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What’s moving markets today: June 12, 2019

Oil prices surge after tanker attack in Gulf of Oman
01:25

What we're covering here today

  • Stocks close lower for second day in a row.
  • Oil drops to lowest level since January.
  • CrowdStrike (CRWD) rallies in its first day of trading.
21 Posts

Lululemon's sales soar, led by $128 men's pants

Lululemon’s $128 ABC casual pants are a hit with men.

The upscale athletic brand said Wednesday that sales at stores open at least a year increased 16% during the first quarter of 2019 compared with a year earlier.

Lululemon’s men’s division revenue increased 33% during the quarter from a year ago, led by the ABC pants and different styles of shorts.

Lululemon’s (LULU) stock rose 3% after trading hours. It has rallied 44% so far this year.

The upscale athletic brand unveiled a five-year growth plan earlier this year to double its men’s and digital businesses.

Lululemon also plans to strike more partnerships with companies like SoulCycle, expand its bag selection, and sell deodorants, moisturizers and shampoo under a new “Selfcare” product initiative.

The company is currently testing an annual membership program in Denver and Austin.

Stocks close lower for second day in a row

US stocks finished the day in the red, marking their second down day in a row after a week-long market rally came to an end.

Trade tensions are still on investors minds ahead of the G-20 meeting in Japan at which President Donald Trump is expected to meet Chinese President Xi Jinping. Should Xi not attend the summit, the United States would impose further tariffs on Chinese imports, Trump said.

Financials and energy stocks led the losses, with companies like Goldman Sachs (GS), JPMorgan (JPM) and Exxon Mobil (XOM) closing lower.

Newly IPO’d cybersecurity firm CrowdStrike (CRWD) ended 70.6% higher on its first day as a public company. The company priced at $34 a share late Tuesday.

Oil settles down 4%, drops to lowest level since January

US oil futures settled today at their lowest level since January 14, according to Refinitiv.

WTI futures for July delivery settled at $51.14 a barrel, which was a 4% drop from yesterday’s settlement, according to data from CME.

Oil prices are under pressure thanks to worries about excess supply. Making matters worse, US crude oil inventories rose 2.2 million barrels in the week that ended June 7, according to a report published by the Energy Information Administration.

Stocks on track to close lower again as trade fears resurface

With less than an hour to go in the trading day, stocks are on track to end the day in the red.

The Dow, S&P 500 and Nasdaq Composite are all in the red and have been for nearly the whole day. Shares in the financials and energy sectors, such as Goldman Sachs (GS), JPMorgan (JPM) and Chevron (CVX), are leading losses amid declining oil prices.

Trade worries are also back on investors’ minds after President Donald Trump said he was the only one holding up the trade deal with China.

Expectations for an interest rate cut in the near-term are still high, and this morning’s consumer price inflation report hammered this thesis home once more. Still, there seems to be little optimism in the market today.

If stocks close lower, it would be the second down day in a row following a week-long rally.

But while blue chips are struggling today, small-cap stocks are doing better.

The Russell 2000 is up a 0.2%. Nonetheless, the Russell is still in correction, down more than 12% from the all-time closing high it hit in August last year, according to Refinitiv.

Beyond Meat rallies after new Tim Hortons deal

Beyond Meat’s (BYNDstock rallied 13% after Tim Hortons said it will sell the fake meat at all of its 4,000 restaurants in Canada.

The coffee chain is offering Beyond Meat’s sausage patty in three breakfast sandwiches. Today’s news is an expansion of a trial it was conducting of the new sandwiches in several Toronto-area locations during the last month.

The stock has soared more than 500% from its initial public offering price of $25 per share.

Read more about the deal here.

Investors think a rate cut is coming. But the Fed might disappoint, strategist says

US markets are being driven higher by hopes that the Federal Reserve will cut interest rates sooner rather than later. But be prepared for the chance that the central bank could disappoint, according to Lindsey Bell, CFRA Research Investment Strategist.

Investors will hang on every word at Fed Chairman Jerome Powell’s press conference following next week’s policy meeting. Investors don’t think it’s too likely the Fed will cut rates this time, but expectations for a rate cut at next month’s meeting are above 80%, according to the CME FedWatch tool.

“The options are vast, but the market is pricing in a rate cut this year,” Bell told CNN’s Julia Chatterley on the Markets Now live show.

But Bell said “there is a high likelihood for Powell to disappoint.” She doesn’t expect a rate cut at all this year. The US economy is strong enough as is, and consumer confidence is at a healthy level.

Bell also expects there could be more market volatility to come.

Birchbox wants Walgreens to help it reach the everyday consumer

Subscription box business Birchbox is partnering with Walgreens (WBA) to reach the “everyday beauty consumer.”

CEO Katia Beauchamp thinks the partnership will set the company apart from its growing competition.

“Sephora and Ulta [Beauty] are very focused on the way the industry has always thought, that there’s a customer who loves beauty,” she told CNN’s Julia Chatterley on the Markets Now live show.

But Beauchamp added that about 70% of the market doesn’t think that way. She said Walgreens has the customer “who’s going in to run an errand and grab some beauty.”

As for the future of Birchbox?

“You are always thinking about how to finance the next phase of expansion,” she said.

Confidence among CEOs slips again

American CEOs are growing wary.

According to Business Roundtable’s “CEO Economic Outlook Index,” confidence slipped 5.7 points to 89.5 for the second quarter of 2019. It’s the fifth continuous quarter the metric has fallen.

The survey, which polled 127 CEOs, blames the drop on “unease about the direction of US trade policy and uncertain prospects for global growth.”

JPMorgan Chase (JPM) CEO Jamie Dimon, who is also chairman of the Business Roundtable, echoed those concerns and said that it’s “crucial for Congress and the Administration to work together to enact policies that will encourage inclusive growth, innovation and opportunity in the United States.”

CrowdStrike rallies in first trading after IPO

Cybersecurity business CrowdStrike (CRWD) celebrated its stock market debut today, and rallied about 70% in early trading.

The company priced its IPO at $34 per share Tuesday, above its intended range of $28-30.

The stock was last trading just under $60 per share — about 70% above its IPO price.

America's CFOs are bracing for a 2020 recession

The longest economic expansion in modern American history could come to a screeching halt right before the 2020 presidential election. At least that’s what US finance leaders fear.

Nearly half (48.1%) of chief financial officers in the United States are predicting the American economy will be in recession by the middle of next year, according to the Duke University/CFO Global Business Outlook survey released on Wednesday.

And 69% of those executives are bracing for a recession by the end of 2020.

Read more from the survey here.

The inflation report 'fits the market's narrative,' trader says

Consumer price inflation has risen less than expected in May, and that’s fitting right into the idea that the Federal Reserve will cut interest rates soon.

Inflation is one of the key factors influencing the central bank’s interest rate policy. The CME’s FedWatch tool predicts a near 84% chance of a cut in July, up from 79% yesterday.

Stocks rallied over the past week amid expectations for a rate cut.

The Federal Reserve is next meeting a week from today, and investors will be hanging on every word of Fed Chairman Jerome Powell.

“They won’t cut without telling us they will beforehand,” said Trang.

Stocks open mixed after inflation report

US stocks opened mixed but soon slipped into negative territory on Wednesday, as investors digested the consumer price inflation report for May.

Prices rose less than expected at 1.8% year-over-year, compared with the consensus of 1.9%. This could add fuel to the fire of interest rate cut expectations in the near term, as inflation is one of the key factors in the Federal Reserve’s policy decision making.

  • The Dow opened flat in positive territory, up 9 points.
  • The S&P 500 kicked off little changed in negative territory.
  • The Nasdaq Composite opened 0.2% lower.

A few minutes into trading, they were all in the red. All three indexes closed lower yesterday, ending a rally that lasted for more than a week.

Mattel (MAT) stock climbed 5.7% at the open after it reportedly rejected a merger offer from a rival that makes Bratz dolls.

The shares of Dave and Busters (PLAY) plunged 18.2% at the open following a worse-than-expected earnings report.

The American oil boom is rewriting the history books

Daily oil production in the United States surged by a massive 2.2 million barrels in 2018.

That’s the “largest ever annual increase by a single country,” according to BP’s annual statistical review of world energy that was released on Tuesday.

Those gains, made possible by the Permian Basin of West Texas, accounted for nearly all of the planet’s production growth.

US production has spiked by more than 7 million barrels per day since 2012 – “an astonishing increase” that BP said is equivalent to Saudi Arabia’s oil exports.

Meanwhile, the United States is less reliant on foreign oil. BP said that US net oil imports (after accounting for exports) have shrunk to less than 3 million barrels per day, compared with more than 12 million in 2005.

All of that American oil is keeping a lid on prices – despite US sanctions on Venezuela and Iran. US oil prices plunged into a bear market last week.

Goldman Sachs predicted on Wednesday that strong Permian Basin production will keep Brent crude, the global benchmark, around $65 a barrel in the third quarter. Brent fell 2% on Wednesday to $61.

Mattel rises after reportedly rejecting merger offer

Shares of Barbie doll maker Mattel (MAT) rose 4% in premarket trading after it reportedly rejected a merger offer from a rival that makes Bratz dolls.

The Los Angeles Times reports that MGA Entertainment tried to pursue Mattel for an undisclosed price but was rejected. MGA also makes Little Tikes and LOL Surprise dolls.

“They’re not delivering. Look at the results,” said MGA Entertainment founder Isaac Larian said in an interview with the newspaper.

Jefferies analyst Stephanie Wissink told Reuters that the proposed deal was “not all that accretive or financially merited for existing equity holders.”

Stock futures pare losses after inflation misses expectations

US stock futures pared some of their losses and edged higher following the consumer price inflation report for May.

Inflation rose 1.8% year-over-year, compared with the 1.9% expected. Core inflation, which takes out more volatile costs like energy, stood at 2% on the year, versus the 2.1% expected.

Dow futures were last down 0.2%, while futures for the S&P 500 were down 0.1%. Nasdaq Composite futures were down 0.3%.

The stock market is banking on an interest rate cut from the Federal Reserve to shore up economic growth. Inflation is one of the key metrics the Fed looks at in determining its monetary policy.

No fun for Dave & Buster's

Dave & Buster’s (PLAY) investors want to get off this ride. The stock plunged 20% in premarket trading after a dismal earnings report.

The company missed on earnings and lowered its guidance for the rest of the year. Sales at stores opened more than a year also slid 0.3%.

The company blames the slowing sales because of Easter happening later this year, which it said “proved unfavorable.”

If the stock hold its premarket losses, it will have wiped out all of its year to date gains.

US markets set to open lower

As of 7:00 am, the Dow is down 50 points in premarket trading. The S&P 500 slipped 6 points in premarkets, while the Nasdaq is lower 30 points, or 0.4% in premarket trading.

Trade tensions between the United States and China are still weighing heavily on investors.

Tuesday’s close: US stocks ended slightly lower, marking the end of a rally that had lasted for more than a week.

Tesla shareholders like what Elon Musk told them

Tesla (TSLA) shares rose 2.5% in premarket trading follow CEO Elon Musk painting a positive picture about the company at its annual shareholder meeting late Tuesday.

Here’s what he said:

  • The Model 3 sedan is selling faster than Tesla can build them.
  • Self-driving capabilities are just a year away. 
  • He hyped the new vehicle models that are in Tesla’s pipeline, including the Model Y, a lower-cost SUV, as well as a semi truck and a pickup.
  • He said it was “financially insane” not to invest in an electric vehicle that isn’t capable of being updated with fully autonomous driving.

Despite that, Wedbush Securities analyst Daniel Ives remains skeptical. Here’s what he wrote in a new note:

In our opinion Tesla needs a significant rebound in Model 3 deliveries this quarter as well as into the back half of 2019 for the company to provide sustained profitability, which remains a hot button issue of the Street in light of the softness seen in the March quarter and the recent capital raise.

Hong Kong stocks tumble amid protests

Stocks dropped in Hong Kong on Wednesday as tens of thousands of people marched through the city’s financial district to protest a controversial extradition bill.

The Hang Seng index ended the day 1.7% lower. Leading the sell-off were property companies like Wharf Real Estate Investment, which fell 5.4%, and New World Development, which declined 4.2%.

The bill, which would enable China to extradite people from Hong Kong, was set to be debated by lawmakers in a Legislative Council session on Wednesday.

Eye on oil prices

Investors will closely watch an update on US oil inventories at 10:30 a.m. ET. Oil prices are under pressure due to concerns about excess supply and flagging global growth.

The US Energy Information Administration on Tuesday lowered its 2019 forecast for global oil prices on fears about demand growth, boosting pessimism.

US crude oil futures dropped 2.8% Wednesday. Brent crude, the global benchmark, fell 2.7%.

Mega media deal

US private equity giant KKR wants to take the German owner of Business Insider private in a deal that values the publisher at nearly $8 billion.

KKR (KKR) on Wednesday offered investors in Axel Springer €63 ($71.40) per share in a deal that has support from the company’s largest shareholder, Friede Springer, and CEO Mathias Doepfner.

The price is a 12.5% premium over Tuesday’s close and an increase of nearly 40% from late May, when talks between the companies were first reported.

Axel Springer owns a range of publications including top German tabloid newspaper Bild. It also operates a 50-50 joint venture that publishes the European edition of Politico and owns Business Insider.