Stock Market Today Mid-Morning Updates
On Tuesday, the Dow Jones Industrial Average is up by 12 points as investors are waiting for insight on what the next set of moves by the Federal Reserve will be. The Fed will end its two-day meeting on Wednesday. Many analysts say that a 50 basis point hike in interest rates is a likely outcome of this meeting. U.S. and Western officials believe that Russia could formally declare war on Ukraine as soon as May 9. The declaration would enable the full mobilization of Russia’s reserve forces.
Shares of Logitech (NASDAQ: LOGI) are down today after the company missed earnings, citing a 20% drop in quarterly sales compared to a year earlier. This comes as the company continues to face challenges from current supply chain issues and the war in Ukraine. Online education company, Chegg (NYSE: CHGG) plummeted by over 30% today after it cut its revenue outlook, saying that current economic conditions are prompting consumers to prioritize earning over learning.
Among the Dow Jones leaders, shares of Apple are up by 0.28% today while Microsoft (NASDAQ: MSFT) is down by 0.31%. Meanwhile, Disney (NYSE: DIS) and Nike (NYSE: NKE) are trading mixed on Tuesday. Among the Dow financial leaders, Visa (NYSE: V) is down by 0.23% while JPMorgan Chase (NYSE: JPM) is up by 0.90%.
Shares of EV leader Tesla (NASDAQ: TSLA) are up by 2.20% on Tuesday. Rival EV companies like Rivian (NASDAQ: RIVN) are also up by 5.14%. Lucid Group (NASDAQ: LCID) is up by 2.88% today. Chinese EV leaders like Nio (NYSE: NIO) and Xpeng Motors (NYSE: XPEV) are trading higher today.
Dow Jones Today: U.S. Treasury Yields Breaches Trades Below 3% Ahead Of Fed Decision
Following the stock market opening on Tuesday, the S&P 500, Dow, and Nasdaq are trading higher at 0.31%, 0.04%, and 0.32%. Among exchange-traded funds, the Nasdaq 100 tracker Invesco QQQ Trust (NASDAQ: QQQ) is up by 0.56% while the SPDR S&P 500 ETF (NYSEARCA: SPY) is also up by 0.34%.
The benchmark 10-year U.S. Treasury yield trades at 2.91% today briefly hitting 3% on Monday for the first time since late 2018. Investors are anticipating that the Federal Reserve will hike interest rates by 50 basis points this week. Having risen by almost 100% since the start of the year, the bond market is reacting to the Fed. This comes as the Fed is adopting a more hawkish monetary tightening policy to combat rising inflation that is affecting the U.S. economy.
However, there are fears that the Federal Reserve could push the economy into a recession. Former Fed vice chair Roger Ferguson says that a recession at this stage is almost inevitable. This is because the tools the Fed has to control inflation are ‘crude’. Furthermore, all they can control is aggregate demand. Given that it is a supply-side issue that is driving most of these latest inflationary problems. Demand for goods has skyrocketed during the pandemic-era economy and could persist for the near future.
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Western Digital Stock Gains Following Business Split Suggestion From Elliott Management
Front and center in the stock market news cycle today is Western Digital (NASDAQ: WDC) or WDC, for short. By and large, this is thanks to a letter to the company’s board by Elliott Management (EM). Before going into the details, a bit of background. Elliot Management is one of the largest activist funds globally. The firm currently has approximately $1 billion in investments in WDC. Earlier today, EM sent a letter to WDC’s board of directors, calling for a strategic review of the company’s business. More importantly, the activist fund operator is suggesting that WDC split up its core hard disk drives (HDD) and NAND flash memory sections.
In detail, the letter notes that WDC has “underperformed—operationally, financially and strategically—as a direct result of the challenges of operating both the HDD and Flash businesses as part of the same company.” EM argues that a full separation of the two business divisions would serve to unlock significant value. By the fund’s current estimates, WDC’s stock price could cross the $100 per share mark by the end of 2023, should this occur. Ideally, EM is suggesting a substantial upside from WDC stock’s current value.
To support such a move, EM is offering at least $1 billion in incremental equity capital to WDC. The letter goes, “This investment proposal underscores our conviction on the merits of a separation as well as our belief in the long-term prospects of the Flash business.” As a result of all this, WDC stock is now looking at gains of over 11% at today’s opening bell.
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Nutrien Posts Record Net Earnings In Latest Quarterly Earnings Report As Global Fertilizer Demand Grows
At the same time, Nutrien (NYSE: NTR) is also making the rounds following its first fiscal quarter earnings call. After yesterday’s closing bell, the Canadian fertilizer titan posted strong figures. Diving in, Nutrien’s net earnings for the quarter are at an all-time high of $1.4 billion. Furthermore, the company also saw an adjusted EBITDA of $2.6 billion as well. Worth noting, Nutrien explains that this is thanks to higher realized prices and strong retail performance. Both of which helped in “offsetting a reduction in fertilizer sales volumes that was primarily due to a delayed start to the planting season in North America.”
In the larger scheme of things, Nutrien’s current momentum is likely due to the ongoing fertilizer supply shortages worldwide. With this comes a rise in prices and demand overall. Providing an overview on the company’s current strategy is CEO Ken Seitz. He states, “Nutrien is responding by safely increasing potash production and utilizing our global supply chain to provide customers with the crop inputs and services they need for this critical growing season. We expect to generate higher earnings and cash flows in 2022, which provides an opportunity to accelerate our strategic initiatives that we believe will advance sustainable agriculture practices and create long-term value for all our stakeholders.”
Not to mention, Nutrien’s board is also authorizing a $740 million share repurchase plan. As the company continues to address the increasingly apparent fertilizer shortages worldwide, NTR could stand to benefit. Even now, the company’s shares are seeing gains of over 2%.
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