Dow Jones Today: U.S. Stock Futures Fall, Marathon Oil Jumps on ConocoPhilips Takeover

U.S. stocks fell Wednesday as Treasury yields advanced amid uncertainty about the Federal Reserve’s interest-rate path.

The Dow Jones Industrial Average fell 1%, while the S&P 500 shed 0.6% and the Nasdaq Composite slipped 0.4%.

Treasury yields continued to climb Wednesday, with the 10-year yield now up more than 15 basis points in the last two days. Minneapolis Federal Reserve President Neel Kashkari said at a forum in London Tuesday that it was unlikely the Federal Reserve would raise interest rates but that rates may stay elevated “for an indefinite period of time.”

Marathon Oil (MRO) shares surged after ConocoPhillips (COP) said it has agreed to acquire its fellow Houston-based energy firm in a $22.5 billion all-stock deal.

The Nasdaq closed at a record yesterday as Nvidia (NVDA) hit an all-time high, while rising Treasury yields weighed on the Dow.

Marathon Oil Stock Jumps on $22.5B Acquisition by ConocoPhillips

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Marathon Oil (MRO) stock jumped Wednesday after ConocoPhillips (COP) announced that it would acquire its fellow Houston-based energy firm in an all-stock deal valued at $22.5 billion, inclusive of $5.4 billion of net debt.

Marathon shareholders will receive 0.255 shares of ConocoPhillips stock for each share of Marathon they own, a premium of nearly 15% to Marathon’s Tuesday closing price of $26.45.

ConocoPhillips said the acquisition will be “immediately accretive” to its earnings and cash flow, and expects to generate “at least $500 million of run rate cost and capital savings within the first full year following the closing of the transaction,” which it believes will occur in the fourth quarter of 2024.

Marathon shares were up 7.8% Wednesday afternoon, and have gained 18% so far this year.

–Aaron McDade

American Airlines Stock Drops After Company Lowers Outlook, Key Executive Departs

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American Airlines (AAL) shares plummeted Wednesday after the full-service carrier slashed its current-quarter outlook and announced the sudden departure of its chief commercial officer, Vasu Raja.

American, the world’s largest airline by fleet size, said it now sees second-quarter unit revenue declining between 5% and 6%, down from its earlier forecast of a 1% to 3% contraction. The airline also trimmed its bottom-line guidance for the period, saying it expects adjusted earnings to range between $1 and $1.15 per share, below its prior projection of $1.15 to $1.45 per share.

The airline’s soft guidance for the current quarter, which includes the busy summer season, comes as travel demand over the period is expected to reach record levels.

In a separate statement late Tuesday, American said Chief Commercial Officer Vasu Raja, who had assumed the role a little over two years ago, will be stepping down next month and temporarily replaced by Vice Chair and Chief Strategy Officer Stephen Johnson.

American Airlines shares were down more than 14% early Wednesday afternoon, bringing their year-to-date decline to about 16%.

–Timothy Smith

Chewy Stock Soars on Earnings Beat as Auto Delivery Sales Jump

2 hr 18 min ago

Chewy (CHWY) shares skyrocketed Wednesday after the e-commerce pet food and supplies retailer reported results that topped forecasts and announced a new stock buyback plan as its automatic delivery sales jumped.

Chewy posted first-quarter revenue of $2.88 billion, rising 3.1% from a year ago and beating analysts’ estimates compiled by Visible Alpha. Net income of $66.9 million nearly tripled from $22.86 million in the year-ago period, far exceeding expectations, while Chewy said its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) tripled year-over-year to a record $162.9 million. Diluted earnings per share came in at 15 cents, up 10 cents from a year ago.

The company’s active customers declined 2.1% to 20 million, but net sales per active customer jumped 9.6% to $562. In addition, Chewy’s autoship customer sales increased 6.4% to $2.23 billion, and made up 77.6% of total sales, compared to 75.2% a year earlier.

Chewy also said its board approved an up to $500 million share repurchase program with no expiration date.

Shares of Chewy were up 29% Wednesday morning, gaining around 8% so far in 2024.

–Bill McColl

Stocks Making the Biggest Moves in Early Trading

3 hr 32 min ago

Gains:

Marathon Oil (MRO): Shares surged after ConocoPhillips (COP) said it has agreed to acquire its fellow Houston-based energy firm in a $22.5 billion all-stock deal.
Dick’s Sporting Goods (DKS): Shares jumped the sports-wear firm posted better-than-anticipated results and boosted its guidance as its stores saw an increase in shoppers who spent more.
Robinhood (HOOD): Shares rose after the online discount brokerage firm unveiled a $1 billion stock buyback program, signaling its coming of age as a mature financial services provider.
Abercrombie & Fitch Co. (ANF): Shares of the retailer surged after the company’s first-quarter earnings beat forecasts.

Losses:

American Airlines (AAL): Shares slumped after the airline lowered its second-quarter guidance and said a key executive was departing.
Cava Group (CAVA): Shares fell as lower same-store sales at the restaurant chain offset higher-than-forecast earnings and a swing into profitability.

US Stock Futures Decline

5 hr 21 min ago

Dow futures were down 0.6% in premarket trading Wednesday.

S&P futures were down 0.6%.

Nasdaq futures were down 0.6%.