Stock Market News: First Horizon, TD scrap deal, PacWest shares tank, Apple earnings

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., May 4, 2023. REUTERS/Brendan McDermid

Wall Street ended lower on Thursday after PacWest's move to explore strategic options deepened fears about the health of U.S. lenders and hit shares of regional banks as well as JPMorgan Chase, Wells Fargo & Co and other major financial players.

PacWest Bancorp tumbled after it confirmed it was exploring strategic options, including a sale. Shares of the regional lender and other banks got hammered recently on fears of a worsening banking crisis.

Western Alliance Bancorp plummeted, with trading in the stock halted multiple times. At its session low, Western Alliance shares were down more than 60% and the lender denied a report that it was exploring a potential sale.

According to preliminary data, the S&P 500 lost 29.99 points, or 0.73%, to end at 4,060.76 points, while the Nasdaq Composite lost 61.39 points, or 0.51%, to 11,963.94. The Dow Jones Industrial Average fell 292.18 points, or 0.87%, to 33,122.06.

A smartphone with a displayed AMD logo is placed on a computer motherboard in this illustration taken March 6, 2023. REUTERS/Dado Ruvic/Illustration

Microsoft Corp is working with Advanced Micro Devices Inc on the chipmaker's expansion into artificial intelligence processors, Bloomberg News reported on Thursday, citing people with knowledge of the matter.

The software giant is providing financial support to bolster AMD's efforts, and working with the chipmaker on a homegrown Microsoft processor for AI workloads, code-named Athena, the report said.

Khirfan’s Super K convenience store owner Brad Khirfan, attends to a customer in Flint, Michigan, U.S., October 9, 2019. REUTERS/Brian Snyder

Fears of an economic slowdown are weighing on the minds of America's small business owners, who cite recession, inflation and a decrease in access to capital as major concerns, according to new data.

The Small Business and Entrepreneurship Council (SBE) released its Small Business Checkup Survey on Thursday, which found 85% of owners expressed concern about an economic slowdown or recession in the coming months. 

According to the findings, a culmination of factors could be at play, including historically high inflation, the Federal Reserve's attempts to tamp it down with aggressive interest rate hikes, and the recent regional banking crisis that started with the collapse of Silicon Valley Bank in March.

ECONOMY

Small business checkup: Recession, inflation, lending top concerns

The Small Business and Entrepreneurship Council has released its latest annual checkup survey showing recession, inflation and access to capital are concerns for owners.

Shares of First Horizon tumbled on Thursday after a previously announced $13.4 billion merger agreement with TD Bank was called off.

The companies mutually terminated the deal, which was originally announced in late February 2022, due to uncertainty over if and when TD could receive regulatory approval.

First Horizon's stock plunged more than 36% on the news. TD's shares listed on the New York Stock Exchange were flat.

MARKETS

First Horizon shares tank after TD Bank deal scrapped

Shares of First Horizon are down on Thursday after the company said a merger agreement with TD Bank was terminated due to uncertainty over regulatory approvals.

A screen displays the company logo for Kroger Co on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., October 14, 2022. REUTERS/Brendan McDermid

The Kroger Co has agreed to pay West Virginia $68 million to settle claims that it fueled the opioid epidemic through lax oversight of its pill sales, bringing the state's years-long litigation over opioids to a close.

The deal, announced Thursday by West Virginia Attorney General Patrick Morrisey, comes a month before the grocery store had been set to go to trial against the state. All other companies sued by the state over opioids had already settled.

Morrisey at a news conference said the deal marked "a big day for West Virginia." Kroger did not immediately respond to a request for comment.

West Virginia, which has opted out of nationwide opioid settlements in order to pursue cases on its own, has now secured close to $1 billion from drugmakers, distributors and pharmacies, Morrisey said, a larger amount per capita than any other state.

A vial of the Moderna coronavirus disease (COVID-19) booster vaccine targeting BA.4 and BA.5 Omicron sub variants is pictured at Skippack Pharmacy in Schwenksville, Pennsylvania, U.S., September 8, 2022. REUTERS/Hannah Beier/File Photo

Moderna Inc on Thursday reported a surprise profit and stronger-than-expected sales for its COVID-19 vaccine in the first quarter, as it received payments for orders that were deferred last year.

The vaccine maker posted a profit of 19 cents per share, compared with analysts' expectations for a loss of $1.77 per share, in part because sales were higher than expected. 

The $1.83 billion of sales for its COVID vaccine Spikevax represents most of the $2 billion expected in the first half of the year for advanced purchase agreements and double the average analyst estimate of $998 million, according to Refinitiv IBES data.

Moderna expects an additional $3 billion in deferred vaccine revenue in the second half of 2023.

Shopify Inc has divested the logistics arm it built over the past few years, in a reversal of its strategy of aggressively investing in fulfillment networks, the Canadian e-commerce platform said on Thursday.

It has sold its logistics unit, including Deliverr Inc, a company it acquired for $2.1 billion less than a year ago, to freight forwarder Flexport in an all-stock deal in exchange for a 13% stake in the startup it has previously invested in.

The company on Thursday also said it would let go 20% of its staff, its second round of large layoffs within a year. It also reported stronger-than-expected earnings.

Shopify has also sold 6 River Systems, another retail fulfillment automation startup it paid $450 million for in 2019, to British online supermarket technology provider Ocado for an undisclosed amount, the company said. The move to expand into logistics services was part of Shopify's ambition to support merchants selling on its platform with one-stop service.

A view of the Goldman Sachs stall on the floor of the New York Stock Exchange July 16, 2013. REUTERS/Brendan McDermid

Goldman Sachs is among the underwriters named as defendants in a securities class action lawsuit related to several of SVB Financial Group's share offerings in 2021 and 2022, the investment bank disclosed in a regulatory filing on Thursday.

The complaint asserts claims under the federal securities laws and alleges the offer documents contained material misstatements and omissions, the Wall Street giant said.

Goldman added the lawsuit, filed on April 7 in the U.S. District Court for the Northern District of California, seeks compensatory damages in unspecified amounts.

On March 14, SVB said Goldman Sachs was the acquirer of a bond portfolio on which it booked a $1.8 billion loss, a transaction that set in motion the failure of the bank. The loss on the portfolio was the reason SVB, attempted a $2.25 billion stock sale, using Goldman Sachs as an adviser.

The logo of Qualcomm is seen during the Mobile World Congress in Barcelona, Spain February 27, 2018. REUTERS/Yves Herman/File Photo

Qualcomm Inc's shares sank nearly 8% premarket on Thursday after the chip designer signalled it would take longer for its crucial smartphone market to rebound from a post-pandemic slump.

The company blamed the weakness on the timing of purchases by a customer that only buys its cellular modems and China, where an expected post-COVID recovery was yet to materialize.

The company, supplies top handset makers Apple Inc and Samsung Electronics. Qualcomm did not name the modem customer, but analysts pointed to Apple, which will report results after markets close.

"While we believe investors were expecting a miss, this was admittedly a somewhat sobering report," said Bernstein analysts, among the 13 brokerages that cut price targets on Qualcomm's stock.

Shares of Pacific Western, also known as PacWest , extended losses from Wednesday on reports the California regional bank was seeking a buyer as it fights for its survival. On Thursday, the bank, in a statement, said

"Recently, the Company has been approached by several potential partners and investors - discussions are ongoing. The company will continue to evaluate all options to maximize shareholder value. The bank has not experienced out-of-the-ordinary deposit flows following the sale of First Republic Bank and other news."

MARKETS

Another bank failure? PacWest reportedly seeks buyers after stock drop

Another regional bank, PacWest Bancorp, is mulling a sale or other moves, according to Bloomberg. Raising capital and breaking up its businesses are other options.

The logo for ConocoPhillips is displayed on a screen on the floor at the New York Stock Exchange (NYSE) in New York, U.S., January 13, 2020. REUTERS/Brendan McDermid/File Photo

ConocoPhillips on Thursday raised its full-year production outlook after the U.S. shale producer topped Wall Street estimates for quarterly profit as higher oil output helped offset the impact of a decline in prices.

Conoco joined larger rivals Exxon Mobil Corp and Chevron Corp in posting upbeat first-quarter results.

The largest U.S. independent oil company raised the midpoint of its annual production forecast range by 10,000 barrels of oil equivalent per day (boepd). Production in 2023 is now expected to be 1.78 million to 1.80 million boepd.

The company's first-quarter production hit a record 1.79 million boepd, an increase of 45,000 boepd from the same period a year earlier.

Larry Fink's Blackrock will play a big role in helping clean up the banking crisis which continues to unravel.

MARKETS

FDIC enlists BlackRock to clean up banking castoffs

The FDIC enlisted BlackRock's Financial Market Advisory unit to help sell off $114 billion in leftover assets from recently failed banks, a role the influential firm has played before.

A view of the European Central Bank headquarters in Frankfurt, Germany March 16, 2023. REUTERS/Heiko Becker/File Photo

The European Central Bank raised interest rates by 25 basis points to 3.25% as expected on Thursday and said it would stop reinvesting cash from maturing debt in its 3.2 trillion euro Asset Purchase Programme from July.

The central bank for the 20 countries that share the euro has now lifted rates by a combined 375 basis points since last July, its fastest pace of tightening, but further action is still likely given mounting wage and price pressures.

The rate hike, a slowdown after three consecutive 50 basis point increases, comes only days after euro zone banking data showed the biggest drop in loan demand in over a decade. That suggests previous rate rises are working their way through the economy and that ECB policies are now restricting growth.

Adding to the case for caution, most big central banks around the world are now moving in 25-basis-point increments after big hikes earlier, and the U.S. Federal Reserve even signalled on Wednesday that it could pause.