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Bank of England Governor Andrew Bailey is speaking at a press conference following the U.K. central bank’s latest monetary policy decision.

In a widely expected move, policymakers at the BOE voted for a fourth consecutive rate hike since December at a time when millions of U.K. households are grappling with skyrocketing living costs.
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Starbucks, Apple and other major U.S.-listed companies have warned in quarterly earnings reports about the impact of China’s Covid lockdowns to their business.
While companies like DuPont expect the situation to improve later in May, there is a second-quarter impact.
Businesses face a number of challenges in addition to China’s Covid situation, and corporate sentiment among S&P 500 companies has fallen to the lowest since the second quarter of 2020, according to Bank of America’s proprietary model.

Factories in China affected by Covid lockdowns can conditionally resume work, by housing workers on-site. Pictured here is an auto parts manufacturer in Suzhou that has had 478 employees on site since April 16.
CFOTO | Future Publishing | Getty Images

BEIJING — Several international corporations warned in the last week the drag from China’s Covid controls will hit their entire business.
Since March, mainland China has battled an outbreak of the highly transmissible omicron variant by using swift lockdowns and travel restrictions. The same strategy had helped the country quickly return to growth in 2020 while the rest of the world struggled to contain the virus.

Now the latest lockdown in Shanghai has lasted for more than a month with only slight progress toward resuming full production, while Beijing has temporarily closed some service businesses to control a recent spike in Covid cases.
International corporations have a host of other challenges to deal with, from decades-high inflation in the U.S. and a strong dollar, to the Russia-Ukraine war. But China is an important manufacturing base, if not consumer market, that many companies have focused on for their future growth.
Here is a selection of what some of the companies have told investors about China in the last week:

Starbucks: Suspending guidance

Starbucks said Tuesday same-store sales in China fell by 23% in the quarter ended April 3 from the same quarter last year. That’s far worse than the 0.2% increase analysts expected, according to FactSet.

Conditions in China are such that we have virtually no ability to predict our performance in China in the back half of the year.

Howard Schultz
Starbucks, interim CEO

The coffee giant suspended its guidance for the rest of the fiscal year, or the remaining two quarters.

“Conditions in China are such that we have virtually no ability to predict our performance in China in the back half of the year,” interim CEO Howard Schultz said on an earnings call, noting additional uncertainty from inflation and the company’s investment plans.
Starbucks said it still expected its China business to be bigger than the U.S. in the long term.

Apple: Shanghai lockdown to hit sales

Despite nearly all its final assembly plants in Shanghai restarting production, Apple said the lockdowns would likely hit sales in the current quarter by $4 billion to $8 billion — “substantially” more than in the last quarter. The other factor is the ongoing chip shortage, management said on an April 28 earnings call.

“Covid is difficult to predict,” CEO Tim Cook said after describing those estimated costs, according to an earnings call transcript from StreetAccount.
Apple also blamed Covid disruptions for affecting consumer demand in China.

DuPont: Second-quarter lockdown impact

DuPont, which sells multi-industry specialty products such as adhesives and construction materials, announced second-quarter guidance Tuesday below analysts’ expectations.
“We anticipate key external uncertainties in the macro environment, namely COVID-related shutdowns in China, will further tighten supply chains resulting in slower volume growth and sequential margin contraction in the second quarter 2022,” Lori Koch, Chief Financial Officer of DuPont, said in a release, noting that “underlying demand continues to remain solid.”
Two DuPont sites in China “went into full lockdown mode in March” and are expected to be fully reopened by mid-May, Koch said. She also said that within the electronics business, inability to get raw materials from China forced some factories to run at lower rates, affecting margin in the second quarter.
The company expects revenue of $3.2 billion to $3.3 billion in the second quarter, slightly below the $3.33 billion forecast by FactSet. Earnings per share of 70 cents to 80 cents in the second quarter is also below FactSet’s estimated 84 cents a share.
Full-year guidance for the year ending in December remained in line with FactSet expectations.

Estee Lauder: Cutting fiscal year outlook

Despite a strong fiscal third quarter, makeup company Estee Lauder cut its full-year outlook due to Covid controls in China and inflation.
“The resurgence of COVID-19 cases in many Chinese provinces led to restrictions late in the fiscal 2022 third quarter to prevent further spread of the virus,” the company said in a release Tuesday.

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“Consequently, retail traffic, travel, and distribution capabilities were temporarily curtailed,” it added. “The Company’s distribution facilities in Shanghai operated with limited capacity to fulfill brick-and-mortar and online orders beginning in mid-March 2022.”
The new guidance for the fiscal year, which ends June 30, anticipates revenue growth of between 7% to 9%, well below FactSet expectations for a 14.5% increase. Estee Lauder’s forecast of $7.05 to $7.15 earnings per share is also below the $7.57 a share analysts expected.

Yum China: Upcoming quarterly loss

While analysts generally expect second-quarter profit of 29 cents a share, Yum China CFO Andy Yeung warned that “unless the COVID-19 situation improves significantly in May and June, we expect to incur an operating loss in the second quarter.”
The company operates fast food brands KFC and Pizza Hut in China, and is the majority stakeholder in a joint venture with Italian coffee company Lavazza, which has opened cafes in China in the last year.
Yum China said Tuesday that same-store sales plunged by 20% year-on-year in March, and likely maintained the same pace of decline in April. The company said it still intended to achieve its full-year target of 1,000 to 1,200 net new store openings.

Chinese companies cut earnings forecasts

For the first quarter, roughly half of MSCI China mainland stocks, excluding financials, missed first-quarter earnings expectations, with only about a quarter beating expectations, Morgan Stanley analysts said in a note Tuesday.
The quarterly results were the worst since the first quarter of 2020, the analysts said.
That’s when the pandemic initially shocked the economy and GDP contracted.
Downward earnings revisions are likely to continue for another two to four weeks, the Morgan Stanley report said, noting all of the mainland traded stocks known as A shares have all reported first-quarter results as of April 30.

Overall decline in corporate sentiment

As U.S. businesses face a number of domestic challenges as well, Bank of America’s proprietary measure of corporate sentiment for S&P 500 stocks fell sharply in the first quarter to the lowest level since the second quarter of 2020, the firm said in a report Sunday.
The latest sentiment score points to a sharp drop in earnings ahead, although that is not BofA’s base case, the report said.
Several major corporate earnings are still ahead, including Disney and Toyota Motors results due out next Wednesday local time.
Shanghai Disney Resort has been closed since March 21 until further notice, while China’s auto sales slumped in March.
— CNBC’s Robert Hum contributed to this report.

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Binance is now listed as a registered digital asset service provider by French stock market watchdog AMF.
The move makes France the first major European nation to give Binance the greenlight.
Changpeng Zhao, Binance’s CEO and founder, described France as “very progressive” in adopting crypto.

Binance CEO Changpeng Zhao gave a keynote at a Paris crypto industry event in April 2022 to debut a new accelerator program for so-called “Web3” start-ups.
Benjamin Girette | Bloomberg | Getty Images

Binance has been granted approval from regulators to operate its cryptocurrency exchange in France.
The company is now listed as a registered digital asset service provider by the French stock market watchdog AMF, enabling it to offer trading and custody services for bitcoin and other cryptocurrencies.

Binance is the largest crypto exchange globally. The company handles spot trading volumes of more than $14 billion and nearly $50 billion in derivatives volume in a single day, according to data from CoinGecko.
The move makes France the first major European nation to give Binance the greenlight. The company is supervised in Lithuania by the country’s anti-money laundering regulators, and is also seeking registration with the Swedish finance watchdog.
Binance has no official headquarters, and once took pride in this fact. But the company is now seeking to make peace with regulators after a backlash last year from authorities in numerous countries including the U.K., Italy and Singapore. Changpeng Zhao, Binance’s CEO and founder, told CNBC last month that the company plans to establish its European base in Paris.

Read more about cryptocurrencies from CNBC Pro

Binance has sought to turn on the charm in France lately.
Zhao gave a keynote at a crypto industry event in Paris last month to debut a new accelerator program for so-called “Web3” start-ups. The firm also committed to invest 100 million euros ($105 million) in the country.

Binance’s billionaire CEO described France as “very progressive” in adopting crypto.
“In our interactions with them, they are far more advanced in their understanding, and they’re also much more progressive in their attitudes,” he told CNBC
“France is a very strict regulator. But they have the advanced understandings to go with that.” More

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The economy may be hitting a crucial turning point.
Investor Peter Boockvar warns the Federal Reserve will not be able to meaningfully contain surging inflation, and there’s not much more consumers can withstand.

“It gets to the question: At what point does the consumer blink in the face of these rising prices,” the Bleakley Advisory Group CIO told CNBC’s “Fast Money” on Wednesday. “On the low-end consumer, they’re already beginning to blink.”
A TransUnion study out this week reflects trouble among consumers with the “riskiest credit profiles” in the form of rising trend credit balances and delinquency rates.
Boockvar believes the report is a harbinger of what’s ahead. In a note out this week, he warned consumers are at a “fork in the road.”
“The consumer is going to call a timeout on spending because of the continued rise in prices,” he wrote. “It is inevitable as price matters to the U.S. consumer who loves discounts.”
Boockvar, a Fed critic, believes all income levels are at a breaking point. He warns they’re on the cusp of delaying purchases until prices cool — which would have painful consequences on the broader economy. It would put Fed Chair Jerome Powell’s view that it’s possible to avert a recession at risk.

“This is going to be the most aggressive tightening cycle in 40-plus years between the rate hikes and the shrinking of the balance sheet,” noted Boockvar, a CNBC contributor. “Considering how dependent economic activity is to cheap money, how dependent markets have been to cheap money, I don’t see how it’s possible to achieve a soft landing.”
Yet, Wall Street appeared to embraced the Fed’s half point rate hike and Powell news conference. The S&P 500 saw its best day since May 2020.
Boockvar expects the bounce to evaporate.
“If there are low odds of a soft landing, which means we’re going to have a recession, well that means that earnings numbers are going to have to come down,” Boockvar said.
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Stock futures fell slightly after the Federal Reserve raised rates by half a point and the major averages rallied to end the day.
Futures tied to the Dow Jones Industrial Average lost 46 points, or 0.1%. S&P 500 futures and Nasdaq 100 futures each fell 0.1%.

In regular trading, the Dow Jones Industrial Average rose 932 points, or 2.81%, and the S&P 500 gained 2.99% for their biggest gains since 2020. The Nasdaq Composite jumped 3.19%.
Stocks rose for a third straight day to start the month, after the Fed increased its benchmark interest rate by 50 basis points, as expected, and said it would begin reducing its balance sheet in June. However, investor sentiment, which has been bogged down since the start of the year, flipped during Powell’s news conference, when he clarified that the Fed is “not actively considering” a larger, 75-basis-point rate hike.
Some Wall Street strategists had suggested markets could see a relief rally after the rate increase. After Powell’s comments, investors seemed at ease about the central bank’s ability to slow inflation without triggering a recession.
Still, the Fed remains open to the prospect of taking rates above neutral to rein in inflation, Zachary Hill, head of portfolio strategy at Horizon Investments, noted.
“Despite the tightening that we have seen in financial conditions over the last few months, it is clear that the Fed would like to see them tighten further,” he said. “Higher equity valuations are incompatible with that desire, so unless supply chains heal rapidly or workers flood back into the labor force, any equity rallies are likely on borrowed time as Fed messaging becomes more hawkish once again.”

Stock picks and investing trends from CNBC Pro:

Even after stocks rallied to finish the day, the market saw big moves on the down side after hours as companies continued reporting financial results for the last quarter. Etsy tumbled more than 12% and eBay lost 5.8% in extended trading, on lighter-than-expected revenue guidance for the second quarter. Meanwhile, Booking Holdings shares advanced more than 8% after hours.
Earnings continue on Thursday, with Shell, Shopify and ConocoPhillips set to report before the bell. Block, DoorDash, Shake Shack, Zillow and other big names will report after the market closes.
In economic data, investors will be eyeing jobless claims data, which is due out at 8:30 a.m.

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The Etsy website
Gabby Jones | Bloomberg | Getty Images

Check out the companies making headlines in midday trading.
Etsy — Shares of the e-commerce company plunged by more than 12% after Etsy’s revenue guidance for the second quarter came in lighter than anticipated. The company CFO also said on the earnings call that “consumers have less disposable income and many more places to spend it,” which “creates a short-term headwind for sales.”

Booking Holdings — Shares of the travel booking site operator jumped 8.2% in extended trading Wednesday after the company posted big beats on revenue and adjusted EBITDA for the first quarter. It also reported $27 billion in gross bookings for the quarter, the highest quarterly amount in the company’s history. Management said on the earnings call it’s preparing for a busy summer travel season.
eBay — The online marketplace’s shares fell 5.8% following the company’s quarterly earnings. EBay posted a slight first-quarter revenue beat, but issued weaker-than-expected earnings and revenue guidance for the second quarter and for the full year.
Cognizant — The information technology company saw shares drop 4.5% after hours following its quarterly earnings report. Cognizant brought in revenue of $4.83 billion, in line with estimates, according to FactSet. However, it issued weaker-than-expected earnings and revenue guidance for the second quarter and the full year.
Twilio — The customer engagement tech company’s shares gained 1.5% after Twilio posted revenue of $875.4 million for the first quarter, which was greater than the $864.2 million expected by analysts, according to FactSet.

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Close-up of vertical sign with logos for ride-hailing companies Uber and Lyft.
Smith Collection | Gado | Getty Images

Check out the companies making headlines in midday trading.
Lyft — Shares of Lyft tumbled about 30% after the ride-hailing company issued disappointing guidance for the second quarter and said it would increase spending to attract more drivers, due to surging gas prices.

Uber — The ride-hailing app saw its stock drop nearly 4.7% after the company posted a massive loss on investments. Uber reported a loss of $5.9 billion during the first quarter, which it said was primarily due to its equity investments in Grab, Aurora, and Didi. The sell-off came even as Uber posted surging revenue as it recovers from its coronavirus lows.
Advanced Micro Devices — The semiconductor stock added 9.1% after beating revenue and earnings estimates in the recent quarter. AMD’s sales jumped 71% even as analysts worry about a PC slowdown.
Starbucks — Shares jumped about 9.8% after Starbucks surpassed revenue expectations in its most recent earnings report. The coffee chain earned 59 cents per share on an adjusted basis, meeting consensus expectations from Refinitiv. The firm posted $7.64 billion in revenue, compared with the $7.6 billion figure forecast by analysts from Refinitiv, following strong domestic sales that offset declines overseas.
Airbnb — The vacation rental stock gained about 7.7% after Airbnb reported a smaller-than-expected loss for the first quarter. The company reported a loss of 3 cents per share on $1.51 billion in revenue. Analysts surveyed by Refiniv were expecting a 29-cent per-share loss on $1.45 billion of revenue. The company said it had its highest number of bookings on record and more than $1 billion in free cash flow during the quarter.
Match Group — Shares of the online dating company added 6.2% after Match issued weak forward guidance and announced its CEO Shar Dubey would step down at the end of May. Zynga President Bernard Kim will take over as chief executive, Match said.

CVS Health — CVS Health rose 4.8% after the company beat estimates in the recent quarter and raised its forecast for the year. The company also said it saw a decrease in demand for pandemic-related services during the first quarter.
Caesars Entertainment — Caesars Entertainment’s stock dropped 1.9% after the company reported quarterly results. The casino operator posted $2.29 billion in revenue for the quarter, missing analysts’ estimates of $2.35 billion, according to FactSet’s StreetAccount.
Skyworks — Shares of Skyworks plummeted 5% despite the semiconductor company beating revenue estimates in the recent quarter. The company reported earnings that were in line with analysts’ estimates but shared weak forward guidance.
Akamai Technologies — Shares of Akamai fell 9.7% after the cybersecurity firm missed earnings estimates in the recent quarter. Revenue was in line with expectations.
Generac — Generac’s stock added 11.8% after the generator manufacturer beat estimates on the top and bottom lines in the first quarter. The company posted $2.09 adjusted earnings per share on revenues of $1.14 billion. Analysts expected $1.94 a share on $1.09 billion in revenue.
Brinker International — Shares plummeted more than 12% as Chili’s parent company reported per-share earnings that were 10 cents below estimates. Brinker International’s revenue fell in line with estimates, but the company issued weaker-than-expected forward earnings guidance.
— CNBC’s Tanaya Macheel, Yun Li, Jesse Pound, Sarah Min and Hannah Miao contributed reporting.

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Intuit, which owns TurboTax, has agreed to pay $141 million in restitution to 4.4 million low-income customers who were charged for using the TurboTax Free Edition, according to an announcement Wednesday.
These customers should have gotten the tax filing services for free.
All 50 states and the District of Columbia are party to the agreement.

Kimberly White | Getty Images Entertainment | Getty Images

Intuit, the owner of popular tax filing software TurboTax, will pay $141 million in restitution to millions of low-income Americans who were “unfairly charged” for services that should have been free, according to a multistate agreement announced Wednesday.
TurboTax also agreed to reform its business practices. For example, it must suspend a “free, free, free” advertising campaign that “lured” customers with the promise of free tax preparation but then asked them to pay, according to an announcement from New York Attorney General Letitia James.

All 50 states and the District of Columbia have signed the agreement.
Intuit admitted no wrongdoing as part of the agreement and expects minimal impact to its business from implementing changes, according to a company statement.
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“Intuit is clear and fair with its customers, including with the nearly 100 million Americans who filed their taxes free of charge with our products over the last 8 years — more than all other tax prep software companies combined,” said Kerry McLean, Intuit’s executive vice president and general counsel.
Intuit will pay restitution to nearly 4.4 million consumers who used TurboTax’s Free Edition during tax years 2016 through 2018. These customers were told that they had to pay for the service despite being eligible to file for free via the IRS Free File Program offered through TurboTax, according to the announcement.

Consumers are expected to receive about $30 for each year they paid for services, the announcement said. They will automatically receive notices and a check by mail.

“Intuit cheated millions of low-income Americans out of free tax filing services they were entitled to,” James said in a statement. “For years, Intuit misled the most vulnerable among us to make a profit. Today, every state in the nation is holding Intuit accountable for scamming millions of taxpayers, and we’re putting millions of dollars back into the pockets of impacted Americans.”

Allegations and reforms

Until recently, Intuit offered two free versions of TurboTax. One was through the IRS Free File Program, a public-private partnership that lets low-income Americans file their taxes for free. Intuit ended its participation in July 2021. (That version of TurboTax had been available to taxpayers with income below around $39,000 and active-duty military service members with income below $72,000 in tax year 2020.)
Intuit aggressively marketed another version, the TurboTax Free Edition, as “free,” but it’s only free for taxpayers with “simple” returns as defined by Intuit, according to the announcement. Users without a simple return must upgrade to a paid version of the tax service; however, these individuals may have been eligible for the IRS Free File Program.
(For tax year 2021, Intuit refers to a simple return as one that can be filed on a Form 1040 with limited attached schedules, like one that includes student loan interest paid, according to the Federal Trade Commission.)
The service would be free for about one-third of U.S. taxpayers, while the IRS Free File products are free for about 70%, according to the announcement.

We believe this settlement with the state attorneys general and the District of Columbia also addresses the issues at the core of the FTC litigation.

Kerry McLean
executive vice president and general counsel at Intuit

State attorneys general claim Intuit violated the states’ consumer protection laws by engaging in deceptive and unfair marketing, advertising and sales of online tax preparation, according to the agreement.
For example, in tax year 2018, Intuit hid the landing page for its IRS Free File Program from search engines for about five months during the peak of tax season, they alleged.
Further, the company’s TurboTax home page misled consumers into thinking they were eligible for the “freemium” service, and its product and pricing screen didn’t mention the Free File product, “impeding consumers from learning of its existence,” states claimed.
Last tax season, Intuit delivered more than 17 million free tax filings, the most in the industry and multiple times more than the IRS Free File Program, according to a company statement. It expects to help more than 40 million taxpayers prepare and file their tax returns for free over the next three years.

TurboTax agreed to change some of its business practices, including: better informing users whether they’ll be eligible to file their taxes for free, and refraining from requiring consumers to restart their tax filing if they switch from a paid product to a free one, the announcement said.
The Federal Trade Commission filed a lawsuit with similar allegations as the states in March. That case is ongoing.
“We believe this settlement with the state attorneys general and the District of Columbia also addresses the issues at the core of the FTC litigation, making that lawsuit entirely unnecessary,” Intuit’s McLean said. “Nevertheless, we are fully prepared to litigate with the FTC to prove the merits of our case.”
A spokesman for the FTC declined comment on these claims.

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