BArrons : Buying Porsche’s Stock Isn’t Easy. How to Pick the Right One.

Buying Porsche’s Stock Isn’t Easy. How to Pick the Right One.

The reviews are in for the 2024 Porsche Cayenne, which is available as a plug-in hybrid, and they are spectacular. Porsche POAHY +1.14% stock could be spectacular as well, but the big question is, which one?

U.S. investors can be forgiven if that sounds like an odd question. If they want to buy Ford Motor F +0.09% (ticker: F), Tesla TSLA +1.84% (TSLA), or General Motors GM –0.73% (GM), they simply type in the ticker and go. Porsche isn’t nearly as straightforward.

There are American depositary receipts of Porsche Automobil (POAHY), but that isn’t Porsche , the car maker. It’s a holding company that owns about 25% of the ordinary stock in Porsche and about 53% of the ordinary stock in Volkswagen (VOW.Germany).

Porsche, the maker of the famous 911, is actually named Dr Ing hc F Porsche AG, though it’s usually just referred to as Porsche. The ticker of the U.S.-listed ADR is DRPRY. The company has 911 million shares outstanding in Germany, a total composed of 455.5 million ordinary shares and 455.5 million preferred shares. In Germany, it trades under the ticker P911. (Clever, huh?)

That’s the one investors uninterested in complexity should consider buying. Though the stock is up roughly 40% from its initial public offering about eight months ago, there’s still room for more gains, if trading in Ferrari RACE +1.04% (RACE) is anything to go by. Ferrari sells fewer, more expensive cars than Porsche, but both companies are low-volume, ultra-luxury car makers that have no problem selling out their annual production—and are less impacted by a slowing economy or affordability issues.

Porsche, though, trades for 18 times estimated 2024 earnings, less than half the 37 times Ferrari fetches. Ferrari deserves some premium—its earnings are expected to grow at about 13% a year on average for the coming two years, faster than the 9% rate for Porsche—but that premium seems a bit much. The franchises are similar enough that they can trade closer to one another. Valuing Porsche at 21 times, as Société Générale analyst Stephen Reitman does, would put Porsche stock at about $146 a share, or about $14.60 for the ADR, up 16% from Thursday’s close of $12.59.

Porsche Automobil is more intriguing. Its stakes in Porsche and Volkswagen are worth roughly $39 billion, but it has an enterprise value (market capitalization plus debt) of just $25 billion, a 37% discount. There are reasons for that discount—potential payouts related to charges that Volkswagen had manipulated emissions testing in the U.S. is the largest overhang—but it’s grown too large for Abhay Deshpande, founder of Centerstone Investors, to ignore. He believes a discount of 10% to 15%, in line with its historical discount, is more reasonable, and would imply a 50% gain for Porsche Automobil.

“I know the thesis about [P911] being highly profitable…a luxury goods kind of concept,” Deshpande says. “We own the holding company.”

Smead Capital Management CEO Cole Smead, who bought the Porsche IPO, now thinks shares in the holding company, Porsche Automobil, are the better bet. He cites the possibility, if not probability, that the latter decides to spin out the individual auto makers, or at least part of them.

Investors can take advantage of the holding company’s complexity or keep it simple and buy shares in the auto maker. Either way, they should go far.

Barrons : Everyone Is Focusing on Bud Light’s Transgender Controversy. They’re M

Everyone Is Focusing on Bud Light’s Transgender Controversy. They’re Missing a Bargain Stock Opportunity.

The mess involving Bud Light has dampened a revival at Anheuser-Busch InBev BUD +0.99% and soured Wall Street on the global beer giant’s stock.

Investors, however, might want to consider the depressed shares (ticker: BUD), which have fallen about 11%, to $58.80, since the company reported good first-quarter results in early May. Now fetching about 18 times projected 2023 earnings of $3.19 a share, BUD is more than 50% below its 2016 peak of $133 and trades at a wider-than-usual discount to leading consumer stocks such as Coca-Cola (KO) and PepsiCo (PEP), which command about 25 times earnings.

The drop was spurred by a Bud Light promotion featuring transgender influencer Dylan Mulvaney, leading many conservatives to boycott the brand.

While Bud Light’s troubles are hurting its U.S. brands, BUD gets just 30% of its profits from the U.S. and Canada. The company has strong positions elsewhere around the globe, anchored by Central and South America, where it generates about half of its profits. The beer business shows signs of perking up, and BUD’s improved balance sheet has let the company boost its dividend, now yielding 1.4%.

Says Evercore ISI analyst Robert Ottenstein: “The issues in the U.S. present a serious challenge today, but seem to be stabilizing. If [negative] volume trends start to moderate soon—and we think there is a good chance [they will]—this will likely prove an attractive entry point.” He rates the stock Outperform with an $80 price target.

Investors, however, might need to be patient. Owing to the Bud Light brouhaha, Wall Street has cut its 2023 estimates by about a dime a share and sees little or no earnings growth this year. The villain: 20%-plus declines in Bud Light off-premise sales—those at retail stores—since the controversy erupted more than a month ago, according to Beer Business Daily. And the drop at bars and restaurants, some investors suspect, may be worse.



Moreover, the controversy appears to be hurting other BUD brands, including Budweiser and even Michelob Ultra—one of the few bright spots domestically for the company, which has suffered steady overall U.S. volume declines for a decade.

However, BUD’s global beer volume rose 1.8% in 2022 and 0.9% in the first quarter, with revenue up 12.4% on higher pricing. Citigroup analyst Simon Hales, who rates BUD a Buy with a $73.50 target, expects a 13% drop in Bud Light volume in 2023’s final three quarters, but argues that its woes already are more than discounted in the stock price.

There have been encouraging developments. BUD has shifted from an acquisition-heavy growth strategy to one focused on driving volume and revenue growth.

The architect of the old approach, Carlos Brito, stepped down as CEO in 2021, replaced by another Brazilian, Michel Doukeris. Now, the company is emphasizing its premium-price beers, led by Corona, Stella Artois, and Budweiser, which are marketed worldwide. In the first quarter, earnings rose 9% year over year to 65 cents a share. Corona’s revenue rose 11.9%; Stella Artois’, 13.3%; and Budweiser’s, 17.8% outside their home markets of Mexico, Belgium, and the U.S., respectively.

Net debt fell to a still hefty $69.7 billion at year-end 2022, versus $76.2 billion in 2021, helping to raise BUD’s credit ratings from Moody’s and S&P to single-A from BBB and the equivalent. For years, especially after it bought SABMiller for $100 billion in 2016, a knock on BUD was that it was taking on too much debt for acquisitions.

Ottenstein and some other analysts think the Bud Light controversy will fade by next year. That’s reflected in the FactSet consensus call for a 15% increase in 2024 earnings to $3.69 a share, which puts the stock at a reasonable 16 times forward earnings. Doukeris and other executives were upbeat on the company’s first-quarter earnings conference call in early May, saying that they expect 2023 earnings before interest, taxes, depreciation and amortization, or Ebitda, to rise 4% to 8%, in line with its medium-term guidance. They also expect revenue this year to rise at a faster rate than Ebitda.

One problem: The brewer is incorporated in Belgium, so isn’t eligible to be in the S&P 500 indexSPX –0.14% . That gives U.S. institutions less reason to own it.

Although the Mulvaney marketing strategy backfired, it was addressing a real issue: the long-term decline of Bud Light, BUD’s top domestic brand, accounting for 30% of U.S. sales. Volumes were down by a third since 2010, even before the recent debacle.

BUD plans to triple spending on Bud Light marketing this summer. But its handling of the Mulvaney situation has raised questions about its marketing and crisis-management abilities. The company’s initial statement said, “We never intended to be part of a discussion that divides people. We are in the business of bringing people together over a beer.” Nick Puleo, founder and CEO of Comsint, a strategic consulting firm, wrote in Barron’s that such “wishy-washy verbiage isn’t likely to unite anyone.”

Two U.S. marketing executives involved in the initiative have been put on leave, and HSBC analyst Carlos Laboy argues that further leadership changes may be needed. But whatever happens, the stock is cheap enough to warrant a look from bargain hunters.

BArrons : It’s Time to Think Bigger on AI. These 8 Stocks Could Be the Next Winn

It’s Time to Think Bigger on AI. These 8 Stocks Could Be the Next Winners.

Investors continue to scramble for new ways to play the mania over artificial intelligence software. From here, they’re going to have to think a little more outside the box.

The obvious bets are so well known that it seems everyone owns them. The consensus big winner is Nvidia NVDA –1.31% (ticker: NVDA), which makes graphics processors used to train the large language models at the heart of generative AI. Nvidia shares have more than doubled this year already, and the company now ranks as the fifth most valuable tech stock, ahead of Meta Platforms META –0.49% (META) and Tesla TSLA +1.84% (TSLA).

Microsoft MSFT –0.06% (MSFT) was the market’s first pick on AI software, given its large stake in ChatGPT creator OpenAI and the introduction of AI features into a host of Microsoft applications. The stock is up 33% this year, and has a market value of $2.4 trillion, trailing only Apple .

Alphabet GOOGL –0.06% (GOOGL) shares were shunned earlier this year after Microsoft unveiled an AI-powered version of its Bing search engine. But Alphabet has been investing in AI for at least a decade and recently announced AI advancements of its own. The stock is up 39% in 2023. Also creeping into the discussion: Oracle (ORCL), which has an agreement to host Nvidia-powered supercomputing services on the Oracle Cloud. Oracle shares are pennies from an all-time high, up 26% for the year.

Then there are the crowd favorite but speculative AI plays: enterprise software maker C3.ai (AI) was up 30% this past week; data analytics firm Palantir Technologies (PLTR) was up 23% on the week, while voice-enabled AI play SoundHound (SOUN) rallied 10%.

But if AI is going to be world-changing technology along the lines of the internet, the cloud, the smartphone, electricity, and air travel, there have to be other ways to play it, right?

I raised that question with Brook Dane, a Goldman Sachs tech portfolio manager, who was a guest this past week on Barron’s Live, our daily webcast and podcast.

“I’ve been a tech investor for more than 30 years. This is one of, if not the most exciting, developments I’ve ever seen,” he said. “The power of these models and how they will change knowledge-worker productivity...is profound...we are fully focused on finding the next AI winners.”

That said, Dane points out that it is “super early.” Microsoft said on its most recent earnings call that generative AI related workloads could add 1% to the quarterly growth of its Azure cloud business in the June quarter. That implies $150 million of incremental revenue, for a company generating about $55 billion a quarter in revenue overall. It’s barely a rounding error.

Dane sees four basic ways to play the opportunity in AI. There are pick-and-shovel plays, which enable data centers to run these AI workloads. There are infrastructure needs around AI, “given that data is the key to all this.” There are security firms. And there are applications that will benefit from the addition of AI.

In the pick-and-shovel category, Dane’s favorite pick is Marvell Technology (MRVL), which makes chips used in data center connectivity. Their chips, he says, assure workloads are distributed fast and efficiently.

He also thinks the AI trend will be a boost for software companies focused on electronic design automation, or EDA. In particular, Dane is bullish on Cadence Design Systems (CDNS). He also notes that AI workloads are memory intensive, which is bullish for DRAM and flash memory giant Micron Technology (MU).

As for data technology plays, Dane says he has been talking to lots of companies about how they think about deploying AI, and that a couple common themes have emerged. He says companies want to train models on their own internal data, without sharing intelligence with the world. That requires “cleaning and sandboxing” data, he says, which is a boost to companies like Snowflake (SNOW) and Datadog (DDOG) that help companies warehouse and analyze information.

In security: “Any time you get a big change in the threat landscape, it is very good for cybersecurity companies,” Dane says. “This will introduce a whole new realm of mayhem into the world as bad actors take advantage of this technology and do things that you and I can’t even think of right now. But it’s coming...We’re going to need new forms of protection.”

His top pick to protect against the new threat is Palo Alto Networks (PANW). Dane says Palo Alto has data on “threat vectors” that dwarf anything their customers could compile. “They are going to run AI models across that data to identify threats earlier, faster, and better than any other companies.” He’s also bullish on ZScaler (ZS), a cloud security software company.

Finally, there are applications: “This is the earliest area, but will be the biggest over time,” Dane says. “We’re looking for the obvious places these tools can get deployed in a responsible and safe way.” One stock he likes is HubSpot (HUBS), which provides customer relationship software for small and medium-size businesses. He thinks HubSpot can use AI to make its customers more productive and efficient in their marketing spend. If HubSpot can do that, Dane says, customers will pay more. And the stock should ratchet higher.

To be clear, this is hardly an exhaustive list. I’ve written before about other companies deploying AI software, including Adobe (ADBE) and Duolingo (DUOL). ServiceNow (NOW) just laid out a new partnership with Nvidia to drive better workflow management software for the enterprise.

The internet has changed every business. And so will AI.

WSJ : Negotiators Halt Debt-Ceiling Talks With No Breakthrough in Sight

Negotiators Halt Debt-Ceiling Talks With No Breakthrough in Sight
White House, Republicans hope to reach deal centered on spending cuts, work requirements

Debt-ceiling negotiators broke off a second round of talks late Friday without yielding a breakthrough, as the White House and House Republicans struggled to reach a deal to raise the limit and avert a government default as soon as next month.

The resumption and abrupt end of the talks Friday night followed a breakdown in the negotiations earlier in the day, highlighting the divisions that remain as time for reaching a deal draws short.

Rep. Patrick McHenry (R., N.C.), one of the negotiators, said that he wasn’t confident it would be possible to reach an agreement this weekend, the deadline that President Biden said needed to be met to clear legislation by June 1, when the U.S. could default.

“This wasn’t a negotiation tonight,” Rep. Garret Graves (R., La.) told reporters after talks ended. “This was a candid discussion about realistic numbers, a realistic path forward.”

White House officials left the Capitol without promising to return. “We’re going to keep working tonight,” White House adviser Steven Ricchetti told reporters. “I’m not assessing anything. I’m sorry,” Ricchetti said when asked if he would be returning.

Negotiators said the breakdown in talks centered around how deeply to cut the government budget, with House Speaker Kevin McCarthy (R., Calif.) saying Friday that spending levels were a major sticking point as Republicans pressed for deeper reductions than Democrats appeared poised to accept. Republicans have ruled out any tax increases as a way of reducing federal deficits.

“We’ve got to get movement by the White House and we don’t have the movement yet so, yeah, we’re in a pause,” McCarthy told reporters. “We can’t be spending more money next year. We have to spend less than we spent the year before. It’s pretty easy.”

“There is no question we have serious differences,” White House press secretary Karine Jean-Pierre said in a briefing in Hiroshima, Japan, where Biden was attending the Group of Seven summit. She said the president is being briefed regularly while he is in Asia and the White House will “work hard toward a reasonable bipartisan solution” that can pass both chambers of Congress.

“This is the core of democracy, that’s what we’re seeing at play here,” she said, adding that both sides will need to give up some of their demands to land a deal.

The White House followed up with a tougher statement from White House communications director Ben LaBolt. “Republicans are taking the economy hostage and pushing us to the brink of default,” he said, adding that Republicans “are recycling a barely watered down version of their extreme budget proposal.”

In Hiroshima on Saturday, Biden told reporters during a meeting with Australian Prime Minister Anthony Albanese that he was “not at all” worried about the talks. He said they tend to move in stages and “I still believe that we’ll be able to avoid a default.”

The initial setback in talks tempered a weeklong selloff in U.S. Treasurys, with rebounding expectations for economic growth and inflation driving bond yields to new two-month highs. The yield on the benchmark 10-year U.S. Treasury note settled at 3.690% Friday—its highest close since March 10, the day that Silicon Valley Bank was seized by the government following a run by depositors. Yields rise when bond prices fall.

The Dow Jones Industrial Average fell 109.28 points, or 0.3%, while the S&P 500 and Nasdaq Composite finished slightly lower. All three major indexes finished the week in the green.

The break came one day after the White House and McCarthy had expressed optimism that a deal could be reached soon, after both sides narrowed negotiations between McCarthy and Biden to a handful of key aides and allies. McCarthy said he hadn’t spoken Friday with Biden.

Negotiators are facing a short deadline. The Treasury Department has said that the U.S. could become unable to pay its bills on time as soon as June 1 unless Congress acts. Negotiations have focused on capping spending, revoking unused Covid-19 aid, streamlining permitting for energy projects and changing work requirements for some benefit programs.

McHenry had earlier characterized the breakdown in talks as “putting negotiations at a very bad moment.”

Ricchetti had said as he left a meeting earlier Friday that both sides were “playing by ear” when asked whether there would be more talks.

A bill passed by the GOP-controlled House in April that Republicans see as the starting point in negotiations proposed raising the nation’s $31.4 trillion borrowing limit in exchange for deep cuts in government spending. The bill would return the government’s discretionary spending to fiscal 2022 levels in fiscal 2024 and then cap annual spending growth at 1% over roughly a decade.

Notably, McCarthy in his Friday comments didn’t specify returning discretionary spending to fiscal 2022 levels, which would represent about a $130 billion cut from 2023 outlays. Instead, he said that spending had to be less than the current level, which is $1.65 trillion, suggesting that the opportunity for a deal may lie in reaching agreement on a smaller cut.

In the negotiations, the White House has signaled its openness to a deal that caps future spending for two years, though the specifics of such a proposal are unclear. Some Republicans have pushed for a 10-year spending caps deal.

The White House has argued for weeks that rolling back spending to 2022 levels would require cuts as deep as 30% to many government programs if spending on the military and veterans are protected, as GOP lawmakers have promised.

People briefed on the negotiations said the two sides were struggling to make progress on the core issues that have been at the center of the talks for weeks, and both Republicans and White House officials expressed frustration that an agreement hadn’t been reached.

Some of the people expressed optimism that the negotiators could come back to the table over the weekend, but both sides were evaluating next steps on Friday.

Both Republicans and Democrats have acknowledged that any deal to raise the debt ceiling will include some conditions, after the White House effectively gave up on its insistence that the debt-ceiling increase be “clean.” But the conservative and progressive wings of the Republican and Democratic caucuses have signaled opposition to parts of the emerging talks, putting pressure on leadership when it comes time to corral votes.

On Thursday, the House Freedom Caucus, a group of about three dozen, far-right lawmakers who frequently oppose government spending bills, took a position that negotiations should stop until the Senate passed the April debt-ceiling bill.

At the same time, progressive lawmakers on the far left of the Democratic Party are pushing Biden to use the 14th Amendment to the Constitution to raise the debt ceiling without Congress, as a way to avoid negotiating with Republicans. Progressives have loudly opposed strengthening work requirements for programs that help poor Americans.

“We cannot reach a budget agreement that increases the suffering of millions of Americans,” a group of 11 senators wrote, adding it is “seemingly impossible to enact a bipartisan budget deal at this time.”

The 14th Amendment states that federal debt authorized by law “shall not be questioned.” Biden has said he was considering invoking the amendment as a way to keep paying the nation’s bills if Congress didn’t raise the debt limit. But he added the issue would be subject to litigation and might not be a solution in the current standoff, and administration officials have played down the possibility.

The Congressional Black Caucus has also taken a position opposing new work requirements in any final debt-ceiling bill.

WSJ : Mon Dieu! Chanel Challenges Hermès in Bag War

Mon Dieu! Chanel Challenges Hermès in Bag War
Chanel’s most popular handbag is now more expensive than an Hermès Birkin for the first time. Investors should take note.

Chanel has raised eyebrows by hiking the price of its most popular handbag to the same level as an Hermès RMS 0.94%increase; green up pointing triangle Birkin. It’s a fascinating case study of how far wealthy shoppers can be pushed and the results so far look mixed.

The Birkin is the ritziest handbag in the luxury goods industry. A rare one made out of exotic skins like crocodile can sell for more than $100,000 and even a basic leather 25-centimeter Birkin will set American buyers back $10,400 before sales taxes. In addition to sometimes costing more than the average U.S. car, the bags are hard to get hold of as Hermès limits production to around 50,000 each year, according to Bernstein estimates.

Lately, the so-called “Birkin premium” – the price difference between the Hermès bag and other brands, as tracked by luxury handbag forum PurseBop – has shrunk dramatically. Chanel has raised the price of its popular medium-size Classic Flap bag by 75% over three years in the U.S. The bag cost $5,800 in 2019 and is $10,200 today, according to PurseBop’s founder Monika Arora.

The Chanel bag is now more expensive than the comparable-sized Birkin 25 in Europe for the first time. And it is catching up fast in the U.S.: The Chanel model was $4,000 cheaper than the Birkin before the pandemic and is only $200 less today.

Chanel says these sharp moves are due to inflation and exchange rate shifts. Most luxury brands are charging shoppers more as their input costs are higher, but nowhere have prices risen as drastically as at Chanel. The Birkin is only 6% costlier than prepandemic levels, for example.

One theory in the luxury industry about why Chanel is pushing prices so high is that it wants a handbag that is as exclusive as the Birkin. The Classic Flap is now priced out of the reach of all but the wealthiest shoppers. Chanel may also be trying to make them scarce by limiting the number of bags people can buy each year.

A strategy of selling fewer bags at higher prices already appears to be juicing Chanel’s profits. The brand is privately owned but publishes annual results that show group operating margins jumped from 28% in 2019 to 35% in 2021. Chanel’s 2022 earnings are due to be released over the next few weeks and may reveal another rise in profitability.

Despite grumbling about the price increases on online handbag forums, the moves don’t seem to have damaged the brand. “They are raising prices because customers are willing to pay. At the high end, there is no pushback,” says Michelle Berk, CEO of luxury handbag reseller Privé Porter.

Stock analysts who follow Hermès have asked the brand’s executives whether they plan to raise prices more aggressively in response. Being relatively cheaper than Chanel may not be a great look. Luxury brands are a classic example of Veblen goods, demand for which rises as prices go higher. Hermès needs to make sure that shoppers still see its handbags as exclusive since two models, the Kelly and the Birkin, contribute around a quarter of the company’s sales according to some estimates.

Since Hermès is run so conservatively, the Birkin premium isn’t likely to reappear soon. The brand only increases prices enough to offset inflation in its supply chain. Typically, this has been 1% to 2% a year, although Hermès has upped prices 4.4% so far in 2023 in response to higher inflation, UBS data shows.

Trends in the secondhand market suggest Hermès shareholders needn’t worry. Pristine-condition Chanel Classic Flap bags in medium sold for $4,800 on average last year on luxury resale website The RealReal. Data supplied by the U.S.-based reseller shows the bag’s secondhand value is rising in line with the hikes implemented in the brand’s stores.

But even a mint Chanel bag is still only worth roughly 50% of its original cost if the owner decides to resell it. This discount in the secondhand market is a good proxy for whether Chanel’s price maneuvers are making the brand more desirable to luxury shoppers. It hasn’t improved since 2019.

Compare this to Hermès, which is one of the few luxury brands that costs more to buy used than new, along with watchmakers Rolex and Patek Phillippe. Shoppers are willing to pay a premium for these brands secondhand rather than tolerate long waiting lists in stores. Buyers paid nearly double store prices for pristine Birkin bags sold on the RealReal in 2019. In 2022, they shelled out three times what the bags cost in the brand’s boutiques.

This means anyone lucky enough to score a brand-new Birkin can be pretty confident the bag will hold its value. They can even flip it for profit. A shopper who spends $10,400 on a Birkin 25 could walk out of the Hermès store and immediately sell it to a reseller like Privé Porter for $16,000, who in turn will sell it on Instagram for $24,000. These numbers will be higher for unusual colors and hardware combinations.

Chanel can crank its prices as high as wealthy fashionistas will bear, but the resale market makes it easier than ever for savvy buyers to spot which brands are worth splurging on.

>>> US Closing Stock Market Summary

Closing Stock Market Summary

The stock market kicked off this options expiration day on an upbeat note, but rolled over fairly quickly. Opening gains had the S&P 500 back above the 4,200 level before the market turned lower around 11:00 a.m. ET when Fed Chair Powell began speaking at a panel discussion regarding perspectives on monetary policy.

Equities seemed to be responding to worries about the debt ceiling and regional banks, though, rather than Mr. Powell's comments. Briefly, Mr. Powell said that inflation is "far above" the Fed's objective, but also said that rates may not have to rise as much because of credit conditions. These views were comparable to what he shared during his press conference following the FOMC meeting earlier this month, so they weren't necessarily surprising.

What was surprising was a tweet from Punchbowl News reporter Jake Sherman that "debt limit talks between the White House and House Republicans have been paused, per multiple sources involved in the talks." Around the same time, CNN reported that Treasury Secretary Yellen told bank CEOs that more mergers might be needed. The latter news stirred some renewed angst in the banking space.

The SPDR S&P Regional Banking ETF (KRE) closed with a 1.8% loss. Still, regional bank stocks had a good showing this week and today's losses were not enough to offset a sizable gain in the KRE, which rose 7.8% on the week.  

Ultimately, the major indices were able to climb somewhat off their lows to close with more modest losses; however, the S&P 500 remained pinned below 4,200 on a closing basis.

Most of the S&P 500 sectors closed with losses while energy (+0.7%) and health care (+0.5%) outperformed. 

Despite a nice gain in Tesla (TSLA 180.14, +3.25, +1.8%), the S&P 500 consumer discretionary sector (-0.8%) closed at the bottom of the pack. A loss in Amazon.com (AMZN 116.25, -1.90, -1.6%) contributed to the sector's underperformance, but lagging retailers suffered the steepest declines. The SPDR S&P Retailer ETF (XRT) fell 3.6% today.  Although it's not a sector component, retailers were trading down in sympathy with Foot Locker (FL 30.21, -11.31, -27.2%), which reported disappointing earnings results and issued dismal guidance.

The communication services (-0.5%) and financials (-0.5%) sectors were also top laggards today. 

Treasuries saw some knee-jerk buying in response to the debt ceiling and regional bank worries coming back into play. The 2-yr note yield, at 4.35% before the news broke, plunged to 4.19% before settling the day unchanged at 4.27%. The 10-yr note yield, at 3.71% earlier, fell to 3.64% but settled up four basis points to 3.69%.

  • Nasdaq Composite: +20.9% YTD
  • S&P 500: +9.2% YTD
  • S&P Midcap 400: +1.1% YTD
  • Dow Jones Industrial Average: +0.8% YTD
  • Russell 2000: +0.7% YTD

There was no notable U.S. economic data today. 

There will be no notable U.S. economic data on Monday.

>>> US Gapping down

Gapping down
In reaction to earnings/guidance:

  • FL -25.3%, CTLT -4.8% (guidance; to hold business update call related to delay of Q3 results) FLO -4.6%, CVCO -1.8%, AMAT -1.6%, ROST -0.6%

Other news:

  • RBOT -4.9% (names new COO)
  • NDLS -3.4% (CFO resigns)
  • SAIC -1.9% (CEO to retire names new CEO)
  • RDN -1.7% (names new CFO)
  • TSVT -1% (presents late-breaking results for SC-DARIC33 an investigational CD33-targeting CAR t in pediatric and young adults with relapsed or refractory acute myeloid leukemia)

Analyst comments:

  • APH -0.7% (downgraded to Neutral from Outperform at Credit Suisse)