Equity Indexes Wrap: Energy Stocks Follow Oil Prices Higher; Chip Stocks Slip

The Dow

3M (MMM) climbed 5.4% after providing better-than-expected first-quarter earnings guidance. The stock led the index yesterday as well after it named a new CEO. 

Chevron (CVX) rose 1.4%, following oil prices higher after data showed U.S. crude oil stocks fell by 1.5 million barrels in the week ending March 8. 

Disney (DIS) inched up 0.1%, giving up early gains that came after JPMorgan Chase CEO Jamie Dimon came out in defense of Disney CEO Bob Iger, who is facing a proxy fight with activist investor Nelson Peltz.

Intel (INTC) shares slipped 4.4% following reports the Defense Department had backed out of its plan to supply $2.5 billion of a $3.5 billion grant for the company to develop advanced semiconductors for defense and intelligence purposes. 

McDonald’s (MCD) dropped 3.9% after CFO Ian Borden said he expects international sales to fall sequentially in the current quarter amid conflict in the Middle East and weakening demand in China.

The S&P 500

Freeport-McMoRan (FCX) jumped 7.6% as copper prices soared after several major Chinese smelters agreed to cut production.

NextEra Energy (NEE) rose 4.2% after its Florida Power & Light was cleared of allegations it violated campaign finance laws. 

Ford (F) gained 2.2% after Morgan Stanley named it a top automotive pick, citing its spending discipline. General Motors (GM) climbed 2.7%. 

Eli Lilly (LLY) inched up 0.4% after it and Amazon (AMZN) reached a deal to have some Eli Lilly medications delivered through Amazon’s pharmacy. Amazon gained 0.7%. 

Fair Isaac Corp. (FICO) fell 6.1% amid calls by Senator Josh Hawley for the Department of Justice to investigate the software company for alleged anticompetitive practices. 

The Nasdaq 100

PDD Holdings (PDD) rose 3.6%, climbing for a third day after an analyst upgrade on Monday. 

Dollar Tree (DLTR) tumbled 14.2% after it missed quarterly earnings estimates and laid out plans to close 1,000 stores over the next several years. 

Tesla (TSLA) fell 4.5% as Wells Fargo downgraded the stock as concerns persist about its profitability amid a prolonged slowdown in demand for electric vehicles. 

GE Healthcare (GEHC) fell 3.6% after it priced an upsized secondary offering of 14 million shares. 

Semiconductor stocks fell after rallying yesterday. Advanced Micro Devices (AMD) slid 3.9%, Broadcom (AVGO) lost 2.6%, and Nvidia (NVDA) slipped 1.1%.

US Steel Stock Tumbles Amid Reports of White House Dissent

Shares of United States Steel (X) tumbled in intraday trading on Wednesday amid reports President Biden was preparing to express concern about its takeover by Japan’s Nippon Steel. 

According to the Financial Times, the president intends to release a statement about the deal before Japanese Prime Minister Fumio Kishida arrives in Washington for a state visit on April 10.

Shares of U.S. Steel sank more than 12% Wednesday afternoon to trade just slightly above where they were before the Nippon Steel deal was announced last December.

Nippon Steel agreed to buy the iconic American steelmaker, once the world’s most valuable company, for $55 a share in a deal valued at $14.9 billion. 

The White House said in December that it would closely scrutinize the deal and evaluate its implications for national security and the soundness of U.S. supply chains.

Members of Congress have also issued calls for the deal to be closely evaluated to determine its impact on U.S. steelworkers. 

“These workers deserve to work for a company that invests in its employees and not only honors their right to join a union, but respects and collaborates with its workforce,” said Ohio Senator Sherrod Brown in a statement last December. “Given Nippon Steel’s failure to consult or even notify the United Steelworkers (USW) in advance of its acquisition announcement, I have serious concerns that they are not that company.”

The news comes amid a renewed push by federal officials to lessen U.S. reliance on foreign suppliers and international supply chains, especially for products deemed critical to national security. The Commerce Department is in the process of doling out tens of billions of dollars in grants to semiconductor companies to support the expansion of domestic chip production and research. 

Williams-Sonoma Stock Jumps Nearly 20% to All-Time High on Results, Dividend, Buyback

Shares of Williams-Sonoma (WSM) soared nearly 20% to an all-time high Wednesday as the high-end home accessories retailer posted better-than-expected results, and raised both its dividend and stock buyback plan.

The company reported fiscal 2023 fourth-quarter earnings per share (EPS) of $5.44, with revenue falling 7% to $2.28 billion. Both exceeded estimates. Comparable brand revenue slipped 6.8%.

Williams-Sonoma also announced that it was boosting its quarterly dividend by 26% to $1.13 from $0.90. In addition, the board expanded its share repurchase plan to $1 billion.

The company forecasted full-year fiscal 2024 revenue growth in the range of -3% to +3%, with comparable brand revenue between -4.5% and +1.5%.  Williams-Sonoma shares were up 18.8% at $284.41 Wednesday after moving as high as $289.80. ET. The stock has gained about 140% over the past year.

-Bill McColl

Intel Shares Fall on Report That Pentagon Withdrew $2.5B Chip Grant

Intel Corp. (INTC) shares fell Wednesday after the Pentagon reportedly pulled out of a plan to spend as much as $2.5 billion on a chip grant for the company.

The defense funding was part of a spending package that President Joe Biden signed into law over the weekend, and would have given Intel $3.5 billion to produce advanced semiconductors for military and intelligence programs. The Commerce Department, which disburses Chips Act grants, previously had only been responsible for $1 billion of the total grant. 

Apart from getting defense money, Intel has been seeking incentives valued at more than $10 billion from the CHIPS and Science Act, according to Bloomberg. 

The $2.5 billion that the Commerce Department uses to replace the Pentagon's withdrawn funds could come out of Chips Act funding earmarked for Intel, and ultimately decrease its federal grants. Intel shares slid 3.6% to $43.56 Wednesday afternoon. 

-Marc Zerbola Challande

Tesla Stock Tumbles as Wells Fargo Calls It a 'Growth Stock With No Growth"

Tesla shares moved lower Wednesday as analysts at Wells Fargo said the stock "ain't looking so 'Magnificent'" and that the electric vehicle maker is a "growth company with no growth."

The electric vehicle maker, a member of the so-called Magnificent 7 group of tech stocks, was trading at its lowest price in 10 months after Wells Fargo lowered its rating to underweight from equal weight and cut its price target to $125 from $200. Tesla shares, which have shed nearly a third of their value since the start of the year, were down 3.5% Wednesday afternoon.

The downgrade comes as the overall EV market has cooled and competition has intensified, developments that have led Tesla to announce a series of price cuts to boost demand. Those price cuts are having little effect on Tesla's sales and are pushing down profits, Wells Fargo analysts led by Colin Langan said in a note. Wells Fargo said that Tesla trades at a premium to its Magnificent 7 peers even as it is likely to show no growth in sales volume this year and a drop next year. The bank noted that its estimates for Tesla's profits in 2024 and 2025 are now 32% and 52%, respectively, below the Wall Street consensus.

-Christiana Sciaudone

BlackRock Took the Bulk of Record Bitcoin ETF Inflows Tuesday

Bitcoin ETFs saw a record day of net inflows on Tuesday, with BlackRock's offering taking the overwhelming bulk of it, according to BitMex Research. 

BlackRock’s iShares Bitcoin Trust (IBIT) reeled in $849 million yesterday, more than 80% of the record $1.05 billion that all Bitcoin ETFs took in. 

Total ETF net inflows since January 11, the day after the SEC approved 11 spot bitcoin ETFs, reached $4.1 billion yesterday. Bitcoin has been hitting record after record this year, reaching a high of $73,679 Wednesday morning before dipping back below $73,000.

Though not every ETF is celebrating. Grayscale’s Bitcoin Trust ETF (GBTC) has seen more than $10 billion in outflows, as investors have departed for lower-fee offerings. GBTC currently charges a 1.5% fee, while IBIT charges between 0.12% and 0.25%. 

Grayscale yesterday filed to list a lower-rate ETF, the Bitcoin Mini Trust, in the hopes of reversing those losses. The fee for that fund has yet to be revealed.

-Christiana Sciaudone

Eli Lilly, Amazon Partner for Direct-to-Consumer Delivery of Zepbound, Other Drugs

Eli Lilly (LLY) and Amazon (AMZN) announced a partnership Wednesday that will allow Eli Lilly prescription drugs to be shipped through Amazon's online pharmacy, as Eli Lilly looks to expand its direct-to-consumer (DTC) business and Amazon expands its reach into the healthcare industry.

Select medications from the drugmaker's LillyDirect website will be eligible to be filled through Amazon's online pharmacy, the companies announced Wednesday.

Amazon Pharmacy is the second online pharmacy Eli Lilly has partnered with for its DTC operations, along with digital pharmacy Truepill, as the drugmaker looks to lower costs for consumers amid increasing pressure from President Joe Biden and other politicians to do so. Amazon shares were up 0.9%, while Eli Lilly shares were up 0.2% late Wednesday morning.

-Aaron McDade

Disney Stock Gains as Jamie Dimon Defends CEO Iger

Disney (DIS) shares rose Wednesday morning after JPMorgan Chase (JPM) CEO Jamie Dimon endorsed CEO Bob Iger in his fight with activist investor Nelson Peltz. 

“Bob is a first-class executive and outstanding leader,” Dimon told CNBC’s David Faber. “He knows the media and entertainment business cold and has the successful track record to prove it.” 

“Putting people on a Board unnecessarily can harm a company,” he added. “I don’t know why shareholders would take that risk, especially given the significant progress the company has made since Bob came back.”

Disney has been at war with Peltz and his fund Trian Management for more than a year. Peltz launched his first proxy battle with the company in January 2023, just months after Iger returned to the helm after a brief retirement. He dropped his fight for a board seat the next month when Disney announced $5.5 billion in cost cuts. 

But the cuts proved insufficient for Peltz. He relaunched his efforts last December when he nominated himself and former Disney CFO Jay Rasulo to the board. In a white paper published earlier this month, Peltz laid out his plans for the company, which include restructuring the board, altering performance-based compensation plans, and developing a streaming strategy that will achieve “Netflix-like margins of 15-20% by 2027.”

Disney responded on Monday with a video claiming Peltz’s board fight was motivated by vanity, and his election to the board would jeopardize the business’s success. “Nelson Peltz has a long history of attacking companies to the ultimate detriment of shareholder value,” the video said. Disney shareholders will elect nominees to the company’s board of directors at its annual shareholder meeting on April 3.

Disney shares were up 1.2% Wednesday morning. They have gained 26% so far this year, with much of that gain coming after a better-than-expected earnings report in early February.

Dollar Tree Stock Plunges After Earnings Miss, Announcement of Store Closings

Dollar Tree (DLTR) shares plunged in early trading Wednesday as the discount retailer posted fourth-quarter results that missed estimates and announced plans to close 1,000 stores over the next several years.

The retailer, which operates its namesake brand and Family Dollar locations, posted an overall fourth-quarter loss as it recorded over $2.61 billion in charges for the quarter, including goodwill impairment charges and nearly $600 million on its store portfolio review.

When adjusted for those charges, Dollar Tree reported net income of $555.7 million and earnings per share (EPS) of $2.55, both below analyst estimates compiled by Visible Alpha.

Dollar Tree also announced it will close 600 Family Dollar locations in the first half of the 2024 fiscal year, as well as another 370 Family Dollar and 30 Dollar Tree locations that will close once current leases on the locations end "over the next several years," for a total of 1,000 Family Dollar and Dollar Tree closures over that time frame. Dollar Tree shares were down 13.4% at $129.57 in early trading Wednesday following the release.

-Aaron McDade

Stocks Making the Biggest Moves Premarket

Gains:

• Petco Health & Wellness Co. (WOOF): Shares of the animal health services provider jumped 6% after it topped Wall Street’s expectations with its quarterly earnings report. 
• NextEra Energy Inc. (NEE): Shares of the renewable energy utility rose about 2% after the Federal Election Commission closed its file on complaints alleging NextEra subsidiary Florida Power & Light violated the Federal Election Campaign Act. 
• Archer Daniels Midland (ADM): Shares of the commodities giant advanced almost 2% after it announced a $1 billion accelerated share repurchase agreement. 
  

Losses:

• Dollar Tree Inc. (DLTR): Shares of the discount store tumbled about 8% after it missed earnings estimates and laid out plans to close 1,000 stores over the next several years. 
• GE Healthcare Technologies Inc. (GEHC): Shares of the health tech company fell 4% after it priced a secondary offering of 14 million shares, an increase from a prior plan to offer 13 million shares. 
• Tesla Inc. (TSLA): Shares of the electric vehicle maker fell after it was downgraded to underweight from equal weight by Wells Fargo, where analysts see diminishing returns from price cuts.

Stock Futures Dip

Futures contracts connected to the Dow Jones Industrial Average were unchanged from Tuesday's close in premarket trading.

S&P 500 futures were less than 0.1% lower.

Nasdaq 100 futures ticked down 0.2%.