What's moving markets today: November 13, 2019
Shares of Advanced Micro Devices (AMD) hit their highest level in more than 13 years during Wednesday trading.
The stock peaked at $37.96 per share, a level not seen since March 2006. This year, AMD stock has climbed 103.25%, according to Refintiv.
The Dow and the S&P 500 closed at historic highs on Wednesday, surpassing records they set earlier in the week. The Nasdaq Composite, however, finished in the red.
Dow gains were mostly driven by consumer stocks, with Disney (DIS) finishing up 7.3%.
Major US stock indexes are trading mixed this afternoon, with about an hour and a half to go until the closing bell.
Although the indexes have been trading in a tight range all day, they were dragged lower after a Wall Street Journal report said trade talks between China and the United States have once again hit a hurdle. This time the trouble is brewing over farm purchases.
The two countries agreed a "phase one" deal in mid-October but nothing has been finalized as yet.
Starbucks (SBUX) has made a big bet that China's growing middle class wants to drink pricey pumpkin spice lattes. But Luckin Coffee (LK), a relatively new Chinese rival to Starbucks, is proving that tea is still the beverage of choice in the world's most populous nation.
Shares of Luckin Coffee, which went public in May, surged more than 12% Wednesday after a strong earnings report. On the company's conference call with analysts, the word "tea" was mentioned 52 times as Luckin touted the introduction of its Luckin Tea brand.
"China's tea market has huge potential," said Luckin CEO Jenny Qian Zhiya. CFO Reinout Hendrik Schakel added that the sale of tea didn't eat into demand for its coffee drinks either.
Contrast this with what Starbucks had to say about tea on its earnings conference call at the end of October. Execs and analysts mentioned tea just three times -- even though there were 52 references to China. Starbucks may need to focus more on leaves than beans if it wants to make an even bigger splash in China and fend off the threat from Luckin.
It hasn't been the best year for IPOs. Companies thought of as unicorns flopped upon going public, and WeWork didn't even make it to the market. This will change the way investors will treat IPOs next year.
"The truth is setting in, facts are setting in," said Alan Patricof, co-founder and managing director at Greycroft on the CNN Business digital live show Markets Now.
"Investors are asking 'does this company have an economic model that actually works?'" he said.
Questions like that have changed the sentiment and put investors in wait-and-see mode. Investors "will be more discerning," when it comes to IPOs going forward, Patricof said.
With the impeachment hearings in full swing on Capitol Hill, political risk is heightened for financial markets.
"I think everything to do with politics right now has been volatility-inducing for the market," Samantha Azzarello, global market strategist at JP Morgan Asset Management, told Alison Kosik on the CNN Business digital live show Markets Now.
The impeachment proceedings could have an impact the market. But, she added, "political risk is not contained to the US," she said. "There is plenty of other geopolitical risk to go around that investors have to get used to."
For 2020, the arguably biggest geopolitical story of the year -- the US-China trade war -- is not the biggest worry for Azzarello. Rather, she worries about an unknown fear factor that could hit the American consumer, which contributes the majority of GDP growth.
While Warren's policy proposal targets various parts of the financial services industry, it hits private equity particularly hard. She previously described the investment houses' strategy as "legalized looting" that "suck(s) value out of the economy."
The chamber vigorously disagrees with her characterization.
"Private equity firms make valuable, long-term investments in U.S. companies, supporting over 26 million U.S. jobs and driving economic growth by contributing over $475 billion in annual tax revenues. The restrictions and tax increases on the industry that are currently included in proposed legislation would harm Main Street businesses, investors and America’s workforce,” said Tom Quaadman, executive vice president at the chamber's center for capital markets competitiveness.
The legislation could lead to job losses in the range of 6.9 million to 26.3 million across the country, according to the chamber's report. Investors could meanwhile lose "anywhere from $671 million to $3.36 billion per year (about half of which would be lost to pension fund retirees)."
While private equity has long had a PR problem for acquiring businesses and cutting jobs, pension funds that house the retirement savings of millions of people are a big part of the industry's investor base.
Senator Warren called the study an "industry-funded report" in comments emailed from her spokesperson, adding that it confirmed why reform was needed in the private equity industry.
"Wall Street is panicking because my bill would finally make these firms take real responsibility for the outcomes of companies they take over," she said.
Federal Reserve Chairman Jerome Powell says the current stance of monetary policy would likely remain appropriate as long as the economy continues to chug along.
The Fed cut interest rates for a third time in a row in October.
During his testimony before Congress, Powell will call the outlook for the US economy favorable, according to his published remarks.
However, the central banker will say the "federal budget is on an unsustainable path" and warns that the "current low interest rate environment may limit the ability of monetary policy to support the economy" in case of a downturn.
New York-listed Alibaba (BABA) is taking its shares overseas. The Chinese e-commerce giant filed for a secondary listing of 500 million shares in Hong Kong Wednesday.
Could raise as much as $13.4 billion by issuing 500 million shares in its secondary listing in Hong Kong, according to a prospectus for the transaction filed with the SEC. The newly listed shares will account for about 2.3% of the company's ordinary stock, according to an SEC filing.
The political unrest in Hong Kong doesn't seem to be a deterrent for its IPO market.
Alibaba stock was down 1.1% on the New York Stock Exchange, trading at around $184.82 per share Wednesday morning.