US FINANCIAL MARKET

U.S. Stocks Waver, Oil Prices Rise – Wall Street Journal, 4/4/2022

• U.S. stocks swung between small gains and losses and oil prices rose Monday in volatile trading as investors monitored Russia’s war with Ukraine.
• The S&P 500 was less than 0.1% higher in early trading and the tech-focused Nasdaq Composite Index gained 0.8% on Monday. The Dow Jones Industrial Average slipped 0.4%. U.S. stocks edged higher Friday, buoyed by a solid employment report.
• Investors are watching whether new reports of war crimes will add to pressure on the Biden administration and European allies to tighten sanctions on Russia. Analysts say pressure on the West to ban Russian oil is gathering steam.
• The reports come amid peace talks currently under way between Kyiv and Moscow and could complicate those discussions.
• Oil prices rose amid questions about whether European nations may shift away faster from Russian energy and if Russian President Vladimir Putin will halt gas deliveries to Europe over demands for payment in rubles.
• In corporate news, Twitter shares surged more than 23% after Tesla CEO Elon Musk reported that he held a stake of 9.2% in the social-media company as of March 14.
• Mr. Musk asked his followers last month whether they believe Twitter upholds free speech, adding “The consequences of this poll will be important. Please vote carefully.”
• Shares of Starbucks fell 4.3% after the company said it is suspending billions of dollars in share repurchases, a move that interim Chief Executive Officer Howard Schultz said would free up cash to invest in cafes and employees.
• The yield on the benchmark 10-year Treasury note ticked up to 2.393% from 2.374% on Friday.
• Two-year yields, which are more sensitive to expectations of short-term interest rates, stood at 2.442%.
• Russia’s benchmark MOEX index edged up 0.2% Monday. Foreigners remain barred from selling shares, staving off an anticipated fire sale of Russian assets. The pan-continental Stoxx Europe 600 added 0.5%.
• Major indexes in Asia closed with gains. South Korea’s Kospi rose 0.7%, and Japan’s Nikkei 225 edged up almost 0.3%.
• Markets in mainland China were closed for a holiday.
• Hong Kong stocks led gains in the region. Technology stocks were among the biggest advancers, boosted by hopes that a potential compromise by China over audit inspections could help avert the eventual delisting of U.S.-listed Chinese stocks.
• The Hang Seng Tech Index gained 5.4%, while the city’s main Hang Seng Index rose 2.1%.

Tesla Deliveries Rose in Quarter Elon Musk Calls Exceptionally Difficult – Wall Street Journal, 4/4/2022

• Tesla vehicle deliveries rose in the first quarter, but missed Wall Street expectations as the company struggled with global supply-chain disruptions and a brief Covid-19 shutdown at its Shanghai factory.
• “This was an *exceptionally* difficult quarter due to supply chain interruptions & China zero Covid policy,” Tesla Chief Executive Elon Musk tweeted Saturday morning. Tesla employees and key suppliers “saved the day,” he added.
• The electric-car maker said Saturday that it delivered 310,000 vehicles globally in the first three months of the year, rising about 68% from the same period a year ago. Deliveries were roughly flat from the final quarter of 2021.
• Model S and Model X vehicle deliveries totaled 14,724.
• Tesla also delivered a combined 295,324 Model 3 sedans and Model Y compact sport-utility vehicles.
• The company doesn’t release deliveries by region. Additionally, it said it produced 305,407 vehicles.

Elon Musk Takes Surprise 9% Stake in Twitter, Sending Shares Higher – Wall Street Journal, 4/4/2022

• Elon Musk disclosed a 9% stake in Twitter, turning one of the social-media company’s most famous users into its largest shareholder.
• The surprise move sent Twitter’s stock up 23% in early Monday trading.
• In a securities filing Monday, the Tesla chief executive reported owning almost 73.5 million shares of Twitter as of March 14, representing a stake worth $2.9 billion based on Friday’s closing price.
• That gives Mr. Musk more Twitter shares than even company co-founder and former CEO Jack Dorsey.
• On March 25, Mr. Musk tweeted a poll, saying, “Free speech is essential to a functioning democracy. Do you believe Twitter rigorously adheres to this principle?”
• “The consequences of this poll will be important. Please vote carefully,” Mr. Musk added in a follow-up tweet.

Ford’s F-Series Sales Plunge Highlights Industry’s Supply Woes – Bloomberg, 4/4/2022

• Ford Motor’s sales tumbled to start the year, led by a 31% first-quarter plunge for its F-Series pickup, as it continued to struggle with the semiconductor shortage.
• The manufacturer sold 159,328 vehicles in the U.S. in March across its namesake and Lincoln brands, a 26% decline from a year ago, according to a statement Monday. For the full quarter, sales fell 17%.
• “While the global semiconductor chip shortage continues to create challenges, we saw improvement in March sales, as in-transit inventory improved 74% over February,” Andrew Frick, vice president of sales, distribution and trucks, said in the statement.
• Toyota Motor retained its spot as the No. 1 automobile seller in the U.S. for the first quarter despite a 15% decline.

Exxon signals record quarterly profit from oil and gas prices – Reuters, 4/4/2022

• Exxon Mobil on Monday said its first-quarter production results could top a seven-year quarterly record, with operating profits from pumping oil and gas of up to $9.3 billion.
• A snapshot of the largest U.S. oil company’s quarter ended March 31 showed operating profits from its oil and gas unit could jump by between $1.9 billion and $2.7 billion over the prior quarter’s $6.6 billion.
• Operating profits in refining could be up to $300 million higher, while its chemicals business could decrease by as much as $300 million compared to the previous quarter.
• Final results could be dampened by impairments to Exxon’s Russian operations.
• The company last month said it would phase out of Russia following the invasion of Ukraine.
• The oil company has $4 billion in assets at risk to potential seizure and faces a 1% to 2% hit to production and revenue from the move.

AMD to buy cloud startup Pensando for $1.9 bln in data center push – Reuters, 4/4/2022

• Chip designer Advanced Micro Devices said on Monday it would acquire cloud startup Pensando for $1.9 billion to bolster its data center products and capitalize on booming demand from cloud and enterprise sectors.
• AMD said the deal value does not include working capital and other adjustments.
• The startup makes a fully programmable processor and a software platform, which helps enterprise clients and data center customers to function more like cloud computing data centers like Amazon’s Amazon Web Services.
• The deal, which would enable AMD to add Pensando’s platform to its line of processors and graphics chips, is expected to close in the second quarter of this year.

Hertz to buy up to 65,000 electric vehicles from Polestar – Reuters, 4/4/2022

• Rental car firm Hertz Global Holdings said on Monday it would buy up to 65,000 electric vehicles over five years from Swedish EV maker Polestar, the latest move by the rental car firm to add zero-emission models.
• Hertz said Polestar cars would be available beginning this spring in Europe and later in 2022 in North America and Australia.
• The Florida-based rental car company said that it would initially order the Polestar 2 sedan.
• Hertz shares were up 1.75% in premarket trading Monday.
• Hertz in October announced its order to purchase 100,000 electric cars from Tesla, primarily the EV maker’s Model 3.

Starbucks Suspends Buybacks as Schultz Returns as CEO – Wall Street Journal, 4/4/2022

• Starbucks said it is suspending billions of dollars in share repurchases, a move that interim Chief Executive Officer Howard Schultz said would free up cash to invest in cafes and employees.
• Pausing the buyback program, which Starbucks initiated last fall, represents the best way for the company to invest in its next phase of growth, Mr. Schultz told employees in a letter coinciding with his return Monday as the coffee giant’s CEO.
• Starbucks previously halted share repurchases in 2020 after the Covid-19 pandemic hurt its business. The company told investors in October that it would make a new authorization of $20 billion in dividends and buybacks over three years.
• About two-thirds of that spending would go to share repurchases, the company said at the time. Starbucks in February issued $1.5 billion in debt for corporate purposes that included buybacks.
• The company said in February that it had repurchased 31.1 million shares of stock in its quarter ended Jan. 2, and had roughly 17.8 million shares remaining available for purchase under the current authorization.

Amazon Workers in New York Vote to Form Tech Giant’s First U.S. Union – Wall Street Journal, 4/4/2022

• Amazon.com warehouse workers in New York voted to establish the tech giant’s first union in the U.S., providing a major victory for labor activists who have long sought to bring representation to the nation’s second-largest private employer.
• Employees at the JFK8 facility, Amazon’s largest in Staten Island, voted 2,654 to 2,131 in favor of organizing, the National Labor Relations Board said Friday.
• That gave the labor group, which calls itself Amazon Labor Union, a clear majority of the total votes cast, even with several dozen challenged or voided ballots.
• More than 57% of the facility’s roughly 8,300 eligible voters cast valid ballots, according to NLRB data.
• U.S. unions broadly have been pressing to increase their ranks and secure gains for their members amid the tighter labor market of the pandemic era, seeking to reverse long-term declines in private-sector union membership.
• In 2021, a record low 6.1% of private-sector workers were members of a union, according to the Labor Department.

Oil Climbs Above $103 With EU Working on New Russia Sanctions – Bloomberg, 4/4/2022

• Oil rallied back above $100 as the European Union said it was working on new Russian sanctions, while Saudi Arabia hiked its prices for Asian buyers further into record territory.
• West Texas Intermediate added as much 4.5% to trade above $103 a barrel.
• The European Union on Monday condemned Russia for alleged atrocities by its military in several Ukrainian towns, saying it will work on additional sanctions against Moscow as a matter of urgency.
• French President Emmanuel Macron said the group will discuss possible sanctions on oil and coal while German Finance Minister Christian Lindner said all economic ties with Russia must be severed as soon as possible.

Saudi Arabia Hikes Oil Prices Further Into Record Territory – Bloomberg, 4/4/2022

• Saudi Arabia raised oil prices for customers in all regions as Russia’s invasion of Ukraine continues to reverberate through markets.
• State producer Saudi Aramco increased its Arab Light crude for next month’s shipments to Asia to $9.35 a barrel above the benchmark it uses.
• That’s a jump of $4.40 a barrel from April, when the key grade was already at a record.
• Aramco made its decision after OPEC+ on Thursday opted to continue raising output only gradually.
• The 23-nation group, led by Saudi Arabia and Russia, has resisted calls from major importers including the U.S. to accelerate production increases and bring down global fuel prices.
• The Saudi hike — likely to set the tone for other Middle Eastern producers such as Iraq and Kuwait — comes despite a spate of virus lockdowns in China, the top oil importer.