What's moving markets today: April 12, 2019
US equities ended Friday in the green, with the Dow pushed higher by gains in the basic materials, consumer cyclicals and financial sectors.
On the week, the Dow logged a loss after two weeks of gains. The S&P and Nasdaq both recorded a third week of gains in a row.
Disney (DIS) was the best performing Dow stock with a nearly 12% jump, trading higher following the announcement of its Disney+ streaming channel. Disney logged its best one-day percentage gain in nearly a decade.
Financial stocks were led higher by JPMorgan (JPM), which reported better-than-expected earnings before the bell.
Campbell (CPB) is selling Bolthouse Farms, the juice, salad dressing and carrot line that marked the company's ill-fated foray into fresh food.
The soup maker decided to sell Bolthouse in May after conducting an operational review to figure out how to turn the business around. At the time, Campbell also decided to sell its international business, which includes Arnott's cookies, in order to focus on its core brands.
Bolthouse presented a particular problem: Poor weather hurt carrot crops, which hit sales and profits in 2017. Last year Keith McLoughlin, then interim CEO, said the company aggressively pursued the health "megatrend" without considering what differentiated Campbell from rivals doing the same exact thing.
The $510 million sale to Butterfly, a private equity firm focusing on the food sector, is expected to close this summer. Bolthouse's former CEO Jeff Dunn, operating partner at Butterfly, will be reinstated as chief executive.
General Electric has moved a step closer to putting its disastrous adventure into subprime mortgages behind it.
The Justice Department announced on Friday a $1.5 billion penalty on GE over WMC Mortgage, the subprime lender it shut down a decade ago.
The settlement puts to rest allegations that WMC, like other subprime lenders before the mortgage meltdown, misrepresented the quality of subprime mortgages.
Those low-quality loans were then sold to investment banks, which packaged them into securities that were sold to invest investors who suffered billions of dollars in losses when the housing market collapsed.
"The failure to disclose material deficiencies in those loans contributed to the financial crisis,” Jody Hunt, the assistant attorney general, said in a statement.
Between 2004 and 2007, WMC made more than $65 billion of mortgage loans. The DOJ alleged that the majority of the subprime loans WMC originated and sold into securities "did not comply" with the lender's representations about the loans.
GE said in a statement that the settlement contains "no admission of any allegations" and marks a step towards de-risking GE Capital, the company's financial arm.
"We are pleased to put this matter behind us," GE said.
JPMorgan and Wells Fargo (WFC) kicked off reports for financial institutions before the bell, putting bank earnings in focus. JPMorgan is up 5%, while Wells Fargo fell 3%.
Investors are also looking at Disney and its competitor Netflix (NFLX) after Disney announced the price of its streaming service. Disney is up 10%, making it the top gainer in the Dow. Netflix is down 4%.
Netflix (NFLX) might be more expensive than the upcoming Disney+ service, but one analyst says Netflix has a big advantage: It's producing more original content.
That's what Bernstein analyst Todd Juenger told clients in a note. Here are some highlights:
There are dozens of websites on the Internet dedicated to 'what's new to watch on Netflix this week,' We don’t think there will be any websites similarly dedicated to 'what's new to watch on Disney+ this week.'"
Juenger said there will be only a "little more than one new thing per week" by the time Disney+ hits its production peak by 2024:
We're not sure the Disney+ [user interface] will even have a 'what's new' feature as one of its categories. Too embarrassing to have 'what's new' be the same thing for weeks at a time."
Juenger also doubts that parents would automatically want to buy Disney+ (DIS), despite the brand's reputation for family friendly content.
We also question, a bit, how much of Disney's brand strength and appeal stems from nostalgic memories from the parents, as opposed to demand from the kids.
Of course, parents are the decision-makers so maybe that's what matters most. But that won't last long if they can't get their kids interested in watching (relative to YouTube, and Netflix, and Fortnite, and Instagram)."
The roll out for Lyft (LYFT) continues to hit potholes: Shares are down more than 4% in early trading. The stock is down more than 25% since it went public.
On Thursday, its largest rival Uber filed paperwork to go public in what is likely to be one of the biggest public offerings ever for a technology company.
Daniel Ives, an analyst at Wedbush, said he expects "continued pressure" on Lyft's stock:
We've been anticipating that Lyft shares have been under pressure as investors we've spoken with have been worried about Uber's impending S-1 and roadshow which could be a dark shadow over Lyft's stock in the near-term."
Disney and JPMorgan Chase catapulted the Dow 200 points higher on Friday as Wall Street flirts with record territory.
Disney (DIS) led the Dow higher, soaring 11% after unveiling a new streaming service that will only cost $6.99 per month. Disney is on track for its best day since May 2009. Netflix (NFLX), the streaming leader, fell 2%.
JPMorgan Chase (JPM) jumped 3% on record profit and revenue that exceeded expectations.
Anadarko Petroleum (APC) surged 34% after Chevron agreed to buy the oil exploration company for $33 billion. Chevron (CVX), which is paying cash and stock for Anadarko, declined 5%.
Investors are apparently excited Disney's new streaming service because the stock is up 10% in early trading.
- The service launches in November and will cost $6.99 per month.
- It will be loaded with hours of Disney-owned content including movies and TV shows from Marvel, Star Wars and Pixar.
- The company expects the service to attract as many as 90 million subscribers by 2024.
Here's a preview of what Disney+ looks like: