Author: Reuters

(Reuters) – Wall Street’s main indexes slid at open on Tuesday after a hotter-than-expected consumer inflation reading drove U.S. Treasury yields higher, squashing market speculations for imminent interest rate cuts.

The Dow Jones Industrial Average fell 98.21 points, or 0.25%, at the open to 38,699.17. The S&P 500 opened lower by 53.90 points, or 1.07%, at 4,967.94, while the Nasdaq Composite dropped 343.67 points, or 2.16%, to 15,598.88 at the opening bell.

(Reporting by Johann M Cherian in Bengaluru; Editing by Maju Samuel)

By Shivansh Tiwary

(Reuters) -Shares of JetBlue Airways surged 13% in early trading on Tuesday after activist investor Carl Icahn said he took a nearly 10% stake in the low-cost carrier.

Icahn said his company had been in discussion with JetBlue about possible board representation after the airline’s $3.8 billion merger with ultra-low-cost carrier Spirit Airlines was blocked by a U.S. judge last month.

Both airlines have asked for an expedited appeal to the judge’s ruling and a U.S. appeal court will hear arguments in June.

Icahn, in the filing, called shares of JetBlue undervalued, saying it represented an attractive investment opportunity. He has made a career out of buying companies he sees as undervalued and the JetBlue purchase is one of his first big moves in 2024.

“We are always open to constructive dialogue with our investors,” JetBlue said on Tuesday.

Many analysts had questioned the merits of the deal over fears Spirit’s grim financial health may become a drag for JetBlue. “JetBlue dodges a bullet,” J.P. Morgan analysts had said after the judge blocked the deal.

Last month, the airline said it was evaluating deeper cost cuts after it forecast higher expenses and a fall in revenue in the current quarter as it grapples with uneven travel demand.

Wild swings in travel demand between peak and off-peak periods have forced airlines to adjust schedules and capacity to more profitable routes.

JetBlue has said it will move underperforming capacity to premium leisure and popular markets.

The company’s stock has gained 24% since the merger ruling.

“Key items to watch are what Icahn can or cannot do on the board level, to put ‘Neutral/High Risk-rated’ JetBlue on a better strategic path,” Citi analyst Stephen Trent wrote in a note.

(Reporting by Shivansh Tiwary in Bengaluru; Editing by Sriraj Kalluvila)

By Carolina Mandl, Johann M Cherian and Ankika Biswas

(Reuters) -The Nasdaq slipped on Monday afternoon after briefly surpassing its record closing high from November 2021, while the Dow rose modestly ahead of two U.S. inflation reports this week that could influence Federal Reserve policy.

The benchmark S&P 500 closed slightly lower but remained just above the 5,000-point level it crossed on Friday.

Traders awaited January’s Consumer Price Index (CPI) and Producer Price Index (PPI) this week to gauge prospects for interest rate cuts. This week the market also gets data on industrial production, retail sales and preliminary University of Michigan consumer sentiment.

“The CPI report tomorrow will be just another important data point on where inflation is and that will translate to the pace of when we may see a cut in the Fed funds rate,” said Michael Rosen, chief investment officer at Angeles Investments. “No one wants to make a big bet one way or the other.”

The Nasdaq lost steam in the afternoon after rising early in the session past its highest closing level hit in November 2021, within a percentage point of its all-time intra-day high of 16,212.229.

“An inflation number that’s really hot might get some investors a bit nervous, but other than that the Fed is going to be in the same mode,” said Joe Saluzzi, co-manager of trading at Themis Trading.

Over the past four months, megacaps with greater exposure to artificial intelligence have spearheaded a bull market on Wall Street as other stocks also rose on hopes of imminent rate cuts and an upbeat outlook from businesses.

During the session, Nvidia crossed above Amazon.com in market capitalization, as the euphoria around AI catapulted the chipmaker to the fourth-most valuable U.S. company, but ended the day behind the online retailer. Nvidia ended the day up 0.16%, while Amazon dipped 1.2%.

With recent data reflecting a robust economy, central bankers have shown less eagerness for early rate cuts. The odds for at least a 25-basis-point rate reduction in May have dropped to 52.2%, from over 95% at the start of 2024, as per the CME FedWatch Tool.

The S&P 500 lost 4.12 points, or 0.08%, to end at 5,022.49 points, while the Nasdaq Composite lost 42.74 points, or 0.27%, to 15,947.92. The Dow Jones Industrial Average rose 135.76 points, or 0.35%, to 38,807.45.

The small caps Russell 2000 index climbed 1.9%.

“Investors are rotating into those areas that have not kept pace with the broader market because that’s possibly where there is greater value,” said Sam Stovall, chief investment strategist at CFRA Research. “Today could be sort of a bottom fishing day for the market.”

Among other movers, Diamondback Energy jumped 9.4%, helping energy to top the 11 S&P 500 sectors with gains. Diamondback announced a $26-billion deal to buy the largest privately held oil and gas producer in the Permian basin, Endeavor Energy Partners.

Joby Aviation gained 6.4% as the electric-powered aircraft maker signed an agreement to launch air taxi services in the United Arab Emirates by early 2026.

On the Nasdaq 2,835 issues advanced and 1,452 declined as a 1.95-to-1 ratio favored advancers. On the NYSE advancing issues outnumbered declining ones by a 3.4-to-1 ratio. There were 592 new highs and 46 new lows.

The S&P 500 posted 53 new 52-week highs and no new lows while the Nasdaq recorded 344 new highs and 53 new lows.

On U.S. exchanges 11.14 billion shares changed hands compared with the 11.72 billion moving average for the last 20 sessions.

(Reporting by Johann M Cherian and Ankika Biswas in Bengaluru; Editing by Maju Samuel and David Gregorio)

By Johann M Cherian, Ankika Biswas and Carolina Mandl

(Reuters) – The Nasdaq slipped on Monday afternoon after briefly surpassing its record closing high from November 2021, but the Dow and the S&P 500 rose modestly ahead of two U.S. inflation reports this week that could influence Federal Reserve policy.

Nvidia overtook Amazon.com in value, but Nasdaq lost some steam after nearing its all-time intra-day high of 16,212.229.

Over the past four months, megacaps with greater exposure to artificial intelligence have spearheaded a bull market on Wall Street as other stocks also rose on hopes of imminent rate cuts and an upbeat outlook from businesses.

The benchmark S&P 500 remained above the 5,000-point level it crossed on Friday and was trading at record high levels along with the blue-chip Dow.

Leading the charge, Nvidia surpassed Amazon.com in market capitalization, as the euphoria around AI catapulted the chipmaker to the fourth-most valuable U.S. company. Nvidia was up 0.1%, while Amazon dipped 1%.

“Earnings are coming in better than expected, the forecast for inflation continues to decline and the Fed is still likely to lower rates, Wall Street is having a hard time finding something to go wrong with the stock market rally,” said Sam Stovall, chief investment strategist at CFRA Research.

Traders awaited January’s Consumer Price Index (CPI) and Producer Price Index (PPI) this week to gauge prospects for interest rate cuts this year. This week the market also gets data on industrial production, retail sales and preliminary University of Michigan consumer sentiment.

“An inflation number that’s really hot might get some investors a bit nervous, but other than that the Fed is going to be in the same mode,” said Joe Saluzzi, co-manager of trading at Themis Trading.

With data reflecting a robust economy, central bankers have shown less eagerness for early rate cuts. The odds for at least a 25-basis-point rate reduction in May have dropped to 52.2%, from over 95% at the start of 2024, as per the CME FedWatch Tool.

At 1:52 p.m., the S&P 500 gained 6.01 points, or 0.12%, to 5,032.62 points, while the Nasdaq Composite lost 12.13 points, or 0.08%, to 15,978.54. The Dow Jones Industrial Average rose 196.04 points, or 0.51%, to 38,867.73.

The small caps Russell 2000 index also surged 1.8%.

“Investors are rotating into those areas that have not kept pace with the broader market because that’s possibly where there is greater value,” said Stovall. “Today could be sort of a bottom fishing day for the market.”

Among other movers, Diamondback Energy jumped 9.2%, helping energy to top the 11 S&P 500 sectors with a 1.16% gain. Diamondback announced a $26-billion deal to buy the largest privately held oil and gas producer in the Permian basin, Endeavor Energy Partners.

Joby Aviation gained 6.6% as the electric-powered aircraft maker signed an agreement to launch air taxi services in the United Arab Emirates by early 2026.

Advancing issues outnumbered decliners by a 4.3-to-1 ratio on the NYSE and by a 2.32-to-1 ratio on the Nasdaq.

(Reporting by Johann M Cherian and Ankika Biswas in Bengaluru; Editing by Maju Samuel and David Gregorio)

By Johann M Cherian and Ankika Biswas

(Reuters) -U.S. stocks climbed on Monday, with the tech-laden Nasdaq inching close to its all-time high as investors geared up for two crucial inflation reports during the week, while Nvidia overtook Amazon in value for the first time in two decades.

Nasdaq rose past its highest closing level hit in November 2021, bringing it within a percentage from its all-time intra-day high of 16,212.229.

Over the past four months, megacaps with greater exposure to artificial intelligence have spearheaded a bull market on Wall Street, also riding on hopes of imminent rate cuts and an upbeat outlook from businesses.

The benchmark S&P 500 crossed the psychological 5,000-point level on Friday and is trading at record high levels along with the blue-chip Dow.

Leading the charge, Nvidia crossed above Amazon.com in market capitalization, as the euphoria around AI catapulted the chipmaker to the fourth-most valuable U.S. company. Nvidia was up 2.6%, while Amazon dipped 0.4%.

“A lot of people earlier in the year may have thought we were set for a bit of pullback in the semiconductor sector and it didn’t happen, so it’s certainly people saying, I don’t want to miss the performance like I did last year,” said Joe Saluzzi, co-manager of trading at Themis Trading.

Traders await January’s Consumer Price Index (CPI) and Producer Price Index (PPI) this week to determine the timeline for monetary policy easing this year. Other data through the week also include industrial production, retail sales and preliminary University of Michigan consumer sentiment.

“An inflation number that’s really hot might get some investors a bit nervous, but other than that the Fed is going to be in the same mode,” Saluzzi added.

With growing data reflecting a robust economy, central bankers have effectively pushed back against traders’ bets for early rate cuts. The odds for at least a 25-basis-point rate reduction in May have dropped to 55.8%, from over 95% at the start of 2024, as per the CME FedWatch Tool.

Remarks from Federal Reserve officials including Richmond President Thomas Barkin and Minneapolis chief Neel Kashkari, scheduled through the day, will be scrutinized for any hints on the timing for rate cuts.

At 11:57 a.m. ET, the Dow Jones Industrial Average was up 202.88 points, or 0.52%, at 38,874.57, the S&P 500 was up 19.56 points, or 0.39%, at 5,046.17, and the Nasdaq Composite was up 74.54 points, or 0.47%, at 16,065.20.

The small caps Russell 2000 index also surged 1.8%.

Among other movers, Diamondback Energy jumped 10.2%, helping energy to top the 11 S&P 500 sectors with a 1.0% gain, after announcing a $26-billion deal to buy the largest privately held oil and gas producer in the Permian basin, Endeavor Energy Partners.

Joby Aviation gained 8.2% as the electric-powered aircraft maker signed an agreement to launch air taxi services in the Emirate by early 2026.

Advancing issues outnumbered decliners by a 4.00-to-1 ratio on the NYSE and by a 2.45-to-1 ratio on the Nasdaq.

The S&P index recorded 45 new 52-week highs and no new lows, while the Nasdaq recorded 149 new highs and 29 new lows.

(Reporting by Johann M Cherian and Ankika Biswas in Bengaluru; Editing by Maju Samuel)

By Johann M Cherian and Ankika Biswas

(Reuters) – Wall Street’s main indexes were muted on Monday, with investors gearing up for two crucial inflation reports during the week for clues on the interest-rate cut outlook, while Nvidia surpassed Amazon in market value for the first time in two decades.

Nvidia crossed above Amazon.com in market capitalization, as the euphoria around artificial intelligence catapulted the chipmaker to the fourth-most valuable U.S. company. Their shares were up 0.5% and 0.1%, respectively.

Megacaps with greater exposure to AI have spearheaded a Wall Street rally, also riding on hopes of imminent rate cuts and an upbeat outlook from businesses.

The latest milestone in a four-month rally among Wall Street’s main indexes was the S&P 500 closing above the psychological 5,000-point level on Friday. The Nasdaq briefly surpassed the 16,000 mark for the second straight session on Monday, bringing it closer to its all-time high hit in November 2021.

“We are at hefty levels and the real question out there is how much longer can this market continue to rally without any new serious catalyst on the way,” said Peter Cardillo, chief market economist at Spartan Capital Securities.

“We’ll begin to shift towards the macro news with CPI that could set the stage whether the market continues to rally.”

Traders await January’s Consumer Price Index (CPI) and Producer Price Index (PPI) this week to determine the timeline for monetary policy easing this year. Other data through the week also include industrial production, retail sales and preliminary University of Michigan consumer sentiment.

With growing data reflecting a robust economy, central bankers have effectively pushed back against traders’ bets for early rate cuts. The odds for at least a 25-basis-point rate reduction in May have dropped to 61%, from over 95% at the start of 2024, as per the CME FedWatch Tool.

Remarks from Federal Reserve officials including Richmond President Thomas Barkin and Minneapolis chief Neel Kashkari, scheduled through the day, will be scrutinized for any hints on the timing for rate cuts.

At 9:51 a.m. ET, the Dow Jones Industrial Average was up 21.04 points, or 0.05%, at 38,692.73, the S&P 500 was up 1.20 points, or 0.02%, at 5,027.81, and the Nasdaq Composite was up 5.72 points, or 0.04%, at 15,996.38.

Among other movers, Diamondback Energy jumped 7%, helping energy to top the 11 S&P 500 sectors with a 0.8% gain, after announcing a $26-billion deal to buy the largest privately held oil and gas producer in the Permian basin, Endeavor Energy Partners.

Citigroup slipped 0.8% after Reuters reported U.S. regulators have asked the lender for urgent changes to how it measures default risk of trading partners and its own auditors have found a plan to improve internal oversight to be lacking.

Joby Aviation gained 3.5% as the electric-powered aircraft maker signed an agreement to launch air taxi services in the Emirate by early 2026.

Advancing issues outnumbered decliners by a 3.18-to-1 ratio on the NYSE and by a 2.36-to-1 ratio on the Nasdaq.

The S&P index recorded 25 new 52-week highs and no new lows, while the Nasdaq recorded 93 new highs and 13 new lows.

(Reporting by Johann M Cherian and Ankika Biswas in Bengaluru; Editing by Maju Samuel)

(Reuters) – Wall Street’s main stock indexes had a muted start on Monday with investors awaiting a bunch of data reports including two inflation prints, that could clear out some uncertainty on the timing for interest rate cuts this year.

The Dow Jones Industrial Average fell 14.93 points, or 0.04%, at the open to 38,656.76. The S&P 500 opened higher by 0.22 points, or 0.00%, at 5,026.83, while the Nasdaq Composite dropped 10.05 points, or 0.06%, to 15,980.62 at the opening bell.

(Reporting by Johann M Cherian in Bengaluru; Editing by Maju Samuel)

By Susanna Twidale

LONDON (Reuters) -The value of traded global markets for carbon dioxide (CO2) permits reached a record 881 billion euros ($948.75 billion) in 2023, marking a 2% increase on the previous year, analysts at LSEG said on Monday.

Many countries and regions have launched emissions trading systems (ETS) to put a price on carbon dioxide (CO2) emissions and incentivise companies to invest in low carbon technology and help meet climate targets.

Around 12.5 billion metric tons of carbon permits changed hands in the world’s emissions markets, similar to 2022, but record prices in several markets such as Europe and North America pushed up the overall value, the LSEG Carbon Market Year in Review 2023 said.

The world’s most valuable carbon market, the EU’s ETS, was worth around 770 billion euros last year, up 2% from the previous year and representing 87% of the global total.

The price of carbon permits in the EU ETS hit a record high over 100 euros in February last year but fell towards the end of 2023 amid weak demand from industrial buyers and the power sector.

This bearish trend has continued into 2024 with the benchmark contract falling below 60 euros/ton.

“Economic growth is likely to remain sluggish in the near term across Europe and is expected to lead to further demand destruction from many of the industrial sectors covered by the EU ETS,” the report said.

The value of the UK’s ETS fell 22% to 36.4 billion euros with prices averaging around 65 euros/ton, some 34% lower than the 2022 average, the report said.

In North America prices hit record high’s last year in the main compliance markets, hitting $39/ton in the Western Climate Initiative and over $15/ton in the Regional Greenhouse Gas Initiative.

Prices in China’s national ETS also hit a record high in 2023 of 80.51 yuan ($11.19) in October, the report said.

The North American markets were worth a combined 71.4 billion euros while the Chinese market was worth 2.3 billion.

($1 = 0.9286 euros)

($1 = 7.1929 Chinese yuan renminbi)

(Reporting By Susanna Twidale; Editing by Chizu Nomiyama)

By Timothy Aeppel

(Reuters) – North American companies ordered about a third fewer robots last year as worries about a slowing economy and higher interest rates made it harder to justify buying the advanced machines, the first hiccup in five years in what has been a steady progression of the robot invasion of the region’s workforce.

“When the economy isn’t great, it’s easier to delay purchases,” said Jeff Burnstein, president of the Association for Advancing Automation, an industry group that tracks robot orders.

Companies bought 31,159 robots in 2023, a decrease of 30% over the year before, the largest drop in percentage terms since 2006 and largest drop ever in net units, according to the group, known as A3. The pullback occurred in automotive-related industries – which made up about half of the market last year – as well as other sectors such as food and metals manufacturing.

Orders in the fourth quarter hit 7,683, an 8% drop from the same period a year earlier.

Slowing robot orders came even as some companies announced initiatives to develop more advanced versions of the machines. Robotics startup Figure said last month it forged a partnership with Germany’s BMW to deploy humanoid robots in the carmaker’s South Carolina factory to take on certain physical tasks. Electric-vehicle maker Tesla also has a humanoid robot in development.

But for many robot makers, selling existing machines has been hampered by worries about a softening economy and the excess inventories built up during the COVID-19 pandemic. Universal Robots, a Danish maker of small, flexible robots, recently reported its revenue fell 7% last year, to $304 million.

Universal’s president, Kim Povlsen, told investors: “2023 was characterized by a difficult economic and business environment for many of our core customers with global industrial activity slowing in the first half of the year.”

COMING OFF A RECORD YEAR

Robot sales boomed during the COVID-19 pandemic – as producers scrambled to use the machines to churn out goods amid a dire labor shortage. Indeed, 2022 marked a record year for orders, according to A3’s data.

To be sure, robots are just one type of equipment companies need, and other gauges of spending have held up better in the U.S. Orders for non-defense capital goods excluding aircraft – a measure closely watched by economists to track trends in business spending – rose 1.7% last year, according to the Commerce Department, suggesting that investments in more basic types of equipment remained close to steady as the economy defied expectations of a sharper slowdown.

Dave Fox, president of CIM Systems Inc, a Noblesville, Indiana, company known as an integrator that assembles robotic systems for customers, said his business started off strong last year but then slumped.

“Several big projects got pushed into this year,” said Fox. “There were definitely a few customers who brought up their concern about where the economy is headed. And interest rates probably didn’t help.” Fox estimates his business volume fell 30% in 2023, compared with the year before.

Fox said some customers who delayed orders are now asking for updated quotes, which is a good sign for business in the months ahead. But he said it is too early to say whether business will return to lofty pandemic levels.

A3’s Burnstein said most robot producers he speaks with are optimistic that business will pick up during the second half of this year.

Burnstein said the industry has largely worked its way through the distortions caused by the pandemic.

During the crisis, many companies put in extra orders for robots because they worried about receiving deliveries amid production delays and a breakdown in global supply chains. “There’s still this feeling that companies were buying in advance of their needs (in 2022),” said Burnstein, “so a lot of companies now have inventory to work through before they order a lot of new robots again.”

Joe Gemma, chief revenue officer of Wauseon Machine, a systems integrator in Ohio, agreed there was an inventory glut that distorted the business.

“A lot of us were ordering extra inventory,” he said. “Our customers were too.”

Gemma said an ongoing shortage of labor in the U.S. means the robot business will continue to thrive. “I was at a plant recently that normally has 600 people working in production – and they have 140 open positions,” he said. “Almost every place we go, there’s still a workforce challenge.”

(Reporting by Timothy Aeppel in New York; Editing by Matthew Lewis)

By Jamie McGeever

ORLANDO, Florida (Reuters) -An engine of world growth for 20 years, the largest consumer of commodities and world’s number two economy has somehow slipped into “alternative investment” buckets for many global investors.

China’s property bust and increasingly interventionist government, along with deepening geopolitical fissures with the United States, have dramatically dimmed its allure as a destination for international capital.

China may not yet be “uninvestable”, as U.S. Commerce Secretary Gina Raimondo suggested U.S. companies believe, but many investors are recategorizing their reduced exposure – in some cases to alternative investment.

“Alts” are typically assets outside the traditional stocks, bonds and cash buckets, like hedge funds, real estate and private equity. They are often riskier but potentially more lucrative bets, and are attractive for their diversification and hedging qualities.

Crucially, they are non-correlated with traditional assets. This is where many investors see Chinese stocks and bonds now – a non-correlated, idiosyncratic play, effectively a hedge against their core bets.

That was the anecdotal evidence garnered from investors, asset managers and allocators on the sidelines of the recent “Hedge Fund Week” conferences in Miami. It is also supported by global capital flows trends.

One fund manager said he may put 5-10% of his portfolio in Chinese stocks but is fully prepared to lose it. A hedge fund manager overseeing billions of dollars of assets said he likes China’s “idiosyncrasies” and diversification qualities but noted that his investors’ money is mostly offshore, not onshore.

Alex Lennard, fund manager at Ruffer, admitted that the economic climate in China is “clearly awful” but his firm is putting money there, essentially as a hedge.

“It’s a small part of our portfolio, about 4%, but it does provide an offset to some of the other market ‘certainties’ that exist,” Lennard said.

It’s worth noting that they are relative optimists on China. The wider consensus is far gloomier.

OUTFLOWS, OUTFLOWS, OUTFLOWS

According to Morningstar Direct, U.S. equity funds’ average asset-weighted exposure to Chinese stocks in December last year was 1.38%, down from 2.17% three years earlier, while their average equal-weighted exposure is down to 3.5% from 4.13%.

U.S. emerging market funds’ allocation to China as a share of total EM exposure declined to 20.6% from 28.6% on an asset-weighted basis, and to 20% from 26% on an equal-weighted basis.

It is a similar pattern across global emerging market funds. The China portion as a share of their overall EM equity allocation has fallen to 19.5% from 27.1% on an asset-weighted basis and to 21% from 25.5% on an equal-weighted basis, according to Morningstar Data.

Demand for Chinese bonds should be stronger though, right?

China is included in the $1.2 trillion benchmark JP Morgan EMBI Global Diversified bond index, and there is now an in-built demand for Chinese bonds from the yuan’s emergence in recent years as an alternative international reserve currency.

But China’s share of the $12 trillion global FX reserves pie has slipped to a four-year low of 2.37%, and has never been higher than 2.83%, according to the International Monetary Fund.

Figures from the Institute of International Finance show outflows from Chinese debt portfolios for seven straight months and only three monthly inflows in the last two years.

Emerging market ex-China debt funds, meanwhile, have attracted inflows for the past seven months and in January drew in $47.3 billion, the most since October 2022 and one of the highest on record.

Whichever way you slice it, investors of all stripes are taking chips off the Chinese table.

BURST OPTIMISM

This is not how many thought it would pan out.

A Greenwich Associates survey of institutional money managers in 2020 showed that pension funds and endowments had 3-5% allocations to China and only 5% of North American institutions had any dedicated exposure to Chinese stocks.

Nearly a quarter of respondents said they planned to increase or significantly increase their dedicated allocation to Chinese equities in the next three to five years.

Liang Yin, investment director at Willis Towers Watson, wrote in November that year that investors should consider raising their allocation to China to around 20% over the next decade.

But Beijing’s closer alignment with Moscow, fraying relations with Washington, and a strengthening interventionist hand in business and markets at home have scared a lot of horses.

The findings of a recent survey by the Official Monetary and Financial Institutions Forum of 22 public pension and sovereign wealth funds managing $4.3 trillion in assets were startling – not one had a positive outlook for China’s economy or saw higher relative returns there.

(The opinions expressed here are those of the author, a columnist for Reuters.)

(By Jamie McGeever;Editing by Kylie MacLellan)