Finance

A Carvana used-car vending machine displays vehicles in Miami, Dec. 9, 2022.
Joe Raedle | Getty Images

Check out the companies making headlines before the bell:
Carvana — Carvana jumped 16% after the online auto retailer reached a deal with noteholders to lower its total debt outstanding by more than $1.2 billion.

Interactive Brokers — Shares slid 5% after Interactive Brokers’ earnings missed estimates. The firm reported second-quarter adjusted earnings of $1.32 per share. That’s lower than analysts’ expectations of $1.40 per share, according to Refinitiv.
Omnicom — Omnicom dropped 6% after the global marketing company’s revenue missed estimates. Omnicom posted second-quarter revenue of $3.61 billion, lower than forecasts of $3.67 billion, according to consensus estimates from FactSet. It narrowly beat earnings expectations, posting adjusted earnings of $1.81 per share, higher than the consensus estimates of $1.80 per share.
Goldman Sachs — The bank stock declined 0.3% after Goldman Sachs missed expectations in its second-quarter earnings. The company posted earnings of $3.08 a share, lower than the Refinitiv forecast of $3.18 per share. Goldman also reported revenue of $10.9 billion, which was more than the expected $10.84 billion.
Joby Aviation — The electric aircraft stock sank 6.3% in premarket trading after being downgraded by JPMorgan to underweight from neutral. The Wall Street firm said Joby’s recent rally is “largely overblown” and likely the result of short covering. Shares are up 200% year to date.
Cinemark — Shares fell 3.3% after JPMorgan downgraded the movie theatre chain to neutral from overweight, citing the impact of the actors strike in Hollywood. 

J.B. Hunt Transport Services — The transportation and logistics company declined 2.2% after posting disappointing quarterly results. J.B. Hunt reported second-quarter earnings of $1.81 per share on revenue of $3.13 billion. Analysts polled by Refinitiv had expected per-share earnings of $1.92 on revenue of $3.31 billion.
Western Alliance — Shares of the regional bank dipped 2.4% following the bank’s mixed second-quarter earnings results. The company posted earnings of $1.96 per share, and revenue of $669 million. Analysts polled by Refinitiv had estimated earnings of $1.98 per share and revenue of $652 million. The bank reported a rise in deposits during the quarter.
U.S. Bancorp — Shares of the large regional bank dipped 1% after US Bancorp reported its second-quarter results. The bank reported $1.12 in adjusted earnings per share on $7.14 billion of revenue. Analysts were expecting $1.12 in earnings per share on $7.16 billion of revenue, according to Refinitiv.
Nasdaq — Shares rose 0.3% after Nasdaq topped profit and sales expectations in its second-quarter results. Nasdaq posted adjusted earnings of 71 cents per share on revenue of $925 million. Analysts had expected per-share earnings of 66 cents on revenue of $914.9 million, per Refinitiv.
— CNBC’s Michelle Fox, Alex Harring, Hakyung Kim and Jesse Pound contributed reporting. More

Life Changes

Student loan payments and interest accrual have been paused since 2020 due to the pandemic. They’re set to resume in October and September, respectively.
Interest accumulation is a key difference between Direct Subsidized Loans and Direct Unsubsidized Loans.
The U.S. Department of Education pays interest on subsidized loans in some cases, like when borrowers are in school or defer their loan payments. That’s not true of unsubsidized loans.

Damircudic | E+ | Getty Images

The looming end of a pandemic-era pause to student loan payments and interest puts a spotlight on a big difference between two types of debt: subsidized and unsubsidized loans.
Interest accrual is among the primary differences between the federal loans — also known as Stafford Loans — which are for the cost of higher education.

How interest accrues on subsidized, unsubsidized loans

Direct Subsidized Loans are available to undergraduate students who demonstrate a financial need.
They don’t accrue interest while a borrower is in school (at least half-time) or during a six-month grace period after leaving school. The loans also don’t accrue interest during deferment, a period when payments are postponed due to unemployment or economic hardship.
The U.S. Department of Education pays the interest on subsidized loans in these instances.

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However, that protection isn’t available for Direct Unsubsidized Loans, which are available to a broader group of borrowers (including graduate students) and are not based on financial need.
Interest on unsubsidized loans starts accruing immediately and borrowers are responsible for interest amassed during all periods — making this debt more expensive than subsidized loans.

In some cases — after a deferment, for example — unpaid interest on unsubsidized loans may “capitalize.” When this happens, unpaid interest is added to the loan’s principal balance; future interest is then calculated off that higher principal, thereby increasing future interest payments.

Borrowers can carry both subsidized and unsubsidized loans, which have different borrowing limits.
About 30.3 million borrowers had subsidized Stafford Loans as of March 31, with an average balance of $9,800, according to Education Department data. About 30.7 million people have an unsubsidized loan, with an average balance of about $19,000, according to the Education Department.
(The term Stafford Loan is an informal way of referring to Direct Subsidized Loans and Direct Unsubsidized Loans made via the Direct Loan Program. It also refers to subsidized or unsubsidized Federal Stafford Loans made via the Federal Family Education Loan, or FFEL, program.)

How the payment pause, interest waiver affected loans

The payment pause and interest waiver has been in place for more than three years, since the onset of the pandemic in 2020.
During that time, interest wasn’t accruing on any loans — meaning unsubsidized loans essentially became subsidized debt for some borrowers.
However, interest will start accumulating on borrowers’ debt again on Sept. 1, and monthly payments will resume in October.
The interest waiver cost the federal government about $5 billion a month.

Some financially strapped borrowers may now wonder if it’s a good idea to pursue deferment or forbearance as payments resume, said Mark Kantrowitz, a higher education expert. But “you’re effectively digging yourself into a deeper hole” by pursuing these avenues, Kantrowitz said, since interest will typically be accruing during deferral or forbearance.
(There are exceptions, such as if a subsidized loan is in deferment or if either type of loan is in deferment due to active medical treatment for cancer.)
Pursuing an income-driven repayment plan, which caps monthly payments, is generally a better option for borrowers, unless the financial difficulty is short term in nature, Kantrowitz said.
“In general, you don’t want to use deferment or forbearance if you’re capable of repaying the loan,” he said. More

Olalekan Jacob Ponle, a Nigerian cyber scammer who lived a profligate lifestyle on social media, was sentenced to eight years in federal prison for scamming businesses across the U.S.
Ponle will pay $8 million in restitution, having already surrendered 151 bitcoin to the U.S. government, and will also forfeit a variety of high-end cars and watches.
Ponle’s rendition from the UAE came in July 2020, despite the lack of any formal extradition treaty between the U.S. and the UAE.

Residential skyscraper buildings beyond luxury villas on the waterfront of the Palm Jumeirah in Dubai, United Arab Emirates, on Thursday, Jan. 19, 2023.
Christopher Pike | Bloomberg | Getty Images

A United Arab Emirates resident and Nigerian citizen was sentenced to 8 years in federal prison for orchestrating a multi-million dollar fraud scheme that victimized businesses across the U.S., Illinois federal prosecutors said.
Olaekan Jacob Ponle was extradited from the UAE into the custody of the Federal Bureau of Investigation in July 2020, where he remained until pleading guilty to a single wire fraud count earlier this year, the Justice Department said in a Tuesday press release.

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Ponle worked with a network of scammers to masquerade as corporate entities using phishing emails. The scammers duped employees into sending money on behalf of their “employers,” who were really scammers.
Ponle, better known as Woodberry, was a minor celebrity in his home country of Nigeria thanks to his profligate displays of wealth on social media.
Ponle relied on a network of “mules” to receive the funds and convert them into Bitcoin that he received. The Nigerian citizen used the proceeds of his scam to purchase ultra-high-end vehicles, including a Rolls Royce Cullinan and a Lamborghini Urus.
Ponle will forfeit those items, collectively valued at over $1 million, and pay more than $8 million in restitution to victim companies. Ponle had already forfeited 151 bitcoin, valued at over $4.5 million as of Wednesday.
Ponle was prosecuted despite the lack of an extradition treaty between the UAE and the United States. Federal officials at the DOJ’S Office of International Affairs worked with their UAE counterparties to secure Ponle’s rendition. More

China’s Commerce Ministry on Wednesday said non-economic factors were growing and interfering with trade.
“Companies say some countries’ politicization of trade has forced orders and production to move out, damaging the economic interests of both suppliers and buyers,” an official said in Mandarin, via a CNBC translation.
The ministry also said its head has met with more than 20 visiting executives of foreign companies this year.

Workers load goods for export onto a crane at a port in Lianyungang, Jiangsu province, China June 7, 2019.

BEIJING — China’s Commerce Ministry on Wednesday said non-economic factors were growing and interfering with the country’s foreign trade which was facing an “extremely severe” situation in the second half of this year.
“Some countries’ forceful push for ‘decoupling,’ ‘severing [supply] chains’ and so-called ‘de-risking’ are human-made obstacles blocking normal commerce,” Li Xingqian, the head of the ministry’s external trade department, said in Mandarin, according to a CNBC translation. He was speaking to reporters at a press conference about the ministry’s work in the first half of the year.

China’s exports, a significant contributor to domestic growth, have plunged in recent months as global growth has slowed.
On Wednesday, Li noted the overall slowdown. He also said that since trade had risen during the three years of the Covid-19 pandemic, that had set a high base for this year’s figures.

Li also directly referenced calls for supply chain diversification.
“Companies say some countries’ politicization of trade has forced orders and production to move out, damaging the economic interests of both suppliers and buyers,” he said. He added the ministry would help businesses to cope with “unreasonable trade restrictions.”
The ministry did not say anything about its own recently announced export controls, set to take effect Aug. 1 on two key metals.

The U.S. is using export controls of its own in an effort to limit China’s development of high-end tech. Trade tensions between the U.S. and China have escalated over the last few years, prompting other countries to take action as well.
China, meanwhile, is looking to retain and attract foreign investment. Apple’s Tim Cook, Tesla’s Elon Musk and many other business leaders have traveled to China since it relaxed its border restrictions this year.
The Commerce Ministry said Wednesday that its minister, Wang Wentao, has met with more than 20 visiting executives of foreign companies this year. The ministry reiterated its efforts to establish regular roundtables with foreign businesses in China and address operational challenges.
Among other plans, the ministry said it would make changes to allow foreign investors to increase the size of their strategic investments in listed companies. More

Economists polled by Reuters had projected an annual rise in the headline consumer price index of 8.2%, following the hotter-than-expected 8.7% reading of May.
Core inflation — which excludes volatile energy, food, alcohol and tobacco prices — remained sticky at an annualized 6.9%, but fell from a 31-year high of 7.1% in May.

Skyline view of the City of London financial district.
Mike Kemp | In Pictures | Getty Images

LONDON — U.K. inflation cooled significantly in June, coming in below consensus expectations at 7.9% annually.
Economists polled by Reuters had projected an annual rise in the headline consumer price index of 8.2%, following May’s hotter-than-expected 8.7% reading, but annualized price rises continue to run well above the Bank of England’s 2% target.

On a monthly basis, headline CPI increased by 0.1%, below a consensus forecast of 0.4%. Core inflation — which excludes volatile energy, food, alcohol and tobacco prices — remained sticky at an annualized 6.9%, but fell from a 31-year high of 7.1% in May.
Falling prices for motor fuel made the largest downward contributions to the monthly change in the CPI annual rate, the Office for National Statistics said Wednesday. Food prices rose in June, but by less than in the same period of last year.
“There were no large offsetting upward contributions to the change in the rate,” the ONS added.
Sterling slid 0.6% against the dollar on Wednesday, hovering around $1.296 as of 7:50 a.m. London time.
Chief Secretary to the Treasury John Glen told CNBC on Wednesday that the larger-than-expected decline in the inflation rate was “very encouraging.”

“But there’s no complacency here in the Treasury,” he added. “We’re working closely in lockstep with the Bank of England as we try to halve it this year and get it down to its long term norm of 2%.”

The U.K. has endured persistently high inflation that both the government and the Bank of England have warned could become entrenched in the economy, as a cost-of-living crisis and a tight labor market fuel wage price increases.
Bank of England Governor Andrew Bailey and U.K. Finance Minister Jeremy Hunt told an audience in the City of London earlier this month that high wage settlements were harming their efforts to contain inflation.
The Organization for Economic Cooperation and Development last month projected that the U.K. will experience the highest level of inflation among all advanced economies this year, with a headline annual rate of 6.9%.
The Bank of England implemented a bumper 50-basis-point hike to interest rates last month, its 13th consecutive increase, as the Monetary Policy Committee struggles to quash demand and rein in inflation.
After the U.K. base rate went from 0.1% to 5% over the last 20 months, markets are narrowly pricing in another aggressive half-point hike to 5.5% at the MPC’s August meeting.
A ‘glimmer of light’
Although energy and fuel prices are taking headline inflation in the “right direction,” stubbornly high core inflation and food costs mean Wednesday’s print is unlikely to offer any “real relief to struggling households and businesses,” said Suren Thiru, economics director at the Institute of Chartered Accountants in England and Wales.
“June’s decline in inflation should be followed by a hefty fall in July, with lower energy bills – following the reduction in Ofgem’s energy price cap – likely to pull the headline rate below 7%,” Thiru said in a statement.
He added that core inflation should continue to trend downwards, as the lagged effects of the Bank of England’s monetary policy tightening and the government’s tax increases squeeze demand. He nevertheless warned this will come “at the expense of a notably weaker economy and higher unemployment.”
“While interest rates will probably rise again in August, focusing too much on current inflation data to set rates can lead to damaging policy mistakes given the long time lag between rate rises and their effect on the wider economy,” Thiru said.

Marcus Brookes, chief investment officer at Quilter Investors, said that the fall in CPI represented a “glimmer of light,” but “still leaves us wondering once again why the U.K. is such a drastic outlier” among major economies when it comes to inflation.
“Demand has withstood both inflation and the rise in rates, but cracks are appearing, and as more mortgage holders get exposed to the current rates, the economy is likely to be hit as a result.”
Brookes noted that this path to a likely recession next year may be necessary in order to get inflation back to target, with the Bank of England raising rates further and with fiscal tightening unlikely, as the government faces an election in 2024.
“Inflation should begin to come back down to more palatable levels soon, but as we have seen these forecasts are unpredictable,” he added.
“For investors, this means seeking shelter in quality companies that can navigate this difficult environment, while also considering U.K. fixed income investments, such as gilts, as these look at attractive prices right now as we head into a potentially difficult economic period.” More

Western Alliance Bank’s logo is seen on a smartphone.
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Check out the companies making headlines after hours.
Interactive Brokers — Interactive Brokers slid 2.6% after the brokerage firm’s second-quarter earnings missed estimates. The firm reported adjusted earnings of $1.32 per share, weaker than consensus estimates of $1.40 per share, according to Refinitiv.

Carvana — The online auto retailer dropped more than 8% in extended trading. Carvana said Tuesday it will post second-quarter earnings results on Wednesday, moving the date of its report up from August 3.
Omnicom Group — Shares dropped more than 5% after Omnicom Group reported disappointing revenue. The global marketing company posted second-quarter revenue of $3.61 billion, lower than forecasts of $3.67 billion, according to consensus estimates from FactSet. It narrowly beat earnings expectations, posting adjusted earnings of $1.81 per share, higher than the consensus estimates of $1.80 per share.
J.B. Hunt Transport Services — J.B. Hunt Transport Services declined 1.1% after posting disappointing results. The transportation and logistics firm reported second-quarter earnings of $1.81 per share on revenue of $3.13 billion. Analysts polled by Refinitiv had expected per-share earnings of $1.92 on revenue of $3.31 billion.
Western Alliance Bancorp — The regional bank stock declined about 5% after Western Alliance posted second-quarter results. The company reported earnings of $1.96 per share, lower than the consensus estimate of $1.98 per share, according to Refinitiv. Revenue for the quarter came in at $669 million, topping the forecast of $652 million. The bank reported deposits rose in the quarter. More

A man passes by a location of financial broker Charles Schwab in New York, March 20, 2023.
Brendan McDermid | Reuters

Shares of brokerage firm Charles Schwab rose sharply Tuesday after the company’s second-quarter report topped expectations.
Schwab generated 75 cents in adjusted earnings per share on $4.66 billion in revenue. Analysts surveyed by Refinitiv estimated 71 cents per share on $4.61 billion of revenue.

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Shares jumped 12% Tuesday.

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Shares of Schwab rose sharply on Tuesday.

Chief Financial Officer Peter Crawford said in the release that revenue, which fell 9% year over year, was hurt by customers reallocating their cash with higher rates. However, Crawford stated that “we observed a continued and substantial deceleration in the daily pace of cash outflows” in June and that the company expected client cash to start growing again by the end of the year.
CEO Walt Bettinger said on “Squawk on the Street” that “client cash realigning” is now down more than 80% from the first quarter.
“We were proactive going to clients, encouraging them to move their sweep cash into higher yielding balances, and that process began 15 or 16 months ago. They’ve largely done that,” Bettinger said. “And what’s interesting about June is that even as this cash realigning fell to the lowest level it’s been in many, many months, part of that was because clients are now moving back into the equity markets.”
Shares of Schwab entered Tuesday down nearly 30% for the year. The stock was hit hard during the regional banking crisis in March, as investors grew concerned about the value of the debt on Schwab’s balance sheet and potential deposit outflows. More

Pedestrians walk by a sign posted outside a Charles Schwab office in San Francisco, April 17, 2023.
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Check out the companies making headlines in midday trading.
Morgan Stanley — Shares of the James Gorman-led bank jumped more than 6% after the firm posted second-quarter earnings and revenue that topped analysts’ expectations. The results were helped by Morgan Stanley’s record revenue from wealth management.

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Bank of America — Bank of America shares rose more than 4% after the company reported second-quarter financial results. Earnings came in at 88 cents a share, although analysts estimated a profit of 84 cents per share, according to a Refinitiv estimate. The bank posted revenue of $25.33 billion fueled by a 14% jump in net interest income amid higher rates. Analysts anticipated revenue of $25.05 billion.
Charles Schwab — The brokerage stock popped 12.6% after reporting stronger-than-expected results for the second quarter. Charles Schwab reported adjusted earnings of 75 cents per share on $4.66 billion in revenue. Analysts surveyed by Refinitiv had expected EPS of 71 cents on $4.61 billion in revenue.
Microsoft — Microsoft shares jumped 4%. The software giant announced pricing for its artificial intelligence Copilot tool. Microsoft also announced an expanded partnership with Meta Platforms to make the social media company’s open-source large language model available on Azure and Windows.
Regional bank stocks — Regional bank stocks gained on Tuesday on the heels of a fresh batch of bank results, lifting the SPDR S&P Regional Banking ETF (KRE) more than 4%. Western Alliance popped more than 8% ahead of earnings after the bell. PacWest was up 5.8%, while FB Financial gained more than 6% and Zions Bancorporation rose 3.4%.
UnitedHealth — The health-insurance stock gained 3.3% after being upgraded to outperform from market perform by Bernstein. The firm said UnitedHealth is a “best-in-class” managed-care and value-based care company with an attractive valuation and “large runway of growth.”

Verizon, AT&T — Verizon rose 2.6%, reversing the recent downtrend in shares following a report that linked the companies to lead-encased cables and concerns from analysts. Elsewhere, AT&T lost about 0.6%.
Bank of New York Mellon — Shares rose more than 4% after Bank of New York Mellon reported second-quarter revenue and profit that beat Wall Street’s expectations.
Pinterest — Shares hit a high not seen since early 2022 intraday and rose 4%. Evercore ISI said improving advertising trends are creating an inflection point for the stock.
PNC Financial — Shares gained 2.5% after PNC Financial reported second-quarter earnings that topped Wall Street’s earnings expectations but came in slightly short on revenue. The financial services company reported earnings of $3.36 per share on revenue of $5.29 billion.
Prologis — The logistics real estate stock lost more than 3% after posting second-quarter results that fell short of Refinitiv revenue estimates. Prologis reported net income of $1.31 a share and rental revenue of $1.65 billion.
Novartis — U.S.-listed shares of Novartis jumped 4.6%. The Swiss pharmaceutical firm reported second-quarter earnings that topped estimates, according to StreetAccount. Novartis posted core earnings of $1.83 per share, better than the $1.70 estimate. It posted revenue of $13.62 billion, more than the consensus $13.23 billion. The company raised its full-year forecast. Its board of directors also approved a separation from its Sandoz division.
Masimo — Shares tumbled 20% after Masimo pre-announced second-quarter revenue that was weaker than consensus expectations, and lowered its full-year guidance. The medical-device maker said in its guidance that second-quarter revenue would come in at $453 million to $457 million, lower than expectations of $553.3 million, according to consensus estimates from FactSet. Stifel downgraded the stock to hold from buy after the pre-announcement, according to StreetAccount.
Lockheed Martin — The aerospace company gave back earlier gains that followed the release of its latest financial update. Lockheed Martin reported earnings of $6.73 that beat expectations of $6.45, according to FactSet, and revenue of $16.69 billion, compared with expectations of $15.92 billion. The stock finished nearly 3% lower.
— CNBC’s Tanaya Macheel, Sarah Min, Yun Li, Alex Harring and Michelle Fox contributed reporting. More