US FINANCIAL MARKET

Stocks Fall as Tech Selloff Worsens – Wall Street Journal, 1/6/2022

• Technology stocks continued to fall at the open, as the prospect of interest rate rises briefly pushed Treasury yields to their highest levels since the start of the pandemic.
• All three major U.S. stock indexes sank in recent trading after whipsawing early in the session. At one point, it seemed that indexes were on track to reverse their losses. That quickly faded after a selloff in technology stocks and other sectors worsened.
• On Wednesday, the index posted its biggest daily loss since February after minutes of the Federal Reserve’s most recent meeting showed officials eyeing a faster timetable for raising rates.
• Treasury yields rose for a fourth consecutive day, reflecting investors’ conviction that the fast-spreading Omicron variant won’t stop the Fed tightening monetary policy to tame inflation.
• The yield on 10-year Treasury notes at one point rose to 1.751%, which would be its highest closing level since January 2020, before slipping back to 1.732%.
• Traders in interest-rate futures are pricing in a 71% chance that the Fed will raise its short-term target rate from its range of 0% to 0.25% by the end of its March meeting.
• That is up from about 32% a month ago, shortly after Omicron emerged, according to CME Group data.
• Bank stocks such as Bank of America and JPMorgan Chase got a boost from rising yields in Thursday trading.
• Global markets followed Wall Street lower. Tech stocks retreated in Europe, helping to pull the Stoxx Europe 600 down 1.5%. Japan’s Nikkei 225 lost 2.9% and China’s Shanghai Composite Index fell 0.3%.
• On the economic front, Labor Department data showed there were 207,000 initial jobless claims, a proxy for layoffs, last week. A tightening labor market is one factor behind the Fed’s pivot toward raising rates sooner than the central bank had previously signaled.
• Commodity markets were mixed Thursday. Brent-crude futures, the benchmark in energy markets, rose 1.5% to $82.01 a barrel after violence erupted in Kazakhstan, a major oil producer.
• Precious metals, which typically fall when interest rates rise, lost ground, with silver dropping more than 4% to $22.07 a troy ounce.

Italy Mandates Vaccines for Older People; U.S. Surge Continues – Wall Street Journal, 1/6/2022

• Italy made vaccination mandatory for older people, adopting some of the toughest vaccine requirements in the West in a bid to curb Covid-19 and Omicron’s spread, as figures from New York suggested the new variant produces fewer cases of severe disease.
• The U.S. registered 643,660 cases Wednesday, down from record levels seen at the start of the week when more than one million cases were recorded following the holiday backlog. The seven-day average of daily case reports in the country continued to climb, however, reaching 574,725 on Wednesday, up from 303,476 the previous week, according to a Wall Street Journal analysis of data from Johns Hopkins University.
• As cases rise, President Biden and his administration are preparing Americans to accept the virus as a part of daily life, in a break from when he took office a year ago pledging to rein in the pandemic.
• Hospitalizations for confirmed or suspected Covid-19 in the U.S. are up 58% over the past two weeks, at a seven-day average of 110,334 as of Wednesday, according to the U.S. Department of Health and Human Services.
• Deaths from the disease, however, have remained relatively flat for the past week in the U.S., with the seven-day average of daily reported deaths at 1,223 on Wednesday, according to JHU data.
• The Italian government issued a decree late Wednesday that allows authorities to fine anyone 50 years of age or older who remains unvaccinated after Feb. 1.
• The measures come amid a surge in Covid-19 infections, hospitalizations and deaths across Europe’s largest economies. Over the past week, new infections in Italy more than doubled to 900,000, from the previous week. Deaths increased by 17%.
• Workers who flout these rules will be suspended without pay and face a cash fine of up to €1,500, equivalent to $1,700.
• France’s National Assembly passed a bill Thursday that bars the unvaccinated from entering restaurants, cafes and many other public venues. That would roll back provisions that currently allow the unvaccinated to gain access by showing a negative test.
• Germany’s federal government is meeting with the leaders of its 16 states on Friday to discuss possible new measures to curb the spread of Omicron. The Health Minister Karl Lauterbach said new restrictions, including more social distancing, would be necessary to mitigate the new wave of the pandemic.
• The German parliament will debate later this month a possible general vaccination mandate, which would add pressure on the unvaccinated, who already must produce a negative test to use nonessential shops and public transport, as well as other services.
• A series of protests—some of them violent —against these restrictions have taken place across Germany. On Wednesday night, protesters tried to break through a police blockade in Munich, prompting officers to use batons and pepper spray to disperse them, a police spokesman said.

Walgreens Posts Higher Quarterly Profit, Raises Guidance – Wall Street Journal, 1/6/2022

• Walgreens Boots Alliance said sales and profits rose in its latest quarter, and raised its full-year forecast as demand for Covid-19 vaccines and at-home tests continued to draw customers to its stores.
• Overall, Walgreens posted sales of $33.90 billion for the fiscal first quarter, up from $31.44 billion in the same period last year.
• Analysts surveyed by FactSet expected sales of $32.88 billion.
• Demand for at-home Covid-19 tests helped drive a 24.7% increase in health and wellness sales. Overall comparable retail sales increased 10.6% compared with the year-ago period, the biggest increase in over 20 years, Walgreens said.
• Prescriptions filled rose by 6.2% in the latest quarter on a comparable basis.
• The company posted net income of $3.6 billion for the quarter, compared with a loss of $308 million in the year-ago quarter.
• That includes a $2.5 billion after-tax gain in the most recent quarter due to the valuation of the company’s previously held equity and debt investments in VillageMD and Shields, as well as a $1.2 billion charge from the company’s equity earnings in AmerisourceBergen in the year-ago period.

Bed Bath & Beyond Posts Quarterly Loss Amid Supply-Chain Disruptions – Wall Street Journal, 1/6/2022

• Sales declined substantially for the second straight quarter for Bed Bath & Beyond, the company said, amid continued supply-chain strains the home-goods retailer has faced since last summer.
• The company saw sales fall 28% year over year to $1.88 billion in the three months through November, it said Thursday.
• A year ago, its sales in the period were $2.62 billion.
• Comparable sales, a metric that adjusts for changes to store counts and divestitures, were down 7% year over year.
• Bed Bath & Beyond posted a loss of $2.78 a share, a slide from its loss of 61 cents a share a year ago.

GM to chase Ford, Rivian with a $105,000 electric Silverado pickup – Reuters, 1/6/2022

• General Motors’s $35 billion electric-vehicle strategy will face its biggest test in 2023 when it launches an electric version of its Chevrolet Silverado pickup with a six-figure price tag, more than a year after rivals Ford Motor and Rivian Automotive launched their own electric pickups.
• GM Chief Executive Mary Barra told the annual CES technology conference via video on Wednesday that the electric Silverado will launch in two stages in 2023, starting in the second quarter with a $39,900 WT work truck that will be delivered to a limited group of commercial fleets.
• In the fall of 2023, GM plans to start delivering a consumer, outdoor adventure-oriented model that will start at $105,000 – more than an electric Mercedes EQS sedan.
• By 2035, Barra said, GM plans to offer an electric heavy-duty pickup truck, which would use batteries to replace the carbon-intensive diesel engines currently favored in trucks used primarily for heavy trailer hauling. Chevrolet also plans an off-road “Trail Boss” version of the electric pickup, she said.

Conagra warns inflation will take bigger bite out of margins – Reuters, 1/6/2022

• Conagra Brands missed market expectations for quarterly profit on Thursday and warned of weaker full-year margins as the Slim Jim beef jerky maker reels under a surge in the price of raw materials and shipping costs.
• Net sales rose 2.1% to $3.06 billion in the second quarter, beating analysts’ estimates of $3.02 billion, according to Refinitiv data.
• Net income attributable to the company declined to $275.5 million, or 57 cents per share, in the quarter ended Nov. 28, from $378.9 million, or 77 cents per share, a year earlier.
• Conagra, whose shares were down 2% in premarket trading, said it expected full-year adjusted operating margin to come in around 15.5%, compared with about 16% estimated previously.
• The Duncan Hines cake mixes maker projected gross inflation to be 14% for the year, higher than its previous view of about 11%.
• Conagra also lifted its annual core sales forecast to a rise of about 3%, from its prior estimate of a 1% growth.

Rivian Plunges Below IPO Price on Mounting EV Competition – Bloomberg, 1/6/2022

• Rivian Automotive, the electric pickup maker backed by Amazon.com, fell below the $78 a share price of its November initial public offering.
• The move extends a drop from Wednesday, the biggest since mid-November, after Amazon announced a deal with Stellantis NV for an electric delivery van, a threat to Rivian, which is also working on E-vans for the e-commerce giant.
• The shares fell as much as 17% Thursday to $75.13 in New York before slightly paring the loss. They were down 13% as of 10:14 a.m.

Target holiday shopper traffic growth topped Walmart, Best Buy – Reuters, 1/6/2022

• Shopper foot traffic grew at Target during the recent holiday season compared with two years earlier, while visits to both Walmart and Best Buy stores fell overall, according to data provided exclusively to Reuters measuring shopper visits from Nov. 1 to Dec. 25.
• Shopper traffic at Target stores rose 6.2% through the holiday period compared with two years ago, pre-pandemic, according to Placer.ai, a research firm that collects anonymized location data from 30 million mobile devices across the country.
• At rivals Walmart and Best Buy, traffic declined by 0.1% and 11.5%, respectively, the data shows.
• Target store traffic increased in every part of the country except Hawaii and Washington D.C., with footfall rising nearly 24% in Vermont and Idaho, compared with 2019, according to Placer.ai.
• According to Refinitiv I/B/E/S, Target’s holiday quarter sales are expected to rise by more than a third versus 2019, while Walmart’s revenue is forecast to rise by about 7% and Best Buy sales are expected rise by about 10%.

Nike Sues Lululemon for Patent Infringement Over Mirror Fitness Technology – Wall Street Journal, 1/6/2022

• Nike filed a lawsuit alleging Lululemon Athletica’s Mirror home-fitness device and applications infringe on the sneaker company’s portfolio of patents.
• Nike says the Mirror Home Gym and apps use technology that the sneaker giant invented and patented, including a device that prompts users to exercise, monitors their heart rate and collects data on their activity, among other functions, according to the lawsuit, filed in the Southern District of New York.
• Nike said it sent a notice to the yoga pants maker on Nov. 3, citing a list of patents it owned that were allegedly being used by the Mirror device and its apps.
• A response from Lululemon’s lawyer, filed as an exhibit by Nike, said that after reviewing Nike’s letter the company didn’t believe that the Mirror or its apps were infringing on the patents.

Meme Stocks Slump to Start New Year – Wall Street Journal, 1/6/2022

• A U.S. stock market selloff is hitting shares of meme stocks particularly hard, dragging down companies that became favorites among individual investors last year.
• Shares of GameStop and AMC Entertainment have tumbled in the first trading week of 2022, losing 13% and 16%, respectively.
• It is a turnaround from 2021, when so-called retail investors banded together to send the shares soaring. GameStop and AMC, both struggling businesses when retail investors discovered them en masse last year, finished 2021 with gains of 688% and 1,183% for the year.
• GameStop and AMC aren’t alone in their losses. Other stocks popular among individual investors have slumped this week. Meme stock Bed Bath & Beyond, software company Palantir Technologies and U.S.-traded American depositary receipts for Chinese electric-vehicle maker NIO are all down nearly 6% or more