STOCK MARKET NEWS: Inflation data, bank earnings on tap, NYC nurses strike, Goldman Sachs layoffs

Rite Aid store, Berlin, N.J., Dec. 25, 2022

Rite Aid has named Elizabeth (“Busy”) Burr, a member of the company’s board, as interim CEO, effective immediately. Burr replaces Heyward Donigan.

The drugstore chain has retained a leading executive search firm to help find a permanent chief executive officer.

She previously served as Vice President, Head of Health Ventures and Chief Innovation Officer at Humana. Most recently, at Carrot, Burr served as President and Chief Commercial Officer, leading the team focused on bringing the company’s digital health solutions to market.

Rite Aid reaffirms its fiscal year 2023 guidance for total revenues between $23.7 billion and $24.0 billion and a net loss between $584 million and $551 million.

The company continues to expect to generate positive free cash flow in Fiscal 2023 and will provide additional detail on its financials and operational progress when it reports its full fourth quarter and fiscal year 2023 results.

Chicos FAS is lowering its fourth quarter outlook.

The Florida-based fashion company now expects total net sales to range from $505 million to $515 million and diluted earnings per share to range from ($0.02) to $0.00.

The previous outlook was for net sales of $535 million to $555 million and diluted earnings share of $0.07 to $0.10.

For the nine-week holiday period ending Dec. 31, 2022, total net sales grew 4.9% over last year and comparable sales grew 5.3% over last year.

White House Black Market sales softened as the company sold through newer assortments and were left with leaner inventories and styles that did not match up with customer demand.

Abercrombie & Fitch products at the Woodbury Common Premium Outlets in Central Valley, N.Y., Feb. 15, 2022. (Reuters/Andrew Kelly)

Abercrombie & Fitch Co and American Eagle Outfitters Inc raised their sales forecasts for the holiday quarter on Monday as consumers snapped up their winter wear during the peak shopping season.

The apparel chains have been revamping their inventories to get rid of outdated styles, with Abercrombie replacing casual wear and athleisure clothing with new styles that have drawn more shoppers to its stores.

Ohio-based Abercrombie said it now expects net sales to rise between 1% and 2% in the holiday quarter, compared with its prior forecast for a 2% to 4% fall.

It projected fourth-quarter operating margin between 6% and 8%, up from a range of 5% to 7% estimated previously.

The company said overall sales had improved from the third quarter, but its Hollister brand's performance was still expected to lag 2021 levels in the holiday quarter.

American Eagle also said its fourth-quarter revenue and profit margins were tracking at the high end of its forecasts, benefiting from its decision to right-size inventory and a better-than-expected performance at its American Eagle label.

Walt Disney Company logo above the floor of the New York Stock Exchange, Feb. 25, 2020. (Reuters/Lucas Jackson)

Walt Disney Co's top boss Bob Iger told employees to return to corporate offices four days a week starting March 1, CNBC reported on Monday, citing an email.

The entertainment giant did not immediately respond to a Reuters request for comment.

MARKETS

Disney CEO orders hybrid employees back to the office four days per week

Hybrid employees at Disney will soon have to work in-person four days per week, CEO Bob Iger said in an email. FOX Business obtained the email.

However, with the rise of vaccinations and fall in severe cases that require hospitalization, Disney's move mirrors other companies like Snap, Tesla and Uber in asking employees to return to office.

The move also comes after Iger returned as chief executive officer replacing Bob Chapek in November, a surprise comeback that coincided with Disney's attempt to boost investor confidence and profits at its streaming media unit.

Steve Easterbrook attends the annual Allen and Co. Sun Valley media conference in Sun Valley, Idaho, July 10, 2019. (Reuters/Brendan McDermid)

The U.S. Securities and Exchange Commission (SEC) on Monday charged former McDonald's Corp Chief Executive Stephen Easterbrook with making false and misleading statements to investors about the circumstances of his 2019 termination.

The SEC hit Easterbrook with a five-year officer and director bar and a $400,000 civil penalty.

LIFESTYLE

Former McDonald’s CEO Steve Easterbrook fined by SEC for misleading investors about firing

The Securities and Exchange Commission charged former McDonald's CEO Steve Easterbrook for misleading investors about why he was fired in November 2019.

McDonald's fired Easterbrook in November 2019 for exercising "poor judgment" by engaging in a relationship with a McDonald's employee, the SEC said.

But Easterbrook failed to disclose other additional violations of company policy he committed by engaging in undisclosed relationships with other employees of the fast-food giant, it said.

The agency also charged McDonald's with "shortcomings" in its public disclosures related to Easterbrook's ouster, but did not impose any fines on McDonald's due to the firm's "substantial cooperation" with the investigation, the SEC said.

Pumpjack seen at the Sinopec-operated Shengli oil field in Dongying, Shandong province, China Jan. 12, 2017. (Reuters/Chen Aizhu)

Oil extended gains on Monday, rising more than 3% after China's move to reopen its borders boosted the outlook for fuel demand and overshadowed global recession concerns.

The rally was part of a wider boost for risk sentiment supported by both the reopening of the world's biggest crude importer and hopes for less-aggressive increases to U.S. interest rates, with equities rising and the dollar weakening.

MARKETS

Oil spikes on reopened China and ‘hopes’ of refinery supply

The price of West Texas Intermediate is rising on Monday after China reopened its borders and refineries.

Brent crude was up $1.96, or 2.5%, at $80.53 a barrel by 1450 GMT while U.S. West Texas Intermediate crude rose $2.10, or 2.9%, to $75.87.

"If recession is avoided, global oil demand and demand growth will remain resilient," said Tamas Varga of oil broker PVM, adding that developments in China were the main reason for Monday's gains.

"The gradual reopening of the Chinese economy will provide an additional and immeasurable layer of price support," he said.The rally followed a drop last week of more than 8% for both oil benchmarks, their biggest weekly declines at the start of a year since 2016.

AstraZeneca logo seen outside its North America headquarters in Wilmington, Del., Mar. 22, 2021. (Reuters/Rachel Wisniewski)

AstraZeneca said on Monday it had struck a deal to buy U.S.-based drug developer CinCor Pharma Inc for up to $1.8 billion to increase its stock of heart and kidney drugs.

Core to the deal is CinCor's experimental therapy baxdrostat, which is in development to treat conditions including high blood pressure and chronic kidney disease.

AstraZeneca aims to combine baxdrostat with its own Farxiga, a diabetes drug whose sales ballooned after it was also shown to benefit patients with heart failure and kidney disease.

The Anglo-Swedish drugmaker on Monday agreed to pay $26 per CinCor share in cash, or $1.3 billion in total, a premium of nearly 121% to the U.S.-based company's closing price on Friday.

The offer also includes a non-tradable contingent value right of $10 per share in cash payable upon a specified regulatory baxdrostat submission.

Duck Creek Technologies, which serves some of the biggest clients in the property and casualty sector, will be taken private by Vista Equity Partners in an all-cash deal valued at about $2.6 billion, the insurance tech firm said on Monday.

The deal for Duck Creek at a purchase price of $19 per share, represents a premium of 46% to Duck Creek's last close.

Duck Creek provides cloud-based property and casualty insurance solutions to its customers including Berkshire Hathaway Specialty Insurance and American International Group.

Last week, the company said its revenue in the first-quarter ended Nov. 30, rose 10% to $80.6 million, helped by a 23% jump in subscription revenue.

Vista Equity is a global investment firm focused on enterprise software, data and technology-enabled businesses.

Duck Creek expects the deal to close in the second-quarter of this year. J.P. Morgan is acting as financial advisor to Duck Creek.

Signs advertise Black Friday deals at a Walmart in Secaucus, N.J., Nov. 22, 2022. (AP Photo/Seth Wenig, File)

U.S. households see weaker near-term inflation and are expecting notably less spending, even as they foresee their incomes continuing to rise, the New York Federal Reserve said Monday in its December Survey of Consumer Expectations.

ECONOMY

Americans see inflation cooling further over the next year, NY Fed survey shows

U.S. households are becoming more optimistic about inflation, with consumers seeing prices falling to 5% one year from now, the lowest level since July 2021.

The bank reported that respondents to its monthly survey said they see inflation a year from now at 5%, from 5.2% in November, for the lowest reading since July 2021. Meanwhile, respondents’ expectations for inflation three years from now were unchanged at 3% while projections of inflation in five years’ time stood at 2.4%, up from 2.3% in November.

The decline in near-term inflation expectations comes as the Fed has been aggressively pushing forward with rate rises aimed at lowering some of the highest price pressure readings in decades.

Expected spending tumbled, falling from November’s 6.9% expected rise to 5.9% in December.

“The decline was broad based across age and income groups,” the bank said in its report.

ECONOMY

Goldman Sachs to lay off as many as 3,200 employees this week

Goldman Sachs plans to lay off more than 3,000 employees this week, a source familiar with the matter said. However, the firm will still continue to strategically hire.

Goldman Sachs Group will start cutting thousands of jobs across the firm from Wednesday, two sources familiar with the move said, as it prepares for a tough economic environment.

Just over 3,000 employees will be let go, one of the sources said, but the final number is yet to be determined. That scale of layoffs would be the largest since the 2008 financial crisis, one of the sources said.

The sources could not be named as the information was not yet disclosed publicly. Goldman Sachs declined to comment.Bloomberg News reported on Sunday that Goldman would eliminate about 3,200 positions.

Goldman had 49,100 employees at the end of the third quarter, after adding significant numbers of staff during the coronavirus pandemic.

Lululemon store in the CF Toronto Eaton Centre shopping mall in Toronto, Ontario, Canada, Dec. 13, 2021. (Reuters/Carlos Osorio)

Lululemon Athletica Inc said on Monday it expects holiday-quarter gross margins to decline as the apparel maker grapples with increased costs amid a drop in consumer spending due to stubbornly high inflation.

The yoga pant maker's shares fell about 10% to $296.40 in premarket trading.

A sharp rise in inventory levels has forced several retailers to offer discounts and mark down prices to clear excess stock, a move that has dented margins across the apparel sector.

Italy's Chiesi Farmaceutici said on Sunday it will acquire Ireland-based drugmaker Amryt Pharma Plc, which has products and drugs in development for treating rare diseases, in a deal valued at $1.48 billion.

The total value of the all-cash deal represents a 107% premium over Dublin, Ireland-based Amryt's ADS closing price of $7.00 on Jan. 6, the companies said in a joint announcement.

Amryt shareholders will receive $14.50 per ADS cash upfront, plus Contingent Value Rights (CVR) of up to an additional $2.50 per ADS based on achievement of certain milestones by Filsuvez, a drug approved in Europe for an inherited skin disease called epidermolysis bullosa.

For first nine months of 2022, Amryt reported $188.8 million in revenue, and reaffirmed its full-year forecast for revenue of $260 million to $270 million. Its top-selling drug, Myalept or Myalepta, had third-quarter sales of $37.9 million.

Tilly’s is updating its fourth quarter outlook after holiday sales fell.

The specialty retailer said net sales declined 12.9% to $150.9m for the 2022 holiday period.

Total comparable net sales, including both physical stores and e-commerce, decreased by 14.4% for the 2022 holiday period compared to an increase of 14.1% for the 2021 holiday period. Total comparable net sales increased by 0.2% relative to the comparable period of pre-pandemic fiscal 2019.

Based on the company’s net sales results for the 2022 holiday period and recent historical trends for the fiscal month of January, Tilly’s now expects its fiscal 2022 fourth quarter net sales to be in the range of approximately $178 million to $180 million and its loss per share to be in the range of $(0.01) to $(0.04).

The company expects to end fiscal 2022 with 249 total stores, total cash and marketable securities of approximately $110 million, and with reduced inventory per square foot compared to the end of fiscal 2021.

Cryptocurrency was trading higher early Monday morning. (Getty Images)

Cryptocurrency prices were higher early Monday.

At approximately 4:45 a.m. ET, Bitcoin was trading at nearly $17,258 (+1.21%), or higher by $206.

For the week, Bitcoin was trading higher by nearly 2.7%. For the month, the cryptocurrency was lower by more than 1.05%.

Ethereum was trading at approximately $1,316.9 (+2.48%), or higher by about $31.9.

For the week, Ethereum was trading higher by 7.11%. For the month, it was trading higher by approximately 0.27%.

Dogecoin was trading at $0.075925 (+3.61%), or higher by approximately $0.002699. 

For the week, Dogecoin was higher by more than 4.65%. For the month, the crypto was lower by nearly 25.69%.

Fourth-quarter earnings reports kick off on Friday with the big banks announcing their numbers. (Getty Images)

A pivotal fourth-quarter earnings season gets underway with several big banks reporting at the end of the week. 

JPMorgan Chase, Bank of America, Wells Fargo, Citigroup, and Bank of New York are all scheduled to post results ahead of Friday’s opening bell. 

Rising interest rates (the Federal Funds rate increased by 425 basis points in 2022, the most since 1980) should help the banks by boosting net interest margins and net interest income.

On the flip side, the jump in borrowing costs could mean weaker loan demand. 

Meantime, a steep decline in deal-making and underwriting fees will take a bite out of profits. Finally, investors will pay close attention to the banks’ outlooks in the face of global central bank tightening, economic uncertainty, and the growing risk of recession.

Also watch for results from the world’s largest asset manager, Blackrock, out Friday morning as well. 

This week’s earnings announcements include two Dow members: health care heavyweight UnitedHealth Group, and the aforementioned JPMorgan Chase.

Gasoline and diesel prices dropped slightly overnight for the second straight day. (gasprices.aaa.com)

The nationwide price for a gallon of gasoline slipped on Monday to $3.28.

On Sunday, that same gallon of gasoline was $3.281, according to AAA. The average price of a gallon of gasoline on Saturday was $3.285. 

A year ago, the price for a gallon of regular gasoline was $3.303. One week ago, a gallon of gasoline cost $3.216. A month ago, that same gallon of gasoline cost $3.315.

Gas hit an all-time high of $5.016 on June 14.

Diesel slipped lower by a penny, remaining below $5.00 per gallon on Monday to $4.653. On Sunday, a gallon of diesel cost $4.663, but that is still a far cry from the $3.583 of a year ago.

Oil prices were higher on Monday after China opened its borders for the first time in three years. (Getty Images)

Oil prices climbed on Monday as the borders reopened in China, the world's top crude importer, boosting the outlook for fuel demand growth and offsetting global recession concerns. 

Brent crude futures were up $1.49, or 1.9%, at $80.06 a barrel as of 0745 GMT, while U.S. West Texas Intermediate crude rose $1.43, or 1.9%, to $75.20. 

Hopes for less-aggressive U.S. interest rate rises are buoying financial markets and depressing the dollar. A weaker U.S. currency makes dollar-denominated commodities more affordable for investors holding other currencies. 

Both Brent and WTI tumbled more than 8% last week, their biggest weekly declines at the start of a year since 2016. 

"Crude oil prices recovered from the previous week's losses as the economic reopening in China and less aggressive monetary tightening prospects from the Federal Reserve set a positive tone for demand recovery," said Avtar Sandu, senior manager for commodities at Phillip Futures. 

As part of a "new phase" in the fight against COVID-19, China opened its borders over the weekend for the first time in three years. Domestically, some 2 billion trips are expected during the Lunar New Year season, nearly double last year's movement and recovering to 70% of 2019 levels, Beijing says. 

Over the last week, airlines have boosted their January international seat capacity to and from China by 9.5% as they ramp up flights after its border opening, according to aviation data provider Cirium. 

Despite the gains in oil on Monday, concerns remain that the massive flow of Chinese travellers may cause another surge in COVID infections, while broader economic concerns also lingered. Those concerns are reflected in the market structure for the benchmark oil futures.

Both front-month Brent and WTI contracts are in contango, when current prices are below prices for later-delivery contracts, which typically indicates bearish sentiment for the market. 

"Oil prices have likely ticked up on increased confidence on China's reopening, but fears of recession in the wider global market remains. This uncertainty will likely lead to swings in oil prices in the near-term," said Serena Huang, Vortexa's head of APAC analysis. 

Energy futures for crude oil, refined products and natural gas have plummeted in the New Year as traders have reconsidered near-term worries over cold weather and fears of supply shortages and dumped contracts.