Dow climbs in early Friday action as Wall Street attempts to cap tumultuous trading week with an upswing


Stock benchmarks on Friday rose modestly higher as investors looked to close out a volatile, holiday-shortened week that has the tech-heavy Nasdaq Composite on track for its biggest weekly loss since the height of the pandemic-induced market selloff in March.

How are major benchmarks trading?

The Dow Jones Industrial Average
DJIA,
+0.19%

rose 117 points, or 0.4%, to around 27,650, while the S&P 500
SPX,
+0.07%

gained 14 points, or 0.4%, to trade at 3,353. The Nasdaq Composite Index
COMP,
-0.09%

climbed 48 points, or 0.5%, at 10,952. But all three benchmarks were trading off their intraday peak near the open, highlighting the week’s choppy action.

The Dow on Thursday fell 405.89 points, or 1.5%, to close at 27,534.58, while the S&P 500 ended with a loss of 59.77 points, or 1.8%, at 3,339.19. The Nasdaq Composite fell 221.97 points, or 2%, to finish at 10,919.59. Through Thursday, the Dow was down 2.1% for the week, while the S&P 500 was off 2.6% and the Nasdaq was 3.5% lower; markets were closed Monday for Labor Day.

What’s driving the market?

A decline in the S&P 500 index for the week would mark the benchmark’s first back-to-back weekly drop since May.

“While monetary policy is set to remain supportive for several more quarters, valuations are high across assets and volatility is resurfacing,” said Elia Lattuga, co-head of strategy research at UniCredit Bank, in a note. “The breadth of the rally is still limited and the recovery uneven—hence developments in the economic outlook and political risks represent significant threats to risk appetite.”

Stocks were unable to follow through Thursday on a Wednesday bounce that saw equities recover somewhat from a three-day, tech-led rout that pushed the Nasdaq into correction territory, falling more than 10% from its record close set last week.

Weakness on Thursday was partly tied to the inability of U.S. politicians to agree on a new coronavirus rescue package after Democrats blocked a Republican bill on the Senate floor, leaving the way forward unclear, analysts said.

Meanwhile, investors have fretted that the sharp rally that took stocks from their March pandemic lows to new all-time highs had left valuations significantly stretched for the large-cap, tech-related stocks that had led the rally this year. Among those highfliers, shares of Apple Inc.
AAPL,
-0.85%

 and Netflix Inc.
NFLX,
+1.22%

 were on track for weekly declines of more than 6%, while Facebook Inc.
FB,
-0.57%

 is off more than 5%.

In U.S. economic news, the consumer-price index for August rose 0.4% last month, beating average economists’ estimates for a rise of 0.3% but falling below the past two months at 0.6%. On a year-over-year basis, the CPI increased 1.3% after gaining 1.0% in July, the Labor Department said on Friday

Looking ahead, Federal budget figures for August are due at 2 p.m. Eastern.

Which companies are in focus?
What are other markets doing?

The yield on the 10-year Treasury note
TMUBMUSD10Y,
0.675%

 rose 0.4 basis point to 0.687%. Bond prices move inversely to yields.

The ICE U.S. Dollar Index
DXY,
-0.12%
,
which tracks the performance of the greenback against its major rivals, fell 0.1%.

Gold futures
GCZ20,
-0.08%

were off 0.3% at $1,958 an ounce, threatening to snap a three-day winning streak. The U.S. crude oil benchmark
CL.1,
-0.10%

 fell 16 cents, or 0.5%, to $37.13 a barrel.

The Stoxx Europe 600 index
SXXP,
-0.11%

 was edging 0.1% lower, while the U.K.’s benchmark FTSE
UKX,
-0.26%

rose 0.2%. In Asia, Hong Kong’s Hang Seng Index
HSI,
+0.78%

and the Shanghai Composite Index
SHCOMP,
+0.78%

 both rose 0.8%, while Japan’s Nikkei
NIK,
+0.73%

rose 0.7%.



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Investing legend known for his annual predictions says the world could be in for a big surprise — in a good way


Byron Wien


Bloomberg

Blackstone’s
BX,
-3.45%

Byron Wien has been offering up his list of potential surprises for decades now. As with even the most prescient of Wall Street pundits, he’s got plenty of misfires to go along with his hits, but CNBC’s Jim Cramer once said, “you can make a fortune” from Wien’s work.

So, in that spirit, what’s his latest take on the market?

Well, back in January, Wien was bearish on electric cars, bullish on the economy and predicted that volatility
VIX,
+3.18%

would ultimately slam the markets. Now, with his batch of calls yielding mixed results, Wien offered up a taste of what he sees in the coming months.


‘A big surprise on a global level is if there were more harmony between China and the West. The hostility between the two largest economies in the world is not good for the markets. So if there would be some reconciliation or some rapprochement between the U.S. and China that would restore normal relations, it would be interpreted favorably by the financial markets. That’s unlikely in a Trump presidency. It’s more likely, but not certain, in a Biden presidency.’

That’s how Wien responded when asked his thoughts looking forward in an interview published over the long weekend. While thawing relations between China and the U.S. might eventually provide a boost to markets, for now, it’s rough going out there.

“There’s a lot of speculation going on. That’s probably not a healthy thing,” he said, adding that he sees the economy rebounding more slowly than most expect. “The market is vulnerable.”

Wien said the common train of thought is that the economy isn’t doing as well as the financial markets, but he doesn’t see it that way.

“There really isn’t a disconnect,” he said. “Individual investors are propelling the market to new highs, and they are doing it by pushing up the prices of the internet related stocks, the stocks that are benefiting from people working at home. “

Wien also threw water on the comparisons between today and the dot-com bubble, saying he believes every market cycle to be different.

“In the late nineties, the dot-com bubble was fueled by a real breakthrough in technology, the advent of the internet. It was changing people’s lives, and that was a positive change. It just got carried to excess,” he said. “Today, this is a different thing. It’s a negative surprise: A virus that is going to change the way we live, and it’s difficult to assess the long-term implications of it.”

Wien said, from his perspective, that stocks are overpriced, but not as “outrageously” as they were back then. Hence, he doesn’t see an imminent bear market.

As for the economy, the healing could take a while, and, according to Wien, it depends on an effective vaccine, which may or may not arrive by the end of the year — a time frame that he believes the stock market is already pricing in.

“That’s a realistic assumption,” he said. “But I don’t think that people like me will get it until the end of next year. So a return to normal is a 2022 phenomenon. At best, the economy is a quarter or one third of the way back to normal.”

What’s an investors to do in the meantime?

“There is a good part of the market that’s underpriced,” he said. “Airlines, transportation and hospitality have performed poorly, and some represent good value for patient investors who can tolerate the risk as a part of their portfolio.”

Patience was needed Tuesday, as the Dow Jones Industrial Average
DJIA,
-2.24%
,
Nasdaq Composite
COMP,
-4.11%

and S&P 500
SPX,
-2.77%

were all firmly in negative territory.



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This analysis of Wall Street stock ratings is sounding a warning for Tesla and 62 other stocks


In the financial media, “Wall Street” typically means U.S. brokerage firms and often the analysts who work for them. They are known as “sell-side analysts.” They work independently of the firms’ sales teams, but there’s no question that Wall Street’s job is to sell stocks. So when you see a high level of “sell” ratings on a stock, take heed.

Tesla Inc.
TSLA,
+2.78%

is the poster child for high-flying stocks during this pandemic year. The electric-car company’s shares are up 435% this year and 891% in the past 12 months. And as the shares have shot up, many analysts have continually increased their price targets.

But not all of them have kept doing so. And now, among 37 sell-side analysts polled by FactSet, eight rate the shares the equivalent of a “buy,” while 11 rate them the equivalent of a “sell.” The shares closed at $447.37 on Sept. 2. The consensus price target among those analysts is $284.97, implying 36% downside for the shares.

Tesla is not yet included in the benchmark S&P 500 Index
SPX,
-0.81%
,
although it is expected to be added soon. It is rare for any S&P 500 stock to have majority “sell” ratings, and none do at this time. But a quick look shows 33 stocks with “sell” ratings outweighing “buy” ratings.

Expanding to the Russell 1000 Index
RUI,
-0.85%

of the largest 1,000 publicly traded companies listed in the U.S. by market capitalization (including Tesla and subject to changes when stocks plunge), there are four companies with majority “sell” ratings.

Among the Russell 1000, there are 63 companies with “sell” ratings outweighing “buy” ratings. Here they are, sorted by market capitalization:

Company

Ticker

Share ‘buy’ ratings

Share ‘sell’ ratings

Market cap. ($ millions)

Total return – 2020 through Sept. 2

Tesla Inc.

TSLA,
+2.78%
22%

30%

416,863

435%

Exxon Mobil Corp.

XOM,
-0.07%
12%

20%

165,704

-41%

Illinois Tool Works Inc.

ITW,
-0.37%
13%

22%

63,849

14%

Public Storage

PSA,
-0.37%
13%

27%

37,436

3%

Southern Copper Corp.

SCCO,
+0.81%
15%

54%

37,092

16%

Walgreens Boots Alliance Inc.

WBA,
-0.53%
5%

9%

32,209

-35%

WEC Energy Group Inc.

WEC,
+0.13%
15%

38%

30,726

8%

Paychex Inc.

PAYX,
-0.36%
10%

19%

27,988

-6%

Hormel Foods Corp.

HRL,
+0.17%
8%

23%

27,698

15%

ResMed Inc.

RMD,
-2.41%
22%

33%

26,517

19%

McCormick & Co. Inc.

MKC,
-1.05%
17%

33%

26,001

25%

Brown-Forman Corp. Class B

BF.B,
+0.97%
6%

33%

24,715

19%

Consolidated Edison Inc.

ED,
+0.88%
6%

35%

24,161

-18%

Mettler-Toledo International Inc.

MTD,
-1.42%
0%

25%

24,095

27%

Equity Residential

EQR,
+1.23%
21%

26%

21,473

-27%

Expeditors International of Washington Inc.

EXPD,
-0.84%
7%

36%

15,218

17%

Avangrid Inc.

AGR,
+0.55%
9%

36%

14,968

-3%

Tiffany & Co.

TIF,
-0.31%
0%

7%

14,854

-8%

J.M. Smucker Co.

SJM,
-0.56%
6%

17%

13,786

19%

FactSet Research Systems Inc.

FDS,
-1.97%
0%

44%

13,452

33%

Waters Corp.

WAT,
-1.39%
0%

38%

13,442

-7%

C.H. Robinson Worldwide Inc.

CHRW,
+0.29%
18%

23%

13,438

29%

Jack Henry & Associates Inc.

JKHY,
-1.52%
10%

20%

13,113

18%

Cognex Corp.

CGNX,
-5.22%
22%

28%

12,376

28%

Brown-Forman Corp. Class A

BF.A,
+0.31%
6%

35%

12,170

15%

CenturyLink Inc.

CTL,
-0.09%
13%

44%

11,985

-11%

Ubiquiti Inc.

UI,
+0.13%
25%

75%

11,942

0%

Omnicom Group Inc

OMC,
-0.38%
25%

33%

11,588

-32%

Occidental Petroleum Corp.

OXY,
-2.70%
12%

19%

11,534

-68%

Lennox International Inc.

LII,
-0.42%
12%

29%

11,009

19%

Franklin Resources Inc.

BEN,
-1.02%
0%

43%

10,784

-14%

Carnival Corp.

CCL,
+5.40%
5%

20%

10,037

-67%

Western Union Co.

WU,
-0.86%
10%

29%

9,852

-9%

Allegion PLC

ALLE,
-0.74%
0%

9%

9,666

-15%

CNA Financial Corp.

CNA,
-0.34%
0%

25%

8,766

-22%

Watsco Inc.

WSO,
-0.95%
11%

22%

8,161

42%

Beyond Meat Inc.

BYND,
-3.06%
22%

30%

8,099

72%

Gap Inc.

GPS,
-0.90%
13%

17%

6,870

5%

Vornado Realty Trust

VNO,
+1.46%
15%

23%

6,830

-44%

Credit Acceptance Corp.

CACC,
+0.42%
0%

33%

6,807

-13%

American Airlines Group Inc.

AAL,
+1.87%
20%

45%

6,728

-54%

Grubhub Inc.

GRUB,
-0.77%
0%

4%

6,629

48%

Commerce Bancshares Inc.

CBSH,
+1.86%
0%

40%

6,599

-12%

Continental Resources Inc.

CLR,
-1.81%
10%

16%

5,992

-52%

Comerica Inc.

CMA,
+2.54%
19%

23%

5,587

-42%

Invesco Ltd.

IVZ,
+2.24%
11%

28%

4,881

-38%

Cullen/Frost Bankers Inc.

CFR,
+2.79%
20%

47%

4,403

-26%

Rayonier Inc.

RYN,
-2.17%
14%

29%

4,109

-6%

Xerox Holdings Corp.

XRX,
+1.52%
13%

25%

3,992

-48%

Unum Group

UNM,
+8.21%
9%

18%

3,802

-33%

Hawaiian Electric Industries Inc.

HE,
+0.20%
0%

67%

3,750

-25%

Antero Midstream Corp.

AM,
-1.63%
11%

22%

2,979

-2%

Brighthouse Financial Inc.

BHF,
+6.15%
9%

27%

2,865

-21%

Teradata Corp.

TDC,
-0.70%
14%

21%

2,611

-11%

Mercury General Corp.

MCY,
+0.17%
0%

50%

2,526

-3%

Trinity Industries Inc.

TRN,
+1.79%
17%

33%

2,469

-3%

Nordstrom Inc.

JWN,
+2.77%
14%

18%

2,448

-61%

Taubman Centers Inc.

TCO,
+1.24%
0%

11%

2,357

25%

Park Hotels & Resorts Inc.

PK,
+6.64%
7%

36%

2,300

-60%

Sabre Corp.

SABR,
+2.98%
22%

33%

2,253

-67%

First Hawaiian Inc.

FHB,
+1.12%
25%

50%

2,133

-41%

Associated Banc-Corp

ASB,
+2.79%
0%

10%

2,096

-36%

Chesapeake Energy Corp.

CHKAQ,
+2.36%
0%

100%

46

-97%

Source: FactSet



Original source link

Asian markets mixed as China export data offsets impact of Wall Street’s retreat


Asian markets were mixed in early trading Monday, following a sharp selloff on Wall Street last week.

Japan’s Nikkei 225
NIK,
-0.33%

dipped 0.3% while Hong Kong’s Hang Seng index
HSI,
+0.05%

gained 0.1%. The Shanghai Composite
SHCOMP,
-0.15%

declined 0.2% while the smaller-cap Shenzhen Composite
399106,
-0.25%

retreated 0.2%. South Korea’s Kospi
180721,
+0.76%

rose 0.7%, while benchmark indexes in Taiwan
Y9999,
-0.14%

, Singapore
STI,
+0.11%

and Indonesia
JAKIDX,
-0.13%

were mixed. Australia’s S&P/ASX 200
XJO,
+0.14%

were little changed.

Stocks in Hong Kong and mainland China improved after the release of data that showed China’s August exports were stronger than expected from the prior year, after another strong increase in July.

Shares of Chinese chip maker Semiconductor Manufacturing International Corp.
981,
-19.74%

tumbled about 20% in Hong Kong trading after a Wall Street Journal report that the Trump administration is considering placing export restrictions against it, as it has with fellow chip maker Huawei Technologies.

U.S. markets are closed Monday for the Labor Day holiday. Last week, the tech-heavy Nasdaq Composite
COMP,
-1.26%

saw a 3.3% weekly decline, its largest since March, while the Dow Jones Industrial Average
DJIA,
-0.56%

fell 1.8% and the S&P 500
SPX,
-0.81%

lost 2.3%.

“We view the latest selloff as a bout of profit-taking after a strong run,” said Mark Haefele, chief investment officer at UBS Global Wealth Management, in a note Friday.

“Stocks have had a nervy start to trading Monday after the massive two-day slide for global equities since June left investors on edge,” Stephen Innes, chief global markets strategist at AxiCorp, wrote in a note Monday. “In the short-term, more so with U.S. markets closed today, it should remain an extremely choppy affair, with bounces likely being sold by design.”

In energy trading, U.S. benchmark crude
CLV20,
-1.30%

fell to $39.34 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude
BRNX20,
-1.10%

, the international standard, slipped to $42.30 a barrel.

The dollar
USDJPY,
+0.01%

inched up to 106.29 Japanese yen from 106.24 yen Friday.



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S&P 500 adds three companies not named Tesla, sending car company’s shares down


Three new names will be added to the S&P 500 index this month, but none of them are Tesla Inc.

S&P Dow Jones Indices announced Friday afternoon that it will add three companies to the S&P 500
SPX,
-0.81%

— Catalent Inc.
CTLT,
-2.83%

, Etsy Inc.
ETSY,
-3.58%

and Teradyne Inc.
TER,
-4.06%

Tesla Inc.
TSLA,
+2.78%

was thought to be in line for the addition after announcing a fourth consecutive quarter of profitability, a requirement of the index, which many observers cited as a reason for a gigantic increase in the electric-car company’s stock in recent weeks.

“S&P 500 inclusion now likely a done deal,” Wedbush analyst Dan Ives said after Tesla reported a profitable quarter in July.

“This was a bit of a shocker and the Street assumed this was a foregone conclusion,” Ives said in an email to MarketWatch on Friday afternoon. “Tesla not getting into the S&P 500 club is a head scratcher and the stock will likely be down for the indexing implications.”

Tesla stock has added more than 31% since announcing second-quarter earnings on the afternoon of July 22, though that performance has declined this week — at the end of Monday’s trading session, the stock had gained 56% since earnings. Shares have suffered this week in the wake of a stock split, the announcement of a plan to sell up to $5 billion in fresh shares, and insider selling. Overall, the electric-car company’s shares have still quintupled this year, pushing its market capitalization to $380 billion as of Friday’s closing bell.

Three previous members of the S&P Midcap 400 will move up to the larger index instead, replacing three other companies that moved down to the midcap index, H&R Block Inc.
HRB,
+0.73%

, Coty Inc.
COTY,
+6.31%

and Kohl’s Corp.
KSS,
+2.44%

The changes will take effect before the open of trading on Sept. 21.

Tesla stock fell more than 5% in after-hours trading following the announcement. Catalent shares rose nearly 3%, Etsy shares added more than 5%, and Teradyne stock increased more than 2%.



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