Deutsche Bank AG Stock Making the Biggest Market Move

Stocks were falling on continued worries about banks and rising interest rates in the market. Deutsche Bank AG was leading shares of European lenders lower. Deutsche Bank AG stock tumbled 13% following a spike in credit default swaps, raising concerns again over the health of the European banking industry. Deutsche Bank AG fell 6% in United States trading after its shares took a hit following recent troubles at fellow European banking giant Credit Suisse Group AG ADR.

The price of Deutsche Bank AG’s credit default swaps rose to a four-year high. American depositary receipts of Credit Suisse Group AG ADR were down 5.5%. UBS Group AG bought Credit Suisse Group AG ADR for about $3 billion, slid 3.3% after receiving a downgrade to Hold from Buy by analysts at Jefferies. Shares of United States banks fell as investors worried about the global banking system.

First Republic Bank fell 3%, while Western Alliance Bancorp, Zions Bancorporation NA, and Fifth Third Bancorp all lost more than 2%. Large banks were not immune from traders’ skittishness. JPMorgan Chase & Co and Bank of America Corp were down 2% as well. Activision Blizzard Inc rose 6.9% after the United Kingdom’s Competition and Markets Authority said it no longer had concerns that Microsoft would use its $68.7 billion deal for the video game maker to snag “Call of Duty” from competitors like Sony.

Activision Blizzard Inc was the top performer in the S&P 500 Index.

Block Inc slid 1.9%, a day after losing nearly 15% when short-seller Hindenburg Research alleged that Block facilitates fraud. Block Inc was downgraded to hold by Atlantic Equities on the lack of clarity on its Cash App after Hindenburg’s short position. Block Inc was down 3.4%. Shares of Block Inc closed almost 15% lower after being targeted by short-selling firm Hindenburg Research.

The firm alleged that Block Inc has inflated user metrics and has not reined in improper activity on its platform. Block Inc called the report factually inaccurate and misleading, and announced plans to explore legal action against Hindenburg. Investors put more pressure onto shares of Coinbase Global Inc. Coinbase Global Inc stock ticked down 2.3% in premarket trading, after the company received a “Wells Notice” from the Securities and Exchange Commission, which warned the agency could take enforcement action against the crypto exchange.

The disclosure pushed Coinbase Global Inc stock down more than 14%. Year to date, Coinbase Global Inc stock is still up 87% this year. Coinbase Global Inc stock was downgraded to Underperform from Market Perform with a $36 price target by analysts at TD Cowen. Energy names fell in in the premarket as oil prices slid, with investors worried about potential oversupply.

Marathon Oil Corp and Devon Energy Corp fell about 3%.

Halliburton Co, Occidental Petroleum Corp, Diamondback Energy Inc, and Exxon Mobil Corp each lost about 2%. Incyte Corp saw its shares fall more than 3% after it issued a regulatory update on its ruxolitinib extended-release tablets. The FDA has said it can not approve Incyte Corp’s application in its present form. Shares of Scholastic Corp fell 13% after the company reported a decline in revenue for its fiscal third quarter from the previous year and lowered its financial guidance for the full year.

Scholastic Corp now projects about 4% revenue growth for the year, compared to its previous outlook of between 8% and 10%. Scholastic Corp stock fell 19.6%. Torrid Holdings Inc gained 22.7% after fourth-quarter sales topped estimates and the plus-sized retailer’s fourth-quarter loss narrowed. Lidar maker Ouster Inc Cl A reported fourth-quarter sales that missed estimates and the stock fell 9.3%.

Ouster Inc Cl A expects fiscal first-quarter sales to range between $15 million to $17 million, lower than Wall Street estimates of $20 million. But Ouster Inc Cl A just closed its merger with Velodyne on February 1st 2023 and remains on track to top previously projected annualized cost savings of $75 million within nine months. In September 2020, Accenture reported quarterly profit of $1.70 per share, falling 3 cents a share short of Wall Street forecasts.

Revenue also came in slightly shy of estimates and Accenture gave a weaker-than-expected current-quarter revenue forecast, as clients spend less due to the covid pandemic.

E.W. Scripps announced a deal to buy privately held TV network operator ION Media for $2.65 billion. The deal is being backed by Warren Buffett’s Berkshire Hathaway. With Berkshire Hathaway making a $600 million preferred equity investment in Scripps to help finance the purchase. BlackBerry beats estimates by 9 cents a share, with quarterly earnings of 11 cents per share.

BlackBerry’s revenue was also above expectations, on strong demand for its security and car software. CarMax earned $1.79 per share for its latest quarter, well above the consensus estimate of $1.08 a share. CarMax’s revenue was also above analysts’ forecasts. CarMax saw vehicle sales rise by 3.9%, with comparable-store sales up 1.2%, and its financing profit increased by 29%.

Darden Restaurants earned 28 cents per share for its latest quarter, beating the consensus estimate of 5 cents a share. Darden Restaurants’ revenue was very slightly below Wall Street forecasts with sales during the quarter at about 82% of prior-year levels. Darden Restaurants also reinstated its dividend. FactSet earned $2.88 per share for its latest quarter, 34 cents a share above estimates.

FactSet’s revenue came in above forecasts as well.

FactSet expected fiscal 2021 adjusted earnings of $10.75 to $11.15 per share, compared to a consensus estimate of $10.84 a share. Rite Aid reported a quarterly profit of 25 cents per share, compared to analysts’ expectations of a 1 cent per share loss. Rite Aid’s revenue was also above estimates, with strength in both the retail pharmacy and pharmacy services segments.

UnitedHealth is in advanced talks to buy online pharmacy startup DivvyDose. The proposed deal is said to be worth about $300 million, although nothing has been finalized. Dollar Tree is resuming its stock buyback program, after suspending it in March 2020 due to the pandemic. Dollar Tree has roughly $800 million in buyback authorization remaining under that program.

H.B. Fuller reported quarterly earnings of 76 cents per share, 6 cents a share above estimates. H.B. Fuller’s revenue also topped forecasts. H.B. Fuller has performed well during the pandemic, although the company does expect current-quarter revenue to be flat to lower compared to a year ago. Jefferies Financial earned $1.07 per share for its third quarter, well above the consensus forecast of 34 cents a share.

Jefferies Financial also saw revenue top estimates, helped by record investment banking and asset management revenue.

Goldman Sachs was upgraded to “buy” from “neutral” at UBS, which said Goldman is already generating solid results in the current environment and could benefit further from election-related volatility. FedEx was upgraded to “buy” from “hold” at Stifel, which said FedEx is benefiting from pandemic-related changes, including much faster growth in demand levels than originally anticipated. United States stock futures market jumped after the Nasdaq finished a volatile week lower.

The Nasdaq was off just under 10% from its closing record on September 2nd 2020. The S&P 500, which eked out a slight gain, was 6.7% below its closing record on September 2nd 2020. Shares of Delta Airlines rose in the premarket after the carrier said it would borrow $6.5 billion backed by its frequent-flyer program to shore up liquidity during the covid crisis.

United Airlines and American Airlines have made similar plans. Shares of Apple were higher in the premarket after closing lower, losing 7%. Apple is expected to release the Apple Watch Series 6 and a refreshed iPad Air at its online event. Apple typically unveils its new iPhones during an event at its Cupertino, California headquarters in Septembers every year.

But the annual event in 2020 may happen later since Apple advised during its earnings that the iPhone was delayed a few weeks.

Central bankers also update their outlook on the economy and interest rates, including forecasts for 2023 for the first time. Facing a White House-imposed deadline to sell its TikTok assets in the United States or face a ban, Beijing-based ByteDance is poised to choose Oracle as its American technology partner. Shares of Oracle were up about 9% after Microsoft said ByteDance did not pick its offer.

Shares of New Jersey-based Immunomedics, up 100% in 2020, were set to double again after Gilead agreed to buy the cancer drug maker. The $21 billion deal gives Gilead access to Trodelvy, a Food and Drug Administration (FDA)-approved treatment for metastatic triple-negative breast cancer. Gilead is working on an inhaled version of remdesivir, its antiviral drug approved for emergency use on covid.

Pfizer’s covid vaccine could be distributed to Americans before the end of 2020 if it is found to be safe and effective. Pfizer has been working alongside German drugmaker BioNTech. Pfizer submitted a proposal to the FDA to expand its late-stage trial to include up to 44,000 participants, a third more than its previous target. Shares of AstraZeneca were up after phase three trials for the company’s covid vaccine resumed in the United Kingdom.

The trials were halted over safety concerns.

AstraZeneca declined to disclose medical information about the halt, but indicated a potentially unexplained illness was under investigation. Stock futures slide sharply, pointed to a weaker start after President Donald Trump vowed to end the United States reliance on trade with China and technology shares continued their rapid descent. Contracts linked to the Dow Jones Industrial Average fell 123 points, S&P 500 futures fell 35 points, and Nasdaq futures sank 326 points.

Trump raised the idea of decoupling the United States and Chinese economies, threatened to punish American companies that create jobs overseas, and prevented those that do business in China from winning federal contracts. United States will manufacture its critical manufacturing supplies in the country, create ‘made in America’ tax credits and bring jobs back to the country, and impose tariffs on companies that desert America to create jobs in China and other countries. Stocks in the United States led lower again by tech shares such as Amazon, Facebook, and Google.

The tech-heavy Nasdaq fell 3.3% for its worst since March 2020, the Dow declined 1.8%, and the S&P 500 lost 2.3%. Japanese conglomerate SoftBank has been taking huge options positions in technology shares and could have been a factor in tech’s recent rally. Traders and investors alike may slowly but surely come around to the idea that market rout was tech sector-specific, rather than any real change in underlying sentiment.

Earnings reports are from Slack, Lululemon, Coupa, HealthEquity, GameStop, Peloton, Chewy, and Kroger.

The economic calendar in the United States includes the NFIB Small-Business Index for August 2020. Reports include weekly Jobless Claims, the Producer Price Index, and the Consumer Price Index. Tesla was falling nearly 14% in premarket trading after not being chosen for inclusion in the S&P 500. Instead, Etsy, Teradyne, and Catalent will be joining the index, effective September 21st 2020.

S&P Dow Jones Indices rebalances the index on a quarterly basis, adding new names and kicking others out. If Tesla has been added, tracking funds and ETFs would need to acquire shares in the electric carmaker. After Tesla’s last earnings report, in which it reported its fourth straight quarter of positive earnings, the carmaker became eligible for the index.

Many Tesla investors expected the stock to be included in the S&P 500 this quarter, a reason often cited as why the shares have run up so much. Tesla fell 13.69% to $361.06 in premarket trading. Tesla stock remains up about 400% this year. The Federal Aviation Administration (FAA) was investigating manufacturing flaws involving some Boeing 787 Dreamliners, but was too early to say if new inspections would be needed.

Production problems at a Boeing 787 Dreamliner factory prompted FAA to review quality-control lapses potentially stretching back almost a decade.

Boeing told the FAA that certain parts made at the aerospace giant’s South Carolina plants failed to meet its own design and manufacturing standards. In August 2020, Home Depot earned $4.02 per share for the second quarter, beating the consensus estimate of $3.71 a share. Home Depot’s revenue came in well above estimates. Home Depot’s comparable-store sales jumped 23.4%, more than double the FactSet consensus estimate of 10.9%.

Home Depot benefited from the increase in home improvement projects by people forced to remain at home due to the covid pandemic. Walmart came in 31 cents a share ahead of estimates, with quarterly earnings of $1.56 per share. Walmart’s revenue beat forecasts as well, comparable-store sales rose 9.3%, and e-commerce sales nearly doubled. Walmart’s results were boosted in part by strong sales increases for general merchandise and food.

Amazon is adding 3,500 jobs in six major cities, including 2,000 in New York who would work in the historic 5th Avenue building that once housed retailer Lord & Taylor. Amazon purchased the building from WeWork for a price reported to be more than $1 billion. Kohl’s lost 25 cents per share for its latest quarter, smaller than the 83 cents a share loss that Wall Street analysts had anticipated.

Kohl’s revenue also came in above estimates, though the company declined to report comparable-sales figures due to store closures.

Kohl’s expected the pandemic to continue to impact its business. Advance Auto Parts earned $2.92 per share for the second quarter, well above the $1.98 a share consensus estimate. Advance Auto Parts’ revenue also beat forecasts, and a comparable-store sales increase of 7.5% easily beat the consensus forecast of a 2.6% rise. Advance Auto Parts benefited from the effects of stimulus checks, unemployment benefits, and covid′s impact on consumer behavior.

Carnival was investigating a ransomware attack against one of its cruise brands, involving the personal data of guests and employees. Carnival did not say which brand was involved and did not give further details, saying the probe was in the early stages. Uber planned to continue operating its Uber Eats food delivery service in California, even if it shut down its ride-hailing operation this week.

Uber and rival Lyft both said they would shut ride-sharing services in California if a court ruling forces them to classify workers as employees rather than contractors. Boeing planned to offer voluntary layoffs to employees for the second time in 2020. Boeing did not set a specific reduction target, but was realigning its workforce to deal with the covid-induced drop in travel demand. Oracle had begun talks to buy the United States operations of Chinese video-sharing company TikTok.

That would put Oracle in competition with Microsoft, which was also in talks with TikTok parent ByteDance.

Pinterest named Andrea Wishom to its board of directors, the third woman to be appointed to the company’s board and the first Black member. The move follows accusations by former Pinterest Chief Operating Officer Francoise Brougher that Pinterest’s work environment was hostile for women. Big Lots and Apollo Global Management engaged in unsuccessful buyout talks.

The talks ended with the major stumbling block reported to have been the terms of a sale-leaseback agreement that Big Lots signed with private equity firm Oak Street Capital in June 2020. Cal-Maine Foods announced a six million share secondary stock offering. Cal-Maine shares were being sold by Jean Reed Adams, wife of the egg producer’s late founder, Fred Adams Jr.

Cal-Maine would not receive any proceeds from the offering. The market’s difficulty in pushing above the February 2020 S&P 500 closing peak level of 3386, despite a few game attempts, was partly explainable by the numbers alone. The S&P 500 was up 50% over 100 trading days, taking it to the edge of a record high, making this rally the strongest in history and, by some interpretations, ending the shortest bear market ever.

Based on some tactical, calendar, and sentiment indicators, this powerful rebound was looking mature and prone to slow down or slip back in the short term.

The angle and speed of the market’s ascent also made it resemble most closely the powerful moves off decisive and sanctified market bottoms of yore, ones that kicked off long bull markets and signaled enduring economic revivals to come. If nothing else, the tape had absorbed whatever mechanical selling came its way from traders locking in the break-even level and profit-takers using it as a target and device not to get too greedy. The market came to this point just as professional investors were showing more optimism and aggressiveness in playing the upside than since before the covid-shutdown crash.

Rampant buying of upside options bets had the put-call ratio stretched near multi-year lows. The equity exposure level of the tactical money managers tracked by the National Association of Active Investment Managers (NAAIM) clicked above 100, a very elevated reading suggesting performance-geared pros were roughly all-in. Retail investors had been less willing to trust this comeback rally in the face of severe economic stress, yet a nearly $5 billion net inflow into domestic equity funds at last report was the highest in nine weeks.

Apple ran to the cusp of a $2 trillion market capitalization. Tesla soared anew on the fundamentally substance-free announcement of a 5-for-1 stock split. It all suggested an emerging complacency that could make further easy upside difficult and leaving the broad market ill-positioned for any adverse surprise.

From a broader angle, the market action accompanied by an improving cadence of most economic measures, placed the past few months in close alignment with some storied market revivals of the past.

Since the March 23rd 2020 low, the S&P was set against the strong rallies off the 1982 and 2009 bottoms, and the resemblance was hard to discount. Even if the comparison had merit, the pattern showed this rally was running ahead of those prior instances, so no one should be shocked if progress stalled or the S&P corrected a bit soon. The sharpness and speed of the downturn and the immediacy of the overwhelming liquidity and fiscal response from the Federal Reserve and Congress forestalled the kind of grinding, purgative action of typical bear markets, which wrung out excesses and reset valuations lower.

There was also not the shift in market leadership that usually occurred in the crucible of a bear market. And, perhaps crucially, not much of the prior bull market’s gains were disgorged. At the August 1982 bottom, the prior decade had delivered annual total returns below 3% over the prior decade, on 2009 it was -4.5%. This could make the latest episode a bit more like the 1987 crash, a dramatic and traumatizing jolt after years of strong gains.

The losses from the ’87 break were relatively quickly recouped. That was the moment that the Fed began conditioning investors that it would rescue markets. And stocks did pretty well over the next couple of years before hitting another mild bear phase before resuming a nice uptrend, just not as strong as from ’82 or ’09.