STOCK MARKET NEWS: Powell sinks stocks, JetBlue-Spirit deal grounded, TikTok under fire

CrowdStrike Holdings Inc. on Tuesday reported a loss of $47.5 million in its fiscal fourth quarter.

The Austin, Texas-based company said it had a loss of 20 cents per share. Earnings, adjusted for stock option expense and amortization costs, were 47 cents per share.

The results exceeded Wall Street expectations. The average estimate of 12 analysts surveyed by Zacks Investment Research was for earnings of 43 cents per share.

The cloud-based security company posted revenue of $637.4 million in the period, also beating Street forecasts. Thirteen analysts surveyed by Zacks expected $624.7 million.

For the current quarter ending in April, CrowdStrike expects its per-share earnings to range from 50 cents to 51 cents.

The company said it expects revenue in the range of $674.9 million to $678.2 million for the fiscal first quarter.

CrowdStrike expects full-year earnings in the range of $2.21 to $2.39 per share, with revenue ranging from $2.96 billion to $3.01 billion.

A smartphone with the PayPal logo is placed on a laptop in this illustration taken on July 14, 2021. (Reuters/Dado Ruvic/Illustration)

Blake Jorgensen is stepping down from his position as Chief Financial Officer of PayPal Holdings, Inc., following a leave of absence for health reasons that started in September. Mr. Jorgensen will remain with the company as a senior advisor through September 15, 2023.

At the start of Blake’s leave of absence in September 2022, Gabrielle Rabinovitch was named acting Chief Financial Officer and she will continue in that role.

Stitch Fix Inc. on Tuesday reported a loss of $65.6 million in its fiscal second quarter.

The San Francisco-based company said it had a loss of 58 cents per share. Losses, adjusted for restructuring costs, came to 34 cents per share.

The results fell short of Wall Street expectations. The average estimate of 10 analysts surveyed by Zacks Investment Research was for a loss of 33 cents per share.

The online clothing styling service posted revenue of $412.1 million in the period, which also did not meet Street forecasts. Ten analysts surveyed by Zacks expected $412.5 million.

For the current quarter ending in April, Stitch Fix said it expects revenue in the range of $385 million to $395 million.

Federal Reserve Chair Jerome H. Powell takes his seat to testify before a U.S. Senate Banking, Housing, and Urban Affairs Committee hearing on "The Semiannual Monetary Policy Report to the Congress" on Capitol Hill in Washington, Mar. 7, 2023. (Reuters/Kevin Lamarque)

Shorter-term Treasury yields climbed on Tuesday, while a part of the yield curve saw its deepest inversion in more than four decades, after remarks from Federal Reserve Chair Jerome Powell indicated the U.S. central bank could become more aggressive in its rate hike path.

Powell told the Senate Banking Committee the Fed will likely need to raise interest rates more than expected in light of recent strong data and that it is prepared to move in larger steps if the "totality" of incoming information suggests tougher measures are needed to control inflation.

While shorter-dated yields rose, the reverse was true of longer-dated Treasuries, and the yield on 10-year Treasury notes was down 1.5 basis points at 3.968%.

That led to a closely watched part of the U.S. Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes inverting to a negative 105.3 basis points, its deepest since August 1981. Such an inversion is seen as a reliable recession indicator.

The yield on the 30-year Treasury bond was down 3.7 basis points at 3.875%.

Starbucks CEO Howard Schultz speaks at the Starbucks annual shareholders meeting on Mar. 22, 2017, in Seattle. (AP Photo/Elaine Thompson, File)

Howard Schultz has agreed to appear before a U.S. Senate committee that is examining Starbucks' actions amid an ongoing unionization campaign.

Sen. Bernie Sanders, a Vermont Independent and chairman of the Senate Health, Education, Labor and Pensions Committee, said Tuesday that Schultz has agreed to testify before the committee on March 29.

Sanders had been asking Schultz to testify for several weeks, but Schultz had previously refused, saying the company's chief public affairs officer would be better equipped to discuss the company's labor record. But the committee disagreed and had scheduled a Wednesday vote to subpoena Schultz in an effort to force him to testify.

Twitter logo and a photo of Elon Musk are displayed through magnifier in this illustration taken Oct. 27, 2022. (Reuters/Dado Ruvic/Illustration)

Twitter Chief Executive Elon Musk on Tuesday said that the messaging service makes about 5 or 6 cents per hour of attention from users and could raise that to 15 cents or more with advertisements that are more relevant and timely.

Musk, who was speaking at an investor conference that was webcast, said it was "startling" how poorly Twitter managed to make money off the service.

Twitter has been marked by chaos and uncertainty since Musk acquired Twitter for $44 billion in October. On Monday, Twitter suffered a bug that prevented thousands of users from accessing links, its sixth major outage since the beginning of the year, according to internet watchdog group NetBlocks.

TECHNOLOGY

Twitter glitches after internal change leads to 'unintended consequences'

Twitter users experienced glitches for more than an hour on Monday afternoon. Chief Elon Musk tweeted to users that the social media platform is "so brittle."

iStock

Facebook parent Meta Platforms and Google parent Alphabet are primed to benefit from the potential of an expanded market share if Congress bans Chinese-owned video-sharing app TikTok.

Recently, Rep. Darrell Issa, R-Calif., called TikTok an espionage tool of China, equating it to the Chinese spy balloon that the U.S. shot down earlier this month after crossing from Alaska to South Carolina. 

TECHNOLOGY

TikTok ban: Who wins if platform is outlawed to American users?

Meta and Alphabet can win more market share for short-form video content if U.S. lawmakers ban TikTok due to ByteDance app’s relationship to China and threats to national security.

Despite pushback from TikTok, a broad bipartisan bill will be pitched this week by senators to ban the platform by blocking foreign-owned technology that poses a national security threat, particularly a company with connections to China. 

Last week, Republicans on the House Foreign Affairs Committee passed a bill that would give the Biden administration new power to ban TikTok and other apps deemed to pose a national security risk. The committee advanced the legislation on a 24-16 vote that went along party lines. It’s unclear when the bill may reach the House floor for a vote.

Shoppers wait in line outside a Bath and Body Works retail store in Brooklyn, N.Y., Dec. 8, 2020. (Reuters/Brendan McDermid)

Bath & Body Works Inc on Monday named veteran financial executive and board member Thomas Kuhn as a new director, ending a potential challenge from billionaire investor Daniel Loeb's hedge fund Third Point.

Kuhn, a lawyer and former banker who is currently a managing member of advisory and investment firm Doorbrook LLC, joins the board at the end of the week as its third newcomer and was recommended by Third Point, the company said in a statement.

Third Point, which owns a 6% stake in the home fragrance and personal care retailer, had been laying the groundwork for a proxy fight after pushing the company to make changes for months. The hedge fund on Monday said it will not nominate directors this year after the company added Kuhn to the board.

LIFESTYLE

DOJ sues to block $3.8B JetBlue-Spirit Airlines merger, saying it will mean higher fares for customers

The Justice Department acted Tuesday to block JetBlue Airway's acquisition of Spirit Airlines. Attorney General Merrick Garland said the merger would result in higher fares.

The U.S. Justice Department filed suit on Tuesday to stop JetBlue Airways Corp from buying Spirit Airlines Inc SAVE.N, saying the planned $3.8 billion merger "will lead to higher fares and fewer seats, harming millions of consumers on hundreds of routes."

Attorney General Merrick Garland said Spirit's internal documents show that when it enters a market fares fall by 17% while JetBlue's internal documents show that when Spirit stops flying a route, fares go up by 30%."

The merger of JetBlue and Spirit would result in higher fares and fewer choices for tens of millions of travelers , with the greatest impact felt by those who rely on what are known as ultra-low-cost carriers in order to fly," Garland told a news conference.

Bitcoin prices were under pressure after Federal Reserve Chairman Jerome Powell warned investors that interest rates will be going even higher.

Tuesday marks the fifth straight day of declines with prices hovering around the $22K level. While the largest crypto currency by market value is up over 35% YTD it is down 67% from its all-time high of the $68K level.

POLITICS

Biden proposes tax hike on Americans making over $400,000 to fund Medicare

The White House is floating higher taxes on wealthy U.S. households as part of an effort to shore up funding for Medicare, which faces insolvency in 2028.

U.S. President Joe Biden will seek to raise the Medicare tax on high earners and push for more drug price negotiations to help keep the federal health insurance program solvent through at least 2050 as part of his budget proposal this week, the White House said.

The tax increase from 3.8 percent to 5 percent on earned and unearned income above $400,000 is part of a package of proposals aimed at extending the solvency of Medicare’s Hospital Insurance (HI) Trust Fund by at least 25 years, the White House said in a statement on Tuesday.

Biden has sought to link Republicans to the idea of cutting funding for the insurance program for seniors and the disabled as part of negotiations over increasing the United States' $31.4 trillion debt limit. The Democratic president has pledged to offer his vision for funding Medicare and challenged Republicans to offer their own.

The president is scheduled to unveil his budget on Thursday, including a speech in Philadelphia to highlight his plan, although it faces likely opposition from Republicans who control the House.

Squarespace, Inc. on Tuesday reported a loss of $234 million in its fourth quarter.

The New York-based company said it had a loss of $1.72 per share. Losses, adjusted for asset impairment costs, were 7 cents per share.

The results did not meet Wall Street expectations. The average estimate of five analysts surveyed by Zacks Investment Research was for earnings of 6 cents per share.

The software company posted revenue of $228.8 million in the period, surpassing Street forecasts. Seven analysts surveyed by Zacks expected $222.3 million.

For the year, the company reported a loss of $252.2 million, or $1.82 per share. Revenue was reported as $867 million.

For the current quarter ending in March, Squarespace said it expects revenue in the range of $232 million to $234 million.

The company expects full-year revenue in the range of $955 million to $970 million.

THOR Industries RV (Photo: THOR Industries via PRNewswire)

Thor Industries Inc. on Tuesday reported fiscal second-quarter profit of $27.1 million.

On a per-share basis, the Elkhart, Indiana-based company said it had profit of 50 cents.

The results did not meet Wall Street expectations. The average estimate of four analysts surveyed by Zacks Investment Research was for earnings of $1.10 per share.

The recreational vehicle maker posted revenue of $2.35 billion in the period, which also fell short of Street forecasts. Three analysts surveyed by Zacks expected $2.53 billion.

Thor Industries expects full-year earnings to be $5.50 to $6.50 per share, with revenue in the range of $10.5 billion to $11.5 billion.

WW International, Inc. on Monday reported a loss of $32.5 million in its fourth quarter.

The New York-based company said it had a loss of 46 cents per share. Earnings, adjusted for one-time gains and costs, were 6 cents per share.

The results beat Wall Street expectations. The average estimate of three analysts surveyed by Zacks Investment Research was for earnings of 4 cents per share.

The weight-loss program operator posted revenue of $223.9 million in the period.

For the year, the company reported a loss of $251.4 million, or $3.58 per share. Revenue was reported as $1.04 billion.

For the current quarter ending in March, WW International said it expects revenue in the range of $235 million.

Rivian Automotive's logo seen at the electric vehicle factory in Normal, Ill., April 11, 2022. (Reuters/Kamil Krzaczynski)

Rivian Automotive plans to sell bonds worth $1.3 billion, it said on Monday, as weakening demand and lofty costs tighten a cash crunch around electrical vehicle makers.

Initial investors will get an option to buy an additional $200 million of the bonds for settlement 13 days after the bonds are issued, Rivian said in a statement. The capital from this offering will help facilitate the launch of Rivian's smaller R2 vehicle family, a Rivian spokesperson told Reuters, adding that convertible debt was "optimal cost of capital versus selling equity at today's levels."

Irvine, California-based Rivian, which makes R1T electric pickup trucks and R1S SUVs, has said its cash balance will fund its operations through 2025.

Rivian said the bonds would be "green" ones, which typically offer companies the chance to raise debt more cheaply from investors who are willing to take lower returns in exchange for supporting green projects.

Rivian's bond will mature in March 2029 and investors will have the option to convert the bonds into cash or shares in the EV maker.

Dick's Sporting Goods store, Cherry Hill, N.J., Jan. 8, 2023

Dick's Sporting Goods Inc. on Tuesday reported fiscal fourth-quarter profit of $235.6 million.

On a per-share basis, the Coraopolis, Pennsylvania-based company said it had profit of $2.60. Earnings, adjusted for non-recurring costs, were $2.93 per share.

The results beat Wall Street expectations. The average estimate of 11 analysts surveyed by Zacks Investment Research was for earnings of $2.86 per share.

The sporting goods retailer posted revenue of $3.6 billion in the period, which also topped Street forecasts. Eight analysts surveyed by Zacks expected $3.41 billion.

For the year, the company reported profit of $1.04 billion, or $10.78 per share. Revenue was reported as $12.37 billion.

Dick's expects full-year earnings to be $12.90 to $13.80 per share.

POLITICS

California's Newsom slams Walgreens on abortion drugs

California Governor Gavin Newsom slammed Walgreens over its decision to stop selling the abortion drug mifepristone in 20 states led by Republican attorneys general.

California Governor Gavin Newsom is taking on Walgreen's over its abortion drug sales and the drug store chain is firing back as a political storm swirls.

Powell will deliver his semi-annual address on monetary policy to Congress Tuesday in day one of his two day testimony. Financial markets are closing watching his update on the economy, inflation as well the size and duration of future rate hikes as consumers struggle with higher borrowing costs.

ECONOMY

Fed Chair Powell in congressional hot seat as sticky inflation squeezes Americans

The Fed said in its semi-annual monetary report to Congress that additional interest rate hikes are necessary with inflation remaining abnormally high.