Markets News, April 1, 2024: Tech Spared Stock Pullback; Treasury Yields Jump After PCE

Original Article:

Source: Link

Gold Reaches Record Highs and Retreats as Rate Cut Outlook Blurs Gold surged to a record high late Sunday as markets reacted to mixed inflation data released when markets were closed Friday. Data published Friday showed core inflation, which excludes volatile food and energy prices, decelerated to 2.8% in February from 2.9% the month before. That may have overshadowed an acceleration in the non-core rate to 2.5% from 2.4% in January. Gold futures jumped to $2,260 Sunday evening when commodities markets reopened and climbed throughout the evening to more than $2,285 early Monday. They have since pared their gains to trade around $2,261 an ounce. Prices dropped late Monday morning after data showed U.S. manufacturing activity picked up in March, raising doubts the Federal Reserve will cut interest rates as soon as markets had hoped. Gold prices are supported by declining interest rates because the commodity, as an investment with no yield, becomes more attractive as the yields of other instruments, like bonds and cash, decline. Gold has surged since mid-February when it traded for about $2,000 an ounce. Prices have been buoyed by both anticipation of lower interest rates as well as robust buying by central banks and, as evidenced by ETF inflows, interest from retail investors. What To Know Ahead of GE Vernova's and GE Aerospace's Split Tuesday General Electric (GE) will complete the changes it first announced in 2021 before markets open Tuesday, spinning off its energy-focused division from the aerospace division, with the entities becoming GE Vernova and GE Aerospace, respectively. GE Healthcare Technologies was spun off last year, and now trades under the ticker "GEHC." GE Vernova will trade under "GEV" starting Tuesday morning, and GE Aerospace will continue trading under the company's longtime "GE" ticker, the company announced in October. GE Vernova will also join the S&P 500 index Tuesday morning, replacing Dentsply Sirona (XRAY), which will be moved to the S&P Midcap 400 on Wednesday. The company has been on the road to these spinoffs for years, as it has sold a number of subsidiaries and undergone several restructurings since the financial crisis of 2008. The November 2021 announcement that it planned to split into three companies was the latest attempt to emphasize profitability and attract investors. While down 0.4% at $174.80 Monday afternoon, GE stock is up nearly 40% in 2024 and more than 80% in the last 12 months. GE Healthcare was down 1.8% Monday at $89.29 but is up about 15.5% this year and 53% since it spun off. -Aaron McDade 3M Completes Health Care Spinoff, and a Court Finalizes 'Forever Chemicals' Settlement Two big announcements sent 3M (MMM) shares higher on Monday. The first involved the completion of the spinoff of Solventum, its health care business, which became listed on the New York Stock Exchange (NYSE) under the ticker symbol SOLV. With the execution of the spinoff, Solventum joined the S&P 500, replacing V.F. Corp. (VFC), the owner of apparel brands including Vans and Supreme. 3M also reported that its legal settlement with public water utilities over so-called “forever chemicals” has received final approval from the federal district court in Charleston, S.C. The company said the agreement will cost $10.3 billion, with payments spread over 13 years. It noted that the first installment will be made in the third quarter of this year, provided there are no appeals. Shares of 3M were 5.3% higher Monday afternoon, while Solventum and V.F. Corp. shares fell 0.1% and 1.2%, respectively. -Bill McColl Micron Stock Surges to Record High After Bank of America Analysts Raise Price Target Micron Technology (MU) shares jumped to a record high on Monday after Bank of America analysts increased their price target for the stock, saying it is well-positioned to gain amid the artificial intelligence (AI) boom. Bank of America named Micron, alongside Marvell Technology (MRVL) and Advanced Micro Devices (AMD), as a "junior samurAI" poised to gain after its "top picks," Nvidia (NVDA) and Broadcom (AVGO). "Each 'junior samurAI' trades interestingly at a valuation premium to its respective leader, so greater stock volatility is to be expected," the analysts wrote, adding that "as the leader expands the [total addressable market], the junior can likely continue to carve a profitable niche." The Bank of America analysts lifted their price objective to $144 from $120 per share and reiterated a "buy" rating. Micron shares were up almost 7% to $125.75 Monday after earlier hitting an all-time high of $127.38. The stock has gained 53% since the start of 2024. -Naomi Buchanan Wall Street Is Bullish, But Not Euphoric, Says BofA The S&P 500 kicked off 2024 with its best first quarter in five years, but there’s still room for stocks to run, according to Bank of America equities analysts. BofA’s Sell Side Indicator (SSI), which tracks strategists’ average recommended allocation to equities, increased 22 basis points to 55% in March, its highest level since May 2022. Historically, the SSI has acted as a contrarian indicator, meaning that it flashes “Sell” when bullish equity allocations suggest the market is approaching overbought and “Buy” when allocations suggest the opposite. That means the indicator ticking up brings it closer to a “sell” signal. However, sentiment is “nowhere near euphoria,” according to BofA analyst Savita Subramanian. The indicator is in neutral territory and currently “indicates gains of +13% over the next 12m.” Plus, Subramanian expects value and dividend stocks to get a boost from this year’s interest rate cuts. Falling interest rates should lower the yield on bonds and cash. As a result, “trillions of dollars of cash in retirees’ accounts could shift to equity income.” AT&T Slips After Data Breach Affects Millions of Customers Shares in telecommunications bellwether AT&T Inc. (T) fell in early trading Monday after the company said on Saturday that it's investigating a data breach two weeks ago that leaked millions of customers’ personal details onto the dark web. The telecommunication giant’s preliminary analysis of the incident identified that the data contained information from 7.6 million current accounts and 65.4 million former accounts, including names, addresses, phone numbers, dates of birth, and Social Security numbers. AT&T said the compromised data set appears to be from 2019 or earlier and does not contain personal financial information or customers’ call history. “As of today, this incident has not had a material impact on AT&T’s operations,” the company said in a statement released on Saturday. Shares of AT&T were down 1.7% at $17.30 on Monday morning. They're up about 3% so far this year. -Timothy Smith UPS Replaces FedEx as USPS' Primary Air Cargo Provider United Parcel Service (UPS) announced Monday it is becoming the primary air cargo provider of the United States Postal Service (USPS), replacing FedEx (FDX) in the position. The shipping giant said it will become the primary air carrier, moving the majority of U.S. air cargo, after a "transition period." USPS and FedEx negotiated through March 29, before ending negotiations after not being able to reach "mutually agreeable terms," FedEx said in a statement. The company's current contract with USPS runs through Sept. 29, after which FedEx said it will "implement adjustments" to its network, and will continue cost-cutting efforts that have improved profitability in recent quarters. UPS shares fell 0.7% from their Thursday close at $147.59 Monday after the announcement, while FedEx was 2% lower at $284. -Aaron McDade Stocks Making the Biggest Moves Premarket Gains: Li Auto Inc. (LI): The Chinese electric vehicle maker’s shares rose nearly 4% after it reported better-than-expected deliveries in March. 3M (MMM): Shares of the industrial conglomerate rose about 3% after completing the spin-off of its healthcare business, Solventum. It also announced the approval of a settlement worth up to $12.5 billion, payable over the next 13 years. United Parcel Service (UPS): Shares of the delivery company ticked up about 2% after it said it had reached an agreement to become the U.S. Postal Service’s primary air cargo provider. Losses: MicroStrategy Inc. (MSTR): Shares of the software company slid about 5% after a regulatory filing showed Executive Chairman Michael Saylor sold almost 4,000 shares last week after a big run-up in the bitcoin bull’s stock. AT&T Inc. (T): Shares fell more than 2% after the telecom said on Saturday it was investigating a data breach that resulted in millions of customers’ data being leaked onto the dark web.