Stocks fall on recession fears, $1.7T spending bill moves to House, Bankman-Fried’s bond set
The Senate sends $1.7T spending bill to the House, judge sets Bankman-Fried’s bond at $250M, stocks sell off on Fed worries after Q3 GDP is revised upward.
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Ukraine's President Volodymyr Zelenskiy addresses a joint meeting of U.S. Congress, Dec. 21, 2022. (Reuters/Jonathan Ernst)
The U.S. Senate passed a $1.66 trillion government spending bill, sending it to the House of Representatives to approve and send to President Joe Biden for his signature, averting a partial government shutdown.
The legislation provides funding through Sept. 30, 2023 for the U.S. military and an array of non-military programs.
The legislation provides Ukraine with $44.9 billion in wartime aid and bans the use of Chinese-owned social media app TikTok on federal government devices.
While the spending bill is expected to pass in the Democratic-led House as well, most Republicans there have come out against it, criticizing the package for increasing spending without addressing priorities such as securing the U.S.-Mexico border.
House Republicans wanted to delay negotiations on the full-year legislation until early next year, after they take the majority.
Stocks had their second losing session for the week while the dollar gained. Solid economic data increased concerns that the Federal Reserve's monetary policy will hover at restrictive levels for longer than many market participants may have hoped.
• The Dow Jones Industrial Average fell 1%.
• The S&P 500 dropped 1.4%.
• The Nasdaq Composite slide 2.2%
The sell-off helped bolster the greenback against a basket of world currencies.
"It’s a flight to safety because investors are becoming increasingly concerned of a recession coming in 2023," said Sam Stovall, chief investment strategist of CFRA Research in New York.
The drop comes after gross domestic product increased at a 3.2% annualized rate in the third quarter, the government said in its third estimate of GDP. That was revised up from the 2.9% pace reported last month. The economy had contracted at a 0.6% rate in the second quarter.
A separate report on Thursday showed the number of Americans filing new claims for unemployment benefits increased less than expected last week, pointing to a still tight labor market.
The Conference Board's leading indicator, a gauge of future U.S. economic activity, also fell for a ninth straight month in November.
The release on Friday of personal consumption expenditures data will provide further clues on whether inflation is continuing to moderate.
Front Month Nymex Crude for February delivery lost 80 cents per barrel, or 1.02% to $77.49.
Reuters contributed to this report.
| Symbol | Price | Change | %Change |
|---|---|---|---|
| AAL | $12.39 | -0.64 | -4.91 |
| DAL | $32.64 | -1.03 | -3.06 |
| LUV | $35.38 | -1.22 | -3.32 |
| UAL | $37.65 | -1.35 | -3.46 |
Airlines canceled more than 2,700 U.S. flights Thursday and Friday, disrupting holiday travel for thousands, as a powerful winter storm hit the United States.
The extreme weather coincided with the start of a holiday travel season that could be one of the busiest ever.
The Federal Aviation Administration said Thursday that the winter storm was bringing blizzard conditions to the Midwest with major travel disruptions expected in Chicago, Detroit and Minneapolis-St. Paul.More than 1,830 U.S. flights had been canceled Thursday and another 900 flights for Friday were scrapped, according to flight tracking website FlightAware.
| Symbol | Price | Change | %Change |
|---|---|---|---|
| DIS | $85.50 | -1.42 | -1.63 |
The ABC broadcast network and ESPN may be leaving the Walt Disney family, predicts Wells Fargo.
The bank's analysts say spinning off the two networks is the best path forward and a probable late 2023 event.
A divestiture would leave Disney as an attractive pure play intellectual property company, the bank predicted.
Sam Bankman-Fried, the founder and former CEO of crypto currency exchange FTX, is escorted into the Magistrate Court building in Nassau, Bahamas Dec. 21, 2022. (Reuters/Marco Bello)
Sam Bankman-Fried will be released on a $250 million bond package while he awaits trial on fraud charges related to the collapse of the FTX crypto exchange, a federal magistrate judge said on Thursday.
Federal prosecutors in Manhattan have accused him of stealing billions of dollars in FTX customer funds to plug losses at his hedge fund, Alameda Research.
Bankman-Fried was not asked to enter a plea on Thursday. He has previously acknowledged risk-management failures at FTX, but has said he does not believe he has criminal liability. His defense lawyer, Mark Cohen, declined to comment after the hearing in Manhattan federal court.
Nicolas Roos, a prosecutor, told U.S. Magistrate Judge Gabriel Gorenstein that the bail package would require Bankman-Fried to surrender his passport and remain in home confinement at his parents' home in Palo Alto, California. He would also be required to undergo regular mental health treatment and evaluation.Roos called the package the "largest ever pretrial bond."
| Symbol | Price | Change | %Change |
|---|---|---|---|
| AMC | $5.30 | 0.22 | 4.33 |
| APE | $0.69 | 0.01 | 1.59 |
AMC Entertainment Holdings said on Thursday it would raise $110 million in new equity capital through the sale of its preferred stock, sending the cinema chain's shares down about 28% before the bell.
Antara Capital will buy APE at an average price of 66 cents per share. APE shares surged about 98% to $1.35.Antara, a current AMC debt holder, will also exchange $100 million in debt for about 91 million APE units, which would reduce AMC's annual interest expense by about $10 million.
AMC in August announced APE as a special dividend for shareholders and a means to raise capital in the future. The company in the same month listed the stock in New York under the ticker 'APE'.
The average long-term U.S. mortgage rate declined for the sixth straight week, giving potential homebuyers a tiny amount of relief after rates topped out over 7% last month.
Mortgage buyer Freddie Mac reported Thursday that the average on the benchmark 30-year rate dipped to 6.27% this week from 6.31% last week. A year ago the average rate was 3.05%.The average long-term rate reached 7.08% in late October and again in early November as the Federal Reserve has continued to crank up its key lending rate this year in an effort to cool the economy and tame inflation.
Former associates of FTX founder Sam Bankman-Fried are cooperating with authorities.
Former Alameda Research CEO Caroline Ellison, 28, and former Chief Technology Officer of FTX Trading LTD Zixiao (Gary) Wang, 29, secretly pleaded guilty to charges including wire fraud, securities fraud and commodities fraud.
The Securities and Exchange Commission charged Ellison and Wang for their roles in a multiyear scheme to defraud equity investors in FTX.
Investigations into other securities law violations and into other entities and persons relating to the alleged misconduct are ongoing.
| Symbol | Price | Change | %Change |
|---|---|---|---|
| NFLX | $295.19 | -2.77 | -0.93 |
Governor Phil Murphy (D-N.J.) and Netflix today announced the entertainment company will develop a state-of-the-art East Coast production facility on the former Fort Monmouth campus in Monmouth County.
The move is expected to create more than 1,500 permanent production jobs and more than 3,500 construction-related jobs in New Jersey.
Netflix plans to commit $848 million in capital investments to develop the more than 292-acre parcel into 12 state-of-the-art soundstages totaling nearly 500,000 square feet of new development, with the remainder of the property slated for redevelopment with supporting film uses and several community amenities.
Netflix’s plans for a sustainable, integrated film studio campus will be completed in two phases over the course of several years.
The first phase of the project will include the construction of 12 soundstages that will range in size from 15,000 square feet to 40,000 square feet each with a minimum total buildout of 180,000 square feet and a maximum buildout of 480,000 square feet.
Additional and ancillary improvements may include office space, production services buildings, mill space, and studio backlots, among other uses customary to the film industry, with the potential for consumer-facing components, such as retail and consumer experiences.
People line up outside a newly reopened career center for in-person appointments in Louisville, Ky., April 15, 2021. (Reuters/Amira Karaoud)
The number of Americans filing new claims for unemployment benefits increased less than expected last week, pointing to a still tight labor market, while the economy rebounded faster than previously estimated in the third quarter.
Initial claims for state unemployment benefits rose 2,000 to a seasonally adjusted 216,000 for the week ended Dec. 17, the Labor Department said on Thursday. Economists polled by Reuters had forecast 222,000 claims for the latest week.Claims have swung up and down in recent weeks, but have remained below the 270,000 threshold, which economists said would raise a red flag for the labor market. A raft of layoffs in the technology sector and interest-rate sensitive industries like housing have not had a material impact on claims.
Gross domestic product increased at a 3.2% annualized rate last quarter, the government said in its third estimate of GDP. That was revised up from the 2.9% pace reported last month. The economy had contracted at a 0.6% rate in the second quarter.
Despite mounting recession fears and a housing market slump, growth estimates for the fourth quarter are as high as a 2.7% pace, with consumers doing the heavy lifting, also buttressed by savings accumulated during the pandemic
.Business spending on equipment has also remained resilient despite higher borrowing costs.
Traders work on the trading floor at the New York Stock Exchange (NYSE) in New York City, Dec. 14, 2022. (Reuters/Andrew Kelly)
Stocks opened lower after closing higher the past two sessions. Positive reads on the economy raised concerns that the Federal Reserve may have to tighten monetary policy more than expected.
GDP revised upward, labor market remains tight
The final estimate of third-quarter U.S. GDP revealed that gross domestic product increased at a 3.2% annualized rate, above the previous estimate of 2.9%.
Meanwhile, a Labor Department report showed the number of Americans filing for state unemployment benefits increased to 216,000 last week, much below economists' estimate of 222,000, indicating a still tight labor market.
"Third-quarter GDP estimate has been revised up much more than it was expected and is giving the futures a reason to decline ... if the economy is too strong, the Fed may have to raise rates by more than what was expected," said Robert Pavlik, senior portfolio manager at Dakota Wealth, Conn.
"You combine that with the weekly initial unemployment claims, it just fuels the talk of the Fed having to be more restrictive in their policy."
Asia, Europe and oil
Overseas, stocks in Asia closed mixed. The European indices were generally lower, though the FTSE was holding a slight gain.
“The index of leading UK shares is not really a proxy for the UK economy with somewhere around 70% of its earnings coming from overseas,” cautioned AJ Bell investment director Russ Mould.
Britain's economy contracted more than first thought in the third quarter of this year, putting it bottom among the Group of Seven major advanced nations ahead of what is shaping up to be a dismal 2023, data showed on Thursday.
Economic output fell by 0.3% in quarterly terms compared with a previous estimate of -0.2%, the Office for National Statistics said.Oil is higher.
Reuters contributed to this report.
Wall Street
U.S. stock futures are in reverse on Thursday after experiencing a small rally the last two trading days.
The Dow Jones Industrial Average futures is off roughly 67 points, or 0.20%, while the S&P and Nasdaq futures are approximately 0.25% and 0.38% higher, respectively.
Over the last five days, the Dow is up around 0.31%, the S&P remains off nearly 0.67% and the tech-heavy Nasdaq is still roughly 1.41% lower.
Pre-market, shares of Nike plummeted around 0.07% beneath the redline after experiencing big gains on Wednesday, while other retail stocks like American Eagle slip approximately 1.67% as Levi Strauss pops roughly 1.57% ahead of the opening bell.
Meanwhile, shares of Meta fell approximately 0.64% pre-market, Apple fell roughly 0.34%, while Microsoft went down around 0.41%.
In commodities, West Texas Intermediate crude futures spiked 1.56% to $79.51 a barrel, as gold popped 0.10% to $1,827.30 an ounce.
Stock traders (Reuters)
U.S. equity futures whipsawed Thursday morning following a rally on Wall Street as investors welcomed a report showing U.S. consumer confidence is holding up.
Oil traded higher on Thursday, rising for a fourth straight day with U.S. crude, heating oil and jet fuel stocks growing tighter.
U.S. West Texas Intermediate (WTI) crude futures traded around $79.00 a barrel.
Brent crude futures traded around $83.00 a barrel.
GDP and jobless claims will headline Thursday's economic reports.
The yield on the 10-year Treasury, which influences mortgage rates, slipped to 3.63% on Thursday.
In Asia, Tokyo's Nikkei 225 gained 0.5%, Hong Kong’s Hang Seng jumped 2.7% and China's Shanghai Composite index fell 0.5%.
Markets got a boost on Wednesday from a report showing U.S. consumer confidence is surprisingly strong, despite inflation squeezing wallets. The Conference Board’s consumer confidence index rose to 108.3 in December from 101.4 in November.
The S&P 500 jumped 1.5% to 3,878.44 while the Dow Jones Industrial Average advanced 1.6% to 33,376.48, helped by a 12.2% surge for Nike after its earnings results trounced analysts’ estimates.
The tech-heavy Nasdaq composite rose 1.5% to 10,709.37.
A photo illustration of FTX co-founder Sam Bankman-Fried and caravan leaving airport. ( Joe Raedle/Getty Images/Fox News / Getty Images)
FTX founder Sam Bankman-Fried landed back in the United States Wednesday night following his extradition from the Bahamas, as he faces multiple criminal charges.
The cryptocurrency exchange founder landed in New York shortly after 10 p.m.
He was seen walking away from the tarmac surrounded by law enforcement officials before he was placed into an SUV and rode off in a caravan of vehicles.
Bankman-Fried faces multiple charges from the Southern District of New York and the Securities and Exchange Commission, including conspiracy to commit wire fraud, wire fraud, conspiracy to commit commodities fraud, conspiracy to commit securities fraud, conspiracy to commit money laundering and conspiracy to defraud the Federal Election Commission and commit campaign finance violations.
Employees work on the assembly line at the Dakkota Integrated Systems. (Getty Images)
The Commerce Department will release its final estimate of 3Q GDP. The Refinitiv forecast is for a seasonally adjusted annual increase of 2.9%, unchanged from the preliminary estimate last month.It follows a contraction of 0.6% in the second quarter.
The Labor Department will release the number of new jobless claims filed last week. Expectations are for a rise of 11,000 to 222,000, after a surprise tumble the prior week to 211,000.
Continuing claims, which track the total number of workers collecting unemployment benefits, are expected to climb to 1.683 million, the highest in 10 months.
The Conference Board will report on the Leading Economic index for November. Watch for a decline of 0.4% from October.
Tesla Model 3 (Reuters)
Tesla is offering discounts on certain vehicles delivered in the United States and Canada this month, according to sales pages on its website and reported by Reuters.
The discounts are a $7,500 credit in the United States and a $5,000 credit in Canada on Model 3 and Model Y vehicles delivered before the end of the year.
The company is also offering free supercharging for 10,000 miles.
Tesla has benefitted from the Biden administration's Inflation Reduction Act, which offers rebates of up to $7,500 on EV purchases as part of a law intended to push automakers to reduce their reliance on China.
The latest discount comes just days after the U.S. Treasury Department delayed releasing its proposed guidance on the required sourcing of electric vehicle batteries.
Tyson's stock on NYSE display (Getty Images)
Hundreds of employees at Tyson Foods have decided not to relocate to the company's headquarters in Arkansas next year as the company consolidates its corporate offices.
The workers are reportedly from two of its largest business units, according to the Wall Street Journal.
Tyson announced in October that it planned to close its offices in Chicago, Downers Grove, Ill., and Dakota Dunes, S.D.
Those corporate employees work in the prepared foods, beef and pork divisions. About 1,000 employees total work in those locations, the company has said.
Micron GDDR6X graphics memory solution is pictured (Reuters)
Micron Technology shares were down more than 2% in premarket trading after the company said it will lay off 10% of its workforce next year as it continues to cope with a glut in the semiconductor market.
"Due to the significant supply demand mismatch entering calendar 2023, we expect that profitability will remain challenged throughout 2023," Micron chief executive Sanjay Mehrotra said.
Micron reported a quarterly adjusted loss of 4 cents per share for the quarter, more than the street estimate for a loss of one cent per share.
Revenue fell 46.9% to $4.09 billion from a year ago; analysts expected $4.11 billion.
Micron forecast second-quarter revenue of $3.8 billion, plus or minus $200 million, above Wall Street estimates. But it forecast a loss of 62 cents per share plus or minus 10 cents, much steeper than analysts' estimates for a 30 cents loss, according to Reuters.
Gas prices (AAA)
The nationwide price for a gallon of gasoline slipped Thursday to $3.101, according to AAA.
The average price of a gallon of gasoline on Wednesday was $3.108.
A year ago, the price for a gallon of regular gasoline was $3.296.
One week ago, a gallon of gasoline cost $3.193. A month ago, that same gallon of gasoline cost $3.636.
Everyone remembers when gas hit an all-time high of $5.016 on June 14.
Diesel has slipped below $5.00 per gallon to $4.709, but that is still a far cry from the $3.580 of a year ago.
Oil rig pumping (Reuters)
Oil traded higher on Thursday, rising for a fourth straight day with U.S. crude, heating oil and jet fuel stocks growing tighter.
U.S. West Texas Intermediate (WTI) crude futures traded around $78.00 a barrel.
Brent crude futures traded around $82.00 a barrel.
Both benchmark contracts jumped on Wednesday after government data showed U.S. crude inventories fell by much more than analysts had expected, posting a drop of 5.89 million barrels for the week, according to Reuters.
Distillate stocks, which include heating oil and jet fuel, also declined, going against expectations for a build.
The falling stockpiles come as demand for heating oil is set to soar with a powerful winter storm hitting the United States.
Jet fuel consumption is also expected to pick up with a post-COVID boom in travel for the end-of-year holiday season.
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