Premarket action Friday had the three major U.S. indexes trading mixed. The Dow Jones industrials were up 0.16%, the S&P 500 up 0.04% but the Nasdaq 0.2% lower. The nonfarm payrolls report is due out before markets open, and traders will wait for the real news before making any moves
Ten of 11 market sectors closed lower Thursday, with real estate (−2.89%) and utilities (−2.22%) falling the most. Energy (1.99%) posted the day’s only gain. The Dow closed down 1.02%, the S&P 500 down 1.16% and the Nasdaq down 1.47% on Thursday.
Trading volume was lower Thursday but still above the five-day average. New York Stock Exchange losers led winners by 1,831 to 1,293, while Nasdaq decliners led advancers by about 3 to 2. Potato kingpin Lamb Weston Holdings Inc. (NYSE: LW) added nearly 10% after reporting better-than-expected quarterly earnings. On the other side of the earnings coin, Constellation Brands Inc. (NYSE: STZ) dropped nearly 10% after reporting mixed results Thursday morning.
New claims for unemployment benefits came in lower than expected, indicating to traders that the Federal Reserve is likely to keep moving interest rates higher until the job market cools off more. Traders and investors concluded that the Fed will continue to raise interest rates for some time to come, dampening any hope for economic growth.
Before U.S. markets Friday morning, the Bureau of Labor Statistics will release its December report on nonfarm payrolls. The consensus estimate calls for an increase of 225,000 jobs, down from 263,000 new jobs reported in November. Headline unemployment is expected to tick higher, from 3.7% in November to 3.8%. Growth in hourly earnings is expected to moderate somewhat, from a November increase of 0.6% to a December gain of 0.4%.
Tesla Inc. (NASDAQ: TSLA) once again garnered the most attention in Friday’s premarket, thanks to its second price cut in three months in China. The stock dropped nearly 3% on Thursday and traded down more than 6% before Friday’s opening bell.
Struggling retailer Bed Bath & Beyond Inc. (NASDAQ: BBBY) dropped nearly 30% Thursday after disclosing that there is “substantial doubt” that it will be able to stay in business. The company also warned that quarterly revenue will come in short of expectations and that the net loss for the quarter will be almost 40% larger than in the year-ago quarter. Shares traded down about 12% in Friday’s premarket at around $1.50. KeyBanc analyst Bradley Thomas has put a value of 10 cents on a share of the company’s stock. Some observers expect the company to file for bankruptcy later this weekend.
In startup news, OpenAI, the developer of the ChatGPT artificial intelligence (AI) bot, has begun discussions with investors to raise additional cash at a valuation of some $30 billion, double its value when the company tendered shares at a $14 billion valuation in 2021. Some $300 million would be raised through the sale of shares currently owned by employees and other shareholders. That is less than 3% of the valuation of Alphabet Inc. (NASDAQ: GOOGL), the company that issued a “code red” warning to employees after the latest version of ChatGPT was turned loose last month. Microsoft Corp. (NASDAQ: MSFT) invested $1 billion in the company in 2019 and obtained exclusive rights to the startup’s GPT-3 AI code for cloud computing applications. Other licensees will only get access to GPT-3 and its successors through an API. Microsoft’s market cap is around $1.7 trillion, and it had $107 billion and change in cash at the end of the September quarter.
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The CES show in Las Vegas may have turned into a car show. Stellantis N.V. (NYSE: STLA) showed off its all-electric Ram pickup on Thursday. The truck goes on sale in 2024 and will compete against a lineup of Ford’s F-150 Lightning, Rivian’s, Lordstown’s Endurance pickup and GM’s Hummer EV. Tesla’s Cybertruck and all-electric Chevy Silverados and GMC Sierras could also be in the mix by next year. Good times.
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