Closing Stock Market SummaryThe S&P 500 fell 1.8% on Tuesday amid anxiety surrounding rising interest rates, as well as some concerns about corporate earnings. The Nasdaq Composite (-2.6%) and Russell 2000 (-3.1%) suffered steeper losses while the Dow Jones Industrial Average fell 1.5%.
Ten of the 11 S&P 500 sectors closed lower with losses ranging from 0.7% (real estate) to 2.5% (information technology). The energy sector (+0.4%) was the exception, extending its monthly gain to roughly 17%, amid another 2% increase in oil prices ($85.48, +1.61, +1.9%).
The first issue for the market today was the persistent rise in Treasury yields, which signaled growing expectations for the Fed to hike rates four times this year -- including a potential 50-bps increase in March -- to keep inflation in check.
The 2-yr yield jumped seven basis points to 1.03%, the 10-yr yield jumped nine basis points to 1.87%, and the 30-yr yield jumped seven basis points to 2.18%. The U.S. Dollar Index increased 0.5% to 95.76. Inflation angst was fueled by the increase in oil prices, which was a byproduct of tensions in Europe and the Middle East.
Goldman Sachs (GS 354.40, -26.54, -7.0%) was the second problem today, as shares fell 7% after missing EPS estimates amid a sharp increase in compensation expenses. Rising wages have previously been cited as a potential headwind for corporate earnings, so to see that play out negatively in Goldman's case might have fueled concerns about this being a pain point for this earnings season.
The latter could explain why selling interest was almost indiscriminate. Growth stocks (big and small) may have led the retreat, but value stocks (excluding energy) also did poorly. The Russell 3000 Index fell 2.4%, and the Russell 3000 Value Index fell 1.5%.
Apart from inflation pressures, risk sentiment was curbed by deteriorating technical factors and a negative reading in the Empire State Manufacturing Survey for January, which dropped to -0.7 (Briefing.com consensus 25.0) from 31.9 in December. The Nasdaq Composite closed below its 200-day moving average (14730) for the first time since April 2020.
Separately, Microsoft (MSFT 302.65, -7.55, -2.4%) announced an acquisition of Activision Blizzard (ATVI 82.31, +16.92, +25.9%) for $68.7 billion, or $95.00 per share, in cash.
Reviewing Tuesday's economic data:
- The Empire State Manufacturing Survey for January dropped to -0.7 (consensus 25.0) from 31.9 in December.
- The NAHB Housing Market Index for January decreased to 83 (consensus 84) from 84 in December.
Looking ahead, investors will receive Housing Starts and Building Permits for December and the weekly MBA Mortgage Applications Index on Wednesday.
- Dow Jones Industrial Average -2.7% YTD
- S&P 500 -4.0% YTD
- Russell 2000 -6.6% YTD
- Nasdaq Composite -7.3% YTD
After Hours Summary: CNXC +5% rises while OESX -16% declines on earnings/guidanceAfter Hours Gainers:
Companies trading higher in after hours in reaction to earnings/guidance: CNXC +5.2%, PNFP +3.8%
Companies trading higher in after hours in reaction to news: SOFI +17.7% (received regulatory approval to become Bank Holding Company through proposed acquisition of Golden Pacific Bancorp), LPTX +9.2% (to present data from DisTinGuish study of DKN-01 at ASCO), TGNA +4.5% (Standard General and Apollo [APO] nearing deal for co, according to NY Post), RVNC +4.1% (received official Type A meeting minutes from the FDA regarding CRL for DaxibotulinumtoxinA for Injection for glabellar lines), IBRX +4% (announced interim results from QUILT 88 trial), VMEO +2.6% (reported performance metrics for December), RILY +2.5% (announced acquisition of FocalPoint Securities), UAVS +1.4% (reappointed Barrett Mooney as CEO), MTRX +1.2% (awarded project from Chemours [CC] at West Virginia facility), ENLC +1% (increased quarterly distribution)
After Hours Losers:
Companies trading lower in after hours in reaction to earnings/guidance: OESX -16.0%, ADS -5.9% (WSJ also reported that BJ's Wholesale [BJ] will move credit cards to Capital One [COF]), FULT -2.7%
Companies trading lower in after hours in reaction to news: CRDF -16% (announced new data from from lead clinical program evaluating onvansertib), OCX -8.7% (announced development and co-marketing agreement for two distributed IVD assays on Thermo Fisher's [TMO] Ion Torrent Genexus System), AXU -7.1% (announced bought deal offering), AZN -1.4% (reported results from TOPAZ-1 and HIMALAYA trials)
Is Rebecca Minkoff on the Selling Block?
The lifestyle brand is said to be talking with companies about a potential deal.
Is Rebecca Minkoff close to a deal to sell her lifestyle brand?
According to sources, Minkoff is in talks to sell her 16-year-old company, which has been saddled with debt and has faced difficulties during the pandemic. The brand, which caters to the Millennial consumer, manufactures and markets handbags, clothing, footwear and accessories, and just launched a home line.
The company is owned by Rebecca Minkoff, cofounder and creative director, and her brother, Uri Minkoff, cofounder and chief executive officer.
Uri Minkoff told WWD on Monday, “As a privately held family business we do not comment on any rumors or speculation and are focused on creating the conditions for the future growth of the business. We have always had and are constantly receiving inquiries from parties, whether they be operational, supply chain, manufacturing or financial. We evaluate them on a case-by-case basis as the goal is always to maximize the growth of the business long term.”
Reports were circulating in the market that a deal could potentially be done this week. It couldn’t be learned who was buying the brand. Jason Rabin, CEO of Centric Brands, said, “We’re not one of the parties looking to acquire the brand.” WHP Global CEO Yehuda Shmidman said he wasn’t pursuing a deal either. Joey Gabbay, CEO of Bluestar Alliance, said he passed on it, and neither Zachary Sigel, cofounder of Marquee Brands, nor Jamie Salter, chairman and CEO of Authentic Brands Group, could be reached for comment.
One source said Minkoff could be in talks with a manufacturing partner, and not an IP one.
Sources indicated that Minkoff plans to go the route of an Article 9, a secured transaction where the borrower agrees to offer personal property for security against a debt. That route has none of the shielding that a bankruptcy would give them.
According to sources, a deal came together very quickly, and the offer could be for around $15 million. One source indicated that one of the factories was owed $25 million.
During the pandemic Minkoff acknowledged that the business has been challenging. She said in an interview last June that at the start of the pandemic, retailers abruptly canceled orders, and the brand started pivoting more to a direct-to-consumer business.
“The pandemic made everything come to a glaring halt for a good six to nine months,” said Minkoff at that time. “We’re now back working with these stores, and just ensuring that we’re prepared for a different relationship, not in a bad way at all. We want to make sure wherever we do business, we’re as profitable as we can be. It’s not about being everywhere, it’s about optimizing each store that we’re in so that we’re in the ones that are doing the most business.”
Minkoff said last June that her factors, Rosenthal & Rosenthal, have been “incredible.””
“They made a decision at the moment from their hearts and not what they saw on paper. To be able to call Michael [Stanley, currently senior adviser, the factoring division], and say, ‘I’m in Paris and I’m having a panic attack.’ You need to make a decision from your heart and not the number. The fact that we built a relationship beyond loaning money, he and the team have consistently come through and supported us, in ways that other people who are just about the bottom line haven’t.”
The Minkoffs have built their brand engaging with consumers on social media. The company was among the first to offer “see now, buy now” collections, a video wall for consumers in their flagship, interactive mirrors in dressing rooms and wearables. In September, Minkoff became the first major American designer to make the collection available via NFT. In a tech-forward collaboration with Yahoo, the project offered digital versions of Minkoff’s fall/holiday looks, along with immersive online and augmented reality experiences.
LVMH Invests in Aimé Leon Dore
The French luxury giant’s venture capital arm is taking a minority stake in the New York streetwear brand founded by Teddy Santis.
LVMH Luxury Ventures, the French luxury conglomerate’s arm dedicated to investing in small creative brands, has taken a minority stake in the New York-based label Aimé Leon Dore for an undisclosed sum.
The streetwear brand was founded in Queens, New York by entrepreneur and creative director Teddy Santis in 2014. Since then, its preppy infused designs have gained traction, reflecting a wider rediscovery of a style that was once a driving force in urban fashion.
Sometimes referred to as “ALD” by its cult following, the brand offers streetwear staples like graphic tees and hoodies alongside more elevated items like rugby shirts, tailored pants and Wallabee lace-ups. The styles harkened back to the iconic fits of ‘90s hip-hop stars like Nas and the WuTang Clan, who employed preppy labels like Tommy Hilfiger in radically oversized silhouettes.
In recent years, Aimé Leon Dore’s unique brand of elevated urban Americana has attracted partnerships with the likes of Woolrich and Clarks — heritage brands seeking to reach a younger, trendier audience. Santis was named creative director of New Balance’s “Made in USA” line last year.
Recent collections have also seen the brand blend streetwear signatures with workwear references evoking Santis’ Greek heritage, like wooly fishing caps and waterproof wader pants.
Aimé Leon Dore will continue to operate independently out of its NYC offices while receiving support and guidance from LVMH, the company said.
LVMH Luxury Venture’s other investments include luxury label Gabriela Hearst and mystery-box start-up Heat. Previous minority stakes by taken by the unit include Stadium Goods, which sold to Farfetch for $250 million in 2019 and Officine Universelle Buly, a relaunch Napoleon-era maker of skincare and perfumes, which ended up being fully acquired by LVMH in October.
Gapping down
In reaction to earnings/guidance:
- SI -13.9%, GS -3.6%, HAIN -2%, XERS -1.8%, BK -1%
Select travel related names showing early weakness:
- DAL -1.9%, CCL -1.7%, RCL -1.5%, AAL -1.3%, UAL -1.2%, LUV -1.2%, JBLU -0.9%, SAVE -0.9%
Other news:
- MOLN -14.5% (Molecular Partners and Novartis (NVS) finalize license agreement for Ensovibep for COVID-19)
- EVLO -3.9% (Presents Data on EDP1815)
- CS -3.5% (appoints Axel P. Lehmann as new Chairman; António Horta-Osório has resigned)
- LGO -3.1% (FY21 production)
- AGI -2.7% (FY21 production)
- BLUE -1.7% (provides FDA update on review timelines for Betibeglogene Autotemcel)
- RIO -1.5% (reports FY21 Pilbara iron ore production declined 4% yr/yr)
- NCLH -1.2% (opts into CDC's COVID-19 Program for Cruise Ships Operating in U.S. Waters)
Analyst comments:
- ABNB -3.6% (downgraded to Hold from Buy at Gordon Haskett)
- SRAD -2.9% (downgraded to Equal-Weight from Overweight at Morgan Stanley )
- ATUS -2.2% (downgraded to Underperform from Neutral at Exane BNP Paribas)
- SHW -1.8% (downgraded to Equal Weight from Overweight at Wells Fargo)
- BDN -1.4% (downgraded to Hold from Buy at Truist)
- CHTR -1.3% (downgraded to Neutral from Outperform at Exane BNP Paribas)
- CHH -1.1% (downgraded to Underweight from Equal-Weight at Morgan Stanley)
Gapping up
In reaction to earnings/guidance:
- RADA +2.8%
Select oil/gas related names showing strength:
- RDS.A +2.1%, OIH +1.5%, BP +1.5%, XOM +1.3%, XLE +1.2%, SLB +1%, USO +0.9%, HAL +0.8%, PSX +0.6%, .
Other news:
- CTXS +2.8% (Bloomberg reports co is receiving buyout interest from private equity)
- NVRO +2.5% (announced the results from data presentations supporting the use of 10 kHz spinal cord stimulation (SCS) therapy for patients with chronic pain)
- NRXP +2.1% (expansion of ZYESAMI)
- TRQ +1.5% (FY21 production)
- ADMA +1.4% (FDA approval for its fourth ADMA BioCenters plasma collection facility)
- AZN +1.1% (receives Priority Review from FDA for ENHERTU)
Analyst comments:
- VTEX +3.3% (upgraded to Buy from Neutral at Goldman)
- SHO +0.9% (upgraded to Overweight from Equal-Weight at Morgan Stanley)
- UAA +0.8% (upgraded to Outperform from Market Perform at BMO Capital Markets)
Early premarket gappers
- Gapping up:
- GENI +6.3%, SBNY +4%, ANGI +2.8%, CTXS +2.8%, RADA +2.4%, IONS +1.6%, RDS.A +1.5%, TRQ +1.5%, AZN +1.4%, USO +1.1%, BP +1.1%, OIH +1%, XLE +0.9%, KL +0.7%, SDGR +0.7%
- Gapping down:
- MOLN -15.7%, SI -8.4%, EVLO -3.9%, CS -3.3%, LGO -3.1%, FSM -2.7%, DAL -2.7%, AGI -2.1%, RCL -1.9%, LUV -1.8%, RIO -1.5%, UAL -1.5%, NCLH -1.4%, AAL -1.4%, CCL -1.3%, JBLU -0.7%