Update—Jan. 17, 2024: For today’s live markets coverage, see here.
Stocks fell Tuesday as Treasury yields jumped and the dollar advanced at the outset of a holiday-shortened week.
The Nasdaq Composite fell 0.2%, while the S&P 500 slipped 0.4% and the Dow Jones Industrial Average lost 0.6%.
Goldman Sachs (GS) inched higher after the bank reported a surge in asset and wealth management revenue in the fourth quarter. Morgan Stanley (MS) shares fell after reporting earnings shrank 32% in the quarter amid several one-time charges.
The 10-year Treasury yield jumped more than 10 basis points to more than 4% after tumbling on Friday. The U.S. dollar surged to its highest level in over a month.
Stocks rebounded last week, with the Nasdaq adding more than 3% for the week after a rough start to the year.
Equity Indexes Wrap: Big Bank Earnings Leave Markets Uneasy; AMD, Nvidia Shine on KeyBanc Optimism
January 16, 2024 04:18 PM EST
The Dow
Walt Disney (DIS) rose 3% amid reports its subsidiary ESPN was in talks with the National Football League to take control of the league’s media assets in exchange for a stake in the company, potentially cementing Disney’s place as the league’s preferred partner as it transitions from linear-first media contracts to streaming agreements.
Goldman Sachs (GS) inched up 0.7% after reporting surging profit and strong wealth management revenue growth in the fourth quarter.
Boeing (BA) fell 7.9% after Wells Fargo analysts downgraded the stock to “market weight” from “overweight,” citing the costs that are likely to follow from a Federal Aviation Administration investigation of the company and its adherence to safety standards.
Apple (AAPL) shares fell 1.2% after the company said it would remove the blood-oxygen monitoring capabilities at the heart of a patent dispute if an appeals court refuses its request to extend a stay on an International Trade Commission import ban. Also Tuesday, the Supreme Court declined to hear Apple’s dispute with Fortnite maker Epic Games regarding in-app purchases.
JPMorgan Chase (JPM) stock fell 0.7% as it agreed to pay $18 million to settle SEC charges it violated whistleblower protection laws by having customers sign confidentiality agreements after receiving credits or settlements of more than $1,000.
The S&P 500
Western Digital (WDC) rose 4.5% after getting two upgrades to “buy,” one from Deutsche Bank and one from Barclays.
Auto parts retailers O’Reilly Automotive Parts (ORLY) and AutoZone (AZO) both gained 3.9%.
Dollar General (DG) added 2.4% after Morgan Stanley upgraded the stock to “buy,” citing the potential for fundamentals to stabilize in the near term and set it up for future growth.
Uber (UBER) shares inched up 0.7% after it said it would shutter Drizly, the alcohol delivery app it acquired for more than $1 billion in 2021.
PNC Financial Services (PNC) ticked up 0.1% despite reporting a 43% year-over-year decrease in net income in the fourth quarter and a 7% drop in revenue.
Morgan Stanley (MS) sank 4.2% after reporting a 32% decrease in net income in the fourth quarter.
The Nasdaq 100
Advanced Micro Devices (AMD) jumped 8.3% after KeyBanc raised its price target on the chipmaker’s stock, citing strong demand for its artificial intelligence chips.
Nvidia (NVDA) also had its price target raised by KeyBanc, which said its next AI chip is likely to offer 50% better performance than its predecessors and demand a 40% higher price. Nvidia shares rose 3.1%. Micron (MU), also a KeyBanc favorite, added 2.7%.
Synopsys (SNPS) climbed 3.1% after it said it would buy engineering software developer Ansys (ANSS) for $35 billion. Ansys led the Nasdaq’s losers, falling 5.5%.
Tesla (TSLA) rose 0.5%, regaining earlier losses after CEO Elon Musk said he would need 25% voting power at the electric vehicle maker before developing AI and robotics technology at the company.
PayPal (PYPL) lost 4.2% after Mizuho Securities downgraded the stock to “neutral” from “buy,” citing competition from peers like Apple and their popularity among younger users.
Spirit Airlines Stock Dives After Judge Blocks JetBlue Merger
January 16, 2024 03:42 PM EST
Spirit Airlines (SAVE) shares lost almost 50% of their value on Tuesday after a judge blocked its proposed merger with rival JetBlue (JBLU).
The U.S. Department of Justice (DOJ) sued in March to block the tie-up, arguing it would “allow JetBlue to eliminate its largest” budget airline rival. U.S. District Court Judge William Young agreed with the DOJ, saying the deal would “harm cost-conscious travelers who rely on Spirit’s low fares.”
JetBlue’s planned $3.8 billion acquisition of discount airline Spirit would have created the fifth-largest carrier in the country.
JetBlue shares climbed more than 6% on the news but are still down more than 1% year-to-date.
Morgan Stanley Stock Slides As Regulatory Charges Shave Off Q4 Profit
January 16, 2024 02:55 PM EST
Shares of Morgan Stanley (MS) shares declined Tuesday after the financial services firm’s profit was dragged down by regulatory charges.
Morgan Stanley reported fourth-quarter 2023 net income dropped 32% to $1.52 billion, or 85 cents per share, missing estimates. Revenue rose 1.6% to $12.9 billion, exceeding forecasts.
The company’s earnings were negatively affected to the tune of 28 cents a share due to $535 million in charges. Those charges include a $286 million special assessment on big banks from the Federal Deposit Insurance Corp. (FDIC) related to the collapses of Silicon Valley Bank and Signature Bank.
The firm benefited from its investment banking business, which had an about 5% increase in revenue to $1.3 billion. That was driven by fixed-income underwriting that posted a 25% gain to $391 million on higher investment-grade issuances.
Morgan Stanley shares were off about 5% at $85.42 in afternoon trading Tuesday and are down 7% in the past year.
Boeing Shares Tumble Amid Quality Control Scrutiny
January 16, 2024 02:24 PM EST
Shares of jet maker Boeing (BA) sank 8% after analysts at Wells Fargo downgraded the stock on concerns about an ongoing quality control investigation by the Federal Aviation Administration (FAA).
Wells Fargo analysts downgraded the stock to “equal weight” from “overweight” and cut their price target on the stock to $225 from $280.
Federal regulators last week launched an inquiry into Boeing and its suppliers to determine the companies’ compliance with safety standards.
“The grounding of the 737-9 and the multiple production-related issues identified in recent years require us to look at every option to reduce risk,” said FAA Administrator Mike Whitaker.
“Given Boeing’s recent track record, and greater incentive for the FAA to find problems, we think the odds of a clean audit are low,” Wells Fargo analysts said in a note to clients Tuesday. The firm also noted that while the FAA’s investigation is currently confined to 737 Max 9 jets—the model of the plane that lost a portion of its fuselage mid-flight earlier this month—the inquiry may expand to include other models with similar parts.
As of Tuesday, all 171 of the aircraft grounded by the FAA a little over a week ago remained out of service.
“The safety of the flying public, not speed, will determine the timeline for returning the Boeing 737-9 MAX to service,” said the FAA.
Midday Movers
January 16, 2024 01:20 PM EST
Boeing (BA) shares tumbled after saying it would add additional quality inspections of its 737 Max jet, and as Wells Fargo downgraded the stock, warning that a review of the company’s production could reveal even more quality problems.
Shares of Morgan Stanley (MS) also declined as the financial services firm’s earnings slumped on charges from regulators.
Apple (AAPL) shares fell after the iPhone maker said it would eliminate a feature reading blood oxygen levels on some of its Apple Watches to avoid a ban on sales imposed by regulators over a patent infringement case.
Goldman Sachs (GS) shares advanced after the investment bank posted better-than-expected results as wealth management revenue soared.
Shares of Synopsys (SNPS) gained as the semiconductor design and software firm announced it had purchased engineering software and services company Ansys (ANSS) for $35 billion. Ansys shares slid.
Dollar General (DG) shares jumped after Morgan Stanley upgraded the stock and raised the price target, saying the discount retailer’s near-term fundamentals could stabilize and set it up for strong growth.
Tesla Stock Seesaws After Elon Musk Says He Wants 25% Control Before Advancing AI
January 16, 2024 12:47 PM EST
Tesla (TSLA) shares rebounded from early losses Tuesday after CEO Elon Musk said that he wants 25% voting control of the electric vehicle (EV) maker before advancing Tesla’s position in artificial intelligence (AI).
Musk said he is “uncomfortable growing Tesla to be a leader in AI & robotics without having ~25% voting control. Enough to be influential, but not so much that I can’t be overturned” in a post on X (formerly Twitter), which Musk owns.
“Unless that is the case, I would prefer to build products outside of Tesla,” he added.
Wedbush analysts said they view Tesla “as a disruptive tech leader and if Musk ultimately went down the path to create his own company (separate from Tesla) for his next generation AI projects this would clearly be a big negative for the Tesla story,” adding that “Musk having a back and forth about such an important issue over X is far from ideal for the investment community around Tesla.
Tesla shares were up 0.3% at $219.58 as of about 12:45 p.m. ET Tuesday, after dropping as low as $212.18 early in the session. The stock has gained 68% over the past year.
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Goldman Sachs Q4 Earnings and Revenue Beat Expectations
January 16, 2024 12:03 PM EST
Goldman Sachs (GS) fourth-quarter results trounced analyst expectations on both earnings and revenue. The bank’s strong performance was driven by a 23% year-over-year growth in its asset and wealth management revenue.
Net income was $2.01 billion for the quarter and Goldman Sachs reported diluted earnings per share (EPS) at $5.48 per share. That figure was 65% higher compared to the same period in the prior year and was meaningfully greater than the $4.64 consensus among analysts surveyed by Visible Alpha. Meanwhile, revenue of $11.32 billion for the period was roughly 7% higher than the year-ago quarter.
Goldman shares were 1.6% higher in midday trading Tuesday, putting them up about 3% in the last year.
Apple Shares Slip as iPhone Maker Awaits Decision on Watch Sales
January 16, 2024 10:59 AM EST
Shares of Apple (AAPL) fell more than 1% Tuesday morning as the company said it would remove a contested feature on its latest Apple Watch models to comply with a U.S. import ban if an appeal fails.
Apple has appealed a decision by the International Trade Commission (ITC) to ban its Series 9 and Ultra 2 watches, the blood-oxygen monitoring technology within which was found to violate the patent rights of Masimo Corp. (MASI). The ban, which went into effect in late December, forced Apple to pull the watches from shelves shortly before Christmas.
The company was granted a temporary stay in late December that allowed it to bring the products back to market. Apple is expecting a court to decide this week whether to extend that stay for the entirety of the appeals process. The company is expected to remove the blood-oxygen monitoring feature if it’s denied a longer stay.
Apple was also hit with a decision from the U.S. Supreme Court, which ruled on Tuesday that it would not consider the company’s appeal of an antitrust suit challenging its App Store practices. A federal court ruled last year that app developers were entitled to inform App Store users of alternative payment systems outside of Apple’s ecosystem when making purchases through software downloaded from the App Store.
Synopsys Jumps on Ansys Takeover
January 16, 2024 10:19 AM EST
Shares of semiconductor designer Synopsys (SNPS) rose in early trading Tuesday after it announced plans to buy engineering software developer Ansys (ANSS) for $35 billion.
Under the terms of the agreement, Ansys shareholders will receive $197 in cash and 0.345 shares of Synopsys stock per share. The deal is expected to close in early 2025.
“Bringing together Synopsys’ industry-leading EDA solutions with Ansys’ world-class simulation and analysis capabilities will enable us to deliver a holistic, powerful and seamlessly integrated silicon to systems approach to innovation to help maximize the capabilities of technology R&D teams across a broad range of industries,” said Synopsys President and CEO Sassine Ghazi in a statement.
Ansys shares jumped 18% to $358 on December 22, 2023, when Bloomberg reported the company had received takeover interest and was considering a sale. Synopsys’s offer, which values Ansys at $390 a share, is based on its valuation at the close of December 21.
Ansys stock tumbled more than 4% to $332 on Tuesday, while Synopsys rose 3.8% to trade at $513.
Stocks Making the Biggest Moves Premarket
January 16, 2024 09:23 AM EST
Gains:
- Western Digital Corp. (WDC): Shares of the data storage device maker rose 3% after analysts at both Barclays and Deutsche Bank upgraded the stock to “buy.”
- Shipping stocks: Shares of ZIM Integrated Shipping (ZIM) and Frontline Plc (FRO) were up as tensions in the Middle East ratcheted up after a U.S. commercial ship was struck by a Houthi missile in the Red Sea on Monday.
Losses:
- Ansys Inc. (ANSS): Shares fell 4% to about $330 after semiconductor designer Synopsys (SNPS) said it would buy the software developer for $35 billion. Ansys shareholders will receive $190 cash and 0.345 Synopsys shares per Ansys share. Synopsys stock was up more than 1% at $500 following the announcement.
- Morgan Stanley (MS): Shares of the investment bank slipped nearly 3% as investors soured on its quarterly earnings report, despite reporting better-than-expected revenue.
- Tesla Inc. (TSLA): Shares fell nearly 2% after CEO Elon Musk said he would develop artificial intelligence and robotics products outside of the EV maker if he didn’t have at least 25% voting power. He currently controls about 13% of voting stock.
Stock Futures Slip at Start of Shortened Trading Week
January 16, 2024 08:28 AM EST
Futures contracts connected to the Dow Jones Industrial Average were down about 0.2% in premarket trading Tuesday.
S&P 500 futures were down about 0.3%.
Nasdaq 100 contracts slipped 0.4%.
