Dow surges 500 points, led by Nike, on hopes of better earnings than fears

Wolfe Research downgraded Palantir Technologies’ stock to underperform, saying investors should sell before the stock dips below $5. Analysts’ $4.50 price target implies a downside of more than 28% from Tuesday’s closing price of $6.31.

“We’ve seen PLTR’s revenue decline by 30 percentage points, while operating margins have contracted from the mid-30s to around 15% over the past few years,” analyst Alex Zukin wrote in a Tuesday note. , and FCF is on the same trajectory,” analyst Alex Zukin wrote in a note Tuesday.

CNBC Pro subscribers can read the full story here.

——Saramin

On Wednesday, Goldman Sachs’ Jan Hatzius did not expect the Federal Reserve to cut interest rates next year, as the economy is likely to avoid a recession in 2023.

“We’re not looking for cuts because we’re not looking for a recession,” the chief economist said, putting the chance of a recession at 35 percent, below consensus expectations. “Our expectation or baseline is that the economy will continue to grow and the labor market adjustment process will continue, but there will be no recession.”

He points to two strengths in the economy that support this view. Real household disposable income, despite falling earlier in the year, has risen along with headline inflation.

Financial conditions have already tightened significantly and the lagged effects of rate hikes may have started, Hatzius said. To be sure, the impact on economic activity may take several quarters, but the impact on growth is relatively short-lived, he added.

Hatzius expects deflation in goods in 2023, while inflation in services may take longer to decelerate. The market has begun to see some relief in the housing and rental markets, although those signs have not yet been reflected in the consumer price index, he said.

“If GDP still grows at 1%, which is our forecast for the next few quarters, then job growth will slow significantly further, but remain positive,” he said. “Obviously there’s going to be more volatility every month, but we’re not trending down.”

— Samantha Subin

Shares of Nike rose nearly 14 points on Wednesday, meaning that alone lifted the Dow Jones Industrial Average by nearly 90 points. That’s also nearly 20% of the average total return.

The Dow, unlike the S&P 500, is a price-weighted average and for every $1 change in any one stock in the Dow, the average moves up or down 6,358 points. The current divisor for the Dow is 0.15728 (1/0.15728=6.358).

— Scott Schniper

The S&P 500 technology sector rose 2 percent on Wednesday, leading the broader market. AMD, Broadcom and Apple were the best performers in the sector, all up more than 3%. Consumer discretionary and financials also rose about 2%, while other sectors of the S&P 500 rose at least 1% each.

— Fred Imbert

Shares of Caterpillar and Conagra Brands rose to near their highest levels since June 2021 on Wednesday.

Arch Capital Group shares are also near their all-time high when they listed on Nasdaq in 2000.

Three S&P 500 stocks hit new lows during Wednesday’s session, including Tesla, which hit its lowest level since November 2020.

These stocks also hit new lows:

• Generac trades at lowest point since April 2020
• Salesforce.com trades at lowest since March 2020

— Samantha Subin

Existing home sales were weaker than expected in November, marking the 10th straight monthly decline.

Existing home sales fell 7.7% to a seasonally adjusted annual rate of 4.09 million units in November, according to the National Association of Realtors. That was below expectations for a 5.9 percent drop to 4.17 million vehicles last month, according to economists polled by Dow Jones.

That was down 5.9 percent from October’s 4.43 million units.

——Saramin

The Conference Board’s consumer sentiment index jumped to 108.3 in December from 101.4 in November, beating StreetAccount’s consensus estimate of 100.5. The figure was also the highest for the index since April.

“Inflation expectations fell back in December to the lowest level since September 2021, driven mainly by the recent fall in oil prices. Vacation intentions have improved, but plans to buy homes and major appliances have cooled further,” said Lynn Franco, senior director of economic indicators. express. the conference committee said in a statement.

“This shift in consumer preferences from big-ticket goods to services will continue in 2023, as will headwinds from inflation and higher interest rates,” Franco added.

— Fred Imbert

Nike shares rose 15.3%, on track for their biggest one-day gain since June 25, 2021, on stronger-than-expected quarterly results. On the day, the stock soared 15.53%.

Stocks opened higher on Wednesday.

The Dow Jones Industrial Average rose 303 points, or 0.92%. The S&P 500 rose 0.66% and the Nasdaq Composite rose 0.35%.

— Samantha Subin

Jefferies downgraded Starbucks to hold from buy, saying a recession could hurt consumer spending through 2023.

“With SBUX stock up 40% since its May YTD low (S&P -2.8%), we turn to the sidelines and will maintain our Buy rating at Hold as investment and growth in the sector continues Afterwards, risk/reward now appears to be balanced following concerns from earlier this year,” analyst Andy Barish wrote in a note on Wednesday.

CNBC Pro subscribers can read the full story here.

——Saramin

Retail stocks rose premarket Wednesday, led by shares of Nike, which rose more than 11%.

The athletic apparel company reported earnings that beat expectations and saw a quarterly decline in inventories. If it holds on to those gains, the stock would have its best one-day performance since June 25, 2021, when it surged 15.5%.

Following overnight moves, the stock has gained 6% in December and is on track for a three-month winning streak for the first time since July 2021. Nike shares are down about 30% this year after five straight years of gains.

Other retail stocks were higher premarket. Lululemon rose 3 percent, Under Armor rose 4.6 percent and VF Corp rose 2.4 percent.

—Samantha Subin, Nick Wells

Along with Nike and FedEx, these are some other stocks that moved before the close:

Rite Aid – Rite Aid rose 4% pre-market, helped by accelerating sales growth in its retail business, after reporting a narrower-than-expected loss and revenue that topped Wall Street forecasts. However, the pharmacy operator lowered its full-year guidance due to various issues including seasonal price cuts.

Six Flags – Six Flags rose 7% in premarket action as activist shareholder Land & Buildings Investment Management increased its stake in the theme park operator by 3%. Land & Buildings proposes management changes, including the sale or divestment of the company’s real estate assets.

Starbucks — Starbucks fell 1% after Jefferies downgraded to hold from buy, saying the coffee chain could be affected by a pullback in consumer discretionary spending.

Read the full list of stocks moving ahead of the close here.

— Peter Sacknow, Sam Subin

Energy stocks rose premarket on Wednesday as oil prices rose.

Western, Asia Pacific company, marathon oil with Antero Resources The transaction price rose by more than 1%.

The Energy Select Sector SPDR Fund (XLE) was last up 1.8%. The SPDR S&P Oil & Gas Exploration & Production ETF rose 1.9 percent for the week. The gain put it on track for its first consecutive weekly gain since early November.

The VanEck Oil Services ETF was up 1.5% in premarket trading.

—Samantha Subin, Nick Wells

Mortgage refinance applications rose 6% last week as interest rates fell to their lowest level since September, according to the Mortgage Bankers Association’s seasonally adjusted index.

At the same time, volumes were down 85% from a year earlier.

Meanwhile, applications to buy a home fell 0.1% this week and are down 36% from a year ago.

— Samantha Subin

Wall Street analysts are growing more confident in Nike after the apparel giant released its latest quarterly results.

UBS analyst Jay Sole called Nike his top pick for 2023, saying the company’s growth potential is undervalued. He reiterated his Buy rating on the stock.

“Nike’s investments in product innovation, supply chain speed and digitalization are unlocking what could be years of above-average growth. In addition, we believe Nike has the brand strength, strategy, skills and resources to outperform peers in a recession” Saul wrote.

CNBC Pro subscribers can read the full story here.

——Saramin

European shares rose on Wednesday, reversing the previous session’s decline.

this STOXX 600 Index It was up 0.6% in early trade, with nearly all sectors and major bourses up. Retail stocks led the gains, up 2.2 percent, followed by financial services, up 1.2 percent.

Many investors’ hopes for a year-end rally were at least briefly dashed ahead of Tuesday’s rally, but there is still time, said Ryan Detrick, chief market strategist at Carson Group.

One of the misunderstood things about so-called “Santa’s rallies” is that they happen during the last five days of the year and the first two days of the new year, he noted on CNBC’s “Closing Bells: Overtime” on Tuesday.

The seven-day average return was 1.33%, and it closed higher almost 80% of the time, he added.

“There’s no seven day of the year that’s more likely to close higher,” he said. “With this weakness we have and our oversold sentiment, anything can happen. We still believe there’s a chance that Santa will end this Friday.” Come to town.”

— Tanaya Marshall

Nike and FedEx were among the biggest gainers in the hours after reporting quarterly results.

Nike shares soared more than 12% after the athletic apparel and footwear maker easily beat its earnings and revenue estimates for the latest quarter. That boosted other athleisure stocks. Under Armor rose more than 2 percent after hours, Skechers rose 2 percent and Lululemon rose 1.75 percent.

Meanwhile, FedEx’s results were less impressive, but investors welcomed the package delivery giant’s “aggressive” cost-cutting measures. Earnings beat expectations, but were down from a year earlier. Revenue for the quarter was lower than expected. FedEx shares rose nearly 4 percent after hours.

— Tanaya Marshall

Stock futures opened higher Tuesday night, driven by earnings reports from Nike and FedEx.

Dow Jones Industrial Average futures were up 110 points, or 0.33%. S&P 500 futures rose 0.23%, while Nasdaq 100 futures rose 0.31%.

— Tanaya Marshall