Raphael Stevens

Traders work on the floor of the New York Stock Exchange, Aug. 22, 2022.
Brendan McDermid | Reuters

Check out the companies making headlines in midday trading.
AMC — Shares of the movie theater stock sank almost 35% after a judge late Friday approved AMC Entertainment’s plan to convert its preferred shares to common stock. AMC’s preferred units, or APEs, surged about 17%.

PayPal — PayPal stock added 2% after the company announced Intuit’s Alex Chriss would take over as chief executive beginning in September.
U.S. Steel, Cleveland-Cliffs — The steel maker founded by Andrew Carnegie and J.P. Morgan climbed nearly 32% after rejecting a buyout offer from peer Cleveland-Cliffs on Sunday, with the company asserting plans to consider other offers. Cleveland-Cliffs stock, meanwhile, climbed more than 8%.
Tesla — Shares slipped 2% after the company announced lowered prices on some models in China.
Hawaiian Electric — Shares plummeted more than 33% after Wells Fargo lowered its target price on the stock earlier and maintained an underweight rating Monday, citing wildfires in Maui as a looming risk.
Nikola — The stock lost 9% after the green truck maker announced a recall of 209 electric trucks following an independent investigation of a June fire. The company, which is coming off blows from complicated second-quarter earnings and news of a CEO departure, said this doesn’t affect its hydrogen fuel cell trucks.

Okta — Stock in the identity management firm added 2.4% in midday trading after an upgrade to buy from Goldman Sachs over an improving risk/reward ratio.
Teledyne Technologies — The conglomerate climbed 4% after Goldman Sachs upgraded the stock to a buy from neutral. Goldman called the company a cash compounder.
— CNBC’s Samantha Subin, Alex Harring, Pia Singh and Hakyung Kim contributed reporting. More

Workers replace a roller that compresses steel at the A&T Stainless steel plant in Midland, Pennsylvania, March 2, 2020.
Michael Rayne Swensen | Bloomberg via Getty Images

Check out the companies making headlines in premarket trading.
U.S. Steel — Shares of the steel producer surged more than 26% premarket after it rejected a $7.3 billion buyout proposal on Sunday from rival Cleveland-Cliffs and said it’s reviewing “strategic alternatives.” Cleveland-Cliffs shares were flat.

Tesla — The electric vehicle stock fell 2.2% in premarket trading. The move comes after Tesla lowered the price in China on its Model Y long-range and performance models by 14,000 yuan, according to a company post on Chinese social media platform Weibo.
Okta — The identity management company’s stock popped 5% before the bell. Goldman Sachs upgraded shares of Okta to a buy rating, citing a favorable risk reward and expectations for an inflection in subscription revenues.
Hawaiian Electric — The power stock slipped 2.2% before the bell after Wells Fargo pulled back its target price for shares and reiterated its underweight rating. Wells Fargo tied the price target cut to the wildfires risk.
Keysight Technologies — The tech stock dropped 2.2% following a Bank of America downgrade to underperform from neutral, citing the likelihood of worsening order trends. Keysight’s earnings report for the fiscal third quarter is slated for release Thursday.
Urban Outfitters — The clothing retailer shed 2.5% following a downgrade by Citi to neutral from buy. While the Wall Street firm expects an earnings beat when Urban Outfitters reports next week, it believes the risk/reward is more balanced at current levels. The Urban Outfitters brand will be slower to turn around, ultimately limiting possible upside to earnings per share, the firm wrote.

Parsons Corporation — The technology stock climbed 2.5% in premarket trading following a rare double-upgrade in rating to buy from underperform by Bank of America. The firm said Parsons has better growth than expected.
EPR Properties — The real estate stock shed 1.3% before the bell after a downgrade to neutral from buy by Bank of America. The firm said EPR can face pressure on its multiple as a result of the Hollywood strikes given its exposure to movie theaters.
Nikola — Shares of the green truck maker dropped 15% to $1.65 after it announced a recall of 209 electric trucks following an independent investigation of a June fire. The company said this doesn’t impact its hydrogen fuel cell trucks.
— CNBC’s Samantha Subin, Hakyung Kim, Sarah Min, Tanaya Macheel and Michelle Fox contributed reporting More

Credit data for July released Friday showed a slump in demand from businesses and households to borrow money for the future.
On Tuesday, China is set to release July economic data that’s expected to show no change from June in the pace of growth for industrial production and fixed asset investment, according to a Reuters poll.  
Developer Country Garden announced over the weekend it was suspending trading in at least 10 of its mainland-China traded yuan bonds.

A woman walks at the Bund in front of the financial district of Pudong in Shanghai, China.
Aly Song | Reuters

BEIJING – China’s economy is running into more challenges.
Credit data for July released Friday showed a slump in demand from businesses and households to borrow money for the future. Real estate problems persist with once-healthy developer Country Garden now on the brink of default. Consumer sentiment is weak.

“The weak July credit data suggest the downward spiral of the property sector continues, and worsening geopolitical tensions add to the uncertainty,” Lu Ting, chief China economist at Nomura, and a team said in a report Friday.
“In Japan during the 1990s, corporates might have paid down their debt to improve their chances of survival, but in today’s China, corporates and households are cutting their borrowing due to a lack of confidence (and trust),” the report said.

All the factors just cannot mask how weak credit demand is and how low risk appetite is.

Xiangrong Yu
chief China economist, Citi

New local currency bank loans plunged by 89% in July from June to 345.9 billion yuan ($47.64 billion), less than half the 800 billion yuan analysts had forecast in a Reuters poll.
The July new yuan loan number was the lowest since late 2009, according to Reuters.
Those figures “should mark a low” since policy moves in June could have moved up some demand, Xiangrong Yu, chief China economist at Citi, and a team said in a note.

“Yet all the factors just cannot mask how weak credit demand is and how low risk appetite is,” the analysts said, noting expectations for rate cuts by the end of September. Without such cuts, they expect a greater risk that China misses its growth target of around 5% this year.
On Tuesday, China is set to release July economic data that’s expected to show no change from June in the pace of growth for industrial production and fixed asset investment, according to a Reuters poll.  
Retail sales are expected to rise 4.7% year-on-year pace in July, slightly faster than in June, the poll showed.

Real estate drag

China’s massive real estate sector, where the majority of household wealth is parked, has reemerged as an area of concern that it could drag down the broader economy.
Developer Country Garden announced over the weekend it was suspending trading in at least 10 of its mainland-China traded yuan bonds.
Last week, the company missed coupon payments on two U.S. dollar-denominated bonds, according to Reuters.
Country Garden’s U.S. dollar bonds account for just under half of outstanding high-yield U.S. dollar-denominated bonds, according to Goldman Sachs analysis.
China U.S. dollar bonds that are of investment grade account for 43% of the total, the analysis showed.
“Given that the majority of [high-yield] developers have either defaulted or conducted bond exchanges, we believe rising stresses amongst the remaining [high yield] developers are unlikely to have broader impact on the offshore bond market,” the Goldman analysts said in a report Friday.
“We believe of greater concern is whether rising stresses will spillover to [investment grade] developers, most of whom are state owned enterprises [SOEs].”

The more the government tries to help the real estate industry, the longer it takes for the industry to find a reasonable bottom.

Brandes Investment Partners

State-owned companies have generally found it easier to obtain loans in China, where state-owned banks dominate. State-owned developers have also fared better in terms of recent sales than non-state-owned developers, data show.
However, China’s entire real estate sector still needs to contract by about 10 percentage points to reach a similar level of GDP contribution as Japan or South Korea, said Louis Lau, director of investments and emerging markets portfolio manager at Brandes Investment Partners.
He pointed out that while real estate has contributed to about 30% of GDP in China, that share is in the lower 20 percentage points in South Korea and Japan.

Read more about China from CNBC Pro

In 2020, Beijing began an earnest crackdown on developers’ high reliance on debt for growth. Authorities have eased their stance in recent months, with a notable shift in late July, but stopped short of large-scale stimulus.
“The more the government tries to help the real estate industry, the longer it takes for the industry to find a reasonable bottom,” Lau said.
He is underweight China, with selective investments in some consumer names and industries he expects will outperform. More

Advancements in investment products and trading platforms haven’t altered long-standing investing fundamentals, according to neurologist and best-selling financial author William Bernstein.
Bernstein, who released the second edition of his 21-year-old classic investment guidebook “The Four Pillars of Investing” this summer, joined CNBC’s Bob Pisani on “ETF Edge” this week.

The first pillar of investing according to Bernstein is theory, in which he stressed that risk and return are “joined at the hip.”
“If you want a perfectly safe portfolio, you’re not going to have high returns,” Bernstein said. “If you want the high returns that come with equities, you’re going to have to sustain bone-crushing losses.”
His second pillar is history. It plays off the idea markets overshoot on the upside and the downside, and only bottom in retrospect.
“Markets don’t get either very expensive or very cheap without a good reason,” Bernstein said. “You have to just be able to keep your discipline and understand that the expected market return has to do with the perceived risk of the market, and the perceived risk of the environment you’re in.”
The third pillar is psychology. Bernstein believes investors tend to be overconfident about their ability to pick stocks.

“The metaphor I like to use [for investing] is that you’re playing tennis with an invisible opponent, and what you don’t understand is the person on the other side of the net is Serena Williams,” Bernstein said.
Bernstein also emphasizes that investors tend to be overconfident on their own risk tolerance.
“One of the things I learned both in 2008 and more recently during the March 2020 Covid swoon was that how you behave in the worst 2% of the markets probably describes 90% of your overall investment performance,” he said.
Bernstein’s final investing pillar is business. It’s the notion the primary business of most fund companies is collecting assets rather than managing money.
This idea is one of the reasons Bernstein feels positive about the exchange-traded funds business and its role in reducing fees.
“One can purchase a lot of investment products now for next to nothing in terms of expenses — a couple of basis points,” Bernstein said.

Disclaimer More

An Alibaba Group sign is seen at the World Artificial Intelligence Conference in Shanghai, July 6, 2023.
Aly Song | Reuters

Check out the companies making headlines in midday trading.
News Corp — The media company’s shares jumped nearly 7% after reporting an earnings beat in the fiscal fourth quarter. News Corp posted adjusted earnings of 14 cents per share, while analysts polled by Refinitiv had estimated 8 cents per share. Meanwhile, the company’s revenue of $2.43 billion missed analysts’ forecast of $2.49 billion.

UBS — Shares rose 5% on news that UBS ended a roughly $10 billion loss protection agreement and a public liquidity backstop with Credit Suisse. The company also confirmed that Credit Suisse fully repaid a 50 billion Swiss franc emergency liquidity loan to the Swiss National Bank.
Chip stocks — Semiconductor shares dropped more than 2% Friday, putting the sector on pace for a weekly decline of 4.5%. The VanEck Semiconductor ETF (SMH) fell 2.3%. NXP Semiconductors, Applied Materials, Nvidia and On Semiconductor each tumbled more than 3% Friday. Lam Research declined 4.5%.
Maxeon Solar Technologies — Shares plummeted 31.9% after the company reported a revenue miss in the second quarter amid weakening demand. The company posted $348.4 million in revenue last quarter, short of the $374.3 million anticipated by analysts polled by FactSet. Maxeon forecasts revenue to range between $280 million and $320 million in the third quarter, while analysts called for $394.8 million.
China-based companies — The U.S.-traded shares of Chinese companies tumbled after Chinese property giant Country Garden issued a profit warning amid a decline in real estate sales, adding to negative sentiment surrounding China’s economy. JD.com and Alibaba lost 5.2% and 3.5%, respectively. Nio declined 2.6%. 
Wynn Resorts — The casino operator’s shares retreated 3.5%. The decline comes after shares rose nearly 3% in the previous session on the back of the company’s earnings announcement. Casino and hospitality peer Caesars Entertainment lost nearly 3% in sympathy.

Krispy Kreme — The doughnut maker popped 4.1% after JPMorgan reiterated its overweight rating, noting that shares are cheap.
Coinbase — The crypto exchange’s stock dipped 2.8% after Mizuho reiterated its underperform rating on the stock. The Wall Street firm said retail crypto traders are flocking to Robinhood to trade cryptocurrencies and away from Coinbase.
Tapestry — Shares gained 1.3% Friday, partly recouping losses of 16% from Thursday’s trading session. Tapestry announced Thursday morning it would acquire Capri Holdings in an $8.5 billion deal. 
Kura Oncology — The biotech company’s shares rose 7.4% after Bank of America initiated coverage of Kura with a buy rating in a Friday note. 
DigitalOcean Holdings — Shares added 2.2% following an upgrade from Morgan Stanley to equal weight from underweight. The firm said its underweight thesis on DigitalOcean has largely played out.
— CNBC’s Alex Harring and Yun Li contributed reporting. More