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Disney extends CEO Bob Iger's contract through 2026 2023-07-12 - July 12 (Reuters) - Walt Disney's (DIS.N) board on Wednesday extended Chief Executive Officer Robert Iger's contract by two years as the experienced leader who came out of retirement in 2022 battles long-term challenges to its film and television businesses. The board said in a statement that it aimed to maintain "continuity of leadership during the company’s ongoing transformation." Iger returned to Disney as CEO in November 2022, less than a year after he retired, vowing to stay for two more years to restore the business while seeking a more durable replacement after the company pushed out Bob Chapek, Iger's hand-picked successor. "There is more to accomplish before this transformative work is complete," Iger said in a statement, adding that the board was continuing to interview internal and external CEO candidates. He faces challenges on multiple fronts during a period of significant transition in entertainment and media. The streaming video business, once viewed as the future of media, continues to lose money. Terms of his contract include opportunity to receive an annual incentive bonus of five times his base salary. In his previous contract, he was entitled to an estimated $27 million per year in total compensation. Weak box office performance of marquee titles have also challenged Iger's effort to turn around the empire. Meanwhile, the television business is confronting long term and likely irreversible declines in audiences. In February, Disney said it would cut 7,000 jobs in a major overhaul to save $5.5 billion in costs. Disney shares edged higher in after hours trading. Reporting by Yuvraj Malik in Bengaluru and Kenneth Li in New York; Editing by Shailesh Kuber and David Gregorio Our Standards: The Thomson Reuters Trust Principles.
US lawmakers seek to lower biofuel blending compliance costs 2023-07-12 - NEW YORK, July 12 (Reuters) - A bipartisan group of U.S. lawmakers introduced legislation this week directing the Biden administration to allow oil refiners to purchase compliance credits for U.S. biofuel blending laws at a lower, fixed cost compared to the open market. The proposal would reduce rising compliance costs associated with the U.S. Renewable Fuel Standard (RFS) and aim to help struggling refineries stay afloat at a time of great flux in the global energy markets, lawmakers said. As part of the standard, oil refiners must blend billions of gallons of biofuels into the nation's fuel mix, or buy tradable credits from those that do. Oil refiners argue the mandates are pricey, while biofuel proponents like ethanol producers and corn farmers like the obligations because it increases the market for their products. Under the proposed bill, refiners could buy credits around conventional biofuel blending, which includes corn-based ethanol blending, at the fixed price if they are not able to obtain them in the market at cost-effective levels, according to a news release. News of the bill caused prices for the credits, known as RINs, to dip. "We can and must do more to address volatile and soaring compliance costs driven by fuel mandates that are out of step with domestic fuel demand,” said Chris Coons, who introduced the bill along with fellow Democratic Senator Bob Casey and Republican U.S. Representative Brian Fitzpatrick. It is unclear whether the measure, unveiled on Tuesday, will pass. Issues around the RFS typically draw strong lobbying efforts from both oil refining advocates and biofuel advocates. The bill must pass both the Democratic-controlled Senate and the Republican-led House of Representatives before it could reach President Joe Biden's desk, who would decide whether to sign it into law. Renewable fuel credits traded at $1.54 each on Tuesday after the bill came out, down from $1.56 prior, traders said. Credits traded on Wednesday between $1.55 and $1.56 each amid U.S. government data release. Reporting by Stephanie Kelly; Editing by Susan Heavey Our Standards: The Thomson Reuters Trust Principles.
Steve Bannon, Michael Flynn must answer questions in Smartmatic US defamation case 2023-07-12 - [1/2] Former U.S. President Donald Trump's White House chief strategist Steve Bannon attends his arraignment at the New York Criminal Courthouse in New York, U.S., September 8, 2022. Steven Hirsch/Pool via REUTERS/File Photo July 12 (Reuters) - Steve Bannon and Michael Flynn, two allies of former U.S. President Donald Trump, must answer questions under oath in voting technology company Smartmatic's defamation lawsuit against right-wing media outlet Newsmax, court records showed on Wednesday. Florida-based Smartmatic served subpoenas on Bannon, who served as a White House strategist under Trump, and Flynn, who briefly served as national security adviser, on Wednesday, according to documents filed in Delaware state court. Bannon and Flynn, both of whom have faced their own legal woes, were two of the most vocal boosters of Trump's false claims that the 2020 U.S. election was stolen from him through widespread voting fraud, and they could have information on the spread of these claims that might help Smartmatic in the litigation. Smartmatic has accused Newsmax of knowingly spreading false claims that the voting software maker was part of a scheme to rig the election against Trump, who was seeking re-election, and in favor Democratic rival Joe Biden, who won. The company is seeking a total of $2.7 billion in damages across five cases, including against Fox, several of its hosts and former Trump lawyers. Smartmatic's case has played out alongside a similar defamation lawsuit against Fox News and Fox Corp (FOXA.O) by Dominion Voting Systems, which settled on the eve of trial in April for $787 million. Bannon and Flynn representatives did not immediately respond to requests for comment, nor did Smartmatic and Newsmax. A trial date has not yet been set in the Smartmatic case. Representatives of both companies previously have declined to say whether they are in talks over a possible settlement. Bannon, an influential figure on the American right, worked on Trump's 2016 campaign and later in the White House. He now hosts a podcast. Bannon last year was convicted of contempt of Congress for defying a subpoena from the committee that investigated the 2021 attack on the U.S. Capitol by Trump supporters. Bannon separately was charged in 2020 with defrauding donors to a private fund-raising effort to boost Trump's project to build a wall along the U.S.-Mexican border. Trump pardoned Bannon before that federal case went to trial. Bannon now is set to go on trial next year on state criminal charges related to the wall scheme. Flynn is a retired U.S. Army lieutenant general who served as Trump's first White House national security advisor until he stepped down after only a few weeks on the job amid revelations that he misled then-Vice President Mike Pence about his communications with the Russian ambassador to the United States. Trump also pardoned Flynn, who had twice pleaded guilty to lying to the FBI during the federal investigation into Russian meddling in the 2016 election. Reporting by Jack Queen; Editing by Will Dunham Our Standards: The Thomson Reuters Trust Principles.
Banks can manage outflow risk in Fed's new payment service system, Mester says 2023-07-12 - NEW YORK, July 12 (Reuters) - Cleveland Federal Reserve President Loretta Mester said on Wednesday that the U.S. central bank's new real-time money moving system is being designed in a way that should help ensure financial stability should bank stress arise. Mester acknowledged concerns that FedNow, a real-time, all-hours payment system the central bank is making available to banks, could exacerbate banking troubles by facilitating fast outflows from financial institutions, in effect super-charging a potential bank run. She said it will be up to the users of FedNow themselves to use transfer limits. "Banks have tools they could use to mitigate large outflows of deposits," including limiting how much money can be moved over a given period, restricting who can use the system, and firms can determine which direction money can flow in real time, Mester said in a speech to the National Bureau of Economic Research Summer Institute. "Future releases of the FedNow Service may allow configurable transaction limits by customer type, if such limits are deemed useful," she added. Mester said banks can also plan for how they can tap Fed emergency lending and private sources of liquidity, should they need it. "In addition to a bank being able to borrow from the Fed during the hours the discount window is open, a bank could use liquidity management transfers to replenish its master account balance from private funding sources on the weekend when the discount window is not accessible, which would help to mitigate the effects of deposit outflows on the health of the bank," Mester said. Mester's comments on mitigating the financial stability risks of the real-time payment system were rooted in events in the spring, when trouble at a limited number of banks spooked the global financial system, and were in part rooted in anxious customers moving funds from affected banks very quickly. Mester did not comment on monetary policy in her prepared remarks. Reporting by Michael S. Derby; Editing by Paul Simao Our Standards: The Thomson Reuters Trust Principles.
Manhattan office market's tough outlook persists, leaving investors on sidelines 2023-07-12 - [1/2] The Empire State Building and Manhattan skyline are pictured from the Summit at One Vanderbilt observatory in Manhattan in New York City, U.S., April 14, 2023. REUTERS/Mike Segar/File Photo NEW YORK, July 12 (Reuters) - The end of the pandemic has brought little relief to Manhattan's depressed market for workspace, where empty floors remain the norm and by one calculation the values of 45% of the city's office buildings are below their last sale price. The amount of space leased in the second quarter was down almost 50% from a year ago and was a quarter less than the five-year pre-pandemic average, according to brokerage data provided to Reuters. Even so, rental prices have held up and jumped for high-end space. But a slump in office building sales paints a more dire picture as capital remains reluctant to invest in a market radically changed by remote work. "There's essentially almost no market for office buildings right now because people don't know where the bottom is," said Andrew Nelson, a real estate economist who runs Nelson Economics in Washington. Demand is strong for expensive space in trophy assets, but everything else is "getting more and more vacant," he said. "It's a slow-motion train wreck that's going to take years to play out, but it's bad now and it's going to be getting worse." Unlike in past economic cycles, the office market has yet to correct after more than three years of a downturn, said Andrew Lim, a research director at Jones Lang LaSalle Inc (JLL.N) in New York. Opportunistic investors who could clear the market of unneeded office space and help lift values are biding their time, sitting on the sidelines, Lim said. "We know there's s a lot of capital around, whether it's from domestic firms or sovereign wealth funds," he said. But "buildings going back to the lenders or in foreclosure has not been as widespread as some of the more pessimistic pundits have predicted." The number of buildings in Manhattan with loan balances that exceeded their market value rose in the second quarter to 112, with 33.4 million square feet of space, from 73 with 15.1 million square feet of space the prior quarter, JLL said. The difference in the current valuation of the 112 buildings from their last, mostly pre-pandemic sale price, totaled $38.3 billion, JLL said. That's down from a valuation loss of $75.8 billion in the first quarter, the brokerage said. The biggest construction boom in New York in decades, and building renovations that often cost $100 million or more, have kept office supply high and favored tenants looking to lease. Year-to-date, negative net absorption – when an increase in supply along with more space being vacated is greater than the amount of space leased – is now 2.75 million square feet, brokerage CBRE Group Inc (CBRE.N) said this week. The increase in negative absorption comes despite the number of office jobs in Manhattan now exceeds pre-pandemic levels. Leased square footage was down 46.7% from last year's second quarter and was the lowest quarterly volume since the first quarter of 2021, JLL said in a report. And Savills Plc (SVS.L) said direct available office space in Manhattan now measures 70.3 million square feet, the highest in history. "People talk about converting into residential, and that's certainly possible for some, but it's way overstated what the potential is," said Nelson, throwing cold water on hopes large-scale conversion will right-size the market. CONCESSIONS SOAR AT HIGH END Landlords have increased concessions to bolster asking rents - a key metric in commercial real estate loans that lenders use to judge the revenue a property can generate - that have held steady during the pandemic. "Asking rents overall really haven't shifted since 2019, which is an anomaly given what past cycles have been like," Lim said. "We know that is not perhaps the real state of the market." Net effective rents, which include concessions such as allowances for tenants to improve an office, have doubled in price to $106 per square foot this year from $53 in 2020 for trophy buildings, Lim said. But the net effective rent for office space in older Class B buildings barely rose during the pandemic, to $50 from $48, a sign of the market's bifurcation between demand for the very best and the lack for lesser quality. Mark Berry, managing director of REIT credit ratings at Kroll Bond Rating Agency LLC in New York, said capital sees an opportunity but it's difficult to underwrite loans for office buildings as sales are so few it's hard to judge true value. "I don't think values are yet at the point where those pools of capital are ready to put the money to work." (This story has been officially corrected to say 'Savills Plc said direct available office space in Manhattan now measures 70.3 million square feet,' not 70.4 million square feet, in paragraph 15) Reporting by Herbert Lash; Editing by Nick Zieminski Our Standards: The Thomson Reuters Trust Principles.
Disney extends CEO Bob Iger’s contract through 2026 2023-07-12 - Bob Iger’s sequel at Walt Disney Co. just got renewed for a few more seasons. Disney DIS, +0.74% said late Wednesday that its board has extended the chief executive’s contract through December 2026, praising Iger’s “successful leadership record and ongoing strategic transformation of the company.” Disney stock gained 0.6% in the extended session Wednesday after the news.
Growing ‘debt divide’ in the U.S. sees some pulling ahead as others fall further behind 2023-07-12 - Some Americans are racking up debt even as others are paying theirs off, creating a debt divide among the U.S. population. Among U.S. adults who have personal debts, more than 4 in 10 say the amount they currently owe is close to its lowest level ever. But more than 3 in 10 are in a more precarious situation, saying that what they owe is close to its highest level ever. That’s according to a recent survey by insurance company Northwestern Mutual, which polled over 2,700 people in February and March. So although the overall trend is that Americans’ debt situation is improving, that’s not true for everyone, said Christian Mitchell, chief customer officer at Northwestern Mutual. “More people feel like they’re moving in the right direction than those who do not, but there’s still a sizable universe of people carrying more debt than ever,” Mitchell said in a statement. The average amount of personal debt in the U.S., not including a mortgage, is $21,800. That’s $8,000 less than it was in 2019 and also the lowest level since then, according to Northwestern Mutual. In 2023, 39% of Americans with personal debt said the amount they owe is under $5,000, the smallest share of the population with that level of debt in three years. Another 35% said their debt is between $5,001 and $25,000, which is the highest proportion of the population to say that in the last three years. In 2022, 26% said the same, while in 2021, the share was 28%. Those who report that their debt level is close to its lowest point ever are more likely to be people with higher net worth — those who earn more than $75,000 a year — older people, people who describe themselves as disciplined planners and those who say they work with a financial adviser, said Reggie Joe, a wealth-management adviser at Northwestern Mutual. Those who are carrying debt that is close to the highest level ever are more likely to be younger and people who describe themselves as not disciplined planners, he said. The events of recent years have contributed to this gap, Joe told MarketWatch. “The last few years have included a number of things out of people’s control. We went right from the pandemic, for example, into a period of high inflation and economic uncertainty,” he noted. “What we’re seeing is that those factors impact people differently. People with more savings — such as boomers and high-net-worth individuals — are likely to have been in a better position to weather those conditions and not rely on debt.” Loans are getting more expensive The inflation that started in the latter part of 2021 has pushed up prices for everything from groceries to rent. To combat that inflation, the Federal Reserve has raised its benchmark interest rate to a range of 5% to 5.25%. As a result, it’s getting more expensive to borrow money. Credit-card debt is the top source of personal debt, with 28% of survey participants saying it is their No. 1 source of debt, while 12% said car loans were their top source of debt. The cost of financing a new car was at an all-time high in the second quarter of 2023, with a historic share of new-car buyers — 17.1% — taking on a monthly payment of more than $1,000, according to automotive-research firm Edmunds’ second-quarter report. Credit-card debt remained at a record-high level of $986 million in the first quarter of 2023 — the first time in more than 20 years that it did not dip as a result of seasonal variations, according to the New York Fed. Student-debt repayment, meanwhile, has been paused since the early days of the pandemic but will resume in October. Personal education loans were the top source of debt for 5% of the survey participants overall and for 17% of Gen Z members who have personal debts, for 10% of millennials and for 3% of Gen Xers. Also read: Is now a good time to refinance your student loans? You could save money, but tread carefully. Lower-income households lack the resources to tackle debt While there are many factors that affect a person’s financial circumstances — with some of those factors being within their control and some not — focusing on the factors that people can control could help them better navigate their finances, Joe said. Some of the factors within our control are things like disciplined planning and working with an adviser, he added. People working with a financial adviser were more likely to say they are carrying less debt or are close to their lowest debt level ever, with 52% of them saying that, according to the survey, compared with 38% of people who do not work with a financial adviser. About one-third of Americans have sought the help of a financial adviser, although 62% of all Americans say their financial planning needs improvement, according to a 2022 Northwestern Mutual survey. People who earn $100,000 or more a year and college graduates are more likely to have consulted a paid financial adviser, according to the National Association of Plan Advisors. People who called themselves disciplined financial planners were also more likely to say they were closer to their lowest level of debt. Researchers and analysts have said that the U.S. states where people shoulder the greatest debt burden — most of them in the South — also often have lower average household incomes and less access to public safety-net benefits such as community financial support as compared with other states. Also read: Credit-card debt burdens are worst in this state. Here’s why. Although U.S. households accumulated some savings during the pandemic, low-income and middle-income adults are now dipping into their savings as income gains drop off, according to a recent report from Morning Consult. “For the past 25 months, [consumer-price index] inflation outpaced growth in average hourly earnings, meaning that Americans’ incomes were falling on an inflation-adjusted basis. Negative real wage growth acted as a headwind to consumer spending and prompted many Americans to draw down on their savings and take on additional credit,” the report said. Low-income individuals increasingly report juggling bills, and the share who were late on utility payments or rent rose for the second straight month in June, according to Propel, an app that aims to help low-income Americans improve their financial health. In June, an all-time high of 60% of surveyed users of Propel reported not having the household essentials they typically need, according to Propel. “It’s been so hard,” one Florida Propel user said in the survey. “I had no vehicle to go to food pantries. For over three months, I’ve barely eaten so my kids can. I go without dinners often and am in debt with friends and family just for food.” Emma Ockerman contributed. Now read: As food prices rise in June, analysts warn of a ‘tipping point’ for Americans And: Inflation is cooling, but that does not mean cheaper trips to the grocery store
Microsoft cybersecurity expansion poses long-term ‘ramifications’ for Palo Alto Networks, Cloudflare, others 2023-07-12 - Cybersecurity stocks fell Wednesday after Microsoft Corp. announced an expansion into network security, and rebranded its Azure Active Directory to reflect that move, which could haunt pure-play security vendors in the long term. In a blog post Tuesday, Microsoft MSFT, +1.42% announced that Azure AD will now become “Microsoft Entra ID,” as the service focuses on zero-trust ID with Entra Private Access, and an identity-centric secure web gateway with Entra Internet Access, both of which are in preview.
As food prices rise in June, analysts warn of a ‘tipping point’ for Americans 2023-07-12 - Food prices grew at a slower pace in June, but economists remain concerned that prices will reach a level where consumers will make dramatic changes in their behavior. Food prices rose 3% in June compared to a year ago, according to the latest data from the Bureau of Labor Statistics. After a year of price hikes, consumers continued to see food prices rise, but at a slower rate. Grocery prices were 5.7% higher in June compared to a year ago, and dining out was 7.7% more expensive. That’s significantly lower than the 13.5% peak inflation for grocery prices last August and the 8.8% peak inflation for dining out. “Overall, there continues to be a similar narrative of extended upward pressure on food prices as we try to discern whether this stress has led to a tipping point where consumers are struggling to buy the foods that they want,” said Jayson Lusk, the head and distinguished professor of Agricultural Economics at Purdue University. Reported food insecurity across households of different income levels reached 17% in June, the highest level since March 2022, according to the monthly Consumer Food Insights Report from Purdue University. Although it didn’t deviate too much from the normal range — food insecurity hovered at 14% two months ago — Lusk said the increase is concerning given the amount of pressure on more financially vulnerable consumers. “Reported food insecurity across households of different income levels reached 17% in June, the highest level since March 2022, according to Purdue University. ” The pandemic-era expansion of the Supplemental Nutrition Assistance Program ended in March, meaning SNAP recipients are now receiving $90 less on average every month, according to the Center on Budget and Policy Priorities, a progressive policy think tank based in Washington, D.C. The recent rise in food insecurity could be a lag from households adjusting to the policy change, Lusk said. On average, consumers are spending about $120 per week on groceries and $70 per week on dining out or takeout, the report found. Middle-income households earning $50,000 to $100,000 a year and low-income households earning less than $50,000 a year cut weekly spending on groceries and dining out by about $10 a week, Purdue found. The average weekly grocery expenditure for low-income households was $103 in June; for middle-income households, it was $118. Households earning more than $100,000 a year spent $141 a week on groceries in June. Around 47% of low-income households — those earning less than $50,000 a year — said they relied on SNAP benefits in May, up from roughly 40% in February, according to a recent Morning Consult report. For low-income households, rising food insecurity is often coupled with juggling bills such as utilities and rent, which has also led to rising eviction rates in recent months, according to Propel, an app that aims to help low-income Americans improve their financial health. Propel surveys SNAP users on insecurity around food, finance and their housing situation. Nearly half of the survey respondents said they cannot afford the food they want. “We were unable to pay bills because we had to buy food. We’re about to lose our home,” a South Carolina user named Anna told the Propel survey. The share of surveyed households that paid their utilities late rose 11% from May to June, and only 27% of respondents paid their utility bills on time and in full, according to Propel’s June survey.
U.S. Dollar Index chart breakdown warns that further losses loom 2023-07-12 - The ICE U.S. Dollar Index fell through important chart support Tuesday, sending a message that further losses may be looming. The index DXY, -1.13% , which tracks the U.S. dollar’s performance against a basket of rivals, sank 1.2% in afternoon trading to put it on track for its lowest close since April 2022. The selloff comes after relatively tame consumer-inflation data for June sent Treasury yields lower, meaning investors who bought dollars so they could purchase U.S. debt instruments were making less money. Read MarketWatch’s Bond Report column. The dollar index dropped below where it had bottomed during previous selloffs in February, April and May, around the 101 level. FactSet, MarketWatch “With headline inflation continuing to moderate, yield differentials between the U.S. and other countries will be perceived as less attractive by global bond investors,” Janney technical analyst Dan Wantrobski wrote in a note to clients. “This, plus the added nuance of recession creeping into the narrative, could lead to further weakness in the U.S. dollar in our view.” Read: Fed’s Beige Book points to continued slow economic growth Also read: Fed’s Williams says economy won’t hit its weakest point until next year The dollar index was already in a precarious technical position. After the sharp drop in late 2022 through January 2023, it could never mount much of a bounce. The rally to the early March recovery peak retraced less than one-third of the decline from the two-decade high in late September to the initial low in early February. And as Wantrobski noted, the dollar has stayed below its 200-day moving average, which many chart watchers use to define the long-term trend, as it has remained range-bound through the entire first half of 2023. FactSet, MarketWatch Looking below, Wantrobski sees strong support in the mid-90s range. That was a support zone seen in early 2022, just before the big rally, which was fueled by expectations of — and the actual start of — the Federal Reserve’s interest-rate-increase cycle in March 2022. And below that, the dollar’s first-half 2021 lows in the 89-to-90 range should provide support.
Meta earnings could show how AI is already paying off 2023-07-12 - Meta Platforms Inc.’s narrative has been winning points with investors this year, as the company works to shake the perception that its brands have fallen out of fashion amid TikTok’s surge. The company’s July 26 earnings could show a rosy picture for Instagram, and the company might have artificial intelligence to thank in part for the momentum, according to a Deutsche Bank analyst. Investors appear increasingly upbeat about the digital-advertising market and Meta’s META, +3.70% ability to recognize efficiency gains while also leaning on artificial-intelligence investments to fuel “strong engagement and monetization trends,” namely at Instagram, Deutsche Bank’s Benjamin Black wrote in a note to clients Wednesday. Also see: Meta is no longer this analyst’s top internet stock pick. Here’s what’s supplanted it. Black himself is feeling more optimistic about Meta’s story ahead of the report, boosting his price target to $350 from $290. “Recent ad checks indicated ad spend has progressed nicely through the quarter, and Facebook and Instagram have been positive relative to peers,” he wrote. He views Meta as a potential beneficiary from the AI frenzy beyond its role in enhancing content recommendations for users, as the company also leans on the technology to augment its advertising offerings. Meta could use AI and machine learning to help advertisers more easily create short-form video spots and respond to customer queries through Messenger. These areas “should expand the monetization opportunities for Meta,” Black said. Down the line, he also has a positive view on Meta’s ability to capitalize on the strong initial popularity of its Threads app that’s meant to offer an alternative to Twitter. “We note the recent launch of Threads has already reached 100mn users and adds optionality to an already strong ad recovery story,” Black wrote. Read: Meta’s Threads has over 107 million users, research says Barclays analyst Ross Sandler weighed in on Threads as well Wednesday, writing that it could mark the start of a “new phase” for the company. He asked if Meta was “is in a position to continue leveraging its infrastructure, graphs and AI to launch more and more dedicated stand-alone apps like Threads and Messenger,” suggesting that the company could potentially “pull Reels out of Instagram and into its own dedicated app like TikTok, which would allow it to compete better without any internal metric tension and trade-offs with Instagram Feed and Stories?” “If this ‘platform’ strategy was to take hold, whereby apps are launched out of existing apps, we think the P/E [price-to-earnings multiple] assigned to META shares could expand greatly, as it introduces a bunch of new use cases and opportunities to increase engagement and revenue,” Sandler said. Opinion: With Meta’s Threads, Zuck seized an opportunity and took a page from Steve Jobs
Nasdaq is making a big change to its most popular index. Here’s how it might impact your portfolio. 2023-07-12 - Big Tech has gotten too big for Nasdaq’s liking. So the exchange has decided to make some changes to the Nasdaq 100 index, its most popular index, according to company representatives, ostensibly to diminish the concentration risk that accompanies having an index that derives more than half of its value from just seven companies. Nasdaq announced late last week that the Nasdaq 100 NDX, +1.24% will undergo a special rebalancing that will take effect prior to the market open on July 24. It’s only the third time that Nasdaq has announced such an impromptu rejiggering of how much individual stocks contribute to the index. Although Nasdaq can also reconstitute the index regularly every December, and there’s also a mechanism to rebalance every quarter as well. In a statement announcing the move, the exchange alluded to the fact that the largest companies in the technology sector have too much sway over the index’s price. Nasdaq said special rebalancing can be implemented “to address overconcentration in the index by redistributing the weights.” The rebalancing comes at a critical time. The Nasdaq 100 has risen 40% since the start of 2023, largely thanks to the “Magnificent Seven,” a handful of megacap technology names that have powered much of the U.S. stock market’s rally this year. These gains have pushed the index to its highest level since mid-January 2022, meaning that Big Tech has now retraced nearly all of last year’s losses, and might soon be headed for the all-time highs from November 2021. As of Thursday, the Magnificent Seven stocks — Nvidia Corp. NVDA, +3.53% , Apple Inc. AAPL, +0.90% , Microsoft Corp. MSFT, +1.42% , Amazon.com Inc. AMZN, +1.57% , Tesla Inc. TSLA, +0.82% , Meta Platforms Inc. META, +3.70% and Alphabet Inc.’s Class A GOOGL, +1.53% and Class C GOOG, +1.62% shares — accounted for 55% of the Nasdaq 100’s market capitalization, while the top five names account for more than 45%. According to Nasdaq’s official methodology, the goal is to keep the aggregate weighting of the biggest stocks below 40%. In fact, it’s possible that Tesla Inc. surpassing 4.5% of the index earlier this month triggered the Nasdaq’s rebalancing announcement, according to analysts from UBS Group AG UBS, +1.87% . Exactly how it plans to accomplish this isn’t yet known. Nasdaq said the new weighting scheme will be unveiled on Friday, likely after the U.S. market close. But the UBS team has an educated guess. “The quarterly reviews would dictate that the aggregate weight to securities exceeding 4.5% be set to 40%. If that’s the approach Nasdaq takes, then we’d expect the weights of Microsoft, Apple, Nvidia, Alphabet, Amazon, and Tesla to be reduced,” the team said in a note shared with MarketWatch. For investors trying to anticipate how this might impact their portfolios, here the answers to a few key questions. Could the rebalancing kill the U.S. stock market rally? Not likely. Or rather: if the rally in Big Tech does falter, history suggests it won’t be because of the rebalancing. Here’s more on that from Nicholas Colas, co-founder of DataTrek Research, who discussed the topic in commentary emailed to MarketWatch on Wednesday. “…[T]here is the natural inclination to think that the upcoming special reweighting is a sign that large cap disruptive tech is set to roll over because a handful of names have so handily outpaced the rest of its notional peers,” Colas said. “History suggests otherwise. The last 2 one-off reweights were in 2011 and 1998. Neither proved to be the end of a Nasdaq 100/tech stock bull market. Not even close, really.” More immediately, ETF experts expect trading around the rebalancing will be relatively muted. “While it sounds scary, Investors are well positioned — this has been well bantered about,” said David Lutz, head of ETF Trading at Jones Trading, in comments emailed to MarketWatch. How could this benefit investors? Since megacap technology stocks don’t pay much, if anything, in dividends, the rebalancing could increase the amount of dividends that ETF investors receive each year, according to a team of analysts at JPMorgan Chase & Co. Since the largest constituents pay a dividend yield well below the index average, the redistribution of weight from them to the rest of the index will result in a “meaningful boost” to the regular payouts received by investors, which will boost the total return of Nasdaq 100-tracking ETFs and mutual funds. Will there be any short-term costs associated with the rebalancing? There might be. Since the new index weightings will be announced in advance, investors will have plenty of time to front-run the rebalancing trade. Still, there are plenty of hedge funds and proprietary trading firms that run strategies explicitly designed to profit from rebalancing. These firms profits have to come from somewhere, and the logical place would be the fund managers of the Invesco QQQ exchange-traded fund QQQ, +1.26% QQQM, +1.27% . “There are prop traders and hedge funds that run the strategy of providing liquidity to indexes with the expectation that they’ll earn profits,” said Roni Israelov, president and CIO at Wealth Manager NDVR, during a phone interview with MarketWatch. “if they are earning profits by providing that liquidity, the expectation is those profits are being paid by investors in those funds.” So far at least, markets appear to have taken news of the rebalancing in stride. Megacap technology names tumbled earlier this week, but they’ve since recouped those losses and then some.
Analyst Ratings for Builders FirstSource - Builders FirstSource (NYSE:BLDR) 2023-07-12 - Builders FirstSource BLDR has observed the following analyst ratings within the last quarter: Bullish Somewhat Bullish Indifferent Somewhat Bearish Bearish Total Ratings 2 6 2 0 0 Last 30D 1 0 0 0 0 1M Ago 1 1 0 0 0 2M Ago 0 1 0 0 0 3M Ago 0 4 2 0 0 According to 10 analyst offering 12-month price targets in the last 3 months, Builders FirstSource has an average price target of $135.2 with a high of $175.00 and a low of $95.00. Below is a summary of how these 10 analysts rated Builders FirstSource over the past 3 months. The greater the number of bullish ratings, the more positive analysts are on the stock and the greater the number of bearish ratings, the more negative analysts are on the stock This average price target has increased by 17.31% over the past month. Stay up to date on Builders FirstSource analyst ratings. How Are Analyst Ratings Determined? Benzinga tracks 150 analyst firms and reports on their stock expectations. Analysts typically arrive at their conclusions by predicting how much money a company will make in the future, usually the upcoming five years, and how risky or predictable that company's revenue streams are. Analysts attend company conference calls and meetings, research company financial statements, and communicate with insiders to publish their ratings on stocks. Analysts typically rate each stock once per quarter or whenever the company has a major update. Some analysts also offer predictions for helpful metrics such as earnings, revenue, and growth estimates to provide further guidance as to what to do with certain tickers. It is important to keep in mind that while stock and sector analysts are specialists, they are also human and can only forecast their beliefs to traders. This article was generated by Benzinga's automated content engine and reviewed by an editor.
4 Analysts Have This to Say About Beazer Homes USA - Beazer Homes USA (NYSE:BZH) 2023-07-12 - Within the last quarter, Beazer Homes USA BZH has observed the following analyst ratings: Bullish Somewhat Bullish Indifferent Somewhat Bearish Bearish Total Ratings 2 0 2 0 0 Last 30D 0 0 1 0 0 1M Ago 1 0 0 0 0 2M Ago 0 0 0 0 0 3M Ago 1 0 1 0 0 According to 4 analyst offering 12-month price targets in the last 3 months, Beazer Homes USA has an average price target of $25.25 with a high of $31.00 and a low of $20.00. Below is a summary of how these 4 analysts rated Beazer Homes USA over the past 3 months. The greater the number of bullish ratings, the more positive analysts are on the stock and the greater the number of bearish ratings, the more negative analysts are on the stock This average price target has increased by 21.69% over the past month. Stay up to date on Beazer Homes USA analyst ratings. If you are interested in following small-cap stock news and performance you can start by tracking it here. How Are Analyst Ratings Determined? Analysts are specialists within banking and financial systems that typically report for specific stocks or within defined sectors. These people research company financial statements, sit in conference calls and meetings, and speak with relevant insiders to determine what are known as analyst ratings for stocks. Typically, analysts will rate each stock once a quarter. Some analysts also offer predictions for helpful metrics such as earnings, revenue, and growth estimates to provide further guidance as to what to do with certain tickers. It is important to keep in mind that while stock and sector analysts are specialists, they are also human and can only forecast their beliefs to traders. This article was generated by Benzinga's automated content engine and reviewed by an editor.
Analyst Ratings for Truist Finl - Truist Finl (NYSE:TFC) 2023-07-12 - Analysts have provided the following ratings for Truist Finl TFC within the last quarter: Bullish Somewhat Bullish Indifferent Somewhat Bearish Bearish Total Ratings 2 4 6 0 0 Last 30D 1 0 0 0 0 1M Ago 0 2 4 0 0 2M Ago 1 0 0 0 0 3M Ago 0 2 2 0 0 According to 12 analyst offering 12-month price targets in the last 3 months, Truist Finl has an average price target of $41.25 with a high of $46.00 and a low of $32.00. Below is a summary of how these 12 analysts rated Truist Finl over the past 3 months. The greater the number of bullish ratings, the more positive analysts are on the stock and the greater the number of bearish ratings, the more negative analysts are on the stock This current average represents a 9.93% decrease from the previous average price target of $45.80. Stay up to date on Truist Finl analyst ratings. What Are Analyst Ratings? Ratings come from analysts, or specialists within banking and financial systems that report for specific stocks or defined sectors (typically once per quarter for each stock). Analysts usually derive their information from company conference calls and meetings, financial statements, and conversations with important insiders to reach their decisions. Some analysts will also offer forecasts for metrics like growth estimates, earnings, and revenue to provide further guidance on stocks. Investors who use analyst ratings should note that this specialized advice comes from humans and may be subject to error. This article was generated by Benzinga's automated content engine and reviewed by an editor.
The Latest Analyst Ratings for IBM - IBM (NYSE:IBM) 2023-07-12 - Within the last quarter, IBM IBM has observed the following analyst ratings: Bullish Somewhat Bullish Indifferent Somewhat Bearish Bearish Total Ratings 1 2 6 0 0 Last 30D 0 0 1 0 0 1M Ago 0 2 1 0 0 2M Ago 0 0 0 0 0 3M Ago 1 0 4 0 0 In the last 3 months, 9 analysts have offered 12-month price targets for IBM. The company has an average price target of $144.89 with a high of $162.00 and a low of $135.00. Below is a summary of how these 9 analysts rated IBM over the past 3 months. The greater the number of bullish ratings, the more positive analysts are on the stock and the greater the number of bearish ratings, the more negative analysts are on the stock This current average has decreased by 2.87% from the previous average price target of $149.17. Stay up to date on IBM analyst ratings. What Are Analyst Ratings? Analysts work in banking and financial systems and typically specialize in reporting for stocks or defined sectors. Analysts may attend company conference calls and meetings, research company financial statements, and communicate with insiders to publish "analyst ratings" for stocks. Analysts typically rate each stock once per quarter. Some analysts will also offer forecasts for metrics like growth estimates, earnings, and revenue to provide further guidance on stocks. Investors who use analyst ratings should note that this specialized advice comes from humans and may be subject to error. This article was generated by Benzinga's automated content engine and reviewed by an editor.
$100 Invested In Canadian Natural Res 20 Years Ago Would Be Worth This Much Today - Canadian Natural Res (NYSE:CNQ) 2023-07-12 - Canadian Natural Res CNQ has outperformed the market over the past 20 years by 5.39% on an annualized basis producing an average annual return of 13.25%. Currently, Canadian Natural Res has a market capitalization of $63.08 billion. Buying $100 In CNQ: If an investor had bought $100 of CNQ stock 20 years ago, it would be worth $1,203.96 today based on a price of $57.79 for CNQ at the time of writing. Canadian Natural Res's Performance Over Last 20 Years Finally -- what's the point of all this? The key insight to take from this article is to note how much of a difference compounded returns can make in your cash growth over a period of time. This article was generated by Benzinga's automated content engine and reviewed by an editor.
10 Analysts Have This to Say About Dow - Dow (NYSE:DOW) 2023-07-12 - Over the past 3 months, 10 analysts have published their opinion on Dow DOW stock. These analysts are typically employed by large Wall Street banks and tasked with understanding a company's business to predict how a stock will trade over the upcoming year. Bullish Somewhat Bullish Indifferent Somewhat Bearish Bearish Total Ratings 0 1 7 2 0 Last 30D 0 0 1 0 0 1M Ago 0 0 2 1 0 2M Ago 0 0 1 0 0 3M Ago 0 1 3 1 0 According to 10 analyst offering 12-month price targets in the last 3 months, Dow has an average price target of $54.4 with a high of $61.00 and a low of $47.00. Below is a summary of how these 10 analysts rated Dow over the past 3 months. The greater the number of bullish ratings, the more positive analysts are on the stock and the greater the number of bearish ratings, the more negative analysts are on the stock This current average has decreased by 4.36% from the previous average price target of $56.88. Stay up to date on Dow analyst ratings. What Are Analyst Ratings? Benzinga tracks 150 analyst firms and reports on their stock expectations. Analysts typically arrive at their conclusions by predicting how much money a company will make in the future, usually the upcoming five years, and how risky or predictable that company's revenue streams are. Analysts attend company conference calls and meetings, research company financial statements, and communicate with insiders to publish their ratings on stocks. Analysts typically rate each stock once per quarter or whenever the company has a major update. Some analysts will also offer forecasts for metrics like growth estimates, earnings, and revenue to provide further guidance on stocks. Investors who use analyst ratings should note that this specialized advice comes from humans and may be subject to error. This article was generated by Benzinga's automated content engine and reviewed by an editor.
$1000 Invested In This Stock 10 Years Ago Would Be Worth $4,900 Today - Micron Technology (NASDAQ:MU) 2023-07-12 - Micron Technology MU has outperformed the market over the past 10 years by 6.62% on an annualized basis producing an average annual return of 16.9%. Currently, Micron Technology has a market capitalization of $69.87 billion. Buying $1000 In MU: If an investor had bought $1000 of MU stock 10 years ago, it would be worth $4,880.64 today based on a price of $63.79 for MU at the time of writing. Micron Technology's Performance Over Last 10 Years Finally -- what's the point of all this? The key insight to take from this article is to note how much of a difference compounded returns can make in your cash growth over a period of time. This article was generated by Benzinga's automated content engine and reviewed by an editor.
Chamber of Commerce asks judge to block Medicare drug price negotiations before October 1 2023-07-12 - The U.S. Chamber of Commerce seal is displayed during restoration at the headquarters in Washington, D.C. The U.S. Chamber of Commerce on Wednesday asked a federal judge in Ohio to block Medicare's new powers to negotiate drug prices before October 1. The motion for a preliminary injunction is a significant escalation in the pharmaceutical industry's legal battle against Medicare that would halt the talks before they begin this fall. Health and Human Services Secretary Xavier Becerra will publish a list of 10 high-cost drugs by September 1 that are selected for the negotiations. Drugmakers then have to decide whether to sign agreements to participate in the talks by October 1. The U.S. Chamber and local chambers of commerce in Dayton, Ohio and Michigan sued Medicare in federal court in the southern district of Ohio in June. They argued that the drug negotiations violate the First and Fifth Amendments of the U.S. Constitution, as well as the separation of powers. The Chamber asked Judge Thomas Rose on Wednesday to block the negotiations before they get underway because they violate the due process clause. Drugmaker Abbvie , a member of the U.S. Chamber and the Dayton, Ohio area chamber, fears that its blood cancer drug Imbruvica will be selected for the negotiations this fall. Imbruvica generated $4.6 billion in revenue last year, or about 8% of the company's total sales.