Finance

Striking members of the Writers Guild of America picket with striking members of SAG-AFTRA, the actors guild, outside Paramount Studios in Los Angeles, Sept. 18, 2023.
Mario Tama | Getty Images

Check out the companies making headlines before the bell.
AstraZeneca — Shares rose 1.4% after Jefferies upgraded the stock to buy from hold. The upgrade comes after one of its breast cancer therapies, in joint development with Daiichi Sankyo, came out with positive results in a late-stage trial on Friday. 

Urban Outfitters, Foot Locker  — Shares of Urban Outfitters fell 4%, while Foot Locker slid 2.9% before the bell after Jefferies downgraded the stocks to hold from buy. Jefferies said the companies could be affected by pullbacks on consumer spending. 
Dow — Shares of the petrochemicals company rose 1.6% on Monday during premarket trading. JPMorgan upgraded the stock to overweight from neutral, citing potential upside from higher oil prices. 
Nike — The athletic retailer slipped 1.6% after a downgrade from Jefferies to hold from buy. The firm cited wholesale pressures and macro headwinds in China. 
Opendoor Technologies — Shares of the real estate company fell more than 6% after Citi cut its price target on Opendoor to $2.70 per share from $3.90. Citi cited the low number of preexisting homes on the market as a reason to be concerned about Opendoor. Because the stock trades at less than $3 per share, small moves in nominal terms can appear as large percentage changes.
Chinese e-commerce stocks — U.S.-traded shares of JD.com and PDD Holdings lost 3.1% and 2.3%, respectively, as sentiment around China’s economy worsened. A senior central bank member said the country has limited room for further monetary easing, calling for structural reforms to the economy. 

Media stocks — Media companies saw their shares rise after writers and studios reached a preliminary labor agreement. Paramount and Warner Bros Discovery each rose about 2%. Shares of Amazon and Disney also ticked up, 0.8% and 0.6%, respectively, on the news.
HP — Shares of the computer company fell about 3% after Berkshire Hathaway sold 4.8 million shares, or approximately $130 million, of HP. 
Sealed Air — The food packaging company jumped 2.7% after Citi upgraded shares to buy from neutral. Analyst Anthony Pettinari cited a discounted valuation relative to historical averages and the potential for material portfolio transformation actions.
Nio — The U.S.-traded shares of the Chinese electric vehicle maker fell nearly 6%, on news that the company is considering raising $3 billion from investors.
— CNBC’s Alex Harring and Jesse Pound contributed reporting. More

Chinese telecommunications giant Huawei didn’t reveal any details about its new phone or reported advanced chip breakthrough during a high-profile launch event.
Instead, the company teased two new electric cars — its first sedan and a high-end SUV — and launched new wireless earbuds, among other products.
Many online viewers of the launch event appeared disappointed and left many comments asking for details about the phone.

Customers experience the new Mate 60 Pro smartphone at a Huawei-branded store in Shanghai, China, September 5, 2023.
Nurphoto | Nurphoto | Getty Images

BEIJING — Chinese telecommunications and smartphone giant Huawei didn’t reveal any details about its new phone or reported advanced chip breakthrough during a high-profile launch event Monday.
Instead, the company teased two new electric cars — its first sedan and a high-end SUV — and launched new wireless earbuds, among other products. Huawei partners with an auto manufacturer to sell cars under the Aito brand.

The earbuds, priced around 1,499 yuan ($205) include Huawei’s Kirin A2 chip, the company said.
The product releases were part of Huawei’s fall season launch event, which was livestreamed Monday afternoon in Mandarin.
The phone’s absence left many internet fans disappointed, despite indications early in the event from its host Richard Yu that the company would not disclose further details. Yu is executive director and CEO of Huawei’s consumer business group, and heads car-related operations.

Still, many viewers, especially on the Bilibili video platform, left comments asking for details about the phone.
Huawei’s glitzy product launch — at times spilling over into nationalist fervor from the audience online and in-person — had started with an orchestral and choral performance of a song titled “My Dream” in Chinese. It also included a short speech by Hong Kong celebrity Andy Lau around Huawei’s launch of a luxury watch design.

But the attempt to portray a feel-good mood about Huawei’s — and China’s — tech capabilities didn’t result in a tangible announcement at the high-profile event.
The company on Monday released a new version of its smart watch, a new tablet it claims is lighter and thinner than the iPad and a stylus that connects with the tablet using Huawei’s bluetooth-like NearLink tech.
Huawei’s silence on its new phone comes as Apple’s iPhone 15 started deliveries in China on Friday.

A chip production breakthrough?

About a month ago, Huawei quietly released its latest smartphone — the Mate 60 Pro — which reviews indicate offers download speeds associated with 5G, thanks to an advanced semiconductor chip.
The phone’s debut indicated Huawei is able to use high tech processes despite U.S. restrictions.
Analysis by TechInsights found the Kirin 9000s chip inside Huawei’s Mate 60 Pro has a processor that was manufactured by China’s chipmaking giant Semiconductor Manufacturing International Corporation using an advanced 7 nanometer process.
Previously, that 7nm process required an EUV lithography machine from Dutch company ASML, which has also started restricting sales to China. It’s not clear whether older machines or alternative procurement processes were involved with the latest chip production.
When asked about TechInsights’ findings, Huawei was not available for comment.
Huawei’s consumer business revenue has halved under pressure from U.S. sanctions that cut the company off from critical smartphone tech such as semiconductors and Google software.
The Trump administration started restricting Huawei’s access to the tech in 2019.
The U.S. has maintained the Chinese telecommunications giant is a national security risk due to alleged links to the Chinese Communist Party and the country’s military. Huawei has repeatedly denied the existence of any such risk.
This year, Huawei said it expected to launch its flagship consumer products on a “normal” schedule again.
— CNBC’s Arjun Kharpal contributed to this report. More

Dawn Capital, one of Europe’s biggest backers of business software companies, raised $700 million in two new funds, defying the odds as venture capital investment in tech startups has slumped.
The London-based VC firm is one of the most prominent tech investors in Europe, with a portfolio that includes the likes of PayPal-owned payment firm iZettle and Visa-owned open banking startup Tink.
The $700 million will be invested from two funds: a $620 million early-stage fund and an $80 million “opportunities” fund for growth-stage firms in Dawn Capital’s existing portfolio.

Malte Mueller | Fstop | Getty Images

Dawn Capital, one of Europe’s biggest backers of business-to-business software companies, raised $700 million in two new funds — doubling down on its bid to find technology champions in the region at a time when venture capital funding for tech startups has dwindled.
The London-based VC firm is one of the most prominent tech investors in the continent, with a portfolio that includes the likes of Swedish online payments firm iZettle, which was acquired by PayPal for $2.2 billion in 2018, and Swedish open banking company Tink, which Visa acquired for 1.8 billion euros ($1.9 billion) in 2022.

Hannah Gubbins, a newly promoted partner at Dawn Capital, said raising the new funds in a time when private startup company valuations have tanked and investor sentiment toward technology has soured was far from easy — but that it came down to deep relationships with institutional investors built up over years.
“For us, the LP [limited partner] side, even those that weren’t building programs in venture where lots of people felt historically, 18 months ago, they ought to be allocating a lot more to venture,” Gubbins told CNBC in an interview.
“Suddenly with everything with the markets and the denominator effect, their private book was overallocated even if technically by their own benchmarks they weren’t. That meant a lot of funds could only reup with existing managers or those with high convictions.”
“It’s the same as in those cycles where there is still capital out there, there are still investors investing. Investors are excited to be investing in this market,” Gubbins added. “There’s some of the best companies, some of the best vintages have come out of the dotcom [bubble], out of the global financial crisis. They know that, they sit on the data.”
Dawn Capital plans to invest in 20 companies with the new funds, which is the firm’s fifth to date. Dawn V will be split into two distinct funds: a $620 million early-stage fund for Series A and Series B investments, and an $80 million “opportunities” fund aimed at backing winners in Dawn Capital’s portfolio that may go on to exit through an initial public offering or takeover later in their business lifecycle.

Dwindling VC funding

Venture capital investment has fallen off a cliff as investors reevaluate their allocations amid higher interest rates and rising inflation.
With rates at multi-year highs, innovative, growth-oriented companies that are making losses and that take longer to make a return on their investments have become less attractive. Stodgy, profitable firms with more stable revenue streams, on the other hand, are seeing greater interest.
Investors have been watching the initial public offerings of firms like U.K. chip designer Arm and U.S. grocery delivery firm Instacart for signs of a comeback in tech.
Tech boomed in 2020 and 2021 as the Covid-19 pandemic led to a surge in the use of online platforms for just about everything from shopping to remote work. Ultra-low interest rates from central banks aimed at propping up the economy also worked to ensure it was much easier to raise money. But all that has changed dramatically in the past year or so.
Gubbins said she doesn’t have a crystal ball for when the IPO market will officially open up again. However, she said, Dawn Capital is following the debuts of Arm and Instacart closely as it searches for signs of when the dust will settle on the public listings front.
Gubbins stressed that an IPO isn’t the only exit path available to founders. She highlighted the acquisition of LeanIX, an enterprise architecture management software company in Dawn’s portfolio, by German software titan SAP as an example of European technology firms seeing successes when it comes to exits.

Artificial intelligence

One area defying the declines in tech is artificial intelligence — where investment is booming. AI has had billions of dollars’ worth of investments flowing into companies, particularly firms working on so-called “foundational models” capable of generating new content from written prompts, such as OpenAI, Anthropic and Cohere.
Gubbins said that AI has proven a standout part of conversations with limited partners. However, the focus for Dawn Capital, she said, remains investing in a broad range of business-to-business software companies in fields ranging from fintech to security and infrastructure.
“We’re doubling down on what we’ve always done,” she said. “AI is absolutely one of the areas we’re looking at. Both investing in AI companies but also as something that’s disrupting every sector and company.” More

A visitor views a titanium hybrid 2020 Ford Escape FWD small SUV at the Canadian International Auto Show in Toronto, Ontario, in Canada, Feb. 18, 2020.
Chris Helgren | Reuters

Check out the companies making headlines in midday trading.
Ford — Shares popped about 2% in midday trading after a CNBC report said both Ford and the United Auto Workers union are making headway on negotiations as the strike continues.

Squarespace — The website builder popped 4.2% after UBS initiated coverage of the stock at a buy. UBS said the company has a solid product suite and growing brand awareness.
Scholastic — The publishing and media company stock plummeted 13.2% after reporting an earnings miss on the top and bottom line. Scholastic reported an adjusted loss of $2.20 per share on $228.5 million in revenue, while analysts polled by FactSet forecast a loss of $1.35 per share and $268.79 million in revenue.
Arm Holdings — The recently listed chip design stock lost 1.6% during Friday’s trading session after Susquehanna initiated a neutral rating on the company in a Friday note. Shares popped nearly 25% during its Nasdaq debut Sept. 14 but are now trading just above the stock’s $51 initial public offering price.
Seagen — Shares of the biotech firm rose 3.5% after the company reported positive results from a clinical trial for patients with previously untreated bladder cancer. The results showed the treatment improved both overall survival and progression-free survival, compared with chemotherapy.
Deere — Shares of the farming equipment manufacturer fell 1.7% after Canaccord Genuity downgraded shares to hold from buy. The firm mentioned headwinds including slowing growth for large agricultural equipment and normalizing dealer inventories.

Chinese e-commerce stocks — U.S. shares of both PDD and Alibaba added roughly 4% and 5%, respectively, while JD.com stock climbed 2%. A report from Bloomberg said earlier Friday that the Chinese government is considering loosening foreign investment cap rules in publicly traded domestic companies.
Activision Blizzard — Shares of the video gaming firm added about 2% after U.K. regulators said a new deal proposal from Microsoft cleared major antitrust worries.
— CNBC’s Pia Singh, Alex Harring, Hakyung Kim and Samantha Subin contributed reporting. More

Boston Fed President Susan Collins expressed support Friday for keeping interest rates elevated as the battle against too-high inflation continues.
A voting member this year of the Fed’s rate-setting group, Collins said “further tightening is certainly not off the table.”

Susan Collins, president of the Federal Reserve Bank of Boston, speaks during the National Association for Business Economics’ Economic Policy Conference in Washington, D.C., March 30, 2023.
Ting Shen | Bloomberg | Getty Images

Two Federal Reserve policymakers expressed support Friday for keeping interest rates elevated as the battle against too-high inflation continues.
In separate speeches, Governor Michelle Bowman and Boston Fed President Susan Collins said there’s still the possibility that the Fed will have to raise rates further if economic data doesn’t cooperate.

Bowman’s remarks were more pointed as she indicated that progress has not been sufficient in bringing inflation down to the Fed’s 2% target.
“I continue to expect that further rate hikes will likely be needed to return inflation to 2% in a timely way,” she said in prepared remarks to a bankers group in Vail, Colorado.
With the majority of the Federal Open Market Committee expecting inflation to remain above target through at least 2025, and her own expectation that progress in the battle will be slow, it “suggests that further policy tightening will be needed to bring inflation down in a sustainable and timely manner,” Bowman said.
For her part, Collins said the recent inflation data has been encouraging though it’s “too soon” to declare victory while core inflation excluding shelter costs remains elevated.
“I expect rates may have to stay higher, and for longer, than previous projections had suggested, and further tightening is certainly not off the table,” Collins said in prepared remarks for a banking group in Maine. “Policymakers will stay the course to achieve the Fed’s mandate.”

The commentary comes two days after the rate-setting FOMC decided not to raise rates following its two-day meeting. Both said they supported the decision.
Both Bowman and Collins are FOMC voting members this year. The federal funds rate is currently targeted in a range between 5.25% and 5.5%.
While choosing not to raise rates, officials indicated they still see one more increase coming this year, then potentially two cuts in 2024, assuming moves of 0.25 percentage points at a time.
“There are some promising signs that inflation is moderating and the economy rebalancing,” Collins said. “But progress has not been linear and is not evenly distributed across sectors.”
She also noted that the effect of monetary policy moves, which have included 11 interest rate increases and a more than $800 billion decrease in the Fed’s bond holdings, may be taking longer to make their way through the economy due to the strong cash positions of consumers and businesses.
However, she said the path to a soft landing for the economy “has widened” and said Fed policy is “well positioned” to achieve a decrease in inflation while not sending the economy into a recession. More

Americans applied for U.S. passports in record volume in 2023 and passport processing delays are lengthy as a result.
The State Department recommends applying for a passport at least six months ahead of travel or passport expiration.
A routine passport now takes 10 to 13 weeks to process, plus another month for mailing.
There are some ways to get your passport faster, however.

Fatcamera | E+ | Getty Images

Passport applications are at an all-time high

More Americans planned trips abroad this year as their pandemic-era health fears waned and countries largely reopened their borders to visitors.
The State Department issued a record 22 million passports in fiscal 2022. It’s on track to break that record again in fiscal 2023, which ends Sept. 30, a spokesperson said.
Secretary of State Antony Blinken testified to Congress in March that the volume of passport applications has been “unprecedented.” Applications typically ebb and flow with the seasons, peaking from March to late summer, but “basically it’s full time now,” Blinken said.

The State Department also had to restaff positions that were reassigned or eliminated when passport demand cratered in 2020 at the beginning of the Covid-19 pandemic.

How to get your passport faster

Thomas Barwick | Digitalvision | Getty Images

The State Department’s six-month recommendation takes into account longer processing times, as well as padding for things such as mailing on both ends of the process.
Americans should review current processing times before making any definite or nonrefundable travel plans, a State Department spokesperson said.
A routine passport application currently takes 10 to 13 weeks to process, according to the State Department. A traditional passport — a passport book — costs $130. First-time applicants must pay an additional $35 acceptance fee.
Travelers can pay more for faster service. Expedited passport processing costs an extra $60. Expedited passports currently take seven to nine weeks.
For comparison, before the pandemic, it took two to three weeks for expedited passports and six to eight weeks for routine passport processing, the State Department said. It hopes to return to that cadence by year’s end.
The time estimates for expedited and routine passports haven’t changed since March 24.

Processing estimates don’t include mailing times. That may take an additional month — up to two weeks for applications to arrive at a passport agency or center, and another two weeks to receive a printed passport.
Travelers can buy expedited delivery of a new passport book by mail — for delivery in one to two days — for an extra $19.53.
They can also send an application more quickly by purchasing Priority Mail Express service from the United States Postal Service. The price varies depending on the area of the country, according to the State Department.
In some circumstances, travelers may be able to speed up the process further.
Life-or-Death Emergency Service is available for people with a qualified emergency who are traveling abroad in the next three business days. Urgent Travel Service is for those traveling abroad within 14 calendar days for those who haven’t yet applied for a passport, or five days for those who have already applied.
Whether you’ve opted for routine processing or some form of expedited help, you can check your application status online and sign up for email updates.

A soon-to-expire passport may still cost you

Jose A. Bernat Bacete | Moment | Getty Images

U.S. passports are generally valid for 10 years. They’re valid for five years if issued before age 16.
In some cases, Americans may not be allowed to travel even if their passport hasn’t yet expired. Some countries disallow entry if a passport’s expiration falls just a few months after a trip’s end date.
For example, the Schengen Area, which encompasses 27 countries in the European Union, requires a U.S. passport be valid for at least 90 days beyond your date of departure from your home country.
Many countries in the Asia-Pacific and Middle East require at least six months of validity for permission to enter. Other areas, such as Hong Kong and Macau, require one month.
“Even if you don’t have a trip on the books yet, but your passport is going to expire sometime in the first half of 2024, I’d absolutely just renew it now,” Sally French, a travel expert at NerdWallet, previously told CNBC.
You may also need to apply for a separate visa to enter certain nations, a process that requires additional time and planning. The State Department has information about passport and visa requirements for specific countries. More

A shopper for Instacart navigates through the aisles as she shops for a customer.
Cyrus McCrimmon | Denver Post | Getty Images

The Great IPO Reopening may be on hold: rising rates and lower stocks are an IPO killer. 
A combination of still-high valuations, a mediocre reception for the latest crop of IPOs and poor market conditions may force The Great IPO Reopening to be put on hold. 

Instacart on Thursday broke below its initial price of $30 before closing at $30.65. Arm Holdings yesterday broke below its initial price of $51 before closing at $52. Klaviyo hit $31.30 when it opened on Thursday, barely above its initial price of $30, before closing at almost $34. 
And what about the earlier crop of IPOs? Not so good. 
Restaurant chain Cava was the first IPO to get everyone excited, way back in June. It priced at $22, opened at $42, and went to $55 shortly after. It’s now at $30, still above its initial price the victim of massive selling the past two weeks. 
Kenvue, the Johnson & Johnson spinoff, went public in May at $22, traded in the high $20s for a couple months, and has now broken below its initial price of $22. 
Cosmetics firm Oddity Tech priced at $35 in July, opened around $49, and is now $28, well below its $32 initial price. 

Throw in the seasonal weakness and macroeconomic worries, particularly higher interest rates, and it’s likely many executives of IPO hopefuls who are looking to go public in October or November are chewing their fingernails.
Unfortunately, the alternatives are not very appealing. 
Bad news now outweighs the good 
The good news: deals are getting done. 
The bad news: these early companies are the strong ones, and their mediocre reception, even with tiny floats, does not bode well for the hundreds of tech IPO hopefuls, most of whom are not profitable and would still like to avoid taking the massive haircuts that would be necessary to successfully float them in the public markets. 
I noted earlier in the week that there was broad agreement that a successful IPO candidate needed to: 1) be profitable or on a very clear path to profitability, and 2) have a lower valuation. 
The bad news is, some of these tech unicorns will likely pass on taking a huge public haircut. I spoke earlier this week with Nizar Tarhuni, vice president of research at Pitchbook, who estimated there are roughly 800 or so tech unicorns that on average haven’t raised capital in more than 17 months. 
“They’re going to need to raise soon and the pricing dynamics don’t look great,” he told me. 
This leaves those unicorns with three choices: 1) raise additional capital in the private markets, 2) merge or be bought out; or 3) move into the public markets. 
Tarhuni noted that venture capital firms still have dry powder, but that they will be focusing on helping the companies with the highest probability of success. In this environment, that means companies that are already turning an operating profit.
What about the rest? Those that cannot or will not meet the criteria to successfully go public and cannot keep raising private capital will be forced to merge or be bought. That means lots of potential business for distressed M&A firms. 
Finally, a smaller percentage will take their medicine and move into the public markets (a few may take the SPAC route), but will have to accept a lower valuation. 
The macro outlook is the real IPO killer 
This month, the 10-year yield has gone to 4.48% from 4.10%, a rise of almost 40 basis points. (A basis point is 0.01%). The S&P 500 is down 2.7% in September. 
That combination — rapidly rising rates plus a down stock market — is the classic IPO killer. 
This is happening just as the next crop of IPO hopefuls is looking to go public in mid-October. 
Hopefully, by then interest rates will calm down, and stocks will get past the seasonal weakness of September and October. 
But if instead the 10-year yield is up another 40 basis points (near 5%), and the S&P 500 is down another 2.5%-5% or more, a lot of those IPO hopefuls are going to be postponing that decision.  More

A paramedic prepares doses of AstraZeneca vaccine for patients at a walk-in COVID-19 clinic inside a Buddhist temple in the Smithfield suburb of Sydney on August 4, 2021.
Saeed Khan | AFP | Getty Images

Check out the companies making headlines in early trading.
AstraZeneca — Shares of the British pharmaceutical company gained more than 2.7% in premarket trading after the company reported positive results for its drug Dato-DXd in a trial for treating a common type of breast cancer.

Wayfair — Shares gained more than 2% after Bernstein upgraded home merchandiser to market perform from underperform. The firm cited improving revenue growth and margin commentary.
Chinese e-commerce stocks  —  U.S. listed shares of Alibaba and PDD Holdings added nearly 4% in premarket trading, while JD.com rose 3.3%. Bloomberg reported that China is considering easing rules that cap foreign investment in domestic publicly traded companies.  
Seagen — Shares of the biotech firm rose nearly 4% in premarket trading after the company reported positive topline results from a clinical trial of treatment for patients with previously untreated bladder cancer. The results showed the treatment improved both overall survival and progression-free survival, compared with chemotherapy.
Deere — The tractor manufacturer fell around 1% after Canaccord Genuity downgraded shares to hold from buy, citing slowing growth for large agricultural equipment and normalizing dealer inventories.  
Arm Holdings — Shares of the chip designer added 1.3% during premarket trading. The stock jumped nearly 25% during its public trading debut but is now trading just above its $51 IPO price. Susquehanna initiated a neutral rating on the company in a Friday note.

Charter Communications – Shares gained about 2% after Wells Fargo upgraded Charter Communications to an overweight rating, saying that its mobile roll-to-pay offering and rural growth should contribute to accelerating EBITDA and free cash flows.
Ralph Lauren — The clothing brand’s shares ticked up nearly 1% after Raymond James initiated an overweight rating in a note Thursday evening. Analyst Rick Patel forecasts 20% upside potential from where shares closed on Thursday. 
Yeti — Shares fell about 0.4% premarket. Jefferies on Friday called Yeti a “best-in-class” favorite in drinkware, even as the market expands to new entrants.
— CNBC’s Pia Singh, Sarah Min, Samantha Subin, Tanaya Macheel, Brian Evans and Michelle Fox contributed reporting More