Before the Bell: Change in the S&P 500, Rivian to Issue More Debt

Premarket action on Tuesday had the three major U.S. indexes trading higher. The Dow Jones industrials were up 0.04%, the S&P 500 up 0.14% and the Nasdaq 0.25% higher.

Seven of 11 market sectors closed higher on Monday. Technology (0.53%) and communication services (0.46%) rose the most. Materials (−1.65%) and consumer cyclicals (−0.71%) posted the day’s worst losses. The Dow closed up 0.12%, the S&P 500 up 0.07% and the Nasdaq down 0.11%.

Two-year Treasuries closed up three basis points at 4.89% on Monday, and 10-year notes rose by one basis point to close at 3.98%. In Tuesday’s premarket, two-year notes were trading at 4.87% and 10-year notes at 3.94%.

Federal Reserve Chair Jerome Powell will appear before the U.S. Senate and House on Tuesday and Wednesday to talk about Fed policy. As always, every word will be subjected to intense scrutiny by analysts and traders, and what Powell said or what people think he said will move markets.

Economic data due out this week include the weekly report on initial claims for unemployment benefits, currently pegged to rise slightly week over week. The nonfarm payrolls report for February will be released Friday. Analysts are expecting a sharp drop, primarily in private payrolls. The unemployment rate is expected to remain unchanged at 3.4%.

Monday’s trading volume was below the five-day average, and New York Stock Exchange losers outpaced winners by 1,980 to 1,077, while Nasdaq decliners led advancers by about 5 to 3.

Among the S&P 500 stocks, communications services company Lumen Technologies Inc. (NYSE: LUMN) added 4.1% on Monday, after getting kicked off the S&P 500 index. That is now what usually happens. Lumen’s consolation prize was replacing Bed Bath & Beyond Inc. (NASDAQ: BBBY) on the S&P SmallCap 600. Lumen did not belong among the big dogs and has been moved out of the spotlight and into a more fitting location.

Monday’s biggest loser was DexCom Inc. (NASDAQ: DXCM), dropping 7.87% after Abbott Laboratories (NYSE: ABT) received FDA approval to connect its wearable glucose monitors with automated insulin pumps. The FDA action adds a rival for DexCom to a market that it previously had all to itself.

Electric pickup truck maker Rivian Inc. (NASDAQ: RIVN) announced Monday that it plans to offer $1.3 billion worth of green convertible senior, unsecured convertible notes to qualified institutional buyers. The company did not indicate the interest rate it will pay but did say it also expects to grant original purchasers of the notes an option to purchase within 13 days an additional $200 million Rivian debt. What a deal.

Needless to say, Rivian’s share price tumbled in Monday’s after-hours trading, and the stock traded down 5.6% in Tuesday’s premarket session. Rivian said it plans to use the funds from the sale “to finance, refinance, make direct investments in, in whole or in part, one or more new or recently completed (within the 24 months prior to the issue date of the notes), current and/or future eligible green projects, as described in Rivian’s newly established green financing framework.” For Rivian, that means pouring cash into a $5 billion assembly plant for its R2 family of EVs. The R2 vehicles will be smaller and cheaper than the company’s R1T pickup and R1S SUV. Rivian now plans to launch the R2 in 2026, a year later than first proposed.

One industry that has taken more than its fair share of lumps over the past year is cryptocurrency mining. Core Scientific, the largest U.S.-based crypto miner, filed for bankruptcy in December. Hut 8 Mining Corp. (NASDAQ: HUT) managed to hold on despite a 12-month share price decline of nearly 90% through December. Enthusiasm among investors for all things techno at the beginning of 2023 has pared that decline to around 70% since early March of last year. That performance was typical of the industry.

On Tuesday morning, Hut 8 announced that it mined 156 bitcoins during February, down from 188 mined in January. Hut 8’s bitcoin reserve balance dropped from 9,274 in January to 9,242 in February, and the company said it expects to sell its February production to fund its operating costs. Hut 8 sold its entire January production last month. The company is reporting quarterly results later this week.

Bitcoin jumped from around $16,000 at the beginning of the year to nearly $25,000 in mid-February. The cryptocurrency traded for around $22,350 early Tuesday.

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