Volatile trading to start options expiration day
Stocks have been volatile in early trading, with the Dow up more than 300 points at one point after opening lower.
Friday is a key day for options expiration, which could be contributing to volatility.
“At major expirations, options traders track situations where a large amount of open interest is due to expire. In situations where there is a significant amount of open interest due on the strikes of money (strike prices or very close to the current stock). price), delta hedging activity can affect trading in the underlying stock that day,” Goldman Sachs’ Vishal Vivek said in a note to clients on Friday .
– Jesse Pound, Michael Bloom
Shares open slightly lower
The major averages started lower on Friday, although well off the lows indicated by early morning futures. The Nasdaq Composite was the worst performer, down 0.4%.
– Jesse Pound
Traders are increasing the chances of a lower rate hike from the Fed in December
Traders adjusted their expectations for Federal Reserve actions after a Wall Street Journal report on Friday indicated the central bank will discuss the future pace of rate hikes.
While a rate hike of 75 basis points is still widely expected at the Fed’s November meeting, traders raised the possibility that the December meeting would only move by 50 basis points. A basis point is one-hundredth of a percentage point.
The probability of a 0.75 percentage point move in December fell to 57.4% after the Journal news, down from 75.4% at the same time Thursday, according to CME Group data. Traders raised the odds of a 0.5 percentage point move from 24.2% to 39.6%.
—Jeff Cox
Futures rebound after Wall Street Journal report
Futures recovered from their lows after the Wall Street Journal reported that some Federal Reserve officials were growing uneasy with the current pace of rate hikes and are beginning to worry about the risks of excessive tightening.
The S&P 500 and Dow futures are now trading nearly flat. Nasdaq 100 futures were down 0.4%.
– Jesse Pound
Elon Musk’s Twitter deal is a brutal situation for Tesla investors, says Dan Ives
Tesla investors are in a tough spot as Elon Musk could sell more shares of his company to finance his Twitter deal, according to Wedbush technology analyst Dan Ives.
“It’s pretty simple, the more investors buy into this deal, the more money Musk needs to contribute and therefore sell more Tesla stock,” Ives said in a note Friday.
Musk is expected to sell some of his sizable Tesla stock to help finance the closing of this $44 billion private deal. Ives said Musk may have to sell an additional $5 billion to $10 billion in Tesla stock.
“This remains a brutal situation for Tesla investors to bear the burden,” Ives said. “As we’ve discussed, Twitter’s $44 billion price tag is simply a train wreck for an asset we value at best at $30 billion amid growth challenges Everest”.
— Yun Li
SVB upgrades Moderna citing extended period of underperformance
After falling nearly 54% year-to-date, Moderna is in a good place for investors to take note and watch for a compelling entry point, according to SVB Securities.
The firm upgraded the pharmaceutical company to market perform from underperform and raised its price target to $101 from $74.
The upgraded rating comes after an “extended period of underperformance” that contrasts with other similar companies the firm covers, including Ionis Pharmaceuticals, up 47% year-to-date and Alnylam Pharmaceuticals, up 14% this year.
In addition, Pfizer’s commentary “pointed to a significantly higher than expected price for its COVID-19 vaccine as the market transitions from a heavy recruitment to a mostly commercial one,” he wrote analyst Mani Foroohar in a note on Friday. “Assuming MRNA prices as a rational duopolist, this substantially improves the company’s ability to meet 2023 revenue guidance.”
There is also a lack of a clear driving catalyst for the bearish spread without a guiding cut, according to Foroohar.
“Bulls will point to PCV data in 4Q22, following external validation from partner MRK (OP, Graybosch), while questioning the commercial viability of the flu program, for which device data will not be available until late 2023<" said.
The firm also updated its model to reflect proper Covid pricing.
“As this represents insufficient downside from MRNA’s current level (~$118) near its 52-week low to warrant an underperform rating, we are on the sidelines and await a more attractive entry point on both the long side as for the short,” said Foroohar. .
Moderna shares rose more than 3% in pre-market trading.
—Carmen Reinicke
Stocks probably haven’t bottomed yet, says UBS’s Haefele
The stock market is likely to fall to new lows until investors grapple with the next economic slowdown and its impact on earnings, according to Mark Haefele of UBS Global Wealth Management.
“History tells us that markets don’t find a bottom until investors can see Federal Reserve rate cuts or a trough in economic activity on the horizon, or when valuations are so low that they’re trading in a of ‘bear case.’ Today, none of these conditions are met,” Haefele wrote in a note to clients.
He added that it is unclear when the Fed will begin cutting rates, even if the central bank stops its hikes in early 2023. Fed officials have said they may keep rates at a restrictive level until the inflation falls close to the target level of 2%. .
– Jesse Pound
Stocks on track for a winning week
Stocks may be looking at a third day of losses, but the major averages are still up for the week thanks to strong results on Monday and Tuesday.
Here are the weekly stats through Thursday’s close:
- The Dow is 2.36%
- S&P 500 up 2.31%
- The Nasdaq Composite rises 2.84%
For the three major averages, this would be their best stretch since it ended on September 9.
—Jesse Pound
Snap dips after gains
Shares of Snap fell more than 25% in premarket after the company released its latest quarterly numbers.
The parent of Snapchat posted revenue of $1.13 billion, slightly missing expectations. Average revenue per user, a key metric for the company, fell 11% to $3.11.
“Our revenue growth continued to decelerate in the third quarter and continues to be impacted by a number of factors we’ve seen over the past year, including platform policy changes, macroeconomic headwinds and increased from the competition,” Snap said in its letter to investors.
The results led Bernstein analysts to downgrade the stock, noting that it’s unclear where the stock goes from here.
– Fred Imbert
CNBC Pro: Goldman Sachs says these stocks could weather an increasingly likely recession
“The macro picture is certainly more challenging than it has been for some time,” says Goldman Sachs, which favors a bullish strategy on recessionary jitters.
The bank named several buy-rated stocks that it believes could do well in the current macro environment.
Professional subscribers can read more here.
— Xavier Ong
US Treasuries hit new decade highs
The yield on the US 10-year Treasury rose to 4.272%, after surpassing 4.2% for the first time since 2008.
The policy-sensitive 2-year Treasury yield also rose to 4.639%, its highest level in 15 years.
The 30-year Treasury yield soared to a new 11-year high of 4.266%.
Yields and prices move in opposite directions and one basis point equals 0.01%.
– Jihye Lee
European markets: here are the opening calls
Britain’s FTSE 100 will open 36 points lower at 6,905, according to IG data.
Germany’s DAX is expected to open about 119 points lower at 12,636, France’s CAC is expected to drop 51 points to 6,026 and Italy’s MIB index is expected to drop about 205 points to 21,398.
— Hannah Ward-Glenton
CNBC Pro: Here’s what to invest in as yields rise again, say BlackRock and others
Yields are rising again and it looks like the path of interest rate hikes will continue.
For investors, that means they should take the opportunity now to put their cash into bonds or Treasuries, especially those with shorter maturities, analysts said this week.
Wells Fargo said investors should take advantage of the somewhat short-lived nature of this opportunity now.
Read more here.
— Weizhen Tan
Earnings drive after-hours moves
Companies that reported gains after the bell on Thursday were among the biggest movers in after-hours trading.
Tech giant Snap plunged 25% after its revenue came in lower than expected, although the number of global daily active users was higher than expected. Competitors Meta and Alphabet also slipped.
Snap told investors that revenue growth is likely to continue to slow in the fourth quarter as platform policy changes, shifting economic conditions and increased competition hit the company. He did not give guidance for the fourth quarter.
Robert Half International fell 7.7% after the employment agency missed expectations on top and bottom results. The company reported earnings per share of $1.53 on revenue of $1.83 billion, while analysts polled by StreetAccount were expecting earnings per share of $1.62 on revenue of $1.92 billion.
CSX, on the other hand, added 4.3% after beating both top and bottom expectations. The transportation company reported adjusted earnings per share of 52 cents on revenue of $3.9 billion, beating analysts’ forecasts for earnings per share of 49 cents on revenue of $3.74 billion.
Check out the full list of moving stocks here.
—Alex Harring
Lowers higher as Nasdaq 100 lowers at open
Stock futures opened mixed in early after-hours trading.
The Dow added 51 points, or 0.2%. S&P 500 futures traded almost flat.
But Nasdaq 100 futures were down 0.3%.
—Alex Harring