STOCK MARKET NEWS: Job growth cools, Southwest’s revenue hit, Ram rolls out new truck

Macy’s Inc said on Friday it expects fourth-quarter sales to come in at the lower end of its previously announced forecast, blaming a deeper-than-expected lull in shopping between the major holidays of the season.

The company’s shares fell 3.5% in extended trading.

“Based on current macroeconomic indicators and our proprietary credit card data, we believe the consumer will continue to be pressured in 2023, particularly in the first half,” Macy’s Chief Executive Officer Jeff Gennette said in a statement.

The department store chain had previously forecast fourth-quarter net sales of $8.16 billion to $8.40 billion.

The U.S. Food and Drug Administration on Friday approved the Alzheimer’s drug lecanemab developed by Eisai Co Ltd and Biogen Inc for patients in the earliest stages of the mind-wasting disease.

The drug, to be sold under the brand Leqembi, belongs to a class of treatments that aims to slow advance of the neurodegenerative disease by removing sticky clumps of the toxic protein beta amyloid from the brain.

Nearly all previous experimental drugs using the same approach had failed.

“Today’s news is incredibly important,” said Dr. Howard Fillit, chief science officer of the Alzheimer’s Drug Discovery Foundation. “Our years of research into what is arguably the most complex disease humans face is paying off and it gives us hope that we can make Alzheimer’s not just treatable, but preventable.”

Eisai said the drug would launch at an annual price of $26,500.

Initial patient access will be limited by a number of factors including reimbursement decisions from Medicare, the U.S. government insurance program for Americans aged 65 and older who represent some 90% of individuals likely to be eligible for Leqembi.

U.S. stocks rallied across the board with the Dow Jones Industrial Average and the S&P 500 posting the best session since November 2022, while the Nasdaq Composite registered its best showing since December.

Investors celebrated a string of economic data, including jobs and services, that showed a slight pullback signaling the Federal Reserve’s rate hikes may be kicking in. In commodities, for the week oil lost 8% closing at $73.77 per barrel. 

Weekly Performance:

Dow Jones Industrial Average: +1.4%

S&P 500: +1.4%

Nasdaq Composite: +0.98%

Party City Holdco Inc is preparing to file for bankruptcy within weeks as its cash dwindled and inflation dampened sales, the Wall Street Journal reported on Friday, citing people familiar with the matter.

The party supplies retailer, which has a market capitalization of about $41 million, has been struggling with weaker sales as persistently high inflation has impacted the demand for its products.

The company is in discussions with its bondholders to convert debt into equity to trim the balance sheet, the report said.

The report further added that Party City has engaged AlixPartners LLP as a restructuring adviser.

Party City and AlixPartners did not immediately respond to Reuters requests for comment. 

Separately, Bed Bath & Beyond Inc was also preparing to seek bankruptcy protection in the coming weeks, people familiar with the matter told Reuters on Thursday, following poor sales and an inability to compete with large online and big-box retailers.

Exercise equipment maker Peloton Interactive has agreed to pay roughly $19 million in fines related to its delay in reporting a defect for its treadmills that caused one death and multiple injuries, the federal consumer watchdog said Thursday.

The Consumer Product Safety Commission said that the fine resolves the agency’s charges that Peloton knowingly failed to immediately report to the Commission as required by law, that its Tread+ treadmill contained a defect that could create a substantial product hazard and created an “unreasonable risk of serious injury to consumers.

”The civil penalty also settles charges that Peloton knowingly distributed recalled treadmills in violation of the Consumer Product Safety Act.

U.S. stocks soared on Friday as investors celebrated Fed friendly reports on jobs and services, signaling policymakers could ease the size of future rate hikes.

The Dow Jones Industrial Average notched a 700+ point gain with one hour left in the session.

Materials and tech names led the rally while healthcare rose the least. Dow members Travelers, Caterpillar and Merck all hit fresh highs, the first in the new year. 

BioNTech SE has signed a deal with the UK government to enroll up to 10,000 patients in clinical trials by the end of 2030 for personalized cancer therapies, the German drug maker said.

The multi-year collaboration is focused on cancer immunotherapies based on mRNA or other drug classes, infectious disease vaccines, and investments into expanding the company’s footprint in the UK, BioNTech said in a statement on Thursday.

Under the agreement, the parties plan to utilize UK’s clinical trial network, genomics and health data assets, aiming to enroll the first cancer patient in the second half of 2023, the company said.

BioNTech, which partnered with U.S. pharmaceutical group Pfizer to develop a COVID vaccine, said it would open a research and development hub with more than 70 scientists in Cambridge.

Southwest Airlines Co said on Friday it expects to post a loss in the fourth quarter after it canceled over 16,700 flights between Christmas and New Year’s Eve due to a tech meltdown. 

The mass cancellations during the peak season for U.S. airlines will result in a pre-tax hit of $725 million to $825 million to quarterly earnings, said Southwest, which had earlier forecast a strong profit.

But the impact from the cancellations will spill over in the current quarter as the company scrapped many flights in a bid to reset its system, Cowen analyst Helane Becker said. 

During winter storm Elliott, Southwest’s crew scheduling software failed to bear the load of staffing changes made by the airline. Workers had to manually match crew and planes that led to huge waiting times for pilots and cabin crew. 

It said on Friday that cancellations were likely to have cut its capacity by about 6% in the fourth quarter compared with 2019, roughly 4 points lower than its previous forecast. 

Revenue loss from the disruptions is expected to be between $400 million and $425 million, it said.

Earnings from Shell’s liquefied natural gas (LNG) trading operations are likely to have been significantly higher in the fourth quarter of last year despite an output drop caused by plant outages, it said on Friday.

Europe’s largest oil and gas company’s update ahead of its full-year results on Feb. 2 also flagged a $2 billion accounting hit in 2022 as a result of European Union and British windfall taxes on the energy sector.

Fourth-quarter LNG liquefaction volumes are expected to be the lowest since the company acquired BG Group in 2016 for $53 billion, dropping to between 6.6 million and 7 million tonnes after prolonged outages at two major plants in Australia.

But Shell, the world’s top LNG trader, said its LNG trading results are set to be “significantly higher” than in the previous quarter.

“Now for the bad news: lower oil prices will hit the oil products part of the business and Shell has quantified the material impact of freshly introduced windfall taxes in the UK and Europe – which are now expected to run into the billions,” said Russ Mould, investment director at AJ Bell.

Reuters contributed to this report.

Ram, an arm of Stellantis, is taking on Ford and General Motors in the truck wars.

Samsung Electronics Co Ltd flagged on Friday its quarterly profit tumbled by two-thirds to an eight-year low as a weakening global economy hammered memory chip prices and curbed demand for electronic devices.

The dismal profit estimate by the world’s largest memory chip, smartphone and TV maker — a bellwether for global consumer demand — sets a weak tone for other technology firms’ quarterly results.

Samsung’s profits are expected to shrink again in the current quarter, analysts said, after the South Korean company announced its October-December operating profit likely fell 69% to 4.3 trillion won ($3.37 billion) from 13.87 trillion won a year earlier.

It was Samsung’s smallest quarterly profit since the third quarter of 2014 and fell short of a 5.9 trillion won Refinitiv SmartEstimate, which is weighted toward forecasts from analysts who are more consistently accurate.

Quarterly revenue likely fell 9% from the same period a year earlier to 70 trillion won, Samsung said in a short preliminary earnings statement. Asia’s fourth-biggest listed company by market value will release detailed earnings on Jan. 31.

U.S. stock futures are mixing ahead of the opening bell on Friday as gold rises and oil continues to fall.

Dow Jones Industrial Average futures are down roughly 17 points, or 0.05%, while S&P 500 and Nasdaq futures are approximately 0.02% and 0.10% higher, respectively.

Over the last five days, the Dow is now off around 0.71%, the S&P is off around 1.06%, while the tech-heavy Nasdaq is still roughly 2.26% beneath the redline.

In commodities, West Texas Intermediate crude futures dropped 0.41% to $73.37 a barrel, as gold popped 0.50% to $1,841.10 an ounce.

U.S. employers continued to add jobs in December albeit at a slower pace.

U.S. hiring took a dip last month compared to November yet the unemployment rate dipped in a sign that the job market remains tight, potentially with more people on the sidelines.

The first major economic report of the new year, December’s employment data out at 0830 ET Friday morning.

The most anticipated report of the week could give investors further insight into the impact that higher borrowing costs are having on a tight labor market. 

The weakening global economy has hurt Samsung, impacting memory chip prices and overall demand for tech devices.

The company supplied a first look at its quarterly earnings report where profit tumbled by two-thirds to an eight-year low.

The first major economic report of the new year, December’s employment data out at 0830 ET Friday morning, will give investors further insight into the impact that higher borrowing costs are having on a tight labor market. 

Economists surveyed by Refinitiv say the U.S. economy likely added 200,000 new nonfarm jobs. That’s down from a stronger-than-expected tally of 263,000 in November and would mark the weakest job growth since December 2020. 

“Although most minds are focused on turning the calendar page to the new year, the forthcoming monthly employment report is for December, essentially closing the book on 2022,” said Bankrate.com’s Senior Economic Analyst Mark Hamrick. “It is widely expected to show a steady unemployment rate at 3.7%, while hiring is seen to be the weakest monthly hiring in two years.”

The Institute for Supply Management releases its non-manufacturing purchasing managers index for December. 

This key gauge of activity in the services sector is expected to fall one-and-a-half points to 55.0, down from a stronger-than-expected reading of 56.5 in November. 

The index has trended lower since hitting a record-high 68.4 in November 2021. 50 is the dividing line between an expanding and contracting services sector. 

At the same time, the Commerce Department is expected to say factory orders fell 0.8% in November, reversing most of October’s 1.0% rise.

Bitcoin was trading around $16,000, after gaining in four of the last five days.

For the week, Bitcoin added more than 1%.

The 
cryptocurrency has lost 60% in the past year.

Ethereum was trading around $1,200, after adding 4% in the past week.

Dogecoin was trading at 7 cents, after adding less than 1% in the past week.

The nationwide price for a gallon of gasoline bumped up on Friday to $3.290, according to AAA.

The average price of a gallon of gasoline on Thursday was $3.285.

A year ago, the price for a gallon of regular gasoline was $3.301.

One week ago, a gallon of gasoline cost $3.179. A month ago, that same gallon of gasoline cost $3.380.

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

Diesel slipped lower, remaining below $5.00 per gallon to $4.677, but that is still a far cry from the $3.575 of a year ago.

Sony and Honda unveiled their EV prototype this week at the CES in Las Vegas.

The companies with their year-old electric vehicle joint venture is considering a stock offering as one option to raise cash in the future, according to the chairman of Sony Honda Mobility Yasuhide Mizuno.

“IPO is one of our options,” Mizuno told a group of journalists Thursday in a roundtable discussion. “We have to be able to stand on our own two feet.”

Sony unveiled the sedan on Wednesday with the Afeela brand name.

Mizuno said the car is scheduled to be delivered in the United States starting in early spring 2026.

Reuters contributed to this post.

Shell, Europe’s largest oil and gas company, said it expects to pay about $2 billion in additional 2022 taxes related to the European Union and British windfall taxes imposed on the energy sector.

Earnings from liquefied natural gas
trading operations are likely to have been significantly higher in the fourth quarter of last year despite a sharp output drop owing to plant outages, according to a company s update ahead of its full-year results on Feb. 2.

Fourth-quarter LNG liquefaction volumes are expected to be the lowest since the company acquired BG Group in 2016 for $53 billion, falling to between 6.6 million and 7 million tons as a result of prolonged outages at two major plants in Australia.

Reuters contributed to this post.

Oil prices were little changed Friday morning, giving back earlier gains of 1% on initial hopes of a China demand boost.

Prices were also supported by data showed lower fuel inventories in the United States following a winter storm that hit during the year end.

U.S. West Texas Intermediate crude futures traded around $73.00 a barrel.

 Brent crude futures traded around $78.00 a barrel.

Oil prices were still on track to end the week lower, with both contracts down around 7% from a week ago.

Concerns about a possible global recession have weighed on trading sentiment.