Finance

People look at vehicles at the AutoNation Toyota dealership in Cerritos, California.
Mario Anzuoni | Reuters

Check out the companies making headlines in midday trading.
Scholastic — The publisher jumped about 11.5% after announcing it would increase its share repurchase amount by $100 million. Traders also appeared to cheer the company’s quarterly results. Scholastic posted $2.26 in earnings per share on revenue of $428.3 million.

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American Express — Shares slipped about 3.9% after the company reported second-quarter revenue of $15.05 billion, falling short of the $15.48 billion expected from analysts polled by Refinitiv. However, American Express’ earnings per share beat expectations.
Herc — Herc dropped about 6.5% after Bank of America double-downgraded shares to underperform from buy. Analyst Sherif El-Sabbahy said the effect from the ongoing writers and actors strike in Hollywood will hurt the equipment rental stock.
AutoNation — AutoNation tumbled 12.3% during midday trading. The car dealer reported second-quarter results that exceeded expectations on the top and bottom lines. AutoNation posted adjusted earnings of $6.29 per share on revenue of $6.89 billion. Analysts expected per-share earnings of $5.91 on revenue of $6.78 billion.
Knight-Swift Transportation — Knight-Swift Transportation gained 0.8% in midday trading. The move comes even after Knight-Swift reported second-quarter earnings and revenue that were weaker than expected. The company also issued lackluster guidance.
PPG Industries — Shares rose nearly 0.3% after PPG Industries posted strong second-quarter results. The supplier of paints, coatings and other materials posted adjusted earnings of $2.25 on revenue of $4.87 billion. Analysts polled by StreetAccount expected earnings of $2.14 per share and revenue of $4.84 billion. The company also raised its current-quarter and full-year earnings guidance.

Capital One Financial — Capital One Financial rose 0.5% after the financial company topped earnings expectations for the second quarter. Capital One reported adjusted earnings of $3.52 per share, which topped a Refinitiv estimate of $3.23 per share. However, its revenue missed expectations. Total deposits also decreased 2% at the end of the second quarter.
Intuitive Surgical — The health-care stock declined 3.2% after Intuitive Surgical posted weaker-than-expected systems revenue for the second quarter. The company posted systems revenue of $392.7 million, lower than the $415.9 million, according to a consensus estimate from StreetAccount.
Sunnova Energy International — Shares fell 5% following a downgrade from BMO Capital Markets. The firm said although it is “constructive” on growth in the long term, the current macro environment for the residential solar industry in the U.S. remains challenging.
CSX — CSX slid 3.7% after the transportation company reported disappointing second-quarter revenue. The company reported revenue of $3.7 billion, which was weaker than $3.74 billion expected by analysts polled by Refinitiv. Earnings per share came in line with consensus at 49 cents.
— CNBC’s Michelle Fox, Alex Harring and Hakyung Kim contributed reporting. More

Cathie Wood, CEO, Ark Invest, speaks during an interview on CNBC on the floor of the New York Stock Exchange, Feb. 27, 2023.
Brendan McDermid | Reuters

Ark Invest’s Cathie Wood said her flagship innovation fund has reduced its China exposure to zero as the developing market faces an economic slowdown.
The tech investor revealed that her Ark Innovation ETF, with nearly $9 billion assets under management, according to Morningstar, has exited the stocks that generate revenue from China as she consolidated her portfolio toward her favorite bets like Tesla, Coinbase, Roku and Zoom in the market downturn.

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“As we always do during bear markets, we concentrated our strategies towards our highest conviction names and the Chinese names, in particular, came out one by one as we were concentrating so that now, at least in the flagship strategy, we do have no exposure to China,” Wood said in a prerecorded investor webinar Thursday.
ARKK used to own shares in Chinese tech giant Tencent and property site KE Holdings. Wood said her exposure to China and other emerging markets reached about 25% in 2020 as she was impressed by China’s initial response to the Covid pandemic.
“We were looking at the fiscal and monetary policy responses around the world and were impressed with China’s restraint. They were not throwing money at the problem. They were very disciplined in terms of their monetary and fiscal policy responses,” Wood said.
The innovation investor said she changed her stance on China after Beijing started to tighten its grip on the economy by cracking down on the ultrawealthy and the tech sector.
The widely followed investor said she’s particularly concerned about China’s real estate market as the country incurred massive amounts of debt after over a decade of swift expansion.

“It was responsible for roughly 15 years of double-digit real GDP growth … and growth like that can cover a lot of sins,” Wood said. “And those sins usually involve debt, and importantly in the property space, we do believe that China is facing its day of reckoning in this regard.”
Ark Fintech Innovation ETF (ARKF) still owns a small stake in Chinese e-commerce company JD.com, but it has dumped other Chinese names like Pinduoduo and Tencent.
Still, Wood said she might add back shares tied to China as the country overcomes the challenging period and the market enters a new bull cycle.
“More diversification during bull markets, especially as we get more IPOs and as we reconsider some of the names that we let go in our concentration strategy,” Wood said.
Her flagship fund has had a banner year so far as her top holdings rebounded from sharp losses triggered by rising rates. ARKK is up more than 50% in 2023. More

“Recency bias” is a behavioral finance principle that can cost investors money.
It causes people to rely on recent events — like a steep drop in the stock market — when making future choices.
The psychological impulse is normal but can be harmful. Investors often buy high and sell low as a result, according to finance experts.

Stephen Frink | The Image Bank | Getty Images

Investors can get swept away by the fear or euphoria of the recent past — and it often costs them financially.
“Recency bias” is the tendency to put too much emphasis on recent events, like a stock-market rout or the meteoric rise of bitcoin or a meme stock like GameStop, for example.

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Investor choices are guided by these short-term events — which may be counter to their best interests, as is often the case when selling stocks in a panic.
More from Personal Finance:’We’re all crazy when it comes to money,’ advisor saysWhy our brains are hard-wired for bank runsThe fear of missing out can be a killer for investors
Recency bias is akin to a common yet illogical human impulse, such as watching Steven Spielberg’s classic summer blockbuster “Jaws,” a 1975 thriller about a Great White shark whose diet revolves more around humans than marine life, and then being afraid of the water.
“Would you want to go for a long ocean swim after watching ‘Jaws’? Probably not, even though the actual risk of being attacked by a shark is infinitesimally small,” wrote Omar Aguilar, CEO and chief investment officer at Schwab Asset Management.

Fans celebrate the June 14, 2005 release of the Jaws 30th Anniversary Edition DVD from Universal Studios Home Entertainment.
Christopher Polk | Filmmagic | Getty Images

Recency bias is normal, but can be costly

Here’s a recent real-world illustration:

The financial services sector was among the top performers of the S&P 500 Index in 2019, when it yielded a 32% annual return. Investors who chased that performance and subsequently bought a bunch of financial services stocks “may have been disappointed” when the sector’s returns fell by 2% in 2020 — a year when the S&P 500 had a positive 18% return, Aguilar said.
Among other examples posed by financial experts: tilting a portfolio more heavily toward U.S. stocks after a string of underwhelming performance in international stocks, and overreliance on a mutual fund’s recent performance history to guide a buying decision.

People need to understand that recency bias is normal, and it’s hard-wired.

Charlie Fitzgerald III
founding member of Moisand Fitzgerald Tamayo

“Short-term market moves caused by recency bias can sap long-term results, making it more difficult for clients to reach their financial goals,” he said.
The concept generally boils down to fear of loss or a “fear of missing out” — or, FOMO — based on market behavior, said Charlie Fitzgerald III, an Orlando, Florida-based certified financial planner.
Acting on that impulse is akin to timing the investment markets, which is never a good idea; it often leads to buying high and selling low, he said.
“People need to understand that recency bias is normal, and it’s hard-wired,” said Fitzgerald, a principal and founding member of Moisand Fitzgerald Tamayo. “It’s a survival instinct.”

It’s like a bee sting, he said.
“If I get stung by a bee once or twice, I’m not going to go there again,” Fitzgerald said. “The recent experience can override all logic.”
Investors are most vulnerable to recency bias, he said, when on the precipice of a major life change like retirement, when market gyrations may seem especially scary.

How to assemble a well-diversified portfolio

Long-term investors with a well-diversified portfolio can feel confident about riding out a storm instead of panic-selling, however.
Such a portfolio generally has broad exposure to the equity markets, via large-, mid- and small-cap stocks, as well as foreign stocks and maybe real estate, Fitzgerald said. It also holds short- and intermediate-term bonds, and maybe a sliver of cash, he added.

Investors can get this broad market exposure by buying various low-cost index mutual funds or exchange-traded funds that track these segments. Or, investors can buy an all-in-one fund, like a target-date fund or balanced fund.
One’s asset allocation — the share of stock and bond holdings — is generally guided by principles like investment horizon, tolerance for risk and ability to take risk, Fitzgerald said. For example, a young investor with three decades to retirement would likely hold at least 80% to 90% in stocks. More

Kara Birnbaum / CNBC

Check out the companies making headlines before the bell:
American Express — American Express slid 3% after posting smaller-than-expected revenue for the previous quarter, even as earnings per share beat expectations. The company reported second-quarter earnings of $2.89 per share on revenue of $15.05 billion. Analysts polled by Refinitiv had expected per-share earnings of $2.81 on revenue of $15.48 billion.

AutoNation — Shares slid 3% even after AutoNation reported second-quarter results that beat expectations. The company beat on the top and bottom lines, reporting adjusted earnings of $6.29 per share on revenue of $6.89 billion. Analysts expected per-share earnings of $5.91 on revenues of $6.78 billion.
Sunnova Energy — The solar company shed 2% after being downgraded by BMO to market perform from outperform. BMO cited the challenging macro backdrop for residential solar and said Sunnova’s debt issuances could weigh on the stock.
CSX — CSX fell 4% after the transportation company missed revenue expectations in its second quarter. CSX reported revenue of $3.7 billion, lower than the $3.74 billion consensus estimate from Refinitiv. Earnings per share came in line with consensus at 49 cents.
Capital One Financial — The financial stock rose slightly after the company posted better-than-expected earnings for the latest quarter. Capital One reported adjusted earnings of $3.52 per share, beating a Refinitiv estimate of $3.23 per share. However, its revenue missed expectations. Total deposits also decreased 2% at the end of the second quarter.
PPG Industries — PPG Industries declined 2% even after reporting strong second-quarter results. The supplier of paints, coatings and other materials posted adjusted earnings of $2.25 on revenue of $4.87 billion. Analysts polled by StreetAccount expected earnings of $2.14 per share and revenue of $4.84 billion. The company also raised its current-quarter and full-year earnings guidance.

Intuitive Surgical — Intuitive Surgical fell 4% after the health care firm reported weaker-than-expected systems revenue in its second quarter. Intuitive posted systems revenue of $392.7 million, lower than the $415.9 million StreetAccount consensus estimate. Otherwise, the company beat analysts’ expectations. It posted adjusted earnings of $1.42 per share and $1.76 billion in revenue. Analysts polled by Refinitiv forecasted earnings of $1.33 per share on $1.74 billion in revenue.
Knight-Swift Transportation — The transportation stock dropped more than 2% after Knight-Swift reported lower-than-expected earnings in its second quarter and issued weak guidance. Knight-Swift reported adjusted earnings of 49 cents per share and $1.55 billion in revenue. Analysts were expecting 55 cents in earnings per share and a quarterly revenue of $1.60 billion, according to Refinitiv. The company said soft demand and a modest rise in driver turnover hurt the firm.
Scholastic — Scholastic rose 6% after beating earnings-per-share expectations and sharing it will raise its share repurchase amount by $100 million. The publisher posted $2.26 earned per share, higher than the forecast of $1.70, according to one analyst surveyed by StreetAccount. Meanwhile, revenue came in at $428.3 million, lower than the $541.8 million expected.
— CNBC’s Michelle Fox and Yun Li contributed reporting More

TikTok Shop, the e-commerce marketplace of the short video app, will offer “buy now, pay later” service Atome in Malaysia, as part of its e-commerce push into Southeast Asia.
The partnership is expected to “drive growth” and “enable merchants and small businesses to offer their customers a convenient and flexible payment option,” Jonathan Low, e-commerce lead of strategy and special projects at TikTok Shop, said in a statement on Friday.
TikTok Shop has been aggressively expanding into e-commerce in Southeast Asia, as the company looks outside the U.S. for growth.

Two sellers offering merchandise for sale through a TikTok livestream.
Bay Ismoyo | Afp | Getty Images

TikTok struck a partnership with “buy now, pay later” service Atome to offer installment payments on its e-commerce marketplace in Malaysia, the latest in the company’s e-commerce push into Southeast Asia.
TikTok Shop will include Atome as a payment option, which would allow customers to spread deferred payments over three or six months.

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Atome is the BNPL arm of Singapore-based fintech firm Advance Intelligence Group, which is backed by major investors like SoftBank Vision Fund 2 and Warburg Pincus.
The partnership is expected to “drive growth” and “enable merchants and small businesses to offer their customers a convenient and flexible payment option,” Jonathan Low, e-commerce lead of strategy and special projects at TikTok Shop, said in a statement on Friday.
“By integrating Atome as a payment option on TikTok Shop, we’re excited to help drive ecommerce growth and support brands of all sizes,” said William Yang, head of commercial at Atome.

Read more about tech and crypto from CNBC Pro

The partnership comes as TikTok looks to markets outside of the U.S. for growth. While the U.S. is the company’s largest market, TikTok faces headwinds there after Montana became the first state to ban the app. The app has also been banned in India.
In recent months, TikTok Shop has been aggressively expanding into e-commerce in Southeast Asia, competing against existing players like Sea’s Shopee and Alibaba’s Lazada.

TikTok’s CEO previously said the company will pour “billions of dollars” into Southeast Asia over the next few years. As of April, TikTok said it has more than 325 million monthly users in Southeast Asia.
In June, the company said it would invest $12.2 million to help over 120,000 small and medium-sized businesses sell online. The investment consists of cash grants, digital skills training and advertising credits for these businesses. More

A lawsuit against Sam Bankman-Fried alleges the indicted former FTX CEO has been financing his criminal defense with $10 million in company funds.
Bankman-Fried engineered a gift of that amount to his father, legal scholar Joe Bankman, FTX lawyers say.
Bankman-Fried has pleaded not guilty over his role in what federal prosecutors allege was a multibillion-dollar fraud that led to the bankruptcy of his crypto exchange.

Indicted FTX founder Sam Bankman-Fried exits United States Court in New York City, June 15, 2023.
Mike Segar | Reuters

Sam Bankman-Fried, co-founder of failed crypto exchange FTX, was sued in Delaware bankruptcy court on Thursday by his ex-company’s lawyers, who accuse him and members of his leadership team of stealing hundreds of millions of dollars.
The lawyers are seeking to recover funds from Bankman-Fried and former executives of FTX and sister hedge fund Alameda Research. One way the attorneys for the bankrupt exchange say Bankman-Fried pilfered money was through a $10 million gift to his father, distinguished legal scholar Joe Bankman.

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Much of that $10 million gift from was routed from FTX to Bankman-Fried’s Morgan Stanley and TD Ameritrade accounts around January 2022, the lawsuit alleges. The complaint claims those proceeds are now paying for Bankman-Fried’s criminal defense bills.
A representative for Bankman-Fried declined to comment.
Bankman-Fried was indicted on fraud and bribery charges as well as campaign finance violations after FTX filed for bankruptcy late last year. His exchange, once valued at $32 billion, collapsed almost overnight after liquidity dried up and customers demanded withdrawals that the company couldn’t meet.
Bankman-Fried pleaded not guilty. His trial is expected to begin later this year.
Lawyers for FTX have been in search of the company’s remaining assets in an effort to recover as much money as possible for creditors.

FTX and Alameda executives Caroline Ellison, Gary Wang, and Nishad Singh are co-defendants in the case, alongside Bankman-Fried.
WATCH: Taylor Swift agreed to FTX partnership, but the crypto exchange bailed More

A CSX freight train is seen in Orlando, Florida.
Paul Hennessy | Lightrocket | Getty Images

Check out the companies making headlines in after-hours trading.
CSX — The transportation company dropped 5% after missing Wall Street expectations for revenue in the second quarter, coming in at $3.7 billion against a $3.74 billion estimate from analysts polled by Refinitiv. Earnings per share for the quarter were in line with expectations at 49 cents.

Capital One — The financial stock was near flat following a mixed earnings report. The company posted adjusted earnings of $3.52 per share on revenue of $9.01 billion for the second quarter. Analysts polled by Refinitiv were anticipating $3.23 per share on revenue of $9.12 billion. Total deposits decreased 2% at the end of the period, while average deposits grew 1%.
PPG Industries — Shares slid 2.2% despite the paints manufacturer posting a strong quarterly financial report. The company reported $2.25 in earnings per share excluding items on $4.87 billion in revenue, while analysts polled by FactSet forecast earnings of $2.14 per share and $4.84 billion. The company also raised current-quarter and full-year earnings expectations.
Intuitive Surgical — The health-care stock dropped 4.7% after posting systems unit revenue that came in lighter than anticipated. Systems revenue was $392.7 million, compared with analysts’ estimates of $415.9 million, according to FactSet. Overall, the company beat Wall Street expectations in its second quarter. Intuitive posted adjusted earnings of $1.42 per share and $1.76 billion in revenue, beating expectations of $1.33 in earnings per share on $1.74 billion in revenue, according to consensus estimates from Refinitiv.
Knight-Swift Transportation — The transportation company tumbled 3% after missing analysts’ consensus estimates on earnings in the second quarter and giving weak guidance. Knight-Swift reported adjusted earnings of 49 cents per share and $1.55 billion in revenue. Analysts were expecting 55 cents in earnings per share and a quarterly revenue of $1.60 billion, according to Refinitiv. The company also lowered its full-year earnings guidance to a range that falls short of what analysts estimated. Management said soft demand and modest increases in driver turnover hurt volume and utilization. Werner Enterprises, another transportation stock, fell 2.7%.
Scholastic — The publisher advanced 8% after beating expectations for earnings per share and announcing it would increase its share repurchase amount by $100 million. Scholastic reported $2.26 earned per share, higher than the forecast of $1.70 from the one analyst FactSet surveyed. But revenue came in at $428.3 million despite the analyst anticipating $541.8 million.
— CNBC’s Darla Mercado contributed reporting. More

The U.S. Federal Reserve Building in Washington, D.C.
Win Mcnamee | Reuters

The Federal Reserve launched its FedNow instant-payments service Thursday, following several years of developing a system officials say will allow the faster flow of cash for businesses and individuals.
Whether it’s providing instant access to paychecks, allowing for last-minute bill payments or sending government payments out to individuals, the system is expected to improve the flow of money through the U.S. economy.

“The Federal Reserve built the FedNow Service to help make everyday payments over the coming years faster and more convenient,” Fed Chair Jerome Powell said. “Over time, as more banks choose to use this new tool, the benefits to individuals and businesses will include enabling a person to immediately receive a paycheck, or a company to instantly access funds when an invoice is paid.”
So far, 35 early adopters, including JPMorgan Chase and Wells Fargo, two of the four largest banks in the U.S., have signed up.
There are an additional 16 institutions providing services for banks and credit unions.
The American Bankers Association said it welcomes the FedNow developments, noting that the central bank joins the Clearing House, which put its payments service online in 2017, as two major providers in the space.
“We will continue to educate our members on the two systems and the benefits they offer consumers and businesses,” ABA president and CEO Rob Nichols said.

There are still some outstanding questions about FedNow, such as whether banks will charge for the service.
The central bank expects that as the system is developed further, it will be integrated into the apps and websites of banks and credit unions.
As FedNow goes online, Fed officials are studying the implementation of a central bank digital currency, with some saying they think FedNow could mitigate the need for a CBDC. More