Closing Stock Market SummaryThe 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.
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)
Gapping up
In reaction to earnings/guidance:
- FTCH +23.7%, DE +3.6%, GLOB +0.9%
Other news:
- RCKT +4.3% (Presents Positive Data from LV Hematology and AAV Cardiovascular Gene Therapy Programs at the 26th Annual Meeting of the American Society of Gene and Cell Therapy)
- BSGM +3.4% (New Data at Heart Rhythm 2023 Suggests that Unipolar Signals May be Used for a More Precise Accurate Approach to Treating Arrhythmias)
- BCLI +2.9% (Summarizes Key Messages from Its Participation as Expert Speakers in an Invited Presentation and Panel Discussion at The 2023 ALS Drug Development Summit)
- LAZ +2.2% (CEO preparing to step down leaving job for Peter Orszag according to WSJ)
- MODV +2% (Resolves dispute with former CEO)
- CPE +1.4% (names new COO)
- AMAM +1.3% (names new chairman)
- NIO +1.2% (NIO and Autoliv (ALV) to develop safety technology for future electric vehicles)
- LYB +1.2% (increases quarterly dividend to $1.25 per share from $1.19 per share)
- AA +1.1% (union ratifies new collective bargaining agreement)
- OXY +1.1% (bought another 3457222 shares worth more than $201 mln)
- TXRH +1% (names new CFO) .
Analyst comments:
- BE +6.2% (upgraded to Overweight from Neutral at JP Morgan)
- LUNR +1.2% (initiated with an Overweight at Cantor Fitzgerald)
- PLNT +1.1% (initiated with an Outperform at RBC Capital Mkts)
- TEL +0.8% (upgraded to Outperform from Neutral at Credit Suisse)
Early premarket gappers
- Gapping up:
- FTCH +21.4%, DE +5.3%, RCKT +5.1%, TXRH +2.7%, LAZ +2.2%, MODV +2%, NIO +1.5%, GLOB +0.9%, KAI +0.8%, AGR +0.8%, AA +0.7%, MU +0.5%
- Gapping down:
- RBOT -4.9%, FLO -4.9%, DXC -4.6%, NDLS -4.2%, TSVT -2.3%, CVCO -1.8%, RDN -1.7%, AMAT -1.6%, ROST -0.8%, MRNA -0.7%, UMH -0.6%
Google Is Spared a Search-Engine Switch by a Major Partner
Samsung Electronics suspends internal review that contemplated changing its smartphones’ default search engine from Google to Microsoft’s Bing
SEOUL—Samsung Electronics SSNHZ 0.00%increase; green up pointing triangle won’t be swapping out the default search engine on its smartphones from Google to Microsoft’s MSFT 1.44%increase; green up pointing triangle Bing any time soon, according to people familiar with the matter.
Samsung, the world’s largest smartphone maker, has suspended an internal review that had explored replacing Google with Bing on its mobile devices, the people said. The potential switch would have swapped out Google as the go-to search engine on Samsung’s “Internet” web-browsing app, which comes preinstalled on the South Korean company’s smartphones.
Any imminent breakup would have handed Bing a coveted victory in a search-engine space that has long been dominated by Alphabet GOOG 1.68%increase; green up pointing triangle-owned Google. This year, Bing gained some fresh momentum as it adopted the features of ChatGPT, the chatbot that has surged in popularity and is run by Microsoft-backed OpenAI.
Google, Microsoft and Samsung declined to comment. The prospects of Samsung’s search-engine changing from Google to Bing were reported by the New York Times last month.
The South Korean tech giant initially deliberated a search-engine switch, thinking that it wouldn’t substantially change the status quo since the majority of Samsung smartphone users don’t use its in-house Internet app, according to people with knowledge of the discussions. Most users opt for other browsers including Google Chrome, which also comes preinstalled on Samsung phones, they said.
But now, Samsung has decided it won’t further internally discuss the matter at this time given concerns over how the switch could be perceived by the market as well as the impact on its wide-ranging business relations with Google, the people said.
The Suwon, South Korea-based company isn’t permanently closing the door on Bing as a future option, they added.
Samsung shipped roughly 260 million smartphones last year, according to tech-market researcher Counterpoint Research, accounting for roughly one-fifth of the worldwide total. Google has served as the default search engine on Samsung’s smartphones since its first model—the Galaxy S—was launched in 2010.
But Samsung’s smartphone division has long viewed its heavy reliance on Google’s software as a concern, one of the people said. Exploration of a switch to Bing was part of Samsung’s continuing efforts to find ways to diversify its smartphone software and consider new offerings, the person said.
Google’s search engine, the world’s most-visited website, currently accounts for roughly 93% of searches on computers and mobile devices, while Bing accounts for about 3%, according to the latest tracking data from Statcounter.
Google has lucrative contracts with Samsung and Apple to ensure that Google’s apps or services are default options on devices sold by the world’s two largest smartphone makers. Google pays Apple between $8 billion to $12 billion annually, according to estimates disclosed in a 2020 U.S. Justice Department lawsuit challenging Google’s anticompetitive practices.
Google is known to have a similar type of search deal with Samsung, though the sum is estimated to be significantly smaller, according to industry analysts.
Samsung and Google compete in certain product categories, though have been loyal customers of each other’s services in many other areas.
Nearly all of Samsung’s phones depend on Google’s Android operating system, with Google even customizing its apps to work on Samsung’s foldable-screen smartphones. Google is a buyer of Samsung’s memory chips and a customer of the South Korean company’s contract chip-making business.
At the same time, Samsung’s smartphones vie against Google’s Pixel phones in the Android space. They are also rivals in areas including tablets, laptops and wearables, as well as smart home devices and solutions.
Microsoft, too, has maintained a close partnership with Samsung. The two companies have worked to enable smooth connections between their offerings, such as a Windows PC syncing with apps on a Samsung Galaxy smartphone. Microsoft, a major player in the cloud-computing business, is also a key buyer of Samsung’s memory chips.
Volodymyr Zelenskyy lands in Saudi Arabia en route to G7
Ukraine’s president seeks to broaden international support while Hiroshima attendees discuss further sanctions
Volodymyr Zelenskyy has arrived in Saudi Arabia en route to the G7 summit in Japan as Kyiv seeks to broaden international support beyond its western allies.
The Ukrainian president landed in Jeddah, which is hosting an Arab League summit, on Friday afternoon. Four people briefed on the preparations for the G7 meeting said he would travel to Hiroshima this weekend.
Zelenskyy said on Twitter he was beginning his “first-ever visit to the Kingdom of Saudi Arabia to enhance bilateral relations and Ukraine’s ties with the Arab world”.
His journey comes as Ukraine and its allies seek greater support from countries in the global south — several of which have not joined western moves to punish Moscow — at a crucial time in the war, with Kyiv poised to launch a counter-offensive.
Zelenskyy said his agenda included “temporarily occupied territories”, a “peace formula” and energy co-operation. He added that Saudi Arabia “plays a significant role and we are ready to take our co-operation to a new level”.
Saudi Arabia has good relations with the Kremlin, co-operates with Moscow on oil production cuts through Opec+ and has offered to help mediate in the conflict.
Zelenskyy is also seeking to bolster western support for Ukraine with his trip to the G7 in Hiroshima, first reported by the Financial Times.
On Friday, in a joint statement about Ukraine, the G7 leaders agreed to support Kyiv for “as long as it takes” and to increase pressure on Moscow through additional sanctions measures, including efforts to curb its diamond exports.
But the statement did not include an earlier pledge to block Russian energy export routes that have been temporarily shut down by Moscow since the war began.
The watering down of that vow, from “preventing the reopening of avenues previously shut down by Russia’s weaponisation of energy” to promising that “Russia is no longer able to weaponise energy against us” came after the G7’s EU members demanded it be changed, three people briefed on the negotiations told the FT.
Zelenskyy’s attendance could complicate Japanese prime minister Fumio Kishida’s efforts to ensure that the summit, which is being held in Asia for the first time in seven years, would not focus solely on the war in Ukraine.
Kishida wants the gathering to focus on security issues in the Indo-Pacific region and outreach to developing countries as well as the Ukraine conflict. The US also wants to have a strong focus on the Indo-Pacific and ensure that the countries can demonstrate as much unity as possible on their approach to China.
Zelenskyy is expected to redouble efforts to secure increased military support from western allies, including supplies of US-made F-16 fighter jets, which require the blessing of Washington.
He is also expected to discuss efforts to promote his 10-point peace plan for ending the war, which calls for a full Russian withdrawal and the restoration of Ukraine’s territorial integrity. A rival Chinese proposal does not refer to these as prerequisites for peace talks.
Oleksiy Danilov, secretary of Ukraine’s National Security and Defence Council, did not confirm Zelenskyy’s attendance at the Hiroshima summit, but told state TV on Friday that “very important things will be decided there, so the physical presence of our president is absolutely important in order to defend our interests”.
The Japanese government had previously said that Zelenskyy was expected to participate in the event via video conference.
His international travel plans during the war have been kept secret until the final moment because of security concerns.
Zelenskyy has not visited Asia since the conflict began but he made previously unannounced visits to the UK, France, Italy and Germany this week.
Chris Johnstone, a Japan expert and former Pentagon official, said Zelenskyy’s appearance at the G7 would reinforce Kishida’s view that events in Europe and Asia were “deeply interconnected”.
Japan has taken a strong stance in support of Ukraine, including imposing sanctions on Russia, partly because it wants European support in the face of the rising challenge from China.
“It’s also a challenge to Europe, to be equally strong in pushing back [at] Chinese behaviour,” said Johnstone, who is now at the CSIS think-tank in Washington.
Canada on Friday joined the other G7 members in imposing a further round of sanctions on Russia for its suspected human rights abuses and to penalise individuals and entities that provide military technology to the Russian armed forces.
>>> Up
* Asos Raised to Buy at Citi; PT 600 pence
* Aston Martin Raised to Outperform at Mediobanca SpA
* Boohoo Raised to Buy at Panmure Gordon; PT 70 pence
* Catena Media Raised to Buy at ABG; PT 31 kronor
* St James's Place Raised to Outperform at RBC; PT 1,400 pence
>>> Down
* Air France-KLM Raised to Neutral at Redburn (+)
* Boliden Cut to Hold at Berenberg; PT 360 kronor
* Canada Goose Cut to Hold at CFRA; PT $23
* Duell Cut to Reduce at Inderes; PT 1.60 euros
* Sonova Cut to Hold at Bank Vontobel; PT 270 Swiss francs
* Telefonica Deutschland Cut to Hold at Deutsche Bank
>>> Initiation
* BlackRock Rated New Buy at Citi; PT $750
* Blackstone Rated New Buy at Citi; PT $98
* Blue Owl Capital Rated New Buy at Citi; PT $14
* Carlyle Group Rated New Buy at Citi; PT $40
* KKR & Co. Rated New Buy at Citi; PT $69
* Nike Rated New Outperform at CICC; PT $151.87
* SGL Rated New Buy at Jefferies; PT 10.50 euros
* TPG Rated New Buy at Citi; PT $32
* T. Rowe Rated New Sell at Citi; PT $98
>>> Call
* Asos Raised at Citi, Seeing Measures Ahead to Improve Position
* Boliden Downgraded by Berenberg on Subdued Base Metals Outlook
* KKR, Apollo and Blue Owl Rated New Buys, Top Picks at Citi
* M&S Raised to Buy at Peel Hunt as Won’t Remain Cheap for Long
* St James’s Place Upgraded at RBC as Shares Now Offer Value
Friday Morning Papers Summary
LA REPUBBLICA
-La Repubblica takes aim at the new Italian government for having failed to spend money for infrastructure in the wake of the flooding that has left 13 people dead so far in north-central Italy (the Emilia Romagna region). Repubblica claims that there are EUR 8.4B in the state coffers already dedicated to the mitigation of hydrogeological risks which could be used immediately to build or improve for embankments, reservoirs, lamination tanks, canalizations and anything else needed for the country's water basins, which have not been spent since 2018.
-Next Monday, Ireland will charge META Platforms for having failed to protect Facebook users, given that American privacy protection rules do not match those enforced in the EU. The fine could reach up to 4% of the turnover – and it’s expected to exceed the EUR 746M fine that the EU imposed on Amazon in 2011. The difficult negotiations between Washington and Brussels to find a new agreement over data continue, after the Court of Justice canceled the previous one. More specifically, the EU is concerned that the personal data of European Facebook users was transferred to the United States where the NSA, and possibly other intelligence services, had the possibility of accessing them. This is the motivation with which the Irish privacy authority, the country where the Facebook has its EU headquarters, will impose a record fine on Meta on Monday, which according to rumors collected by Bloomberg could exceed the 746 million euro imposed in 2011 from Luxembourg to Amazon.
FRANKFURTER ALLGEMEINE ZEITUNG
-Germany’s Economy Minister Habeck had announced the resignation of his State Secretary for Energy Patrick Graichen on Wednesday after he had not sufficiently separated private and professional matters in two verifiable cases. This also shakes the timetable for the controversial law on the replacement of oil and gas heating systems. The FDP is stepping on the brakes - on the grounds that Parliament has lost the central contact person for the topic in Economics Secretary Patrick Graichen. The SPD and the Greens, on the other hand, see no connection between the two issues. Federal Minister of Social Affairs Hubertus Heil (SPD) has spoken out against postponing the controversial law to replace oil and gas heating systems. "It is necessary to create clarity quickly….I am confident that we can find a good solution." He is in favor of solutions that are technically feasible and socially feasible. "Climate protection needs broad social acceptance and must not become a project only for the well-off." The SPD parliamentary group will make sure in the parliamentary process "that no one is overwhelmed".
-The generals in Myanmar are ostracized worldwide. But three states in particular supply them with weapons. The UN is particularly appalled by Singapore's role. Since taking power in February 2021, the junta has been accused of committing crimes against humanity in what was once the richest country in Southeast Asia. In many countries, the generals and many of their relatives' companies are ostracized, and most Western investors have withdrawn from the dictatorship. China, Russia, but also the rich city-state of Singapore , continue to sell the junta weapons and preliminary products for weapons production, each worth hundreds of millions. Singapore's role in particular is a wake-up call - because the federation of ten Southeast Asian countries (ASEAN), in which Singapore plays a leading role, is trying to find a peaceful solution to the Myanmar conflict under pressure from the democracies of Indonesia and Malaysia. Singapore, with its bargaining power, could play an active role in this. According to the UN report, however, companies and banks in the city-state are making good money from the rogue regime's rearmament.
IL SOLE 24 ORE
-Almost all manufacturing companies in the Emilia Romagna region (and note this is the region of Ferrari, Lamborghini, Maserati, Ducati, Prosciutto di Parma, Parmigiano Reggiano among others) affected by flooding have been shut down, and many will continue to remain closed today, pending new provisions. Even those who have been spared still have to deal with serious logistics problems, adds Bozzi, which not only prevent employees from reaching their workplaces, but also affect supplies and deliveries. «Everything is still – says the president -. In the next few days we will understand the damage, in the meantime we try to help each other: the first thing to do is to make people safe".
-What happens if the United States fails to reach an agreement on the debt ceiling and therefore, technically, the largest economy in the world defaults? In this eventuality, described by Treasury Secretary Janet Yellen as "an economic catastrophe," which asset classes should you include in your portfolio? To this question - the subject of a survey conducted by Bloomberg on both a panel of professional and retail investors - the majority put gold in first place.
-Amazon will invest $13B to expand its cloud business in India by 2030. Jeff Bezos's giant, who had already invested $3.7B in infrastructure in India in recent months for AWS, this new allocation will support 131,700 full-time jobs in roles such as engineering, telecommunications, and construction. India, it should be remembered, is the second largest online market in the world, and has been dealing with a veritable explosion of the cloud market in recent years. This is why Amazon, the global leader in the sector, cannot fall behind its competitors (Microsoft and Google among others) who have already invested in the Asian country.
LES ECHOS
-This is a sign that says a lot about the change in budgetary times for the French state. As at the time of the sovereign debt crisis a little over ten years ago, the government once again has its eyes riveted on the timetable for the publication of the ratings of the rating agencies. The ministry of finance is anxiously awaiting June 2 when Standard and Poor's (S & P's) will issue its judgment on the French debt. Fitch issued the first verdict at the end of April, downgrading the rating. But it will be difficult to hide if S & P's - with a higher weight in the hierarchy of rating agencies, like Moody's - raises its voice in turn.
-By raising its key rates seven times since last July to curb soaring inflation in the euro zone, the European Central Bank (ECB) has put an end to a long cycle of easy money. However, so far, the consequences for the French economy have been quite limited. “It takes between one and two years for the monetary tightening to produce its effects. Some not always negative effects are already visible: “The ECB's policy has led to an appreciation of the euro against the dollar. This lowers the price of imports,” observes Marc Brütsch, chief economist at Swiss Life Asset Managers.
-If Germany made an impression by returning, after the fact, to the compromise reached in Brussels concerning the end of the sale of combustion engines, France is now taking the same path, blocking the directive providing for the development of renewable energies. This text is one of the pillars of the famous European Green Deal. Its flagship measure significantly raises the target for the deployment of renewable energies to bring it to 42.5% of total energy consumption in Europe by 2030, i.e. almost double the current level (22%). At the heart of the debates is nuclear power, which France promotes, and in particular the methods of producing carbon-free hydrogen for industry.
HANDELSBLATT
-Ukrainian President Volodymyr Zelensky wants to personally attend the G7 summit in Hiroshima, the Ukrainian government confirmed on Friday. He is expected at the meeting on Sunday, an EU insider confirmed to the Reuters news agency on Friday. Other media had previously reported that Zelensky not only wanted to participate with a video message, but also wanted to travel there himself. Actually, the heads of state and government wanted to deal with the Ukraine war on Friday afternoon and promise the country further help in the defense against Russia. Even before his visit to Berlin last Sunday, there had been speculation for a long time as to whether Zelensky would come or not. In the end he had visited Rome, Berlin, Aachen, Paris and London. Because there have been repeated death threats against Zelensky, very high security precautions apply when the Ukrainian president travels abroad.
-According to EU Council President Charles Michel, the possible delivery of F-16 fighter jets to Ukraine will be an issue at the G7 summit of the leading western industrial nations in Japan this Friday. They are closely coordinated to pursue a common approach to military support, the Belgian said in a press conference in the morning (local time). This Friday there will be an opportunity to discuss the issue with US President Joe Biden and the other summit participants and to jointly examine what additional support is needed. "It is very clear that Ukraine needs more military equipment," he said.
ABC
-Research on organoids has advanced to the point that brains are being ‘grown’ in the lab. Actually, mini-brains, a controversial term that, while making surprising headlines, creates a stir among scientists, who are still debating what to call them. Simply explained: these are groups of cells that grow in a petri dish; they clump together, and end up functioning in a similar way to processes that occur inside our heads. At the moment, they are not complete brains; but they serve as simplified and miniature models (they measure just a few millimeters, looking similar to a grain of rice) with which to experiment, and with which achievements ranging from mini-brains to which they have grown 'eyes' have already been achieved.
-Digi Mobil arrived in Spain in 2008 and according to its latest data, at the end of 2022 it had 4.9M customers. The Romanian telecom operator has expanded in the last two years and has increased by thousands of mobile users every month. The company, which boasts 5.3M at the end of the first quarter, has already placed itself in second place among telephone companies, followed by Orange-MásMóvil with 3.9 million. It belongs to the multinational RCS & RDS, offers telephone and internet services on mobile phones, as well as fixed and fiber telephony services.