Closing Stock Market SummaryThe S&P 500 fell 2.8% on Tuesday in a relatively broad-based decline led by the growth stocks. The Nasdaq Composite (-4.0%) and Russell 2000 (-3.2%) both underperformed while the Dow Jones Industrial Average fell 2.4%.
The mega-caps were some of the more influential laggards amid trepidation surrounding their earnings reports this week, starting with Microsoft (MSFT 270.22, -10.50, -3.7%) and Alphabet (GOOG 2390.12, -74.88, -3.0%) after the close. The Vanguard Mega-Cap Growth ETF (MGK 205.66, -8.65, -4.0%) fell 4.0%.
Losses broadened out as the day progressed, though, leaving ten of the 11 S&P 500 sectors in negative territory and S&P 500 below yesterday's intraday low (4200.82) by the close. Investors braced for further downside, evident in the 24% pop in the CBOE Volatility Index (33.52, +6.50, +24.1%).
The consumer discretionary (-5.0%), information technology (-3.7%), and communication services (-3.2%) sectors posted the steepest declines. The former included a 12% drop in Tesla (TSLA 876.42, -121.60, -12.2%) attributed in part to concerns surrounding Elon Musk's ownership of Twitter (TWTR 49.68, -2.02, -3.9%).
The energy sector (+0.04%) was the only sector in the S&P 500 that closed higher, although it couldn't keep pace with the increase in oil prices ($101.42, +2.79, +2.8%), which reclaimed $100 per barrel.
The latest earnings reports continued to have little effect on the market despite the results being mostly better than expected, including those from 3M (MMM 144.22, -4.38, -3.0%), General Electric (GE 80.59, -9.29, -10.3%), UPS (UPS 183.05, -6.59, -3.5%), PepsiCo (PEP 173.30, -0.44, -0.3%), and Sherwin-Williams (SHW 271.37, +23.35, +9.4%).
The mixed reactions added to the uncertainty facing the mega-cap earnings. Growth concerns, meanwhile, persisted and were manifested by another sharp decline in Treasury yields. The 2-yr yield fell eight basis points to 2.55%, and the 10-yr field fell five basis points to 2.77%. The U.S. Dollar Index rose 0.6% to 102.34.
Growth concerns were exacerbated by the threat of lockdowns in Beijing and a warning from Russia's Foreign Minister Lavrov that there is a "considerable" chance of nuclear war if western nations continue to deliver weapons to Ukraine, according to Bloomberg.
Separately, the Senate officially confirmed Fed Governor Brainard as Vice Chair of the Fed.
Reviewing Tuesday's economic data:
- Total durable goods orders increased 0.8% month-over-month in March (consensus +1.1%) following an upwardly revised 1.7% decline (from -2.2%) in February. Excluding transportation, durable goods orders increased 1.1% month-over-month ( consensus +0.5%) following an upwardly revised 0.5% decline (from -0.6%) in February.
- The key takeaway from the report is that it conveyed a nice rebound in order activity after a brief slump in February. Notably, new orders for nondefense capital goods, excluding aircraft -- a proxy for business spending -- jumped 1.0% following a 0.3% decline in February.
- New home sales decreased 8.6% month-over-month in March to a seasonally adjusted annual rate of 763,000 units (consensus 770,000) from an upwardly revised 835,000 (from 772,000) in February. On a year-over-year basis, new home sales were down 12.6%.
- The key takeaway from the report is that sales of lower-priced homes have lessened as a percentage of overall sales, likely due to less supply resulting from cost and supply chain pressures for builders, and emerging pressures from rising mortgage rates that are reducing affordability for lower-income buyers. That is leading to higher-priced homes accounting for a larger percentage of new homes sold, which is driving up both median and average selling prices.
- The Conference Board's Consumer Confidence Index dipped to 107.3 in April (consensus 106.0) from an upwardly revised 107.6 (from 107.2) in March. In the same period a year ago, the index stood at 117.5.
- The key takeaway from the report is that consumers' expectations did not worsen in spite of the inflation pressures and the war in Ukraine, although it was noted that purchasing intentions are down overall from recent levels.
- The S&P Case-Shiller Home Price Index was up 20.2% year-over-year in February ( consensus 18.9%) while the FHFA Housing Price Index increased 2.1% month-over-month in February.
Looking ahead, investors will receive Pending Home Sales for March, Advance Intl Trade in Goods, Retail Inventories, and Wholesale Inventories for March, and the weekly MBA Mortgage Applications Index on Wednesday.
- Dow Jones Industrial Average -8.5% YTD
- S&P 500 -12.4% YTD
- Russell 2000 -15.8% YTD
- Nasdaq Composite -20.2% YTD
Here are all the Russian oligarchs who’ve died under strange circumstances this year
Last week, two more Russian oligarchs were found dead alongside their families within 48 hours of each other in alleged murder-suicides. They’re the latest of a series of high-profile Russians to die in mysterious circumstances in recent months.
It’s not the first time there have been reports about Russian officials dying suspiciously, and Russian President Vladimir Putin has long been known to take extreme measures to silence his opponents. In 2017, USA TODAY published an investigative report detailing at least 38 oligarchs who died or went missing over a three-year span.
In the early months of 2022, at least six prominent members of Russia’s upper class have been found dead under strange conditions. Here’s a list of every Russian oligarch we know about that has died this year:
Vladislav Avayev
On April 18, Vladislav Avayev and his wife and daughter were found dead in their Moscow apartment, according to TASS, a Russian state-controlled news agency.
Preliminary evidence suggested that the deaths were the result of a murder-suicide, TASS reported. Avayev was found inside his multi-million dollar Moscow apartment holding a pistol, which was presumably used to kill his wife and 13-year old daughter.
Avayev was the former vice president of Gazprombank, which is Russia’s third largest bank, and services energy giant Gazprom.
Sergey Protosenya
Just two days later, another high-profile Russian was found dead in shockingly similar circumstances.
The body of Sergey Protosenya, a former executive at Novatek—Russia’s largest independent natural gas producer—was found hanged outside the Spanish villa he and his family were renting. His wife and 18-year old daughter were found stabbed to death in their beds, according to Spanish news station Telecinco.
Protosenya, 55, accumulated a net worth of more than $433 million, according to Telecinco.
An initial investigation by local law enforcement initially showed that the family’s deaths had resulted from a murder-suicide, but investigators did not ruling out the possibility that all three had been murdered, according to Spanish news outlet El Punt Avui.
Shortly after their deaths, Novatek, where Protosenya worked from 1997 until 2015, released a statement casting doubt over the theory that he murdered his wife and daughter.
“[Protosenya] established himself as an outstanding person and a wonderful family man, a strong professional who made a considerable contribution to the formation and development of the Company,” Novatek said in the statement. “Unfortunately, speculations have emerged in the media about this topic, but we are convinced that these speculations bear no relation to reality.”
Vasily Melnikov
Last month, Russian billionaire Vasily Melnikov was also found dead in his multi-million dollar apartment in the Russian city of Nizhny Novgorod alongside his wife and two sons, according to Russian newspaper Kommersant and reported by Newsweek.
All three Melnikovs died from stab wounds. According to Kommersant, police investigations determined that Melnikov killed his wife and sons before committing suicide.
According to reporting from Newsweek, neighbors and relatives of Melnikov have come out saying they struggle to believe Melnikov is responsible for killing his family.
Before his death, Melnikov was an executive at the medical firm MedStom. The company has suffered immensely as a result of the economic sanctions placed on Russia in the aftermath of the country’s invasion of Ukraine, according to Ukrainian news outlet Glavred and reported by Newsweek.
Mikhail Watford
In late February, just days after Russia officially invaded Ukraine, Mikhail Watford was found hanged in the garage of his Surrey, U.K. home. His wife and children were home at the time, although they were unharmed.
The Ukrainian-born Russian, 66, made his millions as an oil and gas tycoon after the fall of the Soviet Union, according to the BBC.
Born with the last name Tolstosheya, Watford changed his name after moving to the U.K. His death is under investigation by Surrey Police, who told the BBC in early March that “there were not believed to be any suspicious circumstances at the time.”
Alexander Tyulyakov
On February 25, just three days before Watford’s death, former Gazprom executive Alexander Tyulyakov, 61, was found hanged in the garage of his apartment building near St. Petersburg, according to Russian newspaper Gazeta and reported by Newsweek.
Police told the Gazeta that they found a suicide note next to his body, which led investigators to believe he died by suicide.
Tyulyakov’s suicide is currently being investigated by Gazprom, whose security units arrived at the scene with police in February, according to the Gazeta.
“In all cases, there are widespread suspicions that the deaths may have been staged as suicides, but who did this and why?” Grzegorz Kuczyński, director of the Warsaw Institute’s Eurasia Program, told Fortune about the recent string of deaths involving oligarchs.
Leonid Shulman
Like Tyulyakov, Leonid Shulman was a top executive at Gazprom when he was found dead by apparent suicide in January, before Russia had invaded Ukraine.
Shulman, 60, similarly was found next to a note that led police to believe he committed suicide, according to the Gazeta and reported by Newsweek.
Shulman’s death came just months after a probe into his alleged fraud at Gazprom was opened, according to Fortune. According to a note from the Warsaw Institute, Gazprom is also currently investigating Shulman’s death.
Gazprom, Novatek and Medstom did not immediately respond to Fortune’s requests for comment.
Gapping down
In reaction to earnings/guidance:
- SSTK -13.9%, UHS -12.1%, PII -8.6%, CR -4.7% (also to divest its Canadian distribution business for C$380 mln), IVZ -4.7%, HSBC -4.4%, CADE -4.1%, NMR -3.8%, GE -3.5%, HLX -3.3%, ARCC -2.3%, ZION -2.1%, JBLU -2%, EDU -1.9%, RTX -1.1%, MMM -1%
Other news:
- PTGX -30.9% (announces topline results from the Phase 2 IDEAL study)
- NKTX -8.8% (prices offering of 13333334 shares of its common stock at $15.00 per share)
- NKTR -6.8% (announces cost restructuring/headcount reduction)
- HFFG -4.9% (to acquire substantially all of the assets of Sealand Food)
- ARES -4.6% (NLY to sell its Middle Market Lending portfolio to ARES for $2.4 bln)
- BOC -1.1% (files for $500 mln mixed securities shelf offering; also files for 8297039 offering by selling shareholders)
Analyst comments:
- RDFN -6.6% (downgraded to Underweight from Overweight at Piper Sandler)
- NEXT -5.6% (downgraded to Sell from Hold at Stifel)
- STLA -3% (downgraded to Neutral from Buy at BofA Securities)
Gapping up
In reaction to earnings/guidance:
- OI +10.9%, GLW +9%, ARCH +7.2%, SHW +6.1%, AXTA +5%, ROP +5%, CDNS +4.7%, MEDP +4.7%, VLO +3.7%, ADM +3.5%, CATY +2.5%, HXL +1.9%, CNC +1.9%, DHI +1.8%, WRB +1.7%, BRO +1.7%, BRO +1.7%, WBD +1.6%, WHR +1.4% (also announces strategic review of its EMEA business), UPS +1.4%, CEQP +1.2%, PPBI +1%, ST +0.9%, AVY +0.8%, MSCI +0.7%, WM +0.7%
Other news:
- GMDA +31.2% (announces FDA clearance of investigational IND and removal of clinical hold for GDA-201)
- AVDL +22.1% (continued volatility)
- VNTR +15.2% (VNTR receives $85 mln settlement from Tronox)
- XAIR +2.2% (announces positive long-term safety data)
- TEX +1.9% (acquires Steelweld)
- ZVIA +1.2% (names new COO and CFO)
Analyst comments:
- TWTR +0.6% (upgraded to Hold from Sell at Stifel)
Research Calls
- Upgrades:
- Baker Hughes (BKR) upgraded to Buy from Hold at HSBC Securities; tgt $38.30
- Capital City Bank (CCBG) upgraded to Overweight from Neutral at Piper Sandler; tgt raised to $31.50
- Cie de Saint-Gobain (CODYY) upgraded to Buy from Hold at Kepler
- Hub Group (HUBG) upgraded to Positive from Neutral at Susquehanna; tgt lowered to $83
- Interactive Brokers (IBKR) upgraded to Buy from Neutral at Goldman; tgt $90
- J.B. Hunt Transport (JBHT) upgraded to Positive from Neutral at Susquehanna; tgt raised to $217
- Twitter (TWTR) upgraded to Hold from Sell at Stifel; tgt raised to $54.20
- Downgrades:
- NextDecade (NEXT) downgraded to Sell from Hold at Stifel; tgt raised to $4
- Redfin (RDFN) downgraded to Underweight from Overweight at Piper Sandler; tgt lowered to $11
- Stellantis (STLA) downgraded to Neutral from Buy at BofA Securities
- TC Energy (TRP) downgraded to Underweight from Equal-Weight at Morgan Stanley
- Zions Bancorp (ZION) downgraded to Mkt Perform from Strong Buy at Raymond James
- Others:
- AES (AES) initiated with a Neutral at Credit Suisse; tgt $25
- Air Liquide (AIQUY) initiated with an Outperform at Credit Suisse
- Ameren (AEE) initiated with an Outperform at Credit Suisse; tgt $104
- American Electric (AEP) initiated with an Outperform at Credit Suisse; tgt $113
- Atmos Energy (ATO) initiated with an Outperform at Credit Suisse; tgt $133
- Cedar Fair (FUN) initiated with a Neutral at Rosenblatt; tgt $56
- CenterPoint (CNP) initiated with an Outperform at Credit Suisse; tgt $34
- Charles Schwab (SCHW) assumed with a Neutral at Goldman; tgt lowered to $75
- CMS Energy (CMS) initiated with a Neutral at Credit Suisse; tgt $76
- Con Edison (ED) initiated with a Neutral at Credit Suisse; tgt $100
- DTE Energy (DTE) initiated with a Neutral at Credit Suisse; tgt $142
- Docebo (DCBO) initiated with an Equal-Weight at Morgan Stanley; tgt $54
- Duke Energy (DUK) initiated with an Outperform at Credit Suisse; tgt $125
- Entergy (ETR) initiated with an Outperform at Credit Suisse; tgt $136
- Evergy (EVRG) initiated with an Outperform at Credit Suisse; tgt $76
- Eversource Energy (ES) initiated with a Neutral at Credit Suisse; tgt $92
- Fabrinet (FN) initiated with a Buy at Loop Capital; tgt $129
- Formula One Group C (FWONK) initiated with a Buy at Rosenblatt; tgt $81
- Frontier Communications Parent (FYBR) initiated with a Buy at Citigroup; tgt $36
- FirstEnergy (FE) initiated with an Outperform at Credit Suisse; tgt $51
- Healthcare Realty (HR) initiated with an Overweight at Barclays; tgt $33
- HubSpot (HUBS) initiated with a Neutral at UBS; tgt $410
- Live Nation (LYV) initiated with a Buy at Rosenblatt; tgt $138
- Live Nation (LYV) initiated with a Buy at The Benchmark Company; tgt $135
- LTC Properties (LTC) initiated with an Underweight at Barclays; tgt $30
- MarineMax (HZO) initiated with a Buy at DA Davidson; tgt $48
- Motorola Solutions (MSI) initiated with a Buy at Loop Capital; tgt $295
- NextEra Energy (NEE) assumed with an Outperform at Credit Suisse; tgt $87
- NiSource (NI) initiated with a Neutral at Credit Suisse; tgt $32
- ObsEva (OBSV) initiated with a Buy at Canaccord Genuity; tgt $12
- OGE Energy (OGE) initiated with a Neutral at Credit Suisse; tgt $4
- Omega Health (OHI) initiated with an Equal Weight at Barclays; tgt $29
- Owens & Minor (OMI) resumed with a Buy at Citigroup; tgt $55
- Perficient (PRFT) initiated with an Equal-Weight at Morgan Stanley; tgt $120
- PG&E (PCG) initiated with an Outperform at Credit Suisse; tgt $17
- Phillips 66 (PSX) resumed with a Neutral at Citigroup; tgt $89
- Physicians Realty Trust (DOC) initiated with an Overweight at Barclays; tgt $20
- Pinnacle West (PNW) initiated with an Underperform at Credit Suisse; tgt $73
- Portland Gen Elec (POR) initiated with an Underperform at Credit Suisse; tgt $55
- PPL Corp (PPL) initiated with an Outperform at Credit Suisse; tgt $33
- Public Service (PEG) initiated with a Neutral at Credit Suisse; tgt $76
- SeaWorld Entertainment (SEAS) initiated with a Buy at Rosenblatt; tgt $92
- Sempra Energy (SRE) initiated with an Outperform at Credit Suisse; tgt $180
- Six Flags (SIX) initiated with a Buy at Rosenblatt; tgt $56
- Southern (SO) initiated with an Underperform at Credit Suisse; tgt $77
- The Liberty Braves Grp (BATRK) initiated with a Buy at Rosenblatt; tgt $35
- Victory Capital (VCTR) initiated with a Neutral at UBS; tgt $30
- WEC Energy Group (WEC) initiated with a Neutral at Credit Suisse; tgt $108
- Xcel Energy (XEL) initiated with an Outperform at Credit Suisse; tgt $80
Early premarket gappers
- Gapping up:
- VNTR +18.5%, OI +8%, CDNS +4%, UPS +3.8%, NKTR +3%, WHR +3%, EPD +1.2%, RDBX +1%, NVS +0.5%
- Gapping down:
- PTGX -30.7%, UHS -11%, PII -6.3%, NKTX -6.2%, HSBC -5.1%, HLX -2.4%, EDU -2.4%, DDD -2%, ARCC -2%, OXY -0.6%, ORAN -0.6%
Uber Agrees to Pay Fine for Misleading Users on Cancellation Charges
Ride-hailing giant faces roughly $19 million penalty in Australia
SYDNEY— Uber UBER 5.22% Technologies Inc. could pay roughly $19 million in penalties in Australia after the country’s competition regulator found it misled riders by warning of cancellation charges even within a designated fee-free window.
During a four-year period through late 2021, the ride-hailing app cautioned more than two million Australian customers seeking to cancel a trip within Uber’s free cancellation period that they might be charged a fee, likely leading riders to rethink their cancellation, the Australian Competition and Consumer Commission said on Tuesday. Most services including UberX have a five-minute window after a driver has accepted a trip for riders to cancel without facing any charge.
The regulator also found that for roughly two years, Uber’s app displayed inaccurate fare estimates for a now defunct UberTaxi ride option.
In separate statements, Uber and the ACCC said they have agreed to seek approval from Australia’s Federal Court for a penalty totaling 26 million Australian dollars.
“Since the ACCC raised this, we have worked to streamline our in-app messages to make it clear exactly when cancellation charges will or will not apply, per occasion, so that riders always have certainty,” Uber said in a statement. The regulator didn’t allege Uber was charging cancellation fees at times when no fee should have applied, Uber said.
It is the latest legal battle for the ride-hailing giant. In November, the U.S. Justice Department said it would sue Uber for charging wait-time fees to passengers with physical disabilities.
In August, the regulator for taxis and hire vehicles in Australia’s New South Wales—home to Sydney—fined Uber and issued 13 improvement notices after a safety audit found concerns such as driver fatigue and passenger complaints.
Uber has also faced penalties globally over issues including the classification of its drivers.
Uber may have caused some Australian riders to decide not to cancel their trip after incorrectly receiving the warning, ACCC Chairwoman Gina Cass-Gottlieb said.
In September, Uber amended its cancellation message for Australian services to tell riders they would not be charged if they sought to abandon a trip during the fee-free period, the ACCC said.
In nearly two years through August 2020, Uber’s algorithm also falsely inflated the estimated cost of booking through its UberTaxi option so that the actual fare was “almost always” cheaper than the estimate displayed, the Australian regulator said.
UberTaxi was introduced to Sydney in 2013 and discontinued in mid-2020, having been neither popular nor well promoted following the introduction of UberX in 2014, the company said.
“UberTaxi trips have always been a small portion of trips on the platform in Sydney, regardless we apologize for this,” Uber said.
Rising energy and commodity costs delay margin recovery at AB Foods
Owner of Twinings teas and Ryvita crackers faces inflation in all food businesses
Associated British Foods said the increase in energy and commodity costs following Russia’s invasion of Ukraine would delay a recovery in profit margins at its food divisions, even after price rises.
“All our food businesses are experiencing increasing inflationary pressures in many areas including raw materials, commodities, supply chain and energy,” the group said in its half-year results statement.
“As a result, we now expect a greater margin reduction in these businesses than previously expected for the full year . . . the full effect of margin recovery is now anticipated in our next financial year.”
Its food brands include Dorset Cereals, Twinings teas and Ryvita crackers, while it also has food ingredients and bakery businesses.
The group still expects profits to rise in its sugar business and discount clothing retailer Primark has benefited from the easing of coronavirus-related restrictions across Europe.
Pre-tax profit for the six months to March 6 more than doubled to £635mn after sales rose 25 per cent to £7.88bn, largely reflecting the reopening of Primark stores.
At a group level, AB Foods still expects “significant” progress in profit this year. The recovery at Primark also means that a greater proportion of group profit will be taxed at the UK’s relatively low corporate tax rate.
The interim dividend was 13.8p a share, up from 6.2p last year.