Twitter shares jump as Elon Musk offers to buy company at $54.20 a share
U.S. stock-indexes trade mixed Thursday ahead of the final trading session of a holiday-shortened week as investors digested results from major Wall Street banks as well as economic data, including March retail sales.
Meanwhile, shares of Twitter Inc. TWTR jumped 3.9% after Tesla Inc. TSLA chief offered to buy the whole company.
What’s happening
- The Dow Jones Industrial Average DJIA rose 122 points or 0.3% to 34,686.
- The S&P 500 SPX lost 19 points, or 0.4% to 4,428.
- The Nasdaq Composite COMP lost 130 points, or 1% to 13,512.
Stocks ended on a strong note Wednesday, with the S&P 500 SPX and Nasdaq Composite COMP snapping three-day losing streaks, while the Dow DJIA advanced 344.23 points, or 1%. Indexes were on track for a losing week, however. U.S. equity markets will be closed on Good Friday.
What’s driving the market
Banks such as Morgan Stanley MS, Wells Fargo & Co. WFC, Citigroup Inc. C have reported mixed earnings results.
“We are still very early on in the earnings season,” Lindsey Bell, chief markets and money strategist at financial services company Ally, said in a phone interview Thursday.
“I think my expectation going into earnings season, especially with the banks, was that they were going to set a somewhat cautious tone,” Bell said. “They are one of three sectors expected to report an earnings decline in the quarter and they also have one of the toughest comparisons of all the 11 sectors that make up the S&P 500.”
“But I’m really interested in hearing from some of these other groups that are going to be able to talk more about how the consumer is reacting from a spending perspective, how inflation is impacting their business, if they’re still able to pass higher prices on to consumers, how margins look, and really, what their outlook is for the year ahead,” according to Bell.
In U.S. economic data Thursday, retail sales rose a mild 0.5% in March and a large part of the increase reflected higher gasoline prices, suggesting inflation is taking a toll on U.S. households. Sales in February were revised up to show a 0.8% increase instead of 0.3%.
Initial jobless claims rose 18,000 to 185,000 in the week ended April 9, the Labor Department said Thursday. Claims had matched a 54-year low in the prior week.
The University of Michigan’s gauge of consumer sentiment rose in April to 65.7, a more than 10% increase from March’s reading of of 59.4 as Americans anticipated gasoline prices to remain steady over the next year
.“I think that we are starting to see early signs that inflation is peaking,” Bell said. With the retail sales data, “the headline number looked pretty strong, but when you read into it, you saw that it was primarily driven by higher gasoline prices,” Bell said.
“On the flip side, you also saw that auto sales, used car pricing is starting to come down,” according to Bell.
Federal Reserve Gov. Christopher Waller told CNBC Wednesday afternoon that inflation likely had peaked but that the central bank needed to press ahead with aggressive rate increases and monetary tightening to get it under control. Waller said he continued to support a 50 basis point rate hike in May and “possibly more in June and July,”
Treasury yields were nudging back to the upside early Thursday, with the yield on the 10-year Treasury note BX:TMUBMUSD10Y up 8.6 basis points at 2.783%.
“To be honest, with hopes over an imminent resolution in the conflict between Russia and Ukraine diminishing, and with most major central banks hiking — or preparing to hike — more aggressively than previously thought, we don’t see a clear and valid catalyst behind the rebound in equities,” said Charalambos Pissouros, head of research at JFD Group, in a note.
“Perhaps it was a short-covering bounce. We will hold the view that the path of least resistance remains to the downside,” the analyst wrote.
Furthermore, the European Central Bank on Thursday said it expected to end net asset buys under its Asset Purchase Program in the third quarter.
What companies are in focus
- Twitter shares rose 12% after Musk disclosed he was offering to buy all Twitter stock outstanding he doesn’t own for $54.20 a share, an 18.2% premium to Wednesday’s closing price of $45.85.
- Shares of Morgan Stanley MS gained 1% in pre-market trading after beating profit and revenue targets. Wells Fargo & Co. WFC shares were down 3.9% in pre-market trading as the bank beats earnings target while falling short on revenue. Citigroup Inc. C shares gained 1.2% as the bank posted a 46% drop in profit for the first quarter, while the earnings still topped analysts’ estimates.
- JPMorgan Chase & Co. JPM shares fell more than 3% on Wednesday after disappointing results.
- Rite Aid Corp. RAD shares rose 3.7% in Thursday premarket trading after it reported fourth-quarter revenue that beat consensus and gave guidance ahead of Street expectations. The pharmacy retailer posted a net loss of $389.1 million, or $7.18 per share, after a loss of $18.5 million, or 34 cents per share, last year.
What other assets are doing
- The ICE U.S. Dollar Index DXY, a measure of the currency against a basket of six major rivals, was up 0.7%.
- Bitcoin BTCUSD was down 0.9% to trade at around $40,491.
- Oil futures pulled back, with the U.S. benchmark CL down 1.1% at $103.2 a barrel, while gold futures GC00 fell 0.9% to trade below $1,968 an ounce.
- The Stoxx Europe 600 XX:SXXP rose 0.6%, while London’s FTSE 100 UK:UKX rose 0.4%.
- The Shanghai Composite CN:SHCOMP rose 1.2%, while the Hang Seng Index HK:HSI was up 0.7% in Hong Kong and Japan’s Nikkei 225 JP:NIK gained 1.2%.