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CNBC Daily Open: Fear is the stock killer

Published

4 weeks ago

October 8, 2024

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Traders work on the floor of the New York Stock Exchange during afternoon trading on October 03, 2024 in New York City.

Michael M. Santiago | Getty Images

This report is from today’s CNBC Daily Open, our international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

What you need to know today

Stocks slumped on persistent fears
Major U.S. indexes retreated on Monday. The S&P 500 lost 0.96%, the Dow Jones Industrial Average dropped 0.94% and the Nasdaq Composite slumped 1.18%. But Super Micro shares were a bright spot, jumping 15.8%. Europe’s regional Stoxx 600 index added 0.18%. Household goods led gains, closing 0.97% higher, while tech shares fell 0.65%.

No more jumbo cuts
After last week’s expectation-busting jobs report for September, there’s virtually zero chance the U.S. Federal Reserve will reduce interest rates by half a percentage point at its next meeting, strategists told CNBC. Traders agree. A week ago, they bet on a 34.7% chance of another jumbo cut by the Fed; today, it’s 0%, according to the CME FedWatch Tool.

AI demand is still high
The artificial intelligence boom “still has some time to go,” Foxconn Chief Executive and Chairman of Foxconn Young Liu told CNBC. Foxconn, which reported better-than-expected earnings for the third quarter, manufactures electronics for technology giants like Apple and Nvidia. Demand for Nvidia’s latest chip Blackwell is “much better than we thought,” said Liu.

Tensions push oil prices higher
Oil prices jumped around 3.7% on Monday on worries Israel will attack Iran’s oil production facilities. If Israel hits Kharg Island, it could disrupt the transport of 90% of Iran’s crude exports, said an analyst. Last week was the best for West Texas Intermediate and Brent oil prices in more than one-and-a-half years. They surged 9.1% and 8.4% respectively.

[PRO] Goldman’s getting more bullish
The S&P 500 is in the red in October so far. But Goldman Sachs raised its 2024 target for the S&P to 6,000 from 5,600, making it the second-highest forecast on Wall Street, according to the CNBC Market Strategist Survey. Goldman also increased its 12-month S&P target to 6,300 from 6,000. Here’s why the bank is so bullish on stocks.

The bottom line

September’s blockbuster jobs report, released Friday, lifted sentiment and stocks enough that major indexes reversed their losses and ended last week in the green, but just barely.

That halo has now faded away. Markets are back to contending with rising oil prices, inflation possibly reaccelerating, fewer-than-expected rate cuts and potentially even a distant recession.

Oil prices spiked yesterday after having their best week in over a year. And September’s blockbuster jobs report, the futures market is pricing in a 13.7% chance the Fed will not cut rates at all at its November meeting. That’s a drastic change from a week ago when traders thought there was a 34.7% chance of a 50-basis-point cut.

But a recession?

Admittedly, that’s speculation on my part. But it bears pointing out that the yield curve between the 10- and 2-year Treasurys is “getting close to flipping back into danger territory,” as CNBC’s Jeff Cox noted.

Simply put, when the 10-year yield is lower than that of the 2-year, the yield curve is inverted – which has almost always preceded a recession since the mid-1970s. The yield curve inverted in early July 2022 and normalized in early September.

After Monday, however, the gap between the 10- and 2-year yields is now just 3.5 basis points. It’s not inconceivable, then, for investors who take stock in what the yield curve signals to panic a little.

That said, strategists think a recession is a far-fetched idea, considering the health of the U.S. economy.

As David Roche, founder and strategist at Quantum Strategy, put it, “the economy is fine, thank you very much.”

So much so that “the probability of the American economy going into recession, at least in the fourth quarter of this year, and probably in the first quarter of next year, is close to zero,” said Bob Parker, senior advisor at the International Capital Markets Association.

Concrete numbers are driving market movement. But there’s an undercurrent of fear that can perhaps run contrary to what some of those numbers are saying.

– CNBC’s, Jeff Cox, Lisa Kailai Han and Jesse Pound contributed to this story.

Environment

Oil giant Saudi Aramco posts 15% drop in third-quarter profit but maintains dividend

Published

4 hours ago

November 5, 2024

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Oil giant Saudi Aramco posts 15% drop in third-quarter profit but maintains dividend

Saudi Aramco’s Ras Tanura oil refinery and oil terminal

Ahmed Jadallah | Reuters

Saudi state oil giant Aramco reported a 15.4% drop in net profit in the third-quarter on the back of “lower crude oil prices and weakening refining margins,” but maintained a 31.05 billion dividend.

The company reported net income of $27.56 billion in the July-September period, topping a company-provided estimate of $26.9 billion. The print is also a 5% drop from the previous quarter, which came in at $29.1 billion, as lower global oil prices, weaker demand and prolonged OPEC+ production cuts led by Saudi Arabia continue to impact crude prices.

The average selling price of oil for the second quarter of 2024 stood at $85 per barrel, but dropped to $78.7 per barrel during the third quarter, according to Saudi-based bank Al Rajhi capital, as non-OPEC supply volumes grew.

The oil firm said its year-on-year decline was partly offset by a “reduction in selling, administrative and general expenses primarily driven by a gain from derivative instruments, and a decrease in production royalties largely reflecting lower crude oil prices and a lower average effective royalty rate compared to the same quarter last year.”

Aramco’s dividend includes a base payout of $20.3 billion and an atypical performance-linked one of $10.8 billion. The Saudi government and the kingdom’s sovereign wealth vehicle, the Public Investment Fund, are the main beneficiaries of the dividend, holding stakes of roughly 81.5% and 16% in the company.

The remaining shareholding trades freely on Saudi Arabia’s Tadāwul stock exchange, with the company having finalized its second public share offering back in June.

Aramco’s earnings before Interest and Taxes (EBIT) came in at $51.45 billion in the third quarter, down 17% year-on-year. Aramco’s capital expenditure guidance was brought up 20% to $13.23 billion.

The company was trading at 27.45 riyals following the announcement, down 0.18% on the previous day.

The earnings align with a broader trend across oil majors, whose third-quarter profits have also suffered from declines in crude prices and refining margins. Aramco said it achieved average realized crude price of $79.3 per barrel in the third quarter, compared with $89.3 per barrel in the same period of last year.

Saudi Arabia, the world’s largest crude exporter who produces roughly 9 million barrels per day of crude at present, serves as the de facto leader of the OPEC+ oil producers’ alliance, a subset of whom agreed over the weekend to delay a planned December output hike by one month.

OPEC chief says delayed December output hike is 'nothing unusual'

“Aramco delivered robust net income and generated strong free cash flow during the third quarter, despite a lower oil price environment,” CEO Amin Nasser said in a statement. “We also progressed our upstream developments, strengthened our downstream value chain, and advanced our new energies program as we continue to invest through cycles.”

The revenues will be a boon to the Saudi economy, which is currently undergoing a diversification process under Crown Prince Mohammed bin Salman’s legacy Vision 2030 scheme spanning a slew of high-cost infrastructure “gigaprojects.”

Earlier this year, Saudi Arabia’s Ministry of Finance cut the kingdom’s growth forecast to 0.8% in 2024, in a steep decline from a previous projection of 4.4%, and raised the outlook for the national budgetary shortfall to roughly 2.9% of GDP, from a prior indication of 1.9%.

Environment

Cybertruck backlog runs out, Model S gets stuck, GM hits a sales milestone

Published

10 hours ago

November 5, 2024

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Cybertruck backlog runs out, Model S gets stuck, GM hits a sales milestone

On today’s episode of Quick Charge, Tesla’s Cybertruck is now available in Canada – and, like in the US, there’s no waiting! Plus, we’ve got an “actually” smart summon Tesla that’s actually stuck, GM reaches a sales milestone, and we get a brand-new title sponsor!

Today’s episode is the first with our new title sponsor, BLUETTI – a leading provider of portable power stations, solar generators, and energy storage systems.

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New episodes of Quick Charge are recorded, usually, Monday through Thursday (and sometimes Sunday). We’ll be posting bonusLucid proves than an EV company can keep its promises while Xiaomi teams up with Chevrolet and Honda to prove – at least conceptually – that records are made to be broken. audio content from time to time as well, so be sure to follow and subscribe so you don’t miss a minute of Electrek’s high-voltage daily news!

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This ‘supercharger on wheels’ brings fast charging to you [update]

Published

12 hours ago

November 4, 2024

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This 'supercharger on wheels' brings fast charging to you [update]

Mobile car care company Yoshi Mobility launched a DC fast charging EV mobile unit that it likens to “a supercharger on wheels.”

November 4, 2024 update: Yoshi Mobility will only be charging EVs on the side of the road now – it announced today that it’s selling its fleet fueling operation to EZFill Holdings (Nasdaq: EZFL).

It was originally founded as a direct-to-consumer, mobile fueling business in 2016, but now it’s going to focus on mobile EV charging, virtual vehicle inspections for partners like Uber and Turo, and onsite preventative maintenance.

Bryan Frist, Yoshi Mobility’s CEO & cofounder, said, “By spinning off our fuel business and focusing all of our energy on solving hair-on-fire problems that fleet owners face, we are meeting the changing needs of enterprise customers while making the future of transportation safer, cleaner, and more sustainable.”

May 22, 2024: Yoshi Mobility saw that its existing customers needed mobile EV charging in places where infrastructure has yet to be installed, so the Nashville-based company decided to bring the mountain to Moses.

“We recognized a demand among our customers for convenient daily charging, reliable private charging networks, and proper charging infrastructure to support their fleet vehicles as they transition to electric,” said Dan Hunter, Yoshi Mobility’s chief EV officer and cofounder.

The company says its 240 kW mobile DC fast charger, which can turn “any EV” into a mobile charging unit, is the first fully electric mobile charger available. It can provide multiple charges in a single trip but doesn’t detail how they charge the DC fast charger or who manufactured it. (I asked for more details, and they replied that they won’t disclose client names or the manufacturer of its DC fast charger yet.)

Yoshi is launching its mobile charger on two GM BrightDrop Zevo 600s and will introduce additional vehicles throughout 2024. It aims for full commercialization by Q1 2025. (I wonder if the Zevo 600 ever charges itself? Yes, I asked that too.)

Yoshi Mobility says it’s already deployed its EV charging solutions to service “major OEMs, autonomous vehicle companies, and rideshare operators” across the US. Its initial customers are made up of large EV operators managing “hundreds” of light-duty vehicles requiring up to 1 megawatt of energy per day that don’t yet have grid-connected EV chargers. I’ve asked Yoshi for details of who it’s working with, and will update if they share that info.

The company says pricing is based on location and enterprise charging needs. Once under contract for service, the service will be deployed to US-based customers within 10 days.

To date, Yoshi Mobility has raised more than $60 million, with investments from GM Ventures, Bridgestone, ExxonMobil, and Y-Combinator in Silicon Valley.

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