What to Watch Today
Stocks were falling on Thursday as investors took a breather from a strong rally to start November.
Oil prices were sliding, and Treasury yields resumed their post-CPI decline.
Among the latest earnings, Walmart topped third-quarter estimates but disappointed investors, sending the stock lower.
Cisco Systems reported slightly better-than-expected results for its latest quarter, but the company’s outlook was well short of estimates.
And Alibaba said it won’t proceed with spinning off its cloud computing arm. The company cited recently-expanded U.S. export controls on advanced computer chips. Its stock plunged.
The dollar bounces back from lows reached after soft labor data.
Weekly jobless claims were higher than expected, pointing to an economic slowdown that could lead the Fed to kill its dollar-supporting interest-rate rising cycle.
Industrial production data seemed to go in the same direction, coming in below expectations, but the numbers show resilience when accounting for the auto workers strike, boosting the greenback, said Wells Fargo economist Brenda McKenna.
The dollar strengthens 0.5% against both the aussie and the loonie, while weakening 0.5% to the yen and 0.1% versus the euro.
Walmart stock was on track for its worst day of the year after the firm’s outlook spooked the market.
Walmart stock was down 7.8% in Thursday afternoon trading, which would be its largest decline since it sank more than 11% in May 2022.
Walmart was the second-worst performer in the Dow Jones Industrial Average and the S&P 500.
Though earnings topped expectations, the firm’s outlook came in short of analyst forecasts. Read more about it here.
Cisco stock was sinking on Thursday in response to the networking firm’s latest earnings report. Blame the outlook.
Cisco stock was down 11.5% to $47.16 in Thursday afternoon trading, on pace for its worst day since May 19, 2022, when it fell 13.7%, according to Dow Jones Market Data.
Cisco was the worst performer in the Dow Jones Industrial Average, S&P 500, and Nasdaq 100.
Cisco’s outlook was well short of expectations, sending shares of Arista Networks, Juniper Networks, and Ciena down with it.
You can read more about why Wall Street is worried about IT spending here.
S&P Global Ratings expects the U.S. trailing-12-month speculative-grade corporate default rate to reach 5%, or 86 defaults, by September of next year.
The rate stood at 4.1% this September.
The proportion of ‘CCC/C’ ratings to the total is “historically large,” S&P says, with many firms seeing negative cash flow and large maturities due in 2025.
“This signals a high level of sensitivity to a drop in growth or a further rise in interest rates, which could push the default rate to our pessimistic scenario of 7%,” S&P says.
Nick Kraemer of S&P Global Ratings Credit Research & Insights, says “if the strong third-quarter GDP alongside gradually falling inflation is a signal of things to come, our optimistic projection of a 3.25% default rate could occur.”
The company that emerges from the spinoff of 3M’s healthcare business next year will be named Solventum, a combination of the words “solving” and “momentum,” the Minnesota-based materials maker says.
Its brand logo will be a stylized “S” that resembles the infinity symbol.
Healthcare, which makes products for wound care, oral care, healthcare information technology and filtration, accounts for about a quarter of 3M sales, but the company said last year it would spin off the unit in a bid for faster growth.
Analysts say 3M also would get billions of dollars in a dividend that could help pay its legal settlements over so-called “forever chemicals.”