Stocks slipped and Treasury yields climbed Monday after Fed chair Jerome Powell struck a cautious tone in a rare interview aired Sunday.
“We feel like we can approach the question of when to begin to reduce interest rates carefully,” Powell told CBS‘s Scott Pelley on “60 Minutes.” He also warned it was too early to declare victory over inflation. “We have work to do” before achieving a soft landing, he cautioned.
The Dow Jones Industrial Average traded 0.9% lower midday Monday, while the Nasdaq Composite and the S&P 500 fell 0.4%. Treasury yields climbed, extending their run-up after Friday’s red-hot jobs report.
Caterpillar (CAT), considered an economic bellwether by many, posted better-than-expected quarterly earnings and offered an upbeat forecast for 2024, sending its shares higher.
Stocks jumped Friday after blowout earnings reports from Meta and Amazon.
Tesla Stock Slides to Almost 8-Month Low Amid Scrutiny of Directors’ Ties to Musk
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Shares of Tesla (TSLA) tumbled Monday morning after the Wall Street Journal on Saturday outlined the blurry personal and professional boundaries between CEO Elon Musk and the directors tasked with overseeing his work.
“Several current or former directors at Tesla and SpaceX attend parties with him, go on exotic vacations and hang out at Burning Man, the Nevada arts and music festival,” according to the Journal. They have also “amassed shares worth hundreds of millions of dollars from their seats over the years, significantly more than what board members at other companies make for their service.”
The report comes just days after a Delaware court struck down Musk’s 2018 compensation package, which was valued at up to $55.8 billion. “The process leading to the approval of Musk’s compensation plan was deeply flawed,” wrote Chancellor Kathaleen McCormick, who cited his professional and personal ties to the directors with whom he negotiated the pay package.
In response, Musk said in a post on X (formerly Twitter) that Tesla would hold a shareholder vote on transferring its state of incorporation from Delaware to Texas. The company relocated its corporate headquarters to Austin, TX from Palo Alto, CA in 2021 after Musk criticized California’s tax and regulatory environment.
Adding to the bad news for Tesla investors Monday, German software giant SAP (SAP) will stop purchasing Tesla vehicles for its corporate fleet due to unpredictable deliveries and price swings, according to German newspaper Handelsblatt. It follows German rental company Sixt, which in December dropped Tesla from its fleet because the company’s price cuts on new vehicles were devaluing its used fleet. U.S. rental company Hertz said in January that it would reduce the size of its Tesla and EV fleet due to weak demand and price instability.
Tesla shares fell about 5% to $179, nearly an eight-month low, in intraday trading on Monday.
Eli Lilly Stock Rises Amid Weight-Loss Drug Shortage
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Shares of drugmaker Eli Lilly (LLY) rose more than 5% Monday amid signs of booming demand for the company’s weight-loss drugs Mounjaro and Zepbound.
According to an update posted to the Food & Drug Administration’s website, increased demand for Mounjaro has caused a shortage of higher-dose presentations that is expected to last through early March.
Drug makers have struggled for more than a year to keep up with demand for their blockbuster weight-loss drugs. Shortages of Novo Nordisk’s (NVO) diabetes drug Ozempic and weight-loss indicated Wegovy were reported as early as the spring of 2022 when celebrities and TikTok stars began to tout the drugs’ benefits.
Novo Nordisk’s parent company on Monday announced the $16.5 billion acquisition of drug delivery technology company Catalent (CTLT) as it seeks to boost production capacity and address shortages.
Also on Monday, Amgen (AMGN) published findings from an early-stage trial of its answer to the weight-loss craze. A monthly injection of Amgen’s drug MariTide caused patients to lose 14.5% of their body weight in 12 weeks, according to the company’s researchers. They also said some patients kept the weight off for up to 150 days after stopping the injections.
Eli Lilly shares traded at a record high of $707 early Monday. Novo Nordisk shares were up 2.5%, while Amgen shares were down about 1%.
Boeing Stock Back on the Radar After Another 737 MAX Glitch
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Boeing (BA) shares are once again on investors’ radar screens Monday after the Seattle-based airplane maker said a production glitch detected by a supplier on the fuselage of some of its undelivered 737 MAX aircraft could disrupt deliveries.
The aerospace giant confirmed that a spacing problem involving holes drilled on the window frame of around 50 jets had been identified by its 737 fuselage supplier Spirit AeroSystems (SPR) and could potentially delay some near-term deliveries. However, the company said the production glitch didn’t pose a safety risk and that existing 737 MAX planes could continue to fly.
Boeing’s latest mishap comes less than a month after the door plug of a 737 MAX 9 flown by Alaska Airlines (ALK) blew out mid-air, prompting aviation regulators to ground nearly 200 jets while investigators inspected similar door panels to those involved in the incident. When reporting quarterly earnings last week, the company suspended its forward guidance for 2024 amid ongoing safety issues.
Since falling below the 200-day moving average in mid-January, the Boeing share price has consolidated within a tight range just under the closely watched indicator. It’s also worth noting that volume has increased significantly in recent weeks, indicating institutional reallocations within the stock.
On the downside, monitor a long-term uptrend line that stretches back to September 2022 as a possible area of support, currently around $193. If the price rallies above the 200-day moving average, keep an eye on the August swing high around $240 — a region on the chart that may provide overhead resistance.
Boeing shares were down 2% at $205 in early trading Monday.
Stocks Making the Biggest Moves Premarket
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Gains:
- Estée Lauder Cos. (EL): Shares of the cosmetics giant jumped 16% after it outlined plans to cut 3% to 5% of positions, or about 3,000 jobs, as part of a restructuring effort.
- Catalent Inc. (CTLT): Shares leaped more than 9% after Novo Nordisk’s (NVO) parent company, Novo Holdings, said it would buy the maker of drug delivery and development technologies. Novo Nordisk shares rose about 2%.
- Caterpillar Inc. (CAT): The industrial equipment manufacturer’s shares climbed 5% after it beat expectations with its quarterly earnings report amid strong sales in its energy and transportation units.
Losses:
- ZScaler Inc. (ZS): Shares of the cybersecurity firm slipped nearly 4% after the company revealed its chief operating officer had resigned.
- Boeing Co. (BA): Shares of the jet maker fell 2% after it disclosed another problem with its 737 Max planes that would require it to rework 50 undelivered aircraft.
- McDonald’s Corp. (MCD): Shares of the fast-food giant slipped about 2% after missing fourth-quarter revenue estimates as boycotts stemming from conflict in the Middle East weighed on sales.
Stock Futures Dip After Cautious Comments from Fed’s Powell
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Futures contracts connected to the Dow Jones Industrial Average were down 0.3% in premarket trading on Monday.
S&P 500 futures were also off 0.3%.
Nasdaq 100 futures traded 0.1% lower about an hour before markets opened.
