Markets News, April 15, 2024: Stocks Tumble as Consumer Spending, Treasury Yields Surge

Stock Indexes Wrap: Banks Rise on Earnings Beats; Tech Tumbles Amid Interest Rate Concerns

The Dow

Goldman Sachs (GS) rose 2.9% after its first-quarter earnings blew past analysts’ estimates on the back of investment banking gains. 

UnitedHealth Group (UNH) advanced 1.4% ahead of its earnings report before the opening bell tomorrow. Johnson & Johnson (JNJ), also reporting tomorrow, closed flat. 

Salesforce (CRM) fell 7.3% following reports it was in talks to buy data-management software provider Informatica (INFA).

Big tech also fell amid concerns about delayed interest rate cuts. Apple (AAPL) slid 2.2%, while Microsoft (MSFT) gave up 2% and Amazon (AMZN) shed 1.4%. 

The S&P 500

M&T Bank (MTB) climbed 4.7% after reporting it decreased its commercial real estate loan exposure by 7% in the first quarter.

Charles Schwab (SCHW) rose 1.8% after it reported earnings and revenue came in above expectations in the first quarter. 

Lockheed Martin (LMT) ticked up 0.7% after Reuters reported the defense contractor had won a $17 billion contract to develop a next-generation U.S. intercontinental ballistic missile defense system. 

Tesla (TSLA) slumped 5.6% amid reports it would lay off more than 10% of its workforce to cut costs amid a slowdown in electric vehicle demand. 

Illumina (ILMN) fell 4.7% after the European Commission approved its plan to divest from cancer test maker GRAIL, which it acquired without EU approval in 2021. 

Real estate investment trusts sank as surging consumer spending in March added to reasons for the Federal Reserve to delay interest rate cuts that markets previously thought would start as soon as June. Higher interest rates and vacancies are weighing on commercial property values. Boston Properties (BXP) fell 3.3% and Public Storage (PSA) shed 2.4%. 

The Nasdaq 100

Intel (INTC) gained 1.7%, recovering some of last Friday’s sell-off following reports about Chinese telecoms being ordered to phase out U.S. chips. 

Software companies fell across the board, led by Atlassian (TEAM), down 7%, and The Trade Desk (TTD), down 6.2%.

Trump Media Stock Plummets After Filing To Issue Millions of New Shares

Shares of Trump Media & Technology Group (DJT), former President Donald Trump's media company and the parent of Truth Social, plummeted in intraday trading Monday as it reported in a Securities and Exchange Commission (SEC) filing that it plans to issue millions of additional shares.

Trump Media could offer up to about 21.5 million shares that are issuable upon the exercise of a number of different warrants, the company said in an S-1 filing.

The company also registered to resell more than 146 million shares, about 115 million of which belong to Trump, who is one of several shareholders who cannot sell shares until after a predetermined lock-up period passes.

Trump Media projected that it would receive about $247.1 million if those who hold public warrants exercise them and sell shares, and the company expects they will if the stock's price stays above $11.50. Trump Media shares were down 17% to $26.90 around 1:50 p.m. ET Monday.

-Aaron McDade

Tesla Stock Slips as EV Maker Reportedly Set To Lay Off 'More Than 10%' of Employees

Shares of electric vehicle (EV) maker Tesla (TSLA) fell in intraday trading Monday following reports that the company is laying off "more than 10%" of its global staff.

Tesla Chief Executive Officer (CEO) Elon Musk reportedly told employees in an internal email that the company is looking at "every aspect of the company for cost reductions and increasing productivity," according to The New York Times and EV-focused publication Electrek, which first reported the cuts.

Tesla did not immediately respond to a request for comment.

Earlier this month, Tesla reported its first decrease in quarterly deliveries since 2020 as increasing competition in the EV market and constantly shifting prices affected demand for Tesla's vehicles in the U.S. and internationally. Last month, reports also emerged that Tesla had decreased production at its facility in Shanghai, China, in another sign of the company's acknowledging challenges in demand.

Tesla stock slipped 4.8% to $162.84 Monday afternoon, and has lost roughly a third of its value so far this year.

-Aaron McDade

Yields Climb as Consumer Spending Adds to Rate Cut Doubts

Treasury yields climbed to fresh 2024 highs on Monday after data showed U.S. consumers kept on spending in March, another sign of resilient demand that could help keep inflation above the Federal Reserve’s 2% target. 

The 10-year Treasury yield jumped above 4.6% for the first time since November following the report Monday morning. 10-year yields, which jumped following last week's inflation report and impact interest rates on all sorts of financial products including car loans and mortgages, are now nearly 0.5 percentage points higher than they were just two weeks ago.

Sales of food and retail goods rose 0.7% in March from February, the Census Bureau said Monday. That was more than double the 0.3% increase forecasters had expected according to a survey of economists by Dow Jones Newswires and The Wall Street Journal. On top of that, February’s monthly sales increase was upwardly revised to a 0.9% gain from 0.6%.

The report was the latest in a string of data showing U.S. consumers continue to spend freely despite high prices and high borrowing costs putting pressure on household budgets. Surprisingly resilient consumer spending has kept the economy growing in recent months, fending off a long-anticipated recession, as a good job market and heavy consumer spending continue to boost one another.

“The lack of moderation in consumer spending and inflation will undermine Fed officials’ confidence that inflation is on a sustainable course back to 2% and likely delays rate cuts to September at the earliest and could push off rate reductions to next year,” Kathy Bostjancic, chief economist at Nationwide, wrote in a commentary.

-Diccon Hyatt

M&T Bank Cuts Its Exposure to Commercial Real Estate Loans, and Stock Jumps

M&T Bank (MTB) was the best-performing stock in the S&P 500 on Monday as the regional bank reduced its lending to the struggling commercial real estate market.

M&T reported its first-quarter real estate loans totaled $32.7 billion, a 2% drop from the fourth quarter and a 7% decline from a year ago.

M&T’s adjusted earnings per share (EPS) of $3.09 declined from $4.09 a year ago and narrowly missed the Visible Alpha consensus analysts' estimate of $3.14. Net interest income of $1.68 billion was down from $1.82 billion last year but in line with forecasts.

Chief Financial Officer (CFO) Daryl Bible explained that the bank was “off to a solid start in 2024,” noting that it grew certain sectors of its commercial and consumer loan portfolios, “while continuing to shrink our commercial real estate exposure.”

Shares of M&T Bank jumped 5.6% to $142.10 Monday afternoon, moving into positive territory for 2024.

-Bill McColl

Geopolitical Risks Abound—Is Wall Street Listening?

Stocks rose at the open Monday before sliding throughout the morning as markets digested strong U.S. consumer spending data and awaited Israel’s response to Saturday’s Iranian airstrikes. 

Equities trading near all-time highs, “suggests that markets are back to ignoring the building geopolitical risk, in a rash optimism that earnings will continue to grow and liquidity will boost asset prices further,” according to Noelle Acheson, former head of research at Genesis Trading.

Markets, she wrote in a newsletter Monday, are ignoring the chances Israel will retaliate, eliciting a dangerous back and forth between the two countries. The strikes could also encourage more attacks on shipping in the Red Sea and inflame myriad other tensions seething across Europe and Asia. 

While the stock market may appear to be ignoring these risks, “signs of concern are strengthening elsewhere,” Acheson wrote. Gold, the classic safe haven, has outperformed stocks, bonds, and even bitcoin in the last month. 

Meanwhile, Deutsche Bank analyst Jim Reid on Monday pointed out that geopolitical events have tended to lead to short, sharp S&P 500 sell-offs (around -6% on average) that last about three weeks and take about three weeks to recover from. 

"We have to remember that individual geopolitical events have tended to see a lot more negative press/discussion/worries, relative to the eventual price action," wrote Reid. "The risk is we eventually hit a tipping point of geopolitical risk as the world becomes increasingly fractious, but until we get to this point the market pricing template of the last several decades is hard to ignore."

-Christiana Sciaudone

Goldman Sachs Stock Surges as Investment Banking Boosts Earnings

Shares of Wall Street banking giant Goldman Sachs (GS) surged in intraday trading Monday following the release of a first-quarter earnings report that handily beat analyst expectations on the back of booming investment banking revenue.

Goldman posted $14.21 billion in total revenue for the quarter, along with $4.13 billion in net income, or $11.58 per share. Each of those figures came in well above analyst estimates compiled by Visible Alpha of $12.92 billion in revenue, $3.1 billion in income, and $8.49 in earnings per share (EPS).

Goldman recorded significant year-over-year increases in a number of revenue streams, including debt and equity underwriting increases of 38% and 45%, respectively, along with a 32% increase in investment banking fees to $2.08 billion during the first three months of 2024.

Like big banks JPMorgan Chase (JPM) and Citigroup (C), which reported earnings on Friday, the Wall Street powerhouse lagged forecasts on its net interest income, which at $1.61 billion was below analysts' estimates of $1.76 billion, and about 10% below the year-ago period.

Goldman had ended down 2% Friday, along with several other bank stocks, as executives expressed caution about the future of the U.S. economy. Goldman shares were up 3.2% to $401.80 Monday morning and up almost 20% in the past year.

-Aaron McDade

Salesforce Stock Slips After Reports of Possible Informatica Acquisition

Salesforce (CRM) shares fell more than 4% Monday morning after a report late Friday that the customer relationship management software maker is in advanced discussions to acquire data-management software provider Informatica (INFA).

One potential roadblock to a transaction getting across the line surrounds the price being discussed, which is below Informatica’s Friday closing price of $38.48, people familiar with the matter told The Wall Street Journal, which first reported the story Friday evening. Informatica’s shares have gained 43% so far this year, valuing the company at around $11.36 billion.

If a deal takes place, it would be Salesforce’s largest since it acquired workplace collaboration app Slack Technologies for $28 billion during the pandemic work-from-home boom in 2021. Before that transaction, the cloud software maker purchased data analytics platform Tableau Software in 2019 for $15.7 billion in an all-stock deal.

Since climbing to its record close in late February, Salesforce's share price has consolidated within a descending triangle—a chart pattern that technical analysts often interpret as preceding a move lower.

If a breakdown from the triangle eventuates, investors should keep an eye on the $252 level, an area where the stock is likely to find buying support from a multi-month trendline and the rising 200-day moving average. However, a breakout above the pattern to a new all-time high (ATH) on above-average volume would likely see a continuation of the longer-term uptrend.

-Timothy Smith

Stocks Making the Biggest Moves Premarket

Gains:

• Goldman Sachs (GS): Shares of the investment bank jumped 4% after it reported a surge in quarterly earnings on the back of better-than-expected trading revenue. 
• M&T Bank (MTB): Shares of the regional lender rose more than 3% despite earnings declining in the first quarter amid rising deposit costs and an increase in the money set aside for loan losses. 
• Cisco (CSCO): The networking tech giant’s shares rose more than 2% after it announced the completion of its acquisition of cloud networking and security company Isovalent. 
  

Losses:

• Trump Media & Technology Group (DJT): Shares of the former President’s social media company tumbled 14% after last week shedding about 20% of its value. 
• Salesforce (CRM): Shares fell about 3% amid reports the enterprise software company was in talks to acquire data-management software maker Informatica (INFA).
• Charles Schwab (SCHW): Shares of the brokerage fell more than 1% after it reported net new assets of about $88 billion in the first quarter, a 40% decline from the year-ago period. Total deposits also fell short of analyst estimates. 

Stock Futures Rise as Goldman Kicks Earnings Into High Gear

Futures contracts connected to the Dow Jones Industrial Average were up 0.6% in premarket trading on Monday.

S&P 500 futures were also 0.6% higher.

Nasdaq 100 futures gained 0.7%.