Best trades on CNBC Thursday: Pros are watching Coinbase resurgence after BlackRock deal
Coinbase surged on Thursday, attracting the attention of top markets pros. Coinbase shares gained 10% to close at $88.90, lifted by news that BlackRock entered a partnership with the crypto exchange. Chatter on Reddit and possible short covering may have helped buoy shares to even greater heights, as COIN touched $116.30 during the trading day.
-Darla Mercado, Joshua Natoli
Dow slips, S&P 500 is flat, Nasdaq rises at Thursday close
Stocks wavered Thursday and closed mixed ahead of the July jobs report, due Friday.
The Dow Jones Industrial Average shed 85.68 points, or 0.26%, to 32,726.82. The S&P 500 fell 0.08% to close at 4,151.94 after hitting its highest level since June on Wednesday. The Nasdaq Composite increased 0.41% to 12,720.58, the highest close since early May.
Treasury yields edge lower ahead of jobs report
Treasury yields were lower on the day, as investors await Friday’s jobs report.
The 10-year yield hit a low of 2.52% this week, and then swiftly went to a high near 2.82%. It was trading at 2.67%, in the middle of that range Thursday afternoon. Yields move opposite price.
The yield fell sharply earlier in the week as investors worried about recession and tensions with China as House Speaker Nancy Pelosi visited Taiwan. But the yield snapped back on hawkish comments from Federal Reserve officials.
“It was one of the biggest intraday 10-year yield reversals we’ve seen in a decade,” said Greg Faranello, head of U.S. rates at AmeriVet.
He said the Bank of England soured the mood Thursday. The U.K.’s central bank raised rates by a half percentage point and said it expected a prolonged recession..
Now, the market focus is on Friday’s employment report, expected to show 258,000 non farm payrolls were added in July, according to Dow Jones. “These numbers need to keep coming in strong or the recession narrative will grow in the U.S.,” said Faranello.
Stocks mixed heading into last hour of trading
Going into the final hour of trading, U.S. stocks are mixed and fluctuating. The Dow Jones Industrial Average shed 82 points or 0.25%, while the S&P 500 was barely down 0.06%. The Nasdaq Composite held onto gains, up 0.32%.
Beyond Meat stock slips ahead of earnings
Shares of Beyond Meat fell more than 7% during intraday trading Thursday before the company’s scheduled earnings release, due after the bell.
The stock has struggled to gain this year and were most recently weighed down after McDonald’s said it had completed its U.S. test of a plant-based burger using Beyond Meat, and that the trial had lackluster results.
Beyond Meat has shed more than 44% year to date through Thursday’s close.
Gas prices fall for 50th day in a row
Gas prices have fallen every day for the last 50 days, bringing the national average for a gallon to $4.14, according to AAA.
That’s about 67 cents lower than a month ago and 90 cents lower than the June peak. Still, prices are about $1 more than they were a year ago.
Fed’s Mester reiterates call for higher interest rates to tackle inflation
Cleveland Federal Reserve President Loretta Mester reiterated her call Thursday for more interest rate hikes as the central bank looks to bring down inflation.
At an afternoon appearance in Pittsburgh, Mester said she sees the Fed’s benchmark borrowing rate increasing this year to more than 4%, compared to its current target range of 2.25%-2.5%. That’s consistent with previous estimates she’s made, and she again said she would need convincing evidence that inflation is moderating before changing her stance.
Though she also said “we’re not in recession right now,” she noted that risks are rising.
Mester’s comments are part of broadly hawkish positions staked out this week from Fed officials who see continued rate increases as a necessary for a fragile economy dealing with inflation at 40-year highs.
Traders are pricing in a 0.5 percentage point increase at the September meeting of the Federal Open Market Committee. They also expect the Fed to start cutting rates in the back half of 2023, something Mester acknowledged is possible.
GDPNow update puts third-quarter growth rate at 1.4%
The outlook for third-quarter growth has brightened just a bit.
Following a raft of economic data this week on services, trade and manufacturing, the Atlanta Federal Reserve’s GDPNow gauge indicated that growth from July to September is tracking at a 1.4% pace. That’s up 0.1 percentage point from the last update Monday, but down from the 2.1% starting point last week.
The tracker won’t be updated again until Aug. 10.
e.l.f. Beauty surges after solid earnings report
Shares of e.l.f. Beauty jumped more than 8% Thursday to a 52-week high after the company reported earnings Wednesday that beat Wall street’s estimates. The company also raised its outlook for fiscal year 2023.
This market rally has no legs, HSBC says
The market’s recent surge from the June low shouldn’t be trusted, HSBC said.
“We think this is rather wishful thinking,” Max Kettner, chief multi-asset strategist at HSBC Bank, said in a note to clients. “For this ‘buy anything’ rally to continue, we’d need to see further repricing of rate hike expectations and another sharp drop in real yields.”
CNBC Pro subscribers can read the full story here.
—Fred Imbert, Yun Li
Goldman thinks there could be another leg lower in the market
The firm’s analysts cite systemic traders who didn’t get bearish enough for the positive shift in sentiment. Goldman focuses on large institutional investors when making its determinations.
According to Goldman’s market indicators, investors haven’t reached levels of bearishness that usually indicate a true bottom.
“The ‘true’ trough of our indicator has generally occurred at levels below the 20th percentile, a level we have not actually reached YTD, which suggests there could still be room for downside moves, especially after temporary rebounds,” the analysts wrote.
They said the path from here will become more dependent on macroeconomic data.
Oil falls further
Oil prices continued to decline Thursday, with West Texas Intermediate and Brent crude prices hitting levels not seen since Russia invaded Ukraine.
WTI is near $87.78 per barrel, the lowest level since Feb. 3. So far this week, WTI has shed more than 10% and is on track for its worst weekly performance since the beginning of April.
Brent is near a session low of $93.50, its lowest since Feb. 21. It’s on track for its worst week since April 24, down nearly 15% so far week-to-date.
Coinbase volume more than doubles
Trading in Coinbase shares exploded Thursday after the company’s deal with BlackRock, the biggest asset manager in thge world, was announced.
Coinbase shares have exchanged hands 40.6 million time on the day. That’s more than double the stock’s 30-day average volume of 14.83 million, FactSet data shows.
Stocks at midday: Dow, S&P 500 slump, Nasdaq claws back losses
Stocks were mixed midday, with the Dow Jones Industrial Average and the S&P 500 down but off lows of the day. The Nasdaq Composite index erased earlier losses to trade slightly in the green, boosted by gains in internet retail stocks.
At around noon ET, the Dow Jones Industrial Average lost 75 points, or 0.23%. The S&P 500 was down 0.04%. The Nasdaq Composite was up 0.18%
Internet retail stocks lift Nasdaq
JD.com truck receiving incoming goods and preparing shipments at the Northeast China based Gu’an warehouse and distribution facility in Gu’an, Сhina.
XiXinXing | iStock Editorial | Getty Images
The Nasdaq Composite was boosted Thursday by shares of internet retail companies which surged on solid earnings reports. Mercado Libre, the top performer in the index, jumped nearly 16% after it reported earnings that beat Wall Street’s expectations.
China’s JD.com and Pinduoduo jumped about 4% each, lifted by Alibaba’s earnings.
Ceridian shares rally after earnings beat
Ceridian HCM rallied more than 9%, outperforming every other S&P 500 stock, after the payroll processing and staff monitoring company reported earnings per share that beat analyst expectations.
The company earned an adjusted 21 cents per share, topping a StreetAccount estimate of 10 cents per share. Revenue also came in above expectations. Additionally, Ceridian issued third-quarter revenue guidance that was ahead of estimates.
Thursday’s gain put the stock on track for its biggest one-day gain since December 2020.
Shake Shack plunges on earnings miss
Pedestrians walk past a Shake Shack location in New York.
Scott Mlyn | CNBC
Shake Shack shares shed more than 8% Thursday after the company reported quarterly earnings that fell short of Wall Street’s expectations for revenue but beat on earnings-per-share. The fast food chain said that a slow return to work in July weighed on results.
Energy sector weighs on S&P 500
The energy sector was the biggest laggard in the S&P 500 midday. A slump in oil prices, spurred by fears of a global recession, weighed on the sector. The Energy Select Sector SPDR Fund, which tracks the sector, shed more than 2%.
Datadog, Lucid slump after reporting earnings
Datadog fell nearly 5% after giving a conservative third-quarter revenue outlook, even though its quarterly results beat Wall Street’s expectations. Lucid Group, an automaker, shed more than 10% after cutting its production outlook for 2022 for the second time.
Restaurant Brands International jumps more than 6% after earnings beat
Alibaba shares climb 3% after earnings beat
Alibaba reported fiscal first-quarter earnings on Thursday that beat expectations, sending its stock higher.
The Chinese e-commerce giant’s U.S.-listed shares jumped as much as 6% and last traded up 3%.
Despite Alibaba beating estimates, it is the first time the company posted flat growth in its history. In the quarter, Alibaba faced a number of headwinds including a resurgence of Covid in China that led to major cities, such as the financial metropolis of Shanghai, being locked down.
— Arjun Kharpal, Yun Li
Kellogg raises guidance for 2022
Kellogg’s cold cereal products are pictured in a grocery market in New York, June 21, 2022.
Mike Segar | Reuters
Kellogg is predicting a strong year after reporting earnings that beat Wall Street estimates on Thursday. The food giant reported revenue of $3.86 billion in the second quarter, more than the StreetAccount estimate of $3.64 billion. Those results have promoted the company to raise its full-year 2022 guidance.
Specifically, Kellogg has boosted guidance for organic-based net sales growth to 7-8% from 4%, and adjusted-basis operating profit growth to 4-5% on a currency neutral basis from 1-2%. It also raised guidance for adjusted-basis earnings per share growth to 2% from 1-2% and cash flow is expected to be about $1.2 billion, up from prior guidance of $1.1 – 1.2 billion.
Shares rose more than 2% on the news.
Dow, S&P 500 slip at open
The Dow Jones Industrial Average and the S&P 500 opened lower Thursday as investors shrugged off weekly jobless claims to wait for the July nonfarm payrolls print due Friday. The Nasdaq Composite ticked up slightly, as investors rushed back into beaten up tech stocks.
U.S. oil dips below $90
West Texas Intermediate crude futures, the U.S. oil benchmark, fell below $90 per barrel on Thursday, sinking to its lowest level since February. Thursday’s decline builds on recent weakness for oil as recession fears weigh.
WTI last traded at $89.68 per barrel, for a decline of 1%. International benchmark Brent crude dipped 1.3% to $95.53 per barrel.
“A disappointing summer driving season in the US, as well as China, amid growth concerns has taken hold in the oil market,” Bart Melek, head of commodity strategy at TD Securities, said in a note Thursday.
“[T]he oil market should still find solid support as extremely elevated supply risk premia remains in the market with the world eating away at what little is left of its spare capacity,” he added.
Coinbase surges on BlackRock partnership
The Coinbase cryptocurrency exchange app pictured on the screen of an iPhone on February 12, 2018.
Chesnot | Getty Images
Shares of Coinbase jumped more than 10% in premarket trading Thursday after BlackRock announced that it would partner with the cryptocurrency exchange to offer crypto trading to top clients.
The partnership will initially focus on bitcoin, BlackRock said. BlackRock is the largest asset manager in the world.
Weekly jobless claims increase slightly to 260,000
Weekly jobless claims ticked up 6,000 to 260,000 for the week ending July 30, according to a report from the Labor Department.
Stock futures remained largely flat after the report. Investors will now be waiting for the June nonfarm payrolls report scheduled for Friday.
Tesla higher ahead of potential stock split approval
Tesla cars line up to wait for an open charging bay on July 17, 2022 in Nephi, Utah. With more electric cars on the road, lack of charging infrastructure is becoming more of a problem for EV owners.
George Frey | Getty Images
Shares of Tesla ticked up more than 1% in premarket trading Thursday ahead of a potential approval on a 3-for-1 stock split. The company officially proposed the stock split in a proxy statement filed in June. There will be a vote on the split at Tesla’s annual shareholder meeting today.
Sunrun pops after earnings
Shares of Sunrun added more than 5% during premarket trading Thursday following the company’s second-quarter results.
The residential solar installer reported $584.6 million in revenue for the three-month period. Analysts surveyed by StreetAccount were expecting $501.5 million in revenue.
Sunrun said its total customer count jumped 21% year over year to 724,177.
Eli Lilly, Paramount and Restaurant Brands move on earnings releases
Multiple companies reported quarterly earnings Thursday before the bell, sending shares moving ahead of market open.
Eli Lilly missed estimates and shed nearly 4%. Paramount Global also slumped about 4% even though it reported better-than-expected results. Restaurant Brands posted an earnings beat and ticked up about 1%.
Here’s what other stocks made moves in premarket trading.
Alibaba jumps after earnings beat
Signage for Alibaba Group Holding Ltd. covers the front facade of the New York Stock Exchange November 11, 2015.
Brendan McDermid | Reuters
Shares of Alibaba rose as much as 7% in premarket trading after the company reported earnings that beat Wall Street’s expectations.
Even though the report was ahead of estimates, it marked the first quarterly release where Alibaba showed flat growth. The company faced a number of headwinds in the quarter due to Covid and the global economy.
Bank of England announces largest interest rate hike in 27 years
The Bank of England on Thursday hiked interest rates by half of a percentage point, the sixth consecutive increase and first bump of this size since 1997, in an effort to cool off inflation.
Inflation in the U.K. is also at a 40-year high, and is poised to continue to move higher. The bank now expects that headline inflation will peak around 13% in October, meaning its rate hikes will likely continue.
Another leg down in stocks is coming, Bernstein says
Bernstein strategists led by Sarah McCarthy said they expect the market to take another leg down in the short term.
“While longer term sentiment indicators are bearish enough to take a positive view on equities with a horizon of 12 months, in the short term we think the market is likely to have another leg down as we are just at the start of the earnings downgrade cycle, and we have not yet seen meaningful outflows from equity funds,” they said in a note to clients Thursday.
Those comments come as the market enjoys a sharp rebound from the mid-June lows. Since then, the S&P 500 is up 14.25%.
Stock futures are little changed after Wednesday’s monster rally
Traders work on the floor at the New York Stock Exchange (NYSE), New York, August 3, 2022.
Andrew Kelly | Reuters
U.S. stock futures pointed to a muted open Thursday, as the market took a breather following a rally in the previous session. Futures tied to the Dow Jones Industrial Average rose less than 0.1%, along with S&P 500 and Nasdaq 100 futures.
European markets muted; big Bank of England hike expected
European stocks were muted on Thursday as uncertainty returned following gains in the previous session.
The pan-European Stoxx 600 was up 0.2% by mid-morning. Retail stocks were the standout performers, gaining 2.2%, while telecoms fell 0.5%.
The U.K.’s FTSE pulled back ahead of the Bank of England‘s monetary policy decision later on Thursday. The central bank is broadly expected to hike interest rates by 50 basis points, its largest single increase since 1995.
Alibaba’s Hong Kong shares gain 4% ahead of earnings
Alibaba is projected to post revenue of 203.19 billion yuan ($30 billion) for the June quarter, down 1.2% from a year ago, according to consensus forecasts from Refinitiv.
Alibaba has faced a number of headwinds, from a stricter regulatory environment in China to a resurgence of Covid in the world’s second-largest economy which led to lockdowns of major cities. Those factors have hit the Chinese economy, dampening ad budgets and consumer spending, which will likely to weigh on Alibaba’s June quarter results.
Still, analysts expect the company to return to growth in the coming quarters. Alibaba’s Hong Kong-listed shares were more than 4% higher ahead of earnings.
— Arjun Kharpal
Jim Cramer says charts point to a rally in gold
One kilo gold bars are pictured at the plant of gold and silver refiner and bar manufacturer Argor-Heraeus in Mendrisio, Switzerland, July 13, 2022.
Denis Balibouse | Reuters
CNBC’s Jim Cramer said now is a good time to buy gold as signs are pointing to a rally, according to analysis by commodity trader Larry Williams.
The “Mad Money” host explained Williams’ analysis by looking at the weekly action of gold from 2014 and data on small speculators’ positioning on gold from the Commodity Futures Trading Commission’s Commitments of Traders report.
Gold prices usually peak soon after small speculators get too bullish on the precious metal, and bottom out when small speculators are too bearish, according to Williams.
“The charts, as interpreted by the legendary Larry Williams, suggest that the general public’s giving up on gold en masse and he thinks that that makes it the perfect entry time to do some buying,” Cramer said.
— Abigail Ng, Krystal Hur
Here’s how to invest for yields to beat a bad year for stocks and bonds — according to the pros
Stocks are volatile, and bonds haven’t been doing better for much of this year, with U.S. investment grade bonds plummeting in 2022.
But analysts have recently been bullish on income investing as yields start to creep up again.
Here are some ways that the pros suggest investors can position their portfolios for diversification and protection against market volatility as well as seek higher yields as inflation continues to rise. Pro subscribers can read the story here.
— Weizhen Tan
Fortinet shares fall
Fortinet shares slid more than 9% in extended trading after the cybersecurity firm reported its quarterly results, which included free cash flow of $283.5 million, compared to FactSet estimates of $337.2 million. Services revenue also missed estimates.
Other cybersecurity stocks moved lower too after hours. CrowdStrike edged lower by 1% and Palo Alto Networks lost more than 1%.
— Tanaya Macheel
Walmart begins layoffs, about a week after its profit warning
Walmart has started laying off corporate employees about a week after the retail giant slashed its profit outlook and warned about a pullback in consumer discretionary spending due to inflation. The company described the layoffs as a way to “better position the company for a strong future” in a statement to CNBC. Shares inched lower by less than 1% after hours.
— Tanaya Macheel
Lucid shares tumble nearly 12%
Courtesy: Lucid Motors