(Reuters) – JPMorgan Chief Economic Officer Jeremy Barnum told investors the lender is “absolutely open for business enterprise” in leveraged lending even as other U.S. banking companies are envisioned to reserve considerable losses on dangerous loans underwritten past yr.
“Terms are better, pricing is greater, we have the resources needed,” Barnum mentioned on a convention call with analysts. “We’re completely there. No overhang and no issue.”
Barnum’s reviews occur soon after numerous U.S. financial institutions minimize back on lending to lower-top quality corporate debtors past 12 months, as Wall Street’s need for leveraged financial loans plunged as the Federal Reserve raised curiosity charges to tame inflation.
Immediately after important losses on credit card debt profits final year, which includes a $700 million reduction on an $8.5 billion financial debt package funding the buyout of application maker Citrix Systems Inc, major banks have mostly selected due to the fact then to take up debt they had underwritten earlier in the year.
Some $35 billion to $50 billion of this kind of financial loans are caught on banks’ guides as they await a greater industry atmosphere, bankers advised Reuters previously.
Past summer, Lender of The united states jointly led a group of banks to deliver $13 billion in financial loans and bonds to Elon Musk for his acquisition of social media big Twitter. The banking companies have due to the fact struggled to get the personal debt off their textbooks at a fair cost, in its place selecting to keep the financial debt.
When requested whether these trapped bargains would constrain lending exercise by big banks like JPMorgan, which has been a lot less active than its peers, Barnum explained the overhang is already mirrored in selling prices and banking companies are capable to soak up losses on current deals.
“There’s a little bit of a narrative that exercise in the market place needs to prevail over an overhang,” Barnum explained. “We’re not confident that that’s real.”
Banking institutions have to however mark to marketplace the Twitter credit card debt and other specials to their market place value on their textbooks, environment aside cash for losses that are claimed in quarterly outcomes. The correct volume remains to be viewed, as the financial institutions decide how substantially to generate it down based on sector checks and judgment.
Lender of America Corp’s Main Monetary Officer Alastair Borthwick explained organization accounts for leveraged loans in its outcomes, with out providing details on any significant bargains.
“We mark our positions just about every 7 days,” and textbooks revenue or losses through its investment banking and investing arms, Borthwick claimed. “It’s all in there, our final results reflect any marks in any offered quarter and we observe the procedure as we do every time.”
(Reporting by Matt Tracy modifying by Lananh Nguyen)
NEW YORK, Dec 13 (Reuters) – Some of the banking institutions that lent Elon Musk $13 billion to purchase Twitter are getting ready to e-book losses on the financial loans this quarter, but they are most likely to do so in a way that it does not become a major drag on their earnings, according to three sources with direct understanding of the problem.
Banks normally offer these types of loans to investors at the time of the offer. But Twitter’s lenders, led by Morgan Stanley (MS.N), could facial area billions of pounds in losses if they tried using to do so now, as traders shy absent from buying risky personal debt throughout a interval of economic uncertainty, marketplace contributors claimed. In addition, Twitter has observed advertisers flee amid concerns about Musk’s approach to policing tweets, hitting revenues and its means to pay out the curiosity on the credit card debt.
Banks nonetheless have to mark the mortgage to its market place value on their guides and set apart money for losses that are described in quarterly final results. In the absence of a rate decided by genuine profits of the financial debt, even so, just about every lender can decide how a lot to publish it down dependent on its market checks and judgment, in accordance to the 3 resources who are common with the approach of determining the worth of these types of loans.
The largest chunk of the credit card debt — $10 billion really worth of financial loans secured by Twitter’s belongings — might have to be created down by as considerably as 20{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}, a single of the sources said. The strike on the bank loan, distributed among the seven financial institutions, could in all probability be managed by most of the firms without developing a substantial strike to income, the supply included.
An additional a single of the three sources with direct knowledge of the make any difference estimated that some banking institutions may possibly only consider a 5{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} to 10{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} writedown on the secured portion of the personal loan.
The deliberations of how some of these financial institutions are wondering about accounting for these losses have not been beforehand noted. They appear as Wall Road banking companies are bracing for reduce fourth-quarter earnings thanks to a slump in investment banking earnings and a rise in financial loan-decline reserves amid a weakening world financial state.
Three banking industry sources said the remaining $3 billion, which is unsecured, could lead to steeper losses for the 7 Twitter banking institutions. Reuters could not decide how considerably the banking institutions ended up setting up to compose down the unsecured portion of the financial debt.
The loan providers have considered changing the unsecured section of the debt with a bank loan to Musk backed by his shares of Tesla Inc (TSLA.O), the electrical carmaker, a person of the resources common with the talks mentioned. Musk, having said that, has stated it is very best to prevent this kind of financial loans in the recent macroeconomic natural environment. Bloomberg beforehand reported the margin mortgage risk.
Moreover Morgan Stanley, the syndicate incorporates Lender of America Corp , Barclays Plc , Mitsubishi UFJ Economic Group Inc (8306.T), BNP Paribas SA (BNPP.PA), Mizuho Money Group Inc (8411.T) and Societe Generale SA (SOGN.PA).
SocGen, Musk and representatives for Twitter did not answer to emailed requests for comment. Associates from the other banking companies declined to comment.
ACCOUNTING Versatility
Less than accounting specifications, the banks must mark the financial loan to its industry benefit when some of them report earnings for the fourth quarter in January, a number of bankers and accountants stated.
But with sector activity coming to a standstill, the financial institutions have a fair amount of money of versatility on how to benefit them, which suggests each and every one particular could benefit them in a different way. They also have leeway on how to report any generate downs and the time they just take to offer the financial debt. Leveraged loan offers just after the 2008 economical disaster took decades to apparent.
Every single financial institution would make market place checks with two or a few prospective prospective buyers to get there at a benefit of the financial loans, which an auditor would have to concur with, just one of the three sources said.
The man or woman, who is common with the wondering of one particular of the banking companies in the lending syndicate, extra that some creditors are possible to take a scaled-down hit originally and write it down more than time if valuations continue to keep having even worse.
Projected losses could also be divided in between expenditure banking and trading divisions, producing it modest adequate that it would not have to be disclosed independently, a person of the resources stated. Any writedowns would most likely be damaged into chunks and spread in excess of several months, decreasing the strike to earnings in any just one quarter, two of the sources with immediate understanding of the make any difference mentioned.
Some market contributors be expecting the losses from the financial debt to be major except if market situations improve. Two of the banking field sources mentioned if the banking companies tried using to provide the loans now, they would not get far more than 60 cents to the greenback on the secured bond and an even lower price tag on the unsecured part. That would increase up to billions of pounds in losses for the syndicate as a total.
In September, Wall Avenue lenders led by Lender of The united states endured a $700 million decline on the sale of about $4.55 billion in debt backing the leveraged buyout of business enterprise software package firm Citrix Units Inc.
Some $35 billion to $40 billion of this kind of financial loans are caught on banks’ publications, in accordance to two set earnings bankers.
Twitter’s bankers, on the other hand, are much more sanguine. “I would not bet in opposition to Elon Musk,” Morgan Stanley Main Government James Gorman mentioned in an job interview at Reuters Up coming before this thirty day period. “We really don’t get guiding that form of company and that sort of opportunity except we think it is authentic.”
Reporting by Lananh Nguyen, Saeed Azhar and Shankar Ramakrishnan in New York, further reporting from Matt Tracy, and Abigail Summerville editing by Paritosh Bansal and Claudia Parsons
Stocks added to Thursday’s losses as jitters over a swift tightening of financial conditions increased on the heels of a multi-decade high print on inflation. Fresh geopolitical concerns between Russia and Ukraine further weighed on stocks and sent oil prices soaring to a fresh seven-year high.
The S&P 500, Dow and Nasdaq fell during a choppy session Friday. Stocks sank to session lows Friday afternoon, after the U.K. issued a warning for British citizens to leave Ukraine as tensions with Russia mounted further. The benchmark 10-year Treasury yield rose further after breaking above 2{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} for the first time since August 2019 a day earlier.
The drop on Friday extended volatility from earlier this week. Stocks sold off and yields climbed Thursday after the Bureau of Labor Statistics’ January Consumer Price Index (CPI) showed the biggest annual jump in inflation since 1982.
The surging 7.5{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} jump in prices escalated calls for the Federal Reserve to raise interest rates more aggressively than previously expected and begin rolling assets off its balance sheet, in moves that would curb liquidity in the financial system and dampen soaring consumer demand and prices. St. Louis Federal Reserve President James Bullard told Bloomberg News on Thursday he wanted to see interest rates be raised by a full percentage by July and start the Fed’s balance sheet run-off process in the second quarter, in one of the most hawkish paths so far telegraphed by a Fed official.
“That’s not out of the realm of possibility,” David Spika, GuideStone Capital Management president, told Yahoo Finance Live on Thursday about Bullard’s suggestion. “The Fed realizes they have to start moving. … Consumers are getting killed with this inflation. The Fed has to move and has to move quickly if they want to rein this in.”
“If you go back even to the end of the financial crisis, monetary policy has been the key factor in driving returns and really providing that ‘Fed put’ that really allowed investors to come in and buy the dip,” he added. “Those days are behind us — particularly with the inflation we’re seeing now — and the market does not like this. It’s like a kid that has never been told ‘no,’ that is now being told no and is throwing a temper tantrum. This will continue.”
And against the inflationary backdrop, others also increased their expectations for the number of rate hikes the Fed is likely to roll out this year. Deutsche Bank economists said Thursday they now expect two more quarter-point hikes than they had previously forecasted. With the upgrade, they now see a 50 basis point rate hike at the March Fed meeting, followed by 25 basis point hikes after each of the following meetings of the year except for in November. If realized, a half-point rate hike in March would mark the Fed’s first increase of more than 25 basis points since 2000.
“I think investors have to ask themselves, do I want to hedge against inflation, or do I want to beat inflation? And so, I think things like gold are where you can hedge, but I think there are other areas where you can continue to outpace and see outsized gains relative to inflation,” Jordan Jackson, JPMorgan Asset Management global market strategist, told Yahoo Finance Live on Thursday. “I think that’s things like equities, I do think commodity markets are relatively well-supported here as well. And so investors will need to get diversified in how they think about hedging and outpacing inflation at the current juncture.”
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1:58 p.m. ET: Pfizer, BioNTech delay request for FDA to authorize COVID-19 vaccine in children under age 5 ahead of more data
Pfizer (PFE) and BioNtech (BNTX) announced Friday that they were delaying their request for the FDA to authorize their COVID-19 vaccine for children under age five. The companies are waiting to continue their ongoing clinical study and receive efficacy data on a third dose of the shot for children before having the FDA resume considering authorization of the jab.
“Given that the study is advancing at a rapid pace, the companies will wait for the three-dose data as Pfizer and BioNTech continue to believe it may provide a higher level of protection in this age group,” Pfizer said in its press statement. “This is also supported by recent observations of three dose booster data in several other age groups that seems to meaningfully augment neutralizing antibody levels and real world vaccine protection for omicron compared to the two-dose regimen. The companies expect to have three-dose protection data available in early April.”
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1:51 p.m. ET: U.S. crude oil prices set fresh 7-year high
U.S. West Texas intermediate crude oil futures jumped another 3.4{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} on Friday to set a fresh seven-year high, touching $92.91 per barrel.
The latest leg higher came as concerns over tensions between Russia and Ukraine escalated further, with concerns rising that energy supplies in the countries may be disrupted in the event of military action. The UK on Friday newly advised British citizens to avoid travel to Ukraine and for those already in the country to leave now, a day after President Joe Biden also requested all U.S. citizens leave Ukraine.
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11:53 a.m. ET: Stocks turn lower after hot inflation print, consumer sentiment disappointment
The three major indexes turned sharply lower heading into the afternoon session on Friday, after the University of Michigan’s consumer sentiment index affirmed that Americans’ inflation expectations were rising further. A jump in Treasury yields stoked a drop in growth and technology stocks.
The information technology, consumer discretionary and communication services sectors declined in the. S&P 500. Energy and financials were among the outperformers, with both standing to benefit from an environment with rising rates and commodity prices.
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10:00 a.m. ET: Consumer sentiment falls sharply in early February to lowest in a decade as inflation concerns escalate
U.S. consumer sentiment sank much more than expected in February to set a fresh decade low as concerns over inflation rose markedly among many Americans.
The University of Michigan’s closely watched consumer sentiment index dropped to 61.7 in early February, marking the lowest level since Oct. 2011. This compared with a reading of 67.2 in January. Consensus economists were looking for the preliminary February index to come in at 67.0, according to Bloomberg data.
Consumer expectations for inflation over the next year also rose to 5.0{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}, representing the highest level since 2008. In December, consumers’ one-year inflation expectations were at 4.9{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}.
“Sentiment continued its downward descent, reaching its worst level in a decade, falling a stunning 8.2{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} from last month and 19.7{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} from last February,” Richard Curtin, chief economist for the Surveys of Consumers, said in a press statement. “The recent declines have been driven by weakening personal financial prospects, largely due to rising inflation, less confidence in the government’s economic policies, and the least favorable long term economic outlook in a decade.”
“The impact of higher inflation on personal finances was spontaneously cited by one-third of all consumers, with nearly half of all consumers expecting declines in their inflation adjusted incomes during the year ahead,” he added. “In addition, fewer households cited rising net household wealth since the pandemic low in May 2020, largely due to the falling likelihood of stock price increases in 2022.”
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9:30 a.m. ET: Stocks open higher
Here’s where stocks were trading just after market open on Friday:
S&P 500 (^GSPC): +9.71 (+0.22{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}) to 4,513.79
Dow (^DJI): +47.39 (+0.13{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}) to 35,288.98
Nasdaq (^IXIC): +42.64 (+0.31{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}) to 14,230.07
Crude (CL=F): +$1.10 (+1.22{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}) to $90.98 a barrel
Gold (GC=F): -$7.50 (-0.41{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}) to $1,829.90 per ounce
10-year Treasury (^TNX): -2.2 bps to yield 2.007{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}
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7:27 a.m. ET Friday: Stock futures point to a lower open
Here’s where markets were trading Friday morning:
S&P 500 futures (ES=F): -12 points (-0.27{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}), to 4,485.50
Dow futures (YM=F): -80 points (-0.23{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}), to 35,059.00
Nasdaq futures (NQ=F): -49.25 points (-0.34{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}) to 14,651.75
Crude (CL=F): +$1.20 (+1.34{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}) to $91.08 a barrel
Gold (GC=F): -$8.10 (-0.44{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}) to $1,829.30 per ounce
10-year Treasury (^TNX): -3.1 bps to yield 1.998{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}
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6:10 p.m. ET Thursday: Stock futures decline further
Here’s where markets were trading as the overnight session began on Thursday:
S&P 500 futures (ES=F): -4.75 points (-0.11{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}), to 4,492.75
Dow futures (YM=F): -36 points (-0.1{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}), to 35,103.00
Nasdaq futures (NQ=F): -9.5 points (-0.06{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}) to 14,691.50
NEW YORK, NEW YORK – DECEMBER 08: Traders work on the floor of the New York Stock Exchange (NYSE) on December 08, 2021 in New York City. Following news from the pharmaceutical company Pfizer on the effectiveness of its vaccine against the Omicron COVID-19 variant, the Dow Jones Industrial Average rallied nearly 100 points in morning trading on Wednesday. (Photo by Spencer Platt/Getty Images)
Stocks declined on Friday at the end of a volatile week, with investors monitoring a mixed set of bank earnings and a bigger-than-expected drop in U.S. retail sales.
The S&P 500 and Dow dropped. The Nasdaq fluctuated between gains and losses after a 2.5{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} drop on Thursday.
The Dow underperformed, dropping more than 1{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} at session lows as the index’s bank stock components declined after delivering earnings. JPMorgan Chase (JPM) shares fell more than 5{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} after the company posted lower-than-expected fourth-quarter trading revenues and rising costs as compensation expenses increased. The stock drop marked JPMorgan’s worst post-earnings decline since 2011, based on Bloomberg data. Citigroup (C) shares also fell after posting a similar miss on fixed-income and equities trading revenues for the quarter.
Peer bank Wells Fargo (WFC) shares rose, on the other hand, after posting quarterly revenue that topped estimates as both commercial and consumer loans picked up at the end of last year.
New economic data came in weaker-than-expected on Friday, adding to the risk-off tone in markets. U.S. retail sales fell 1.9{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} in December month-on-month, missing estimates for an only 0.1{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} dip and marking the biggest drop since February 2021. November’s sales were also downwardly revised to show 0.2{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} monthly increase, compared to the 0.3{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} rise previously reported.
Investors this week have been weighing concerning signs of lingering price pressures across the U.S. economy against assertions from key central bank officials that the Federal Reserve is ready to take action to bring down inflation.
In Fed Governor Lael Brainard’s hearing before the Senate Banking Committee on Thursday, she suggested the central bank could begin raising interest rates — a move that would tighten financial conditions and help bring down inflation — “as soon as asset purchases are terminated.” The Federal Reserve is currently set to end its asset-purchase tapering process in March.
JPMorgan Chase CEO Jamie Dimon said during this morning’s earnings call that he expected that on interest rate hikes this year, “there’s a pretty good chance there will be more than four — there could be six or seven.”
“What we’re seeing right now is a repricing of the markets, given anticipated rate hikes… That’s going to be the catalyst driving down the market,” WealthWise Financial CEO Loreen Gilbert told Yahoo Finance Live on Thursday. “It’s going to be a wild ride.”
And the bevy of recent inflation data has so far helped strengthen the case for a near-term move on monetary policy, many economists suggested. Thursday’s Producer Price Index (PPI) showed the biggest annual rise in wholesale prices on record, in data going back to 2010, even as monthly price gains moderated slightly. And this report came just a day following the December Consumer Price Index (CPI) showing the biggest surge in inflation since 1982. Many economists suggested inflationary pressures would continue at least through the first months of this year before gradually easing.
“Two of the biggest things have been the supply chain disruptions and the fiscal stimulus,” Matthew Miskin, John Hancock Investment Management co-chief investment strategist, told Yahoo Finance Live. “As the pandemic comes more under control this year, as the Omicron wave hopefully dissipates, we likely see the supply chain disruptions come off, and then we’re not going to get more fiscal stimulus … That in our view does cause inflation to come down over the course of the year.”
Rising prices have also been hitting companies’ profits as labor costs jump. Of the nearly two dozen S&P 500 companies that had reported fourth-quarter earnings results as of mid-week, 60{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} of these cited a negative impact from higher labor costs or shortages to sales or profits, according to FactSet.
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11:35 a.m. ET: Biden administration names three nominees to fill spots on Fed Board of Governors
The Biden administration announced its nominees to fill out the Federal Reserve Board of Governors, tapping Sarah Bloom Raskin, Lisa Cook, and Philip Jefferson for the roles. Each nominee must still go before the Senate Banking Committee for confirmation.
Earlier this week, Federal Reserve Chair Jerome Powell appeared before the Senate Banking Committee in his renomination hearing to remain as Fed Chair for second term. Current Fed Governor Lael Brainard also had her nomination hearing to become Fed Vice Chair.
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10:15 a.m. ET: Manufacturing production unexpectedly falls in December
The U.S. manufacturing sector showed more signs of slipping amid the latest surge in COVID-19 cases and materials shortages.
According to new Federal Reserve data Friday, manufacturing output declined by 0.3{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} in December to reverse course after a 0.6{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} rise in November. Consensus economists were looking for a 0.3{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} monthly rise in production in December, based on Bloomberg data. Manufacturing accounts for about 12{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} of overall economic activity in the U.S.
A drop in auto production contributed heavily to the headline decline, with ongoing chip shortages impacting the industry. Vehicle production was down 1.3{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} in December following a rise of 1.7{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} in November.
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10:11 a.m. ET: University of Michigan sentiment index drops to 68.8 in January, in second-lowest reading in a decade
Consumer sentiment fell more than expected in early January to reach one of its lowest readings in 10 years, as concerns over the inflation outlook and COVID-19 weighed on optimism.
“While the Delta and Omicron variants certainly contributed to this downward shift, the decline was also due to an escalating inflation rate,” Richard Curtin, chief economist for t he Surveys of Consumers, wrote in a statement. “Three-quarters of consumers in early January ranked inflation, compared with unemployment, as the more serious problem facing the nation.”
“Given that inflation’s impact is regressive, the Sentiment Index fell by 9.4{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} among households with total incomes below $100,000 in early January, but rose by 5.7{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} among households with incomes over that amount,” he added.
Overall, consumers’ one-year inflation expectations edged back up to 4.9{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}, or the highest level since 2008, from December’s 4.8{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}.
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9:30 a.m. ET: Stocks open lower after disappointing economic data, mixed bank earnings
Here’s where markets were trading just after the opening bell Friday morning:
S&P 500 (^GSPC): -28.25 (-0.61{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}) to 4,630.78
Dow (^DJI): -337.64 (-0.76{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}) to 35,775.98
Nasdaq (^IXIC): -51.93 (-0.34{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}) to 14,756.56
Crude (CL=F): +$0.56 (+0.68{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}) to $82.68 a barrel
Gold (GC=F): +$3.90 (+0.21{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}) to $1,825.30 per ounce
10-year Treasury (^TNX): +2.5 bps to yield 1.734{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}
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8:32 a.m. ET: Retail sales drop 1.9{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} in December, missing estimates
Retail sales posted a large-than-expected drop in December, as consumer spending pulled back from earlier in 2021.
The total value of U.S. retail sales was down 1.9{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} in December compared to November, the Commerce Department said Friday. This was the first monthly drop since July, and the biggest decline since February 2021. Consensus economists had looked for a dip of just 0.1{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}, according to Bloomberg data. In November, retail sales rose 0.2{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}, with this figure also downwardly revised. from the 0.3{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} rise previously. reported.
By category, non-store retailers, or e-commerce stores, saw by far the biggest drop in monthly retail sales, with these falling 8.7{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} in December. Department stores also posted a 7.0{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} drop in sales, and furniture and home furnishing sales declined by 5.5{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}. Still, the weakness was broad-based in December, and nearly every category of retailer saw a monthly drop in sales. Notably, building material stores saw a nearly 1{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} sales rise during the month, and miscellaneous store retailers’ sales rose by 1.8{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}.
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7:43 a.m. ET: ‘The economy continues to do quite well despite headwinds related to the Omicron variant’: Dimon
JPMorgan Chase CEO Jamie Dimon struck an upbeat tone about the trajectory of the economic recovery even given the latest disruptions caused by the rapidly spreading Omicron variant.
“The economy continues to do quite well despite headwinds related to the Omicron variant, inflation and supply chain bottlenecks,” Dimon said in the bank’s fourth-quarter earnings report on Friday. “Credit continues to be healthy with exceptionally low net charge-offs, and we remain optimistic on U.S. economic growth as business sentiment is upbeat and consumers are benefiting from job and wage growth.”
Both JPMorgan Chase and Wells Fargo cited an increase in loans as contributing to results at the end of last year, suggesting consumers and businesses were remaining confident in borrowing and spending.
However, JPMorgan’s fixed-income and stock-trading businesses saw sales fall over last year. Fixed income sales and trading revenue declined 16{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} over last year to $3.33 billion, which the bank attributed to “a challenging trading environment in rates, as well as lower revenues in credit and currencies & emerging markets compared to a strong prior year.” Equities sales and trading revenue dipped 1.8{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} to $1.95 billion.
Overall, adjusted revenue grew 0.6{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} over last year to reach $30.35 billion, topping estimates for $30.01 billion, according to Bloomberg data. Earnings per share were $3.33, exceeding expectations for $2.99.
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7:32 a.m. ET Friday: Stock futures give up earlier gains, point to a lower open
Here’s where markets were trading before the opening bell:
S&P 500 futures (ES=F): -5 points (-0.11{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}), to 4,647.00
Dow futures (YM=F): -37 points (-0.1{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}), to 35,952.00
Nasdaq futures (NQ=F): -30.75 points (-0.2{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}) to 15,459.50
Crude (CL=F): +$0.58 (+0.71{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}) to $82.70 a barrel
Gold (GC=F): +$0.90 (+0.05{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}) to $1,822.30 per ounce
10-year Treasury (^TNX): +3.3 bps to yield 1.742{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}
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6:01 p.m. ET Thursday: Stock futures open slightly higher
Here’s where markets were trading Thursday evening:
S&P 500 futures (ES=F): +4.25 points (+0.09{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}), to 4,656.25
Dow futures (YM=F): +37 points (+0.1{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}), to 36,026.00
Nasdaq futures (NQ=F): +18.75 points (+0.12{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}) to 15,509.00
NEW YORK, NEW YORK – JANUARY 11: Traders work on the floor of the New York Stock Exchange (NYSE) on January 11, 2022 in New York City. After yesterdays sell off, the Dow was down only slightly in morning trading. (Photo by Spencer Platt/Getty Images)
SAN DIEGO, Nov. 20, 2021 /PRNewswire/ — The law firm of Robbins Geller Rudman & Dowd LLP filed a class action lawsuit seeking to represent purchasers of Zhangmen Education Inc. (NYSE: ZME) American Depositary Shares (“ADSs”) in or traceable to Zhangmen Education’s initial public offering conducted on or about June 8, 2021 (“IPO”), pursuant to the IPO prospectus (the “Prospectus”) and Form F-1 registration statement, as amended (together with the Prospectus, the “Registration Statement”). The Zhangmen Education class action lawsuit charges Zhangmen Education, certain of its top executives, and the underwriters of the IPO with violations of the Securities Act of 1933. The Zhangmen Education class action lawsuit was commenced on November 19, 2021 in the Southern District of New York and is captioned Banerjee v. Zhangmen Education Inc.
The plaintiff is represented by Robbins Geller, which has extensive experience in prosecuting investor class actions including actions involving financial fraud. You can view a copy of the complaint by clicking here.
If you wish to serve as lead plaintiff of the Zhangmen Education class action lawsuit, please provide your information by clicking here. You can also contact attorney J.C. Sanchezof Robbins Geller by calling 800/449-4900 or via e-mail at jsanchez@rgrdlaw.com. Lead plaintiff motions for the Zhangmen Education class action lawsuit must be filed with the court no later than January 18, 2022.
CASE ALLEGATIONS: Zhangmen Education provides personalized online tutoring services to K-12 students in the People’s Republic of China (“PRC”). The rapid rate of growth in PRC’s online education market has led to a sharp rise in fraudulent activity, including false advertising, fabrication of teacher qualifications, exaggerated student performance, and price fraud. In response to these scandals, the Chinese government sought to clean up the industry by adopting stringent new regulations shortly before the Zhangmen Education IPO. But as the Zhangmen Education class action lawsuit alleges, the true scope and effect of these proposed measures were known to but undisclosed by defendants prior to the IPO and were reasonably likely to have a material adverse effect on Zhangmen Education’s business and future operating results.
Specifically, the Zhangmen Education class action lawsuit alleges that the IPO’s Registration Statement failed to disclose that: (a) PRC authorities were in the process of implementing sweeping new regulatory reforms on the private education industry in China including, among others, prohibitions on: (i) profit-making by private education companies, (ii) engaging in core-curriculum tutoring on weekends and vacations, and (iii) capital-raising by companies like Zhangmen Education; (b) the known risks, events, and uncertainties noted in the Registration Statement were reasonably likely to have a material adverse effect on Zhangmen Education’s business; and (c) based on the foregoing, the statements in the Registration Statement concerning Zhangmen Education’s historical financial performance, market demand, and industry trends were materially incomplete, inaccurate, and misleading.
On July 23, 2021 – less than two months after the IPO – PRC unveiled a sweeping overhaul of its education sector, banning companies that teach the school curriculum from making profits, raising capital, or going public. These drastic measures effectively ended any potential growth in the for-profit tutoring sector in PRC.
Then, on July 26, 2021, Zhangmen Education issued a release providing an update on the new PRC policies, admitting among other things that Zhangmen Education expected “the Guidelines to have material impacts on our existing business operations, financial condition and corporate structure.”
Thereafter, on August 25, 2021, Zhangmen Education issued a press release providing a further update on similar policies implemented by the Shanghai government and the implications for Zhangmen Education’s business, stating for example that: (a) “No new provider of after-school tutoring services on academic subjects in China’s compulsory education system (‘Academic AST’) will be approved, while existing Academic AST providers shall be subject to review and re-registration as non-profit organizations”; (b) “Tuition fees for Academic AST shall follow the guidelines from the government to prevent any excessive charging or excessive profit-seeking activities”; and (c) “AST advertising shall be subject to enhanced oversight.”
Finally, on November 19, 2021, Zhangmen Education announced that its auditor, Deloitte Touche Tohmatsu Certified Public Accountants LLP, had voluntarily resigned.
Subsequent to the IPO, the price of Zhangmen Education ADSs plummeted. As of the filing of the Zhangmen Education class action lawsuit, Zhangmen Education ADSs trade more than 80{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} below the IPO price.
THE LEAD PLAINTIFF PROCESS: The Private Securities Litigation Reform Act of 1995 permits any investor who purchased Zhangmen Education ADSs in or traceable to the IPO pursuant to the Registration Statement to seek appointment as lead plaintiff in the Zhangmen Education class action lawsuit. A lead plaintiff is generally the movant with the greatest financial interest in the relief sought by the putative class who is also typical and adequate of the putative class. A lead plaintiff acts on behalf of all other class members in directing the Zhangmen Education class action lawsuit. The lead plaintiff can select a law firm of its choice to litigate the Zhangmen Education class action lawsuit. An investor’s ability to share in any potential future recovery of the Zhangmen Education class action lawsuit is not dependent upon serving as lead plaintiff.
ABOUT ROBBINS GELLER RUDMAN & DOWD LLP: With 200 lawyers in 9 offices nationwide, Robbins Geller Rudman & Dowd LLP is the largest U.S. law firm representing investors in securities class actions. Robbins Geller attorneys have obtained many of the largest shareholder recoveries in history, including the largest securities class action recovery ever – $7.2 billion – in In re Enron Corp. Sec. Litig. The 2020 ISS Securities Class Action Services Top 50 Report ranked Robbins Geller first for recovering $1.6 billion for investors last year, more than double the amount recovered by any other securities plaintiffs’ firm. Please visit http://www.rgrdlaw.com for more information.
Attorney advertising. Past results do not guarantee future outcomes. Services may be performed by attorneys in any of our offices.
Contact: Robbins Geller Rudman & Dowd LLP 655 W. Broadway, San Diego, CA 92101 J.C. Sanchez, 800-449-4900 jsanchez@rgrdlaw.com
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