US FINANCIAL MARKET

Stocks Surge, Oil Falls, Extending Volatility Amid Ukraine War – Wall Street Journal, 3/9/2022

• U.S. stocks jumped and oil prices dropped Wednesday, extending a volatile spell as investors track the economic fallout of the war in Ukraine.
• The S&P 500 rose 2.2%, while the technology-focused Nasdaq Composite Index added 2.7%. The Dow Jones Industrial Average advanced 607 points, or 1.9%. All three indexes are poised to break a four-session losing streak.
• A surge in oil prices, given new momentum by the U.S. embargo on Russian energy, has raised concerns that sustained inflation and lower economic growth could collide.
• Major central banks were on track to begin tightening monetary policy before Russia invaded Ukraine.
• The European Central Bank is meeting Thursday.
• Federal Reserve Chairman Jerome Powell said last week that he planned to propose a quarter percentage-point rate increase at the central bank’s meeting this month.
• Brent-crude futures, the international benchmark, declined 5.6% to $120.86 a barrel, reversing gains from earlier in the session.
• The U.S. has banned imports of Russian oil and gas, while Russian President Vladimir Putin has issued a decree banning exports of unspecified commodities and raw materials.
• Gold prices, another asset that investors perceive as safer, lost 2.3%. Trading in the nickel market was suspended for another day, following violent moves Tuesday that sent the metal surging to briefly top the $100,000-a-ton mark for the first time.
• Overseas, the pan-continental Stoxx Europe 600 jumped 3.5%. Russia’s stock market remained closed, though its currency trading was open.
• In the offshore market, the ruble edged slightly lower in volatile trading to around 128 rubles to the dollar.
• Pricing of Russia’s currency has been choppy since the country imposed measures to stem its selloff, and Western banks have shunned Russian assets.
• In Asia, stocks largely fell, tracking Wall Street’s Tuesday session. Japan’s Nikkei 225 lost 0.3%, while Hong Kong’s Hang Seng Index fell 0.7%. The Shanghai Composite dropped 1.1%.

Fidelity Investments Posts Record Revenue on Stock Market Rally – Wall Street Journal, 3/9/2022

• Fidelity Investments said operating profit jumped 13% last year as an individual-investing boom and the stock market rally lifted the money-management giant’s revenue to a record.
• FMR LLC, Fidelity’s parent company, posted an operating profit of $8.1 billion, up from $7.2 billion in 2020, the firm said Wednesday in its annual shareholder update.
• Revenue climbed 15% to $24 billion.
• Assets under administration, or what is in Fidelity accounts as well as Fidelity funds held by rivals’ clients, rose 20% to $11.78 trillion in 2021. The firm’s assets under management, or the amount overseen by Fidelity’s funds, totaled $4.48 trillion, up from $3.8 trillion a year earlier.
• Net inflows into Fidelity funds totaled $191 billion, with new client money outpacing withdrawals in managed accounts as well as index and multiasset products.
• The firm ended 2021 with 32.4 million retail-client accounts, a 22% increase from a year earlier.

MongoDB’s Stock Is Climbing. Earnings and Guidance Impressed – Barron, 3/9/2022

• Shares of  MongoDB  surged following better-than-expected results and an upbeat outlook from the database software provider.
• MongoDB adjusted fourth-quarter loss per share was 9 cents, narrower than the consensus loss of 22 cents among analysts tracked by FactSet.
• Revenue for the quarter, which ended in January, was $266.5 million and higher than the $243.4 million forecast.
• The success was driven by the company’s cloud-based service offering called Atlas, CEO Dev Ittycheria said.
• Atlas revenue accelerated by 85% to $155 million in the quarter and represents 58% of the group’s total revenue.
• For the full year the company reported revenue of $873.8 million, higher than the management forecast and analysts’ call of $851.1 million.
• MongoDB on Tuesday gave a fiscal 2023 revenue guidance of $1.151 billion to $1.18 billion, higher than analysts forecast of $1.145 billion.

Campbell Soup Sales Fall On Labor, Supply Constraints – Wall Street Journal, 3/9/2022

• Campbell Soup posted lower quarterly sales as a pandemic-driven surge in demand for its packaged foods faded, and labor and supply constraints weighed on operations and profitability.
• The company behind namesake soups and snacking products like Goldfish crackers and SpaghettiOs on Wednesday posted $2.21 billion in sales for its fiscal second quarter ended Jan. 30, down 3% from a year earlier.
• Analysts surveyed by FactSet were expecting $2.24 billion.
• Higher cost inflation as well as other factors led to a 19% drop in operating earnings in the meals-and-beverages business.
• That decrease in earnings was partially offset by raising prices, the company said. Still, overall gross margin decreased to 30.3% from 34.4% due to inflation, supply-chain challenges and unfavorable volume mix, the company said.
• The company posted quarterly net income attributable to the company of $212 million, compared with $245 million a year earlier. Earnings were 70 cents a share, compared with 81 cents a share in the year-ago period.

Bumble Stock Surges on Earnings. The Relief Rally Is On. – Barron’s, 3/9/2022

• Bumble shares surged in late trading Tuesday after the online dating company announced fourth-quarter results.
• For the fourth quarter, Bumble reported a net loss of 8 cents per share on revenue of $208.2 million. Analysts polled by FactSet were forecasting a net loss of 2 cents a share and revenue of $209.6 million.
• Total paying users rose 10.6% from a year ago, to 3 million, while total average revenue per paying user was up $2.81 to $22.83.
• The company said revenue from Russia, Ukraine, and Belarus was about 2.8% of Bumble’s 2021 revenue, which mostly came from its Badoo App and Other revenue segment, which hit $57.7 million in revenue during the quarter, down from $59.8 million the during the same quarter a year ago. Bumble App revenue jumped 42.2% to $150.5 million.
• For the first quarter, the firm expects revenue between $207 million and $210 million. That assumes about $2 million of lost revenue due to the conflict in Ukraine and the firm’s decision to pull its app from Russia and Belarus.
• For the full fiscal year, the firm expects revenue between $934 million and $944 million. Consensus analyst expectations were for $939.1 million, according to FactSet.

Stitch Fix shares plummet after company cuts guidance for the year – CNBC, 3/9/2022

• Stitch Fix shares tumbled in extended trading Tuesday after the online styling service offered a weak outlook for its fiscal third quarter and slashed its forecast for the full year, as it struggles to grow its subscriber base.
• Stitch Fix shares shed more than 17% in extended trading, having already tumbled 41% this year as of Tuesday’s market close.
• Revenue grew to $516.7 million from $504.1 million a year earlier, beating estimates of $514.8 million.
• The company counted active clients of a little more than 4 million, an increase of 4% from the year-ago period.
• Revenue per client came in $549 during the period.
• Stitch Fix reported a net loss of $30.9 million, or 28 cents per share, compared with a loss of $21 million, or 20 cents a share, a year earlier. That was exactly in line with analysts’ estimates for the quarter.
• For its third quarter, Stitch Fix expects net revenue to be between $485 million and $500 million, which would represent a decline of 10% to 7% from the prior year. Analysts had been looking for sales of $560.5 million.
• For its fiscal year, which ends July 30, Stitch Fix sees revenue flat to slightly down year over year, assuming that the number of active clients is flat through the end of the 12-month period. Analysts had expected revenue to be up 8.1% for the year.

Frackers Say Bottlenecks Slow Them From Ramping Up as Oil Prices Soar – Wall Street Journal, 3/9/2022

• American shale drillers say there are limits to how much and how quickly they can boost shaky oil supplies following Russia’s invasion of Ukraine, cautioning that supply-chain issues, investors wary of overspending, thinning inventories and other problems constrict growth.
• Leaders of the fracking companies that helped make the U.S. the world’s top oil producer say they are responding to calls by the Biden administration and others to increase production after oil prices this week topped $130 a barrel and gasoline prices surged, threatening to dent the broader economy.
• But the executives say that some investors, who felt burned after shale drillers gave priority to expansion over profits last decade and lost billions, are still concerned that the companies might spend too much if they return to rapid growth.
• They also say that a flight of capital from the fossil-fuel industry in recent years has left U.S. oil patches without enough fracking equipment to bring a ton of new wells online, and that a resurgence of go-go drilling would deplete companies’ most valuable drilling locations.
• U.S. oil production ended last year at about 11.6 million barrels a day, according to the Energy Information Administration.
• Many analysts and executives are projecting output will rise by between 500,000 to 1 million barrels a day this year, representing a smaller increase, on a percentage basis, than in years before the pandemic.

Amazon Flagged to Justice Department for Possible Criminal Obstruction of Congress – Wall Street Journal, 3/9/2022

• A U.S. congressional committee is asking the Justice Department to investigate Amazon.com and some of its executives for what lawmakers say is potentially criminal obstruction of Congress, according to people familiar with the matter and a letter containing the request.
• The letter, dated March 9 and viewed by The Wall Street Journal, was sent to U.S. Attorney General Merrick Garland by Democratic and Republican members of the House Judiciary Committee.
• The letter accuses the Seattle-based tech giant of refusing to provide information that lawmakers sought as part of an investigation by the body’s Antitrust Subcommittee into Amazon’s competitive practices.
• The letter alleges that the refusal was an attempt to cover up what it calls a lie that the company told lawmakers about its treatment of outside sellers on its platform.
• Throughout the investigation, “Amazon repeatedly endeavored to thwart the Committee’s efforts to uncover the truth about Amazon’s business practices,” the congressional letter says. “For this, it must be held accountable.” The letter says it is alerting the Justice Department to “potentially criminal conduct by Amazon and certain of its executives,” though it doesn’t specify which individuals.

Amazon to secure unconditional EU approval for $8.5 bln MGM buy – sources – Reuters, 3/9/2022

• Amazon is expected to win unconditional EU antitrust approval for its $8.5 billion buy of U.S. movie studio MGM, people familiar with the matter said, a move that is set to ramp up competition with streaming rivals Netflix and Disney+.
• Announced in May last year, the deal would also strengthen Amazon’s video streaming service, drawing people to subscribe to Amazon Prime, which offers fast shipping and encourages consumers to shop more regularly.
• The MGM acquisition would give the world’s largest online retailer rights to James Bond, one of the most lucrative franchises in film history that’s earned nearly $7 billion at the box office globally, according to MGM.
• The Federal Trade Commission is nearing a mid-March deadline to decide on the deal, according to a source familiar with the matter.

McDonald’s says Russia store closures to cost $50 million per month – Reuters, 3/9/2022

• McDonald’s said on Wednesday that the temporary closure of its 847 stores in Russia will cost the fast-food chain about $50 million a month.
• McDonald’s, an icon of the post-Soviet era, runs 84% of its Russian locations itself and said it will continue paying all of its 62,000 staff and restaurant employees there.
• Other costs will come from sites it leases and supply chain operations, Chief Financial Officer Kevin Ozan said during a UBS conference on Wednesday.
• Seven other fast-food brands with more than 2,600 outlets combined in Russia could also take a financial hit from any decisions to pull out, even though nearly all of those restaurants are owned and operated by independent franchisees.

European Fertilizer Output Cuts Pose Risks for Food Prices – Bloomberg, 3/9/2022

• European fertilizer makers, including Yara International and Borealis, are cutting output because of surging natural gas prices, adding to the growing risks for global food inflation.
• Russia’s invasion of Ukraine has roiled commodities markets and propelled natural gas — the feedstock of nitrogen fertilizers — to record levels. That’s forcing producers to curb ammonia output, pushing up farm input costs and adding to the risks of a worldwide food shock.
• Yara is temporarily curtailing production at Ferrara in Italy and Le Havre in France, the Oslo-based company said on Wednesday. Output of ammonia and urea at its European facilities will be just 45% of capacity by the end of this week.
• The two plants produce 1 million tons of ammonia and 900,000 tons a year of urea between them.
• Natural gas is used as a feedstock for nitrogen fertilizers, usually accounting for around 80% of a manufacturer’s costs.
• European gas futures are now about 10 times higher than a year ago.
• Borealis, another European fertilizer producer, is reducing its ammonia production capacity because of surging gas prices.
• It’s also considering stopping output for “economical reasons.”
• In Northern Italy, several steel mills have also announced stops to production, with the intention of resuming activities once prices go down. About 1,500 staff could be placed on temporary furloughs, according to the Corriere del Veneto newspaper.

Food crisis grows as spiraling prices spark export bans – Reuters, 3/9/2022

• A global food crisis sparked by Russia’s invasion of Ukraine escalated on Wednesday as Indonesia tightened curbs on palm oil exports, adding to a growing list of key producing countries seeking to keep vital food supplies within their borders.
• The conflict in Ukraine is threatening global grain production, the supply of edible oils and fertilizer exports, sending basic commodity prices rocketing and mirroring the crisis in energy markets.
• Ukraine announced on Wednesday it had banned a wide range of agricultural exports including barley, sugar and meat until the end of the year.
• Russia and Ukraine are both major producers of sunflower oil and the two countries account for almost 80% of global exports, leaving customers such as India scrambling to secure supplies of alternatives such as palm oil and soyoil.
• Serbia announced on Wednesday it will ban exports of wheat, corn, flour and cooking oil as of Thursday to counter price increases while Hungary banned all grain exports last week.
• Bulgaria has also announced it will increase its grain reserves and might restrict exports until it has carried out planned purchases.
• Grain supplies in Romania, a major exporter, have also tightened as international buyers seek alternatives to Russia or Ukrainian supplies although there are currently no plans to restrict shipments.

Hundreds of Ships Trapped by Ukraine War, Endangering Sailors and Global Trade – Wall Street Journal, 3/9/2022

• The war in Ukraine has severely hobbled shipping in the Black Sea, with broad consequences for international transport and global supply chains. Dozens of cargo ships are stranded at the Ukrainian port of Mykolaiv, shipping trackers said. An estimated 3,500 sailors have been stuck on some 200 ships at Ukrainian ports, according to London-based shipping tracker Windward Ltd. More ships are stranded around the globe than at any point since World War II, maritime historians said.
• Making matters worse for global shippers, thousands of Ukrainian and Russian seafarers are stuck in ports around the world, leaving shipowners scrambling to find replacement crews to keep strained supply chains rolling.
• The result is a shutdown of the world’s second-largest grain exporting region. Ukraine accounts for 16% of global corn exports, and together with Russia, 30% of wheat exports. Global wheat prices have jumped more than 55% since the week before the invasion.
• Poorer countries that depend on imports could see supply shocks. Authorities are bracing for price spikes in Egypt, Turkey and Syria. Egypt imports 85% of its wheat from Ukraine and Russia.