Before the Bell: Buffett's America, Bed Bath & Beyond's New Life, and a Big Drug Deal

Premarket action on Monday had the three major U.S. indexes trading higher. The Dow Jones industrials were up 0.45%, the S&P 500 up 0.49% and the Nasdaq 0.58% higher.

Nine of 11 market sectors closed lower Friday. Real estate (−1.81%) and technology (−1.77%) dropped the most. Materials (0.65%) and financials (0.11%) posted the only gains. The Dow closed down 1.02%, the S&P 500 down 1.05% and the Nasdaq down 1.69%.

Two-year Treasuries closed up 12 basis points at 4.78% on Friday, and 10-year notes slipped by five basis points to close at 3.88%. In Friday’s premarket, two-year notes were trading at around 4.72%, and 10-year notes closed up four basis points at 3.95%.

Oil traded up by 1.2% Friday, but it traded down by 0.2% early Friday morning at $76.19.

Friday’s trading volume was slightly below the five-day average. New York Stock Exchange losers outpaced winners by 2,0175 to 878, while Nasdaq decliners led advancers by about 3 to 1.

The monthly report on personal consumption expenditures (PCE) came in hotter than expected, stoking fears of continuing inflation that could force the Federal Reserve to keep raising interest rates further into the future.

Among S&P 500 stocks, natural gas producer  EQT Corp. (NYSE: EQT) added 6.89% on Friday after natural gas futures jumped 6%. The consensus seems to be that gas prices had fallen so much that investors were buying the dip. December futures are trading at around $4.00 per thousand cubic feet.

Autodesk Inc. (NASDAQ: ADSK) dropped 12.95% following a change in its billing practices. The software design company is dropping its current practice of signing multiyear contracts with suppliers and moving to an annual contract model. Autodesk’s profits and earnings will take a sharp drop, as will free cash flow.

Berkshire Hathaway Inc. (NYSE: BRK-B) Chair Warren Buffett published his annual letter to shareholders on Saturday. The letter reiterates Buffett’s long-standing optimism about the potential of the U.S. economy.

Even in the face of a slump in stock prices, the Oracle of Omaha remains optimistic about the resilience of the U.S. economy:

I have been investing for 80 years – more than one-third of our country’s lifetime. Despite our citizens’ penchant – almost enthusiasm – for self-criticism and self-doubt, I have yet to see a time when it made sense to make a long-term bet against America.

Berkshire is the largest shareholder in several of the country’s largest companies: American Express, Bank of America, Chevron, Coca-Cola and Occidental Petroleum, among others. Buffett also sang the praises of share buybacks:

When the share count goes down, your interest in our many businesses goes up. Every small bit helps if repurchases are made at value-accretive prices. … When you are told that all repurchases are harmful to shareholders or to the country, or particularly beneficial to CEOs, you are listening to either an economic illiterate or a silver-tongued demagogue (characters that are not mutually exclusive).

In other news, Bed Bath & Beyond Inc. (NASDAQ: BBBY) looks like it is being saved from oblivion again by its meme stock investors. Shares traded up about 8.5% Monday morning at $1.66 on no news. The company was able to put together enough cash to pay debtholders their full amount of interest for February. Bed Bath & Beyond also has a financial rescue package in place that would allow the company to raise up to $1 billion.

Dow component Pfizer Inc. (NYSE: PFE) is reportedly in talks to acquire Seagen Inc. (NASDAQ: SGEN) for a price of at least $30 billion. Merck, another Dow company, failed in its attempt to acquire Seagen last year.

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