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    Walmart expands its drone-delivery service to reach 4 million households

    Walmart is expanding drone deliveries across six states with operator DroneUp, bringing its total network to 37 sites by year-end.
    The big-box retailer said it will be able to deliver items like batteries and Hamburger Helper to 4 million households in parts of Arizona, Arkansas, Florida, Texas, Utah and Virginia.
    Walmart has been testing how drone deliveries could drive e-commerce growth and turn stores into a way to outmatch Amazon on speed.

    Walmart is expanding drone deliveries to select stores in six states. That will make it possible for more customers to get diapers, groceries or more delivered by air.

    Walmart is expanding drone delivery across six states this year, making it possible for many more customers to get a box of diapers or dinner ingredients delivered in 30 minutes or less.
    Through an expansion with operator DroneUp, the big-box retailer said it will be able to reach 4 million households in parts of Arizona, Arkansas, Florida, Texas, Utah and Virginia. The deliveries by air will be fulfilled from a total of 37 stores — with 34 of those run by DroneUp.

    It announced its plans for growth on Tuesday in a blog post. Walmart currently offers drone deliveries from a few stores near its headquarters in northwest Arkansas and in North Carolina.
    Walmart has been testing how the small, unmanned aircraft could change the game for retail, drive e-commerce growth and turn its stores into a way to outmatch Amazon on speed. Two years ago, it struck deals with three operators — Flytrex, Zipline and DroneUp — and began pilot projects to deliver groceries, household essentials and at-home Covid-19 test kits to customers. The company declined to share terms of the deals.
    The new kind of delivery is an extension of Walmart’s strategy to use its huge physical footprint as a competitive edge. About 90% of Americans live within 10 miles of one of Walmart’s more than 4,700 stores. Through those stores, Walmart has offered a growing list of fast online options including curbside pickup; InHome, which delivers directly to customers’ fridges; and Express Delivery, which drops items at doorsteps in two hours or less.
    Customers who live within the range of a Walmart drone-delivery site can order any of thousands of items between 8 a.m. and 8 p.m. Each drone delivery comes with a $3.99 fee. Customers can order items totaling up to 10 pounds.
    Each order is picked, packaged and loaded at the store and flown remotely by a certified pilot to the customer’s yard or driveway. A cable on the drone slowly lowers the package.

    Orders must be placed on DroneUp’s website or through the websites of the two other operators. Walmart said it plan to eventually add the order-placing capability to its own website and app.
    With the larger network of sites, Walmart will be able to deliver over 1 million packages by drone in a year, David Guggina, senior vice president of innovation and automation for Walmart U.S., said in the blog post.
    One of the surprises of the drone tests has been what customers order, he added. Walmart anticipated customers would use the drones to get emergency items, such as over-the-counter medication, Guggina said. Instead, he said, many have used it for convenience. At one store, for instance, the top seller for drone delivery is Hamburger Helper.
    Other frequent items delivered by drone are batteries, trash bags, laundry detergent and Welch’s fruit snacks, the company said.
    Walmart will use the drones to make money in another way, too. It said it plans to offset the cost of deliveries by selling photographs taken by drones to municipalities and local business, such as construction or real estate companies. The revenue will be split with the drone operator.

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    Volkswagen chief says German car giant will overtake Tesla on electric vehicle sales by 2025

    Speaking to CNBC’s “Squawk Box Europe” at the World Economic Forum in Davos, Switzerland, on Tuesday, Herbert Diess said alleviating supply chain issues would likely help create some momentum for the German auto giant over the coming months.
    “Markets are always about the future,” Diess said when asked why investors valued Tesla at such a premium to other traditional carmakers.
    “We are still aiming at keeping up and probably overtaking by 2025 when it comes to sales,” Diess said.

    The chief executive of Volkswagen believes Europe’s biggest carmaker can overtake Tesla to become the world’s largest seller of electric vehicles by 2025.
    Speaking to CNBC’s “Squawk Box Europe” at the World Economic Forum in Davos, Switzerland, on Tuesday, Herbert Diess said alleviating supply chain issues would likely help create some momentum for the German auto giant over the coming months.

    “Markets are always about the future,” Diess said when asked why investors valued Tesla at such a premium to other traditional carmakers, such as Volkswagen.
    “Tesla currently is in the lead when it comes to EVs, probably also it is the most digital car company already and they have some advantages,” he continued. “We are still aiming at keeping up and probably overtaking by 2025 when it comes to sales.”
    Diess said Tesla has been able to demonstrate good results and high returns with a credible business model. However, he reaffirmed his belief that Volkswagen could soon close the gap when it comes to EV sales.

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    “I think for Tesla, also, ramping up now will probably be a bit more challenging. They are opening up new plants and we are trying to keep up speed. We think in the second half of the year, we are going to create some momentum,” Diess said.
    Volkswagen’s Frankfurt-listed shares traded around 0.9% lower on Tuesday morning, roughly in line with losses in the autos sector on the pan-European Stoxx 600.

    Supply chain crisis to alleviate

    More than two years into the coronavirus pandemic, the auto industry continues to grapple with the challenge of obtaining crucial parts and building enough vehicles to meet demand.
    Shortages of critical supplies, particularly when it comes to battery production, are expected to be an ongoing constraint for the growth of electric vehicle sales in the years ahead.
    Nonetheless, Diess said there are some positive signs on the horizon. He expects to see some relief from the semiconductor supply market from the middle of the year.
    “I would say that we would see an alleviation of this situation towards mid-year and second half we should be in better shape — if the situation is not getting any worse, which I don’t think so,” Diess said.
    When asked whether this means he expects the semiconductor crisis could end in the second half of the year, Diess replied: “I wouldn’t say end but we see a much-improved situation. I think supply chains are getting in order again.”
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    Chinese buyers not living in lockdown shake off electric car price hikes, Xpeng says

    Chinese electric carmaker Xpeng said demand for its cars, outside of Covid-affected areas, has recovered to levels seen before the company raised prices.
    From Nio to Tesla, electric car companies in China have raised prices in the last few months, citing the impact of rising commodities costs such as those for battery components.
    However, Xpeng vice chairman and president Brian Gu said in an exclusive interview on CNBC’s “Squawk Box Asia” that “the second quarter will be a challenging one” because of the impact of Covid.

    Guangzhou-based Xpeng is one of several Chinese electric car companies that’s started to expand overseas.
    Feature China | Future Publishing | Getty Images

    BEIJING — In a sign Chinese drivers are still willing to buy electric, start-up Xpeng said that demand for its cars has shaken off the impact of price hikes.
    From Nio to Tesla, electric car companies in China have raised prices in the last few months, citing the impact of rising commodities costs such as those for battery components.

    After hiking prices by a few thousand U.S. dollars in March, Xpeng has seen a recovery in demand in regions not affected by the latest Covid lockdowns in China, Brian Gu, vice chairman and president, said Tuesday in an exclusive interview on CNBC’s “Squawk Box Asia.”
    With that ability to pass on rising raw materials costs to consumers, Gu said the company can then “continue our innovation and investments.”
    Last week, Nio CEO William Li told CNBC his company’s biggest problem was supply chain disruptions, not demand for electric cars in China.
    Passenger car sales fell by 35.5% year-on-year in April, but new energy vehicles — which include battery-powered electric cars — saw sales surge by 78.4%, according to the China Passenger Car Association.

    Covid controls still took a toll on Xpeng, whose shares fell 5.5% in overnight U.S. trading after giving second-quarter guidance below expectations.

    The electric car company said it expects total revenue to nearly double in the second quarter from a year ago, to between 6.8 billion yuan ($1.02 billion) and 7.5 billion yuan. But that was below prior FactSet estimates ranging from 7.08 billion yuan to 9.02 billion yuan.
    In the first quarter, Xpeng did report a smaller-than-expected loss of 1.8 yuan per share, versus the FactSet estimated loss of 1.9 yuan per share. Revenue of 7.45 billion yuan also beat FactSet expectations for 7.39 billion yuan.

    Covid, chip shortage all take a toll

    Gu told CNBC “the second quarter will be a challenging one” because of the impact of Covid, particularly in April.
    “There are no operations per se in the city of Shanghai and some of the surrounding areas,” he said Tuesday.
    The southeastern metropolis of Shanghai has been battling Covid since March, with citywide lockdowns now nearing the two-month mark. The city in mid-April started to prioritize some businesses — especially in the auto sector — for resuming production within a bubble.
    Shanghai also plans to restore normal life and work by mid-June. But over the weekend a downtown district banned residents from leaving their apartment complexes again, illustrating the challenges to reopening quickly.

    Read more about electric vehicles from CNBC Pro

    Gu said earlier on an earnings call, accessed through Refinitiv Eikon, that the Covid lockdowns have affected “important markets” for Xpeng, and that he expected strong order momentum as those areas ease restrictions.
    In addition to Covid controls, the company’s CEO Xiaopeng He added on the call that the ongoing chip shortage was a problem.
    “If there weren’t any COVID resurgence in China right now, I think the majority of our peers or all of the new EV makers in China right now will be actually restricted by the capacity or the supply of the chip in general,” he said.

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    Why China will likely recover more slowly from the latest Covid shock

    When the pandemic first hit in 2020, China bounced back from a first-quarter contraction to grow in the second quarter.
    This year, the country faces a far more transmissible virus variant, overall weaker growth and less government stimulus.
    The “most significant impact” of the Covid resurgence is that it “interrupted” the normal policymaking schedule, said Dan Wang, Shanghai-based chief economist at Hang Seng Bank China.

    As Shanghai tries to reopen businesses, one downtown district over the weekend banned residents from leaving their apartment complexes again for mass virus testing. Pictured here, in another district on May 21, 2022, is a line outside a shopping mall.
    Xu Kaikia | Visual China Group | Getty Images

    BEIJING — China’s economy won’t be snapping back quickly from the latest Covid outbreak, many economists predict.
    Instead, they expect a slow recovery ahead.

    When the pandemic first hit in 2020, China bounced back from a first-quarter contraction to grow in the second quarter. This year, the country faces a far more transmissible virus variant, overall weaker growth and less government stimulus.
    The latest Covid outbreak that began in March has hit the metropolis of Shanghai the hardest. About a week ago, the city announced plans to emerge from lockdown — and fully reopen by mid-June.
    “For China, the main story here is we have seen the light at the end of the tunnel. The worst of supply chain dislocations in China from Covid lockdown looks to be over,” Robin Xing, Morgan Stanley’s chief China economist, said during a webinar Friday.
    “But we also think the road to recovery will likely be slow and bumpy,” Xing said.
    It’s a process of fits and starts. Over the weekend, a downtown Shanghai district again banned residents from leaving their apartment complexes to conduct mass virus testing. More parts of the capital city of Beijing ordered people to work from home as the local daily case count rose — reaching 83 on Sunday, the highest for the city’s latest outbreak.

    Case in point: German automaker Volkswagen, which has factories in two of this year’s hardest-hit regions, said Wednesday its China production sites were up and running, but Covid controls were disrupting supply chains.
    The automaker said it was unable to provide a specific figure on production levels as the factories are joint ventures operated with local partners.
    Although the national Covid case count has fallen over the last month, pockets of new cases ranging from Beijing to southwest China have prompted stay-home orders and mass testing. Freight volumes remain below normal.
    “Many regions and cities have tightened restrictions at the first sign of local cases,” Meng Lei, China equity strategist at UBS Securities, said in a note last week.
    “Our case studies of Shanghai, Jilin, Xi’an and Beijing show logistical and supply chain disruptions are the biggest pain points that affect production resumption,” Meng said. “Therefore work resumption is likely to be gradual rather than happening overnight.”

    A policymaking cycle ‘interrupted’

    The Chinese government has stuck to its stringent policy of “dynamic zero-Covid” despite this year’s emergence of the highly transmissible omicron variant.
    The “most significant impact” of the Covid resurgence is that it “interrupted” the normal policymaking schedule, said Dan Wang, Shanghai-based chief economist at Hang Seng Bank China.
    She said the latest wave of cases and lockdowns really only started after the central government released its annual economic plan at the “Two Sessions” parliamentary meeting in March.
    In China’s heavily managed economy, this annual meeting is a critical part of a cycle for developing and implementing national policies — across departments and regions.
    Supply chain disruption and lackluster consumption are manageable, but once the policy schedule is interrupted, “it’s hard to get it back to its original track quickly,” Wang said.
    There are so many different economic targets that “a lot of compromises have to be made between different [government] departments,” she said. “That has made the policy process extremely slow and lagging.”
    The information office for China’s State Council, the country’s top executive body, did not immediately respond to a CNBC request for comment.
    Politics holds particular weight with officials this year ahead of a regular shuffle of leaders scheduled for the fall. Chinese President Xi Jinping is expected to stay on for an unprecedented third term.

    Half the stimulus as in 2020

    In early March at the “Two Sessions,” Beijing set targets such as GDP growth of “around 5.5%.” But that’s about 1 percentage point or more above the forecast of many investment banks — which have repeatedly slashed their China growth estimates as Covid lockdowns persist.
    Wang maintains a relatively high forecast of 5.1% as she expects China to increase stimulus and ease tight Covid controls later in the summer.
    But so far, nearly two months after Shanghai locked down in earnest, policymakers have yet to make major changes.
    Whether in terms of interest rates or fiscal policy, the level of government stimulus is still about half of what it was during the height of the pandemic in 2020, Morgan Stanley’s Xing said.

    Read more about China from CNBC Pro

    Except for unemployment, most economic indicators have not reached levels worse than early 2020.
    Among other measures, the central government has announced tax and fee cuts for small businesses, and started to cut mortgage rates. But the impact, especially on the massive real estate sector, can take time to play out.
    Xing noted that even without Covid, an easing of policies on the property market would take three to six months to affect homebuying activity.

    Other parts of China hum along

    Still, it’s also possible that growth in China could come faster than many expect.
    “The silver lining is, the experiences from the past two years suggest that a Covid-induced recession tends to end quickly, especially with prompt and powerful policy responses,” Larry Hu, chief China economist at Macquarie, said in a note last week.
    For much of China, work goes on, even if there are additional virus testing requirements.
    About 80% of manufacturing in southern China is back to normal. Though the region’s big city of Shenzhen shut nearly all businesses for about a week in March, moving products via truck within a province is “OK” due to very low numbers of Covid cases in the region, Klaus Zenkel, chair of the south China chapter of the EU Chamber of Commerce in China, told CNBC on Friday.
    Members in the southern Guangdong province — a manufacturing hub — “are all busy, they all have work to do,” Zenkel said. He noted businesses were keeping their warehouses fuller than before to prevent a prolonged shortage issue.
    But “unpredictability is there,” he said. “You don’t know what will happen.”

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    Stock futures fall after Dow’s 600-point comeback

    Stock futures fell in overnight trading on Monday as the markets struggled to sustain a comeback rally following weeks of losses.
    Futures on the Dow Jones Industrial Average fell 110 points, or 0.34%. S&P 500 futures dipped 0.69% and Nasdaq 100 futures dropped 1.33%.

    Zoom Video shares popped 6% in extended trading after sharing strong guidance for the second quarter while Snap shares plummeted more than 28% as the company said it’s bracing to miss earnings and revenue targets in the current quarter and warned of a hiring slowdown.
    The moves came as the markets staged a rebound from last week’s steep market sell-off, which saw the Dow hit its first eight-week losing streak since 1923, and the S&P 500 briefly fall into bear market territory on an intraday basis.
    Stocks rallied during Monday’s regular trading session as the Dow jumped 618 points, or nearly 2%, following a week of sharp losses. The S&P 500 rose 1.9%, and the Nasdaq Composite gained 1.6%.
    The moves left investors wondering whether the bounce can hold or if it was yet another minor relief rally amid the relentless sell-off that has yet to reach a bottom.
    “This kind of environment where you’ve got the whipsaw and ups and downs that are so big is a trading environment where it can feel on any given day like you were wrong yesterday and that is ripe for mistakes,” Sofi’s head of investment strategy Liz Young told CNBC’s “Closing Bell: Overtime.”

    Bank stocks contributed to Monday’s gains led by JPMorgan, which jumped 6.2% after the company said it will reach key targets earlier than expected with the help of rising rates. VMware shares soared nearly 25% on news that Broadcom is reportedly in talks to acquire the clouder service provider.
    Monday’s market rally was broad-based, with 11 sectors positive, led by financials. The sector added 3.23% and saw its best day since March 9.
    Investors are looking ahead to new home sales and a speech from Fed Chair Jerome Powell at the National Center for American Indian Enterprise Development summit on Tuesday. Nordstrom, Best Buy, and Ralph Lauren are also slated to report earnings.

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    SpaceX president defends Elon Musk over sexual misconduct claims: 'I believe the allegations to be false'

    SpaceX President and COO Gwynne Shotwell defended Elon Musk in an email to employees last week responding to sexual misconduct allegations directed at the company’s CEO, CNBC has learned.
    “Personally, I believe the allegations to be false; not because I work for Elon, but because I have worked closely with him for 20 years and never seen nor heard anything resembling these allegations,” Shotwell wrote.
    Musk has denied the allegations, which claim he propositioned a flight attendant on one of SpaceX’s private jets in 2016, calling them “wild accusations.”

    SpaceX President and COO Gwynne Shotwell defended Elon Musk in an email to employees last week, responding to sexual misconduct allegations directed at the CEO, CNBC has learned.
    “Personally, I believe the allegations to be false; not because I work for Elon, but because I have worked closely with him for 20 years and never seen nor heard anything resembling these allegations,” Shotwell wrote in a companywide email sent on Friday and seen by CNBC.

    Musk has denied the allegations, which claim he propositioned a flight attendant on one of SpaceX’s private jets in 2016, calling them “wild accusations.”
    In a response to Business Insider, which reported the allegations and that the flight attendant was paid $250,000 severance after confronting the company, Musk said there is “a lot more to this story,” describing it as a “politically motivated hit piece.” Neither Musk nor SpaceX’s vice president of the legal department, Christopher Cardaci, denied the payment in statements to Business Insider.
    Shotwell emphasized in her email that she “will never comment on any legal matters involving employment issues” before noting Musk publicly denied the allegations as “utterly untrue” in a tweet.
    Shotwell, who is No. 2 at SpaceX and the company’s top female executive, also noted in the email that SpaceX has a “ZERO tolerance” policy for harassment, adding that every accusation is taken seriously and investigated, “regardless of who is involved.”
    SpaceX did not immediately respond to CNBC’s request for comment on Shotwell’s email.

    SpaceX President and COO Gwynne Shotwell
    Jay Westcott / NASA

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    Judge blocks auction of Judy Garland's 'Wizard of Oz' dress by Catholic University pending outcome of lawsuit

    A federal judge in New York blocked Tuesday’s scheduled auction of a dress worn by Judy Garland in “The Wizard of Oz” that had been expected to fetch up to $1 million or more for The Catholic University of America.
    The halt in the planned sale of the dress by Bonhams auction house in Los Angeles came more than two weeks after a Wisconsin woman sued, claiming the dress belonged to the estate of her late uncle, the Rev. Gilbert Hartke.
    Her lawsuit, which contests ownership of the dress, will proceed in Manhattan federal court.

    A blue and white checked gingham dress, worn by Judy Garland in the “Wizard of Oz,” hangs on display, Monday, April 25, 2022, at Bonhams in New York.
    Katie Vasquez | AP

    A federal judge in New York blocked Tuesday’s scheduled auction of a dress worn by Judy Garland in “The Wizard of Oz” that had been expected to fetch up to $1 million or more for The Catholic University of America.
    Monday’s injunction barring a sale of the dress by Bonhams auction house in Los Angeles came more than two weeks after a Wisconsin woman, Barbara Hartke, sued to stop the sale, claiming it belonged to the estate of her late uncle, the Rev. Gilbert Hartke. The lawsuit will proceed in Manhattan federal court.

    Judge Paul Gardephe ordered Catholic University, which is located in Washington, D.C., and Bonhams not to sell the dress until the lawsuit is resolved.
    Anthony Scordo, the attorney for Barbara Hartke, in an email to CNBC said, “I am pleased with the ruling preventing the sale. I feel the judge carefully reviewed the submissions of all parties and came to a fair result.”
    In its statement, Catholic University said, “The Court’s decision to preserve the status quo was preliminary and did not get to the merits of Barbara Hartke’s claim to the dress. We look forward to presenting our position, and the overwhelming evidence contradicting Ms. Hartke’s claim, to the Court in the course of this litigation.”

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    Hartke received the “Oz” dress in 1973 as a gift from Academy Award-winning actress Mercedes McCambridge while serving as head of Catholic University’s drama school, which he founded. It is not known how MacCambridge obtained the costume from the classic 1939 film.
    As an heir to the priest, Barbara Hartke stands to inherit a fraction of the ownership to the dress if she prevails in her lawsuit to prove that it belongs to her late uncle’s estate.

    The dress had been missing for decades before it was found in a trash bag in a room at the drama school last year. Catholic University then moved to put it up for auction, generating widespread media coverage last month.
    The university argues that it is the legal owner of the dress, because Hartke, as a Roman Catholic priest, had taken a vow of poverty and that the dress was intended to benefit the school.
    The school also submitted affidavits from a grandnephew of Hartke who remembered that “my grand uncle Father Gilbert Hartke said to me that I could not have it as the dress belonged to Catholic University.”
    That man, Thomas Kuipers, with a cousin said that they and other descendants of the priest supported the auction of the dress with the understanding that it was given as a gift for the school.
    In its statement, Catholic University said that “it continues to be committed to its plan to use proceeds from a sale of the dress to endow a faculty position in the Rome School of Music, Drama and Art, which it believes is in line with Mercedes McCambridge’s original intent and Father Gilbert Hartke’s desire to support and grow the University’s drama program.”
    The dress is one of only two dresses known to still exist of the several created for Garland to wear in “The Wizard of Oz.”
    The other dress was auctioned in 2015 by Bonhams for more than $1.5 million.   

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    Stocks making the biggest moves midday: JPMorgan Chase, Gap, VMWare & more

    People pass the JP Morgan Chase & Co. Corporate headquarters in the Manhattan borough of New York City.
    Mike Segar | Reuters

    Check out the companies making headlines in midday trading.
    JPMorgan Chase – JPMorgan rose 6.2% after the bank said it expects to reach key return targets sooner than planned thanks to rising interest rates giving its lending business a boost. Other banks were also among the top gainers Monday. Citi and Bank of America got a 6% boost each, and Wells Fargo added 5%. Banks tend to benefit from rising rates, which allow for higher margins and profits.

    Starbucks – Shares of the global coffee chain rose slightly after the company said it will exit the Russian market amid the country’s invasion of Ukraine, joining companies like McDonald’s, Exxon Mobil and British American Tobacco in withdrawing from the country completely. Starbucks has 130 locations in Russia, which account for less than 1% of the company’s annual revenue.
    Gap — Shares fell 5.5% after Gap was downgraded by Citi along with a string of other apparel companies, such as Abercrombie and Fitch and Children’s Place, saying last week’s earnings reports should serve as a “wake-up call” for retailers. Shares of Abercrombie and Fitch fell nearly 2%, shares of Children’s Place fell 4%.
    Electronic Arts — Shares of Electronic Arts added 2.3% on news that it’s seeking a sale or merger. Walt Disney, Apple and Amazon have reportedly held talks with the video game maker.
    Eli Lilly — Eli Lilly’s stock added 1.25% as SVB Securities said the drugmaker’s diabetes drug is “game-changing” and could bring more gains for the stock.
    VMWare – The cloud stock surged more than 24.8% after multiple reports said VMWare is in advanced talks to be acquired by chipmaker Broadcom. Broadcom shares dipped 3.1%. 

    Autodesk — Autodesk shares fell 4.1% after Deutsche Bank downgraded the software company to hold from buy and cut its price target. Deutsche also said it anticipates mixed first-quarter results from Autodesk.
    Emergent BioSolutions — Emergent BioSolutions jumped 3.8% as the life sciences company makes a smallpox vaccine that can be used to prevent spreading monkeypox.
    Porch Group — Shares of the home services company gained 5.4% after JPMorgan initiated coverage with an overweight rating, saying that Porch Group has differentiated itself through its business-to-business strategy.
    — CNBC’s Tanaya Macheel, Yun Li, Hannah Miao and Sarah Min contributed reporting

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