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Wall Street Highlights: Sony Abandons Billion-Dollar Merger, SolarEdge Announces 16% Workforce Reduction, and More

Fernanda T
Latest News
January 22 2024 12:48AM

In Monday’s pre-market, U.S. stock indices indicate a positive opening, reflecting investor optimism ahead of important economic reports to be released this week. Attention is focused on GDP data on Thursday and personal consumption expenditures prices on Friday, while the Wall Street earnings season promises to be bustling, with major technology companies about to release their financial results.

As of 5:12 AM, Dow Jones futures (DOWI:DJI) rose 56 points, or 0.15%. S&P 500 futures were up 0.31%, and Nasdaq-100 futures advanced 0.57%. The yield on the 10-year Treasury bonds was at 4.115%.

In the commodities market, West Texas Intermediate crude for February rose 0.07% to $73.46 per barrel. Brent crude for March was up 0.14%, near $78.66 per barrel. Iron ore with a 62% concentration, traded on the Dalian exchange, rose 0.53% to $132.29 per metric ton, extending gains for the third consecutive session.

On Monday’s economic agenda, investors await, at 10:00 AM, the December Monthly Index of Leading Economic Indicators, a measure of expectations for the country’s economic performance in the coming months, published by the Conference Board.

Asia-Pacific markets showed mixed results on Monday. Japan’s Nikkei 225 grew 1.62%, reaching a near-historic high, while Hong Kong’s Hang Seng retreated 2.52%, pressured by the real estate sector after China maintained its lending rates. The Bank of Japan begins its monetary policy meeting, with expectations focused on upcoming regional economic announcements, including Japan’s trade balance data and South Korea’s fourth-quarter GDP. In Malaysia, the inflation rate remained stable, marking a two-year low. The consumer price index rose 1.5% year-on-year in December, consistent with November’s figures and in line with economists’ expectations.

In the European markets, the Stoxx 600 index opened higher, mainly driven by the automobile, travel, and technology sectors. In contrast, the utilities sector was the only one to register a slight decline. French lottery operator La Francaise des Jeux rose after announcing the acquisition of Kindred. On the other hand, Swiss company Belimo saw a decline due to lower than expected revenues in 2023. There is an expectation of continued focus on the anti-obesity drug market, highlighting opportunities for generic drug manufacturers in Europe.

On Friday, U.S. stocks continued their upward trend, consolidating gains from the previous session. The Dow and S&P 500 set new closing records, while the Nasdaq reached its highest level in two years. The Dow Jones gained 395.19 points (1.05%), reaching 37,863.80 points, the S&P 500 rose 58.87 points (1.23%), closing at 4,839.81 points, and the Nasdaq soared 255.32 points (1.70%), reaching 15,310.97 points. Persistent strength in technology stocks contributed to this performance. Additionally, a University of Michigan report indicated an improvement in U.S. consumer sentiment and falling inflation expectations.

For the quarterly earnings front this Monday, scheduled to present financial reports are Bank of Hawaii (NYSE:BOH), United Airlines (NASDAQ:UAL), Logitech International (NASDAQ:LOGI), Agilysys (NASDAQ:AGYS), Zions Bancorporation (NASDAQ:ZION), CrossFirst Bankshares (NASDAQ:CFB), Enterprise Financial (NASDAQ:EFSC), among others. Throughout the week, Tesla (NASDAQ:TSLA), Microsoft (NASDAQ:MSFT), Verizon (NYSE:VZ), IBM (NYSE:IBM), and Intel (NASDAQ:INTC), will be announcing their results.

Wall Street corporate highlights for today

Microsoft (NASDAQ:MSFT) – On January 12, a group backed by the Russian state breached Microsoft’s corporate systems, stealing some emails and documents from employee accounts, including members of the senior leadership team and cybersecurity and legal staff. The attack used a “password spray attack” and initially targeted Microsoft to discover what the company knew about its operations. Microsoft blocked the group’s access and found no evidence of access to customer environments, production systems, source code, or AI systems.

Apple (NASDAQ:AAPL) – The European Commission is seeking feedback on concessions offered by Apple to resolve antitrust charges related to restricted access to NFC mobile payment systems. Apple has committed to opening these systems to third-party developers in the European Economic Area and allowing the use of alternative payment apps. Rivals and customers have one month to provide feedback on these proposed concessions. If approved, they will be monitored by an independent administrator.

Sony (NYSE:SONY) – Japan’s Sony has abandoned its $10 billion merger plans with India’s Zee Entertainment, citing breach of agreement and referring the case to arbitration. Sony is seeking $90 million in termination fees and provisional measures. The dispute involved the leadership of the combined company, including CEO Punit Goenka, who was accused of embezzlement. Sony expects little material impact on its annual estimates.

Walt Disney (NYSE:DIS) – Activist hedge fund Blackwells Capital has requested support for its three nominees to the Walt Disney board of directors. They claim that each nominee has valuable skills and experience to enhance the board. Blackwells also proposed a non-binding advisory resolution to expand the number of directors, in case any of their candidates are not elected. Disney recently presented its arguments against the activist shareholders’ nominations in its preliminary proxy.

Spirit Airlines (NYSE:SAVE), JetBlue Airways (NASDAQ:JBLU) – Spirit Airlines and JetBlue Airways plan to appeal a federal judge’s decision blocking their $3.8 billion merger. They stated that the process complies with the terms of the merger agreement. Spirit reassured investors with an update, indicating that it expects fourth-quarter revenue at the upper end of its initial estimates and that holiday period bookings were solid. Spirit Airlines’ shares rose 4.3% in pre-market trading, following a 17% increase on Friday.

Boeing (NYSE:BA) – The U.S. Federal Aviation Administration (FAA) recommended inspections of the door plugs on Boeing 737-900ER jets, following reports of issues with screws during inspections. This follows the grounding of 171 FAA Boeing 737 MAX 9 planes due to a door plug explosion. The FAA stated that the MAX 9s will remain grounded until deemed safe.

Royal Caribbean (NYSE:RCL), Carnival (NYSE:CCL) – Some cruise operators canceled or adjusted itineraries to avoid the Red Sea due to attacks by the Houthi militia, affecting some trips, but the overall impact on the cruise industry is expected to be minimal, with security measures prioritized.

Stellantis (NYSE:STLA) – Stellantis, led by CEO Carlos Tavares, seeks to avoid a price war that could harm profitability and make automakers vulnerable to acquisition. Tavares emphasizes the importance of maintaining realistic prices to protect the company’s profitability, while some competitors face challenges after aggressive price cuts. Additionally, Stellantis acquired a 70% controlling stake in Brazilian company DPaschoal, expanding its presence in Latin America. DPaschoal, the second largest in Brazil’s auto parts market, has 123 stores and 2,800 employees, making Stellantis the largest auto parts distributor in the region.

Ford Motor (NYSE:F) – Ford will reduce production of the F-150 Lightning pickup truck due to lower-than-expected demand for electric vehicles (EVs). Production will be cut to one shift starting April 1st at the Michigan Rouge Electric Vehicle Center.

Macy’s (NYSE:M) – Macy’s rejected a $5.8 billion offer from Arkhouse Management and Brigade Capital to take the department store company private, citing concerns with financing and valuation. The retailer faces challenges from online and physical competition.

Manchester United (NYSE:MANU) – Manchester United announced the appointment of Omar Berrada as its next CEO, with the start date to be confirmed soon. Patrick Stewart will continue as interim CEO until the transition.

SolarEdge Technologies (NASDAQ:SEDG) – SolarEdge Technologies announced the layoff of approximately 16% of its global workforce, affecting about 900 employees, as part of efforts to reduce operating costs due to the discontinuation of production in Mexico and reduced capacity in China, as well as the termination of electric mobility activity. The decision aims to align the cost structure with changes in the solar energy market due to weak demand.

Chevron (NYSE:CVX) – Chevron will sell its natural gas business in Duvernay Shale, Canada, as part of its efforts to optimize global operations following major acquisitions. The assets could fetch up to $900 million, according to the Energy Advisors Group. Chevron plans to sell between $10 billion and $15 billion in assets by 2028.

Archer Daniels Midland (NYSE:ADM) – Archer Daniels Midland’s shares plummeted up to 10% in pre-market trading on Monday due to placing its CFO, Vikram Luther, on administrative leave during an investigation into accounting practices in its nutrition segment. Interim CFO Ismael Roig was appointed. ADM’s shares were impacted, and future guidance for the nutrition segment was withdrawn, delaying the disclosure of financial results for the fourth quarter and full year of 2023. The company expects adjusted earnings per share above $6.90 for the fiscal year, below analysts’ expectations of $7.27.

Amer Sports – Amer Sports, maker of Wilson tennis rackets and Salomon ski boots, seeks to raise up to $1.8 billion in an initial public offering (IPO) in the U.S., planning to sell about 100 million shares at $16 to $18 each. The offering could be announced in the coming days. Amer Sports is backed by Anta Sports Products Ltd. and owns brands like Louisville Slugger and Arc’teryx. If successful, this would be the largest U.S. IPO since Arm Holdings’ offering in September 2021.

Citigroup (NYSE:C) – During a recent lunch with Warren Buffett, Citigroup CEO Jane Fraser shared her efforts to simplify the bank and received Buffett’s support. She announced the anecdote during a teleconference with managing directors, indicating that more details about the reorganization would be shared soon. Berkshire Hathaway confirmed the lunch but did not disclose details of the conversation. Fraser is planning the largest overhaul of Citigroup in decades, aiming to reduce bureaucracy and increase profits and share value.

Goldman Sachs (NYSE:GS) – David Viniar was named as the next independent director of Goldman Sachs, succeeding Adebayo Ogunlesi, who will step down in April. Viniar will also serve as the chair of the board’s governance committee.

Synchrony Financial (NYSE:SYF), Ally Financial (NYSE:ALLY) – Synchrony Financial agreed to acquire Ally Financial’s point-of-sale financing business, including $2.2 billion in loan receivables. This will allow Synchrony to offer revolving credit and installment loans for point-of-sale purchases across various verticals, including home improvement, cosmetics, audiological, and dental. Both companies expect the deal to boost earnings in 2024. The sale will increase Ally’s Common Equity Tier 1 (CET1) ratio by about 15 basis points.

Blackstone (NYSE:BX) – Blackstone agreed to acquire Canadian real estate company Tricon Residential for $3.5 billion. The acquisition includes all outstanding shares of Tricon at a cash price of $11.25 per share, representing a premium of 30.35%. The transaction is expected to be completed in the second quarter of this year.

BlackRock (NYSE:BLK) – BlackRock is attempting to sell an office complex in Shanghai at about a 30% discount from the purchase price, reflecting the slowdown in the city’s real estate market. The company bought the property for $167 million in 2018.

Eli Lilly (NYSE:LLY) – The FDA found eight deficiencies at Eli Lilly’s Branchburg factory, including quality and maintenance issues. The company claims that this will not affect the quality or safety of its products. Experts suggest that the FDA could classify these failures as ‘Official Action Indicated’ depending on the corrective measures.