federal Reserve policymakers said on Wednesday they would be cautious about raising interest rates without getting better a handle on how growing risks to an otherwise solid U.S. economic outlook could play out.

After months of tumult in the stock market, presidents of four of the 12 Fed regional banks said they wanted greater clarity on the state of the economy before extending the central bank’s rate hike campaign any further.

Three of the four, Charles Evans of Chicago, Eric Rosengren of Boston, and James Bullard of St. Louis, are voting members this year on the Federal Open Market Committee, the bank’s policy-setting panel.

Bullard has long been critical of the Fed’s rate increases, begun in December 2015, but the caution from Evans and Rosengren is new, even if they both believe growth will remain solid and rates will probably need to rise more.

The fourth president, Raphael Bostic of Atlanta, said there was no urgency to raise rates further at this juncture.

The remarks from the four come less than a week after Fed Chairman Jerome Powell eased market concerns that policy makers were ignoring signs of an economic slowdown. Powell said he was aware of the risks and would be patient and flexible in policy decisions this year.

Rosengren on Wednesday used those same two adjectives, while Evans said he would be “cautious.”

The new tone comes after the U.S. stock market dropped precipitously in the fourth quarter of 2018, suffering its worst December performance since the Great Depression. Other signs of tightening financial conditions surfaced as well, including a sharp slowdown in issuance of corporate bonds.

Short-term U.S. interest-rate futures are now pricing in less than a 2 percent chance of a rate hike this year, and traders see a one-in-four chance of a rate cut by next January.

That stands in stark contrast to forecasts from the Fed released after the central bank’s fourth 2018 rate hike in December. Those forecasts called for two more rate hikes this year.

Evans has been among the most vocal backers of gradually tightening U.S. monetary policy, and after a speech in Riverwoods, Illinois, on Wednesday told reporters he still believes the Fed will need to deliver three more rate hikes this year.

But, in his first public comments since November, he nodded to an array of “tough-to-read” factors highlighted by the recent market selloff, but penciled in a forecast for reasonably good U.S. growth and employment in 2019 and beyond.

Rosengren similarly said he expects solid growth this year and said he suspects financial markets are “unduly pessimistic.” But in a break from speeches last year, when he emphasized the risks of allowing unemployment to stay below sustainable levels for too long, Rosengren on Wednesday emphasized risks that could impinge on growth, and said he was taking on board the cautionary signals from falling stock markets.

“There should be no particular bias toward raising or lowering rates until the data more clearly indicate the path for domestic and international economic growth,” Rosengren told the Boston Economic Club. “I believe we can wait for greater clarity before adjusting policy.”

Bullard, meanwhile, told the Wall Street Journal that while the Fed had “a good level of the policy rate today,” there was no rush to push them higher.

Minutes from that meeting will be released later on Wednesday and could shed more light on how policy makers assessed the economy as they agreed to raise rates and, at that time, projected two more increases in 2019..

Overall, that marked the ninth increase of a quarter percentage point since December 2015, when the Fed began lifting interest rates from near zero, where they had been since the financial crisis in 2008.

Atlanta Fed President Raphael Bostic, who earlier this week said the Fed was likely to need at most a single rate increase this year, on Wednesday elaborated on that view as driven by conversations with business executives, who say they have become more defensive in preparing for slower growth by paying down debt and holding off on new plans.

Those conversations “are not consistent with the business sector ramping up,” Bostic said in remarks prepared for delivery to the Chattanooga Area Chamber of Commerce. Bostic, who backed all four rate hikes in 2018 as an FOMC voter, does not have a policy vote on the panel this year.

(Reporting by Howard Schneider in Chattanooga and Jonathan Spicer in Chicago; with reporting by Ann Saphir in San Francisco and Trevor Hunnicutt in New York; Writing by Dan Burns; Editing by Chizu Nomiyama)

Wall Street set to open higher as post-Christmas rally continues

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., December 27, 2018. REUTERS/Eduardo Munoz

By Medha Singh

(Reuters) – Wall Street was set to open slightly higher on Friday, extending a two-day rally amid volatile trading and raising hopes that the recent selloff may have eased for now.

The three main index futures rose more than 1 percent before paring some gains.

At 8:38 a.m. ET, Dow e-minis were up 0.43 percent. S&P 500 e-minis were up 0.38 percent and Nasdaq 100 e-minis were up 0.23 percent.

The final week of 2018 has seen wild swings in equities, with the CBOE Volatility Index, Wall Street’s main fear gauge, hitting its highest level since early February before easing slightly.

The benchmark S&P 500 tested its 20-month low early in the week and was at the brink of bear market territory before the three main indexes roared back with their biggest daily surge in nearly a decade on Wednesday and a late rally the following day.

On Thursday, the S&P fell as much as 2.8 percent but closed 0.8 percent higher as markets turned around late in the session.

In a sign of optimism on trade on Friday, China opened the door to imports of rice from the United States for the first time ever in the run-up to talks between the two countries in January.

“Yesterday’s reversal suggests the market has made a temporary bottom and we could probably rally well into the new year,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.

“In spite of the government shutdown, the market seems more concerned on trade talks, which are somewhat lifting the negative sentiment.”

Stocks could swing between gains and losses due to the volatility but end-of-the-year window dressing and investors looking to buy stocks at attractive valuations should end in a positive session, Cardillo said.

Heavyweight technology names including Microsoft Corp, Apple Inc and Amazon.com  – which were among the biggest boosts to Wall Street’s rally on Thursday – rose more than 0.5 percent in premarket trading.

Of the 30 Dow components, 29 were trading higher.

The three indexes are set to end the week with gains of more than 3 percent each, snapping three straight weeks of steep losses.

Still, the indexes are down more than 9 percent for December and remain on track for their biggest annual percentage drop since 2008.

Investors head into 2019 with a list of worries ranging from U.S.-China trade tensions, rising interest rates and a cooling economy to a partial U.S. government shutdown, which is now in its sixth day.

(Reporting by Medha Singh in Bengaluru; Editing by Anil D’Silva)