Finance

A runner jogs past the Cisco Systems headquarters in San Jose, California, Feb. 8, 2021.
David Paul Morris | Bloomberg | Getty Images

Check out the companies making headlines in extended trading.
Cisco Systems — Shares of the computer networking giant gained about 2.5% after posting fiscal fourth-quarter earnings that beat Wall Street’s expectations. The company posted adjusted earnings of $1.14 per share, while analysts had forecast $1.06 per share, according to Refinitiv. Revenue came out to $15.2 billion, exceeding expectations of $15.05 billion.

Synopsys — The stock advanced 2.3% after the electronic design automation company beat fiscal third-quarter earnings expectations. Synopsys reported adjusted earnings of $2.88 per share, which was 14 cents per share higher than analysts’ expectations, according to Refinitiv. Its revenue of $1.49 billion also came out just above expectations. The California-based company on Wednesday also announced Sassine Ghazi as its CEO and president, effective Jan. 1.
Wolfspeed — Shares plunged 13% after hours following Wolfspeed’s fiscal fourth-quarter earnings report, which missed expectations on the bottom line. The company posted an adjusted loss of 42 cents per share, while analysts called for a loss of 20 cents per share. Wolfspeed reported $236 million in revenue, however, surpassing analysts’ expectations of $223 million, according to Refinitiv.
Amcor — The packaging stock added 2.5% after the closing bell. Amcor, which hit its 52-week trading low Wednesday, reported adjusted earnings per share of $0.19 for its fiscal fourth quarter. That exceeded the $0.18 forecast from analysts surveyed by FactSet. Amcor’s revenue failed to meet expectations, however, coming at $3.67 billion while analysts had forecast $3.79 billion.
Hawaiian Electric Industries — Shares of Hawaiian Electric slipped nearly 2% after hours Wednesday. The action followed a report in The Wall Street Journal that said the company is in talks with firms that specialize in restructuring. The stock’s losses, now about 55% this week, continued amid Wall Street’s ongoing concerns about the company’s potential liability in the deadly Maui wildfires. 
VinFast Auto — Shares of the Vietnamese electric vehicle maker fell about 5%. Its shares jumped more than 250% Tuesday after VinFast went public through a SPAC deal, but the stock gave back some of those gains Wednesday and dipped 18.7%. More

Plastic bags hang on a self-checkout kiosk at a Target store in Chicago.
Daniel Acker | Bloomberg | Getty Images

Check out the companies making headlines in midday trading.
Target — Target shares added 2.9% even after the retailer cut its full-year earnings forecast and second-quarter sales fell short of expectations. The company reported earnings of $1.80 per share on revenue of $24.77 billion. Wall Street analysts surveyed by Refinitiv had expected earnings of $1.39 per share on $25.16 billion in revenue. Inventory also improved year over year.

Coinbase — The U.S. cryptocurrency exchange slipped 0.2%. The National Futures Association, which has been designated by the Commodity Futures Trading Commission as a self-regulatory organization, approved the company to operate a futures trading service in addition to its already-standing spot crypto trading.
TJX Companies — The discount retailer jumped 4.1% after beating Wall Street expectations for its fiscal second quarter. TJX reported adjusted earnings of 85 cents per share on $12.76 billion in revenue, while analysts surveyed by Refinitiv expected 77 cents earned and $12.45 billion in revenue.
Coherent — Shares plummeted 29.9% a day after Coherent delivered weak guidance for its fiscal first quarter. The manufacturer of lasers and optics forecast earnings of 5 cents to 20 cents per share and revenue of $1 billion to $1.1 billion. Analysts polled by FactSet called for 47 cents per share in earnings and revenue of $1.16 billion.
VinFast Auto — The Vietnamese electric vehicle stock tumbled 18.8%. The company debuted on the Nasdaq on Tuesday and popped more than 250% that day.
JD.com — U.S. shares of the Chinese e-commerce company slid 3%, even as JD.com beat expectations on the top and bottom lines for its most recent quarter.

Keurig Dr Pepper — The beverage stock advanced 1.2% following a UBS upgrade to buy from neutral. The firm cited a cheap valuation in its decision.
H&R Block — The tax prep software stock popped 9.7%. The action follows a day after H&R Block announced a 10% hike to its dividend. The company also surpassed analysts’ expectations for its fiscal fourth quarter, posting adjusted earnings of $2.05 per share on revenue of $1.03 billion. Wall Street estimated earnings of $1.88 per share and revenue of $1.01 billion, per Refinitiv.
Agilent Technologies — Shares slid 3.4% a day after the laboratory technology company cut its full-year guidance, citing a soft macroeconomic environment. The company beat consensus estimates on both the top and bottom line. Agilent posted adjusted earnings of $1.43 per share on revenue of $1.67 billion, while analysts called for earnings of $1.36 per share and revenue of $1.66 billion, per Refinitiv.
Jack Henry & Associates — The financial technology stock retreated 7% after guiding expectations for full-year earnings under where analysts forecast. Jack Henry anticipates earnings of $4.92 to $4.99 per share, while analysts called for $5.32 a share, per Refinitiv. Elsewhere, the company beat expectations on both lines for its fiscal fourth quarter.
Mercury Systems — The aerospace stock climbed 6.9% despite a weak quarterly report and future guidance. Late Tuesday, Mercury posted 11 cents in adjusted earnings per share on $253.2 million of revenue in its fiscal fourth quarter, while the consensus estimates of analysts polled by FactSet placed earnings per share at 52 cents and revenue at $278.8 million.
Cava — Cava lost gained 1.2% after the Mediterranean restaurant chain reported a profit for its first quarter post-IPO. The company posted earnings of 21 cents per share on revenue of $172.9 million.
Jack in the Box — Shares of the restaurant stock rose 2.3% after Loop Capital reiterated its buy rating on Jack in the Box. Shares of the company have fallen for six straight sessions, due in part to a negative reaction by investors to Jack in the Box’s quarterly report last week. Loop Capital said in a note that the sell-off has created a “very attractive entry point.”
GE HealthCare — Shares added 0.2% after Wells Fargo initiated coverage of GE HealthCare with an overweight rating and $90 price target, which suggests 28% upside from Tuesday’s close. The Wall Street firm said the company’s Alzheimer’s drug Leqembi is a potential growth driver.
News Corp — Shares advanced 1% after Morgan Stanley resumed coverage of the media stock, saying shares should rise over the next two months.
Getty Images — The image platform’s stock slid 2.1% following an upgrade to outperform from in line by Imperial Capital. Imperial noted the company has a leading market position and can generate free cash flow.
Intel — Shares slid 3.6% after Intel announced Wednesday it will end its agreement to acquire Tower Semiconductor, citing a failure to obtain regulatory approvals in time. Intel is set to pay a $353 million termination fee to Tower. Shares of Tower Semiconductor tumbled 11%.
General Motors — General Motors declined 1.4% in midday trading. United Auto Workers President Shawn Fain said Tuesday that members have until Aug. 24 to authorize a strike if they don’t have a new contract agreement with the Big Three automakers by next month’s expiration of the current deal. He warned of slow progress in the union’s negotiations with automakers General Motors, Ford Motor and Stellantis.
— CNBC’s Sarah Min, Samantha Subin, Michelle Fox and Jesse Pound contributed reporting. More

Federal Reserve officials expressed concern at their most recent meeting about the pace of inflation and said more rate hikes could be necessary in the future unless conditions change, minutes released Wednesday from the session indicated.
That discussion during a two-day July meeting resulted in a quarter percentage point rate hike that markets generally expect to be the last one of this cycle.

However, discussions showed that most members worry that the inflation fight is far from over and could require additional tightening action from the rate-setting Federal Open Market Committee.
“With inflation still well above the Committee’s longer-run goal and the labor market remaining tight, most participants continued to see significant upside risks to inflation, which could require further tightening of monetary policy,” the meeting summary stated.
That latest increase brought the Fed’s key borrowing level, known as the federal funds rate, to a range targeted between 5.25%-5%, the highest level in more than 22 years. 
While some members have said since the meeting that they think the further rate hikes could be unnecessary, the minutes suggested caution. Officials noted pressure from a number of variables and stressed that future decisions will be based on incoming data.
“In discussing the policy outlook, participants continued to judge that it was critical that the stance of monetary policy be sufficiently restrictive to return inflation to the Committee’s 2 percent objective over time,” the document said.

Lots of uncertainty

Indeed, the minutes suggested considerable misgivings over the future direction of policy.
While there was agreement that inflation is “unacceptably high,” there also was indication “that a number of tentative signs that inflation pressures could be abating.”
“Almost all” the meeting participants, which includes nonvoting members, were in favor of the rate increase. However, those opposed said they thought the committee could skip a hike and watch how previous increases are impacting economic conditions.
“Participants generally noted a high degree of uncertainty regarding the cumulative effects on the economy of past monetary policy tightening,” the minutes said.
The minutes noted that the economy was expected to slow and unemployment likely will rise somewhat. However, staff economists retracted an earlier forecast that troubles in the banking industry could lead to a mild recession this year.

Real estate concern

But there was concern over problems with commercial real estate.
Specifically, officials cited “risks associated with a potential sharp decline in CRE valuations that could adversely affect some banks and other financial institutions, such as insurance companies, that are heavily exposed to CRE. Several participants noted the susceptibility of some nonbank financial institutions” such as money market funds and the like.
For the future of policy, members emphasized two-sided risks of loosening policy too quickly and risking higher inflation against tightening too much and sending the economy into contraction.
Recent data shows that while inflation is still a good distance from the central bank’s 2% target, it has made marked progress since peaking above 9% in June 2022.
For instance, the consumer price index, a widely followed measure of goods and services costs, ran at a 3.2% 12-month rate in July. The Fed’s favorite measure, the personal consumption expenditures price index excluding food and energy, stood at 4.1% in June.
However, policymakers worry that declaring victory too soon could repeat critical mistakes of the past. In the 1970s, central bankers raised rates to combat double-digit inflation, but backed off quickly when prices showed tentative signs of backing off.
Despite the intent of the hikes to slow down the economy, they’ve had seemingly little effect on overall growth.
GDP gains have averaged above 2% in the first half of 2023, with the economy on pace to rise another 5.8% in the third quarter, according to updated projections from the Atlanta Fed.
At the same time, employment growth has slowed some but still remains robust. The unemployment rate was at 3.5% in July, hovering around its lowest level since the late 1960s. Job openings have come in some from record levels but still far outnumber the pool of available workers.
Some Fed officials of late have indicated that while rate cuts are unlikely this year, increases could be over. Regional Presidents John Williams of New York and Patrick Harker of Philadelphia, for instance, both said last week they could see a pathway to holding the line here. Market pricing is strongly pointing to no additional hikes, with less than a 40% chance of another increase priced in before the end of the year, according to CME Group data. More

Households across China have been thrown into panic over the past week. The company building their flats, Country Garden, missed $22.5m in coupon payments on August 6th. Now the firm, one of the world’s largest homebuilders, has until early September to make the payments or follow hundreds of other developers into default and restructuring. Trading in its bonds, which are worth just pennies on the dollar, was halted on August 14th.Officials across the country are watching closely. Country Garden is renowned for its huge projects in China’s second- and third-tier cities. The firm’s debts are smaller than those of Evergrande, a big, heavily indebted company that defaulted in 2021. But at the start of the year Country Garden was building four times more homes than Evergrande was before it defaulted. At the rate Country Garden was delivering them in the first half of 2022, at least 144,000 buyers will not receive homes they were promised by the end of this year. A sudden debt meltdown at the firm would leave even more families out in the cold.China’s housing crisis turns three this month, if measured by the introduction of the government’s “three red lines” policy, which sought to limit leverage. Throughout, officials have struggled to manage confidence and expectations. At the start, few observers believed Evergrande could collapse, and that the government might fail to put a stop to the pain. Until recently, most thought that Country Garden was immune to default. Since late last year officials have sought to calm the market by drawing up an informal list of healthy developers, including Country Garden, which investors could feel comfortable funding and Chinese citizens could trust. The calculation has changed in recent days. Country Garden’s issue is not one of over-leverage in the style of Evergrande. Instead, it is a victim of a loss of confidence among regular folk—a sign the government is losing control. After a short rebound following the lifting of covid-19 controls, the property crisis has intensified. Prices are dropping. Sales among the 100 biggest developers fell by 33% in July compared with a year earlier. Country Garden’s tumbled by 60%. The firm’s decline is forcing market-watchers to confront their deepest fears about the property sector.One is that property supply chains collapse. Over the past three years suppliers of materials, along with the engineering and construction firms that build homes, have often not been paid on time by developers. But so far this backbone of the sector has withstood the pressure. That could change as developers grow shorter on funds. The decline in payments to suppliers is already noticeable. Between 2021 and 2022, Country Garden’s transfers to such firms fell from 285bn yuan ($44bn) to 192bn yuan, according to s&p Global, a rating agency. They are all but certain to fall further this year. Although the biggest contracting firms will probably survive with help from the government, it is not hard to imagine widespread collapses among the myriad smaller engineering and materials companies that do the work on the ground. Another concern is that the crisis spreads to state firms. Since 2021 Chinese developers have been almost entirely shut out of international bond markets. But the onshore debt market has remained open to state-backed firms. The large Chinese investors that dominate the market have so far provided a degree of stability; they have not dumped developers’ credit as have asset managers in Hong Kong. Any change would spell trouble. And in recent weeks investors have noted pressure in the domestic bond market. Sino-Ocean, a state-owned developer, has shown signs that it may struggle to repay debts. Homebuyers have chosen state developers because they are seen as safer. If the crisis hits state firms, that notion would be shattered.The fear that the collapse of a developer will bring down a large Chinese bank has mostly been dismissed. Banks’ exposure to developers, analysts say, is reasonable. They would survive even the fall of a firm like Country Garden. But other types of contagion cannot be ignored. If property continues to weaken, the government may ask banks to offer more loans to the industry, says Michael Chang of cgs-cimb Securities, a broker. This would lower returns and also be a poor allocation of credit at a time when China’s economy is suffering. No worry will loom larger in the minds of officials, however, than threats to social stability. Country Garden may have to cut prices to generate sales. This could create competition and lead to swifter price falls across the industry, pushing people to delay home purchases in the hope that prices will fall still further. During past downturns, those who bought homes too early, missing a discount, have protested and demanded a matching reduction in price.Indeed, Country Garden’s biggest creditors are not banks or bond holders, but folk who have paid for homes upfront. Some 668bn yuan, or about half the firm’s liabilities, were put up by homebuyers. Last year thousands stopped paying their mortgages in protest at years-long delays in delivering homes. There is now the threat of much broader protests across the 300 cities in which Country Garden builds.So far officials in Beijing have decided against direct intervention in the property market. Country Garden almost certainly has the $22.5m it needed to cover payments this month. By not paying up, its bosses are signalling a desire to eventually restructure its debts—perhaps betting that the firm is too big to fail. This puts the central government in an excruciating position. Letting Country Garden fail could lead to wider panic, more economic pain and potentially more defaults, risking contagion and social unrest. Yet stepping in with a rescue package would put officials on the hook for many more bail-outs, and prop up an unsustainable industry. ■For more expert analysis of the biggest stories in economics, finance and markets, sign up to Money Talks, our weekly subscriber-only newsletter. More

Households across China have been thrown into panic over the past week. The company building their flats, Country Garden, missed $22.5m in coupon payments on August 6th. Now the firm, one of the world’s largest homebuilders, has until early September to make the payments or follow hundreds of other developers into default and restructuring. Trading in its bonds, which are worth just pennies on the dollar, was halted on August 14th.Local officials across the country are watching closely. Country Garden is renowned for building huge projects in China’s second- and third-tier cities. Its debts are smaller than those of Evergrande, a big, heavily indebted company that defaulted in 2021. But at the start of the year Country Garden was building four times more homes than Evergrande was before it defaulted. At the rate it was delivering them in the first half of 2022, at least 144,000 buyers will not receive keys to homes they were promised by the end of this year. A sudden debt meltdown at the firm would leave even more families out in the cold.China’s housing crisis turns three this month, if measured by the introduction of the government’s “three red lines” policy, which sought to limit leverage. Throughout, officials have struggled to manage confidence and expectations. At the start, few observers believed Evergrande could collapse, and that the government might fail to put a stop to the pain. Until recently, most thought that Country Garden was immune to default. Since late last year officials have sought to calm the market by drawing up an informal list of healthy developers, including Country Garden, that investors could feel comfortable funding and Chinese citizens could trust. Their calculations have changed in recent days. Country Garden’s issue is not one of over-leverage in the style of Evergrande. Instead, it is a victim of a loss of confidence among regular folk—a sign the government is losing control. After a short rebound following the lifting of covid-19 controls, the property crisis has intensified. Prices are dropping. Sales among the 100 biggest developers fell by 33% in July compared with a year earlier. Country Garden’s tumbled by 60%. The firm’s decline is forcing market-watchers to confront their deepest fears about the property sector.One is that property supply chains collapse. Over the past three years suppliers of materials, along with the engineering and construction firms that build homes, have often not been paid on time by developers. But so far this backbone of the sector has withstood the pressure. That could change as developers grow shorter on funds. The decline in payments to suppliers is already noticeable. Between 2021 and 2022, Country Garden’s transfers to such firms fell from 285bn yuan ($44bn) to 192bn yuan, according to s&p Global, a rating agency. They are all but certain to fall further this year. Although the biggest contracting firms will probably survive with help from the government, it is not hard to imagine widespread collapses among the myriad smaller engineering and materials companies that do the work on the ground. Another concern is that the crisis spreads to state firms. Since 2021 Chinese developers have almost entirely been shut out of international bond markets. But the onshore debt market has remained open to state-backed firms. The large Chinese investors that dominate the market have so far provided a degree of stability; they have not dumped developers’ credit as have asset managers in Hong Kong. Any change would spell trouble. And in recent weeks investors have noted pressure in the domestic bond market. Sino-Ocean, a state-owned developer, has shown signs that it may struggle to repay debts. Homebuyers have chosen state developers because they are seen as safer. If the crisis hits state firms, that notion would be shattered.The fear that the collapse of a developer will bring down a large Chinese bank has mostly been dismissed. Banks’ exposure to developers, analysts say, is reasonable. They would survive even the fall of a firm like Country Garden. But other types of contagion cannot be ignored. If property continues to weaken, the government may ask banks to offer more loans to the industry, says Michael Chang of cgs-cimb Securities, a broker. This would lower returns and also be a poor allocation of credit at a time when China’s economy is suffering. No worry will loom larger in the minds of officials, however, than threats to social stability. Country Garden may have to cut prices to generate sales. This could create competition and lead to swifter price falls across the industry, pushing people to delay home purchases in the hope that prices will fall still further. During past downturns, those who bought homes too early, missing a discount, have protested and demanded a matching reduction in price.Indeed, Country Garden’s biggest creditors are not banks or bond holders, but folk who have paid for homes upfront. Some 668bn yuan, or about half the firm’s liabilities, were put up by homebuyers. Last year thousands stopped paying their mortgages in protest at years-long delays in delivering homes. There is now the threat of much broader protests across the 300 cities in which Country Garden builds.So far officials in Beijing have decided against direct intervention in the property market. Country Garden almost certainly has the $22.5m it needed to cover payments this month. By not coughing up, its bosses are signalling a desire to eventually restructure its debts—perhaps betting that the firm is too big to fail. This puts the central government in an excruciating position. Letting Country Garden fail could lead to wider panic, more economic pain and potentially more defaults, risking contagion and social unrest. Yet stepping in with a rescue package would put officials on the hook for many more bail-outs, and prop up an unsustainable industry. ■ More

A new U.K. investment fund with up to £1 billion ($1.27 billion) in capital raised has been launched to back growth-stage financial technology companies.
The fund, which is backed by Mastercard, Barclays and the London Stock Exchange Group, aims to address the issue of fintech companies struggling to reach scale and pursue public listings.
The U.K. has faced criticisms from some in the industry that it is posing barriers to its fintech entrepreneurs and forcing them to consider listings overseas.

The U.K. has faced criticisms from some in the industry that it is posing barriers to its fintech entrepreneurs and forcing them to consider listings overseas.
Justin Tallis | AFP via Getty Images

The U.K. has created an investment vehicle to back growth-stage financial technology companies until they can go public, in a bid to bolster Britain’s global image as a fintech investment hub.
Backed by the likes of Mastercard, Barclays and the London Stock Exchange Group, the Fintech Growth Fund aims to invest between £10 million to £100 million into fintech companies, ranging from consumer-focused challenger banks and payments tech groups to financial infrastructure and regulatory technology.

The fund, which is being advised by U.K. investment bank Peel Hunt, looks to support companies at the growth stage of their funding cycle, as they seek Series C rounds and above.
The venture was created in response to a 2021 government-commissioned review helmed by former Worldpay Vice Chairman Ron Kalifa and examined whether the U.K.’s listings environment is unattractive for tech firms.
“It’s definitely a start,” Gautam Pillai, an equity analyst at Peel Hunt covering fintech, told CNBC in an interview Wednesday.
It marks a rare commitment to a specialized fund focused on fintech backed by mega-industry players. While fintech-focused funds like Augmentum Fintech and Anthemis Group exist, the U.K. has yet to see a fintech-oriented fund that came about from a government-led strategy.
Britain has faced some industry criticisms that it poses barriers to fintech entrepreneurs and forces them to consider listings overseas — particularly after the country’s exit from the European Union, which has cast some shadow over the U.K.’s status as a global financial center.

The London Stock Exchange has committed to a number of reforms to encourage fintech firms to float in the U.K. rather than in the U.S. — a particularly pressing step, following British chip design firm Arm’s decision to ditch a London listing for New York.
“It’s about finding the next Stripe, the next Worldpay, the next Adyen,” Pillai said.
The fund also counts Philip Hammond, the former U.K. finance minister, as an advisor.

The move could also be an opportunity for financial heavyweights to access to expertise in the development of new technologies. Big banks and financial institutions are trying to advance their own digital ambitions, as they face competition from younger tech upstarts.
The aim is for the Fintech Growth Fund to make its first investment by the end of the year, Pillai said.
While £1 billion pales in comparison to some of the huge sums being deployed in fintech and tech more broadly, Pillai said it’s “definitely a start.”
The U.K. is a hotbed of fintech innovation, only behind the U.S. when it comes to the scale of its fintech industry, he added. The U.K. is home to 16 of the world’s top 200 fintech companies, according to an analysis from independent research firm Statista conducted for CNBC.
The fintech industry is facing a period of turbulence, as rising inflation and macroeconomic weakness soften consumer spending. The valuations of companies such as Checkout.com, Revolut and Freetrade have dropped sharply in recent months.
Last year, the internal valuation of Checkout.com plunged by 73% to $11 billion in a stock options transfer deal.
Revolut, the British foreign exchange services giant, suffered a 46% valuation cut — implying a $15 billion markdown — by shareholder Schroders Capital, according to a filing. Atom Bank, a U.K. challenger bank, meanwhile had its valuation marked down 31% by Schroders.
U.K. fintech investment plummeted by 57% in the first half of 2023, according to KPMG.
Pillai said now is the right time to start a new fintech fund, as the entry level for investors to take positions in privately-held mature companies has been reduced heavily.
“From a pure investment standpoint, you couldn’t find a better time in fintech history to start a fintech fund.”
While 2020 and 2021 experienced a “bubble” of sky-high valuations in the tech sector, Pillai believes this correction “killed some very weak business models butt the stronger business models will survive and thrive.”
“There’s still an active investment market in the U.K., we still have one of the world’s leading financial centers — no matter what was assumed would happen in the last 10 years or so,” Phil Vidler, managing director at Fintech Growth Fund, told CNBC in an interview.
“A center for business — time, location and law, etc. — those fundamentals are still here, and similarly we’re now getting to a point where second-time founders are starting companies, and large, global venture firms touted as the best in the world are setting up here in the U.K.” More

In this photo illustration, a Target logo is displayed on the screen of a smartphone.
Sheldon Cooper | SOPA Images | Lightrocket | Getty Images

Check out the companies making headlines before the bell
Target – Target shares popped nearly 8% before the market opened even as the retailer slashed its full-year forecast and posted revenue for the recent quarter that fell short of Wall Street’s expectations. The company posted earnings of $1.80 a share, versus the $1.39 expected by analysts polled by Refinitiv. Revenue came in at $24.77 billion, lighter than the $25.16 billion that was estimated.

Tesla – The electric vehicle stock lost more than 2% premarket on news that it cut prices on existing Model S and Model X inventories in China.  
Cava – Shares of the Mediterranean fast-casual chain jumped more than 9% after posting a profit in its first quarterly report following its initial public offering. Revenue surged 62% in the latest quarter to nearly $173 million as Cava opened new stores.
Coinbase – Shares of the U.S. cryptocurrency exchange rose about 4% before the bell after the National Futures Association, a CFTC-designated self-regulatory organization, cleared the company to operate a futures trading service alongside its existing spot crypto trading offering.
TJX Companies – The off-price retailer’s stock rose 3% on stronger-than-expected quarterly results. TJX posted adjusted earnings of 85 cents per share on $12.76 billion in revenue. That came in ahead of the 77 cents and $12.45 billion expected by analysts, per Refinitiv.
Coherent – Coherent plunged more than 23% before the bell after posting weaker-than-expected guidance for the fiscal first quarter and full year. The company attributed the disappointing outlook to expectations for “no meaningful improvement” in the macroeconomic environment, including China.

VinFast Auto – The Vietnamese electric vehicle stock shed more than 12% in the premarket, one day after its debut on the Nasdaq via a SPAC merger. Shares more than doubled in Tuesday’s session.
JD.com – U.S.-listed shares of JD.com dropped 5% even after the China-based e-commerce company surpassed expectations for the recent quarter on the top and bottom lines.
Keurig Dr Pepper – The beverage stock rose about 1.4% after UBS upgraded Keurig Dr Pepper to a buy from a neutral rating, citing its cheap valuation relative to peers and its historical average.
H&R Block – The tax preparer’s stock jumped more than 4% after topping fiscal fourth-quarter earnings expectations and hiking its dividend by 10%. H&R Block earned $2.05 adjusted per share on revenues of $1.03 billion. Analysts polled by Refinitiv had estimated $1.88 in earnings and $1.01 billion in revenue.
Agilent Technologies – Shares lost 2.5% in the premarket after the laboratory technology company cut its full-year guidance, citing a softer macroenvironment. Agilent topped its third-quarter revenue and EPS expectations, posting adjusted earnings of $1.43 a share on $1.67 billion in revenue.
Jack Henry & Associates — Jack Henry & Associates dropped 6.3% in the premarket. The financial tech company issued full-year earnings guidance for June 2024 that was weaker than expected; it forecast per-share earnings in the range of $4.92 to $4.99, while analysts polled by FactSet expected $5.35. Otherwise, it beat analysts’ expectations in its most recent quarter. Jack Henry reported fiscal fourth-quarter earnings of $1.34 per share, better than the consensus estimate of $1.19 per share, while revenue of $534.6 million topped analysts’ $512.8 million estimate.
Mercury Systems — The aerospace technology stock fell about 11% in premarket trading after fiscal fourth-quarter results came in short of analyst expectations. Mercury reported 11 cents of adjusted earnings per share on $253.2 million of revenue. Analysts surveyed by FactSet’s StreetAccount were expecting 52 cents per share on $278.8 million of revenue. Guidance for the 2024 fiscal year also missed estimates on several metrics, as the company said it was entering a “transition year.”
— CNBC’s Sarah Min, Jesse Pound and Tanaya Macheel contributed reporting More

In a report on China, Nomura says it’s “increasingly possible that annual GDP growth this year will miss the 5.0% mark.”
But “the current weakness of localities’ finances prevents Beijing from utilizing fiscal policy to support the economy,” Rhodium Group analysts wrote in June.
“A tepid response to the cratering housing market would indicate that the top leadership’s reduced emphasis on economic growth — in favor of priorities like national security and technological self-sufficiency — is more far-reaching than we anticipated,” Gabriel Wildau, managing director at consulting firm Teneo, said in a report Tuesday.

A man looks at his smartphone inside a mall in Beijing on August 15, 2023.
Greg Baker | Afp | Getty Images

BEIJING — Without more stimulus, China is increasingly likely to miss its growth target of around 5% this year, economists said.
The country on Tuesday suspended releases of data on youth unemployment, which had recently soared to records. Other data for July showed a broad slowdown, worsened by the property market slump.

“Prolonged weakness in property construction will add to destocking pressures in the industrial space and depress consumption demand as well,” Tao Wang, head of Asia economics and chief China economist at UBS Investment Bank, said in a note.
“In such a case, economic momentum may stay subdued in the rest of the year and China may miss this year’s growth target of around 5%,” she said. “Deflation pressures could persist longer in such a scenario. The economy would then warrant much stronger or unconventional policies to revive.”
China is the world’s second-largest economy, and accounted for nearly 18% of global GDP in 2022, according to World Bank data.

Beijing should play the role of lender of last resort to support some major developers and financial institutions in trouble, and should play the role of spender of last resort to boost aggregate demand.

Ting Lu and team

“In our view, Beijing should play the role of lender of last resort to support some major developers and financial institutions in trouble, and should play the role of spender of last resort to boost aggregate demand,” Nomura’s Chief China Economist Ting Lu and a team said in a report Tuesday.
“We also see bigger downside risk to our 4.9% y-o-y growth forecast for both Q3 and Q4, and it is increasingly possible that annual GDP growth this year will miss the 5.0% mark,” the report said.

Headline risk

Beijing has acknowledged economic challenges and signaled more policy support. The People’s Bank of China unexpectedly cut key rates on Tuesday.
But the moves need time to take effect and haven’t been enough to bolster market confidence so far, especially as worrisome headlines pick up.
“In August, contagion fears around property developers and default risk in the trust industry have also pushed sentiment lower, setting a higher bar for stimulus to be effective,” said Louise Loo, lead economist at Oxford Economics.

A firmer policy shift could come in the fourth quarter, when a top-level meeting known as the “Third Plenum” is expected to be held, Loo said.
Once-healthy giant developer Country Garden is now on the brink of default. In other news this month, Zhongrong International Trust missed payments to three mainland China-listed companies, according to disclosures accessed via Wind Information.

The current weakness of localities’ finances prevents Beijing from utilizing fiscal policy to support the economy.

Rhodium Group

Zhongrong did not immediately respond to a CNBC request for comment. Its website warned in a notice dated Aug. 13 of fraudulent claims that it was no longer able to operate.
Even if all of Zhongrong’s 630 billion yuan ($86.5 billion) in assets — plus leverage — were in trouble, that’s “not a systemically threatening number” for China’s 21 trillion yuan trust industry and 315 trillion yuan banking system, Xiangrong Yu, Citi’s chief China economist said in a note.
He added the trust firm and its parent company are “much less connected in the financial system compared with previous cases such as Baoshang Bank and Anbang Group.”

Growth vs. national security

Chinese authorities’ initial crackdown on real estate developers in 2020 was an attempt to curb their high reliance on growth. Beijing emphasized this year that defusing financial risks is one of its priorities. This year, the country is also in the process of reorganizing its financial regulatory bodies.
As local government debt remained high, cash levels have fallen, according to a Rhodium report in June. It noted regional authorities have spent money to buy land, to fill demand that once came from developers.
“The current weakness of localities’ finances prevents Beijing from utilizing fiscal policy to support the economy,” Rhodium analysts said.

For many, especially overseas investors, prolonged apparent inaction can affirm the Chinese government has firmly shifted its priorities as well.
“A tepid response to the cratering housing market would indicate that the top leadership’s reduced emphasis on economic growth — in favor of priorities like national security and technological self-sufficiency — is more far-reaching than we anticipated,” Gabriel Wildau, managing director at consulting firm Teneo, said in a report Tuesday.
“Our base case is that policymakers will significantly escalate housing stimulus in coming months, leading to improving sales and construction volumes by year end,” Wildau said.

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Many of China’s recent troubles are not necessarily new. China has been in a multi-year process to try to improve the long-term sustainability of its economy, and shift away from reliance on investment into sectors such as infrastructure and real estate, and toward consumption.
“The challenge for policymakers is to calibrate stimulus that avoids an economic hard-landing on one hand, but that also smoothly transitions property and investments to their nascent downtrend on the other,” said Loo from Oxford Economics.
“In the years to come, China’s emerging strategic sectors — including green economy sectors, digital economy, advanced and semiconductor manufacturing — will continue to be the ones to watch as China transitions to new growth drivers,” Loo said.
She pointed out that high-tech manufacturing’s year-to-date average year-on-year growth of 7.4% has outpaced industrial production’s roughly 3.8% pace. More