Finance

Stock futures rose slightly Tuesday night, following another wild session for the market.
Dow Jones Industrial Average futures climbed 54 points, or 0.2%. S&P 500 futures rose 0.2%, and Nasdaq 100 futures gained 0.4%.

Microsoft shares rose 2% in after-hours trading, after the company issued better-than-expected quarterly revenue guidance. Earlier, the stock traded more than 4% lower after Microsoft’s latest quarterly report showed moderating revenue growth for its Azure cloud business.
The Dow ended the regular trading day down 66 points, or 0.2%. However, the 30-stock average was down as much as 818.98 points on the session and briefly traded up by as much as 226.54 points. Those moves came a day after the Dow recovered from a 1,115-point deficit to post a slight gain.
The S&P 500 and Nasdaq Composite also closed well off their session lows on Tuesday, but still lost 1.2% and 2.3%, respectively.

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Anu Gaggar, global investment strategist at Commonwealth Financial Network, said she thinks this sharp volatility is a byproduct of investors bracing for tighter monetary policy from the Federal Reserve.
“The market is exhibiting withdrawal symptoms as it is dealing with the possibility of the removal of the Fed put,” Gaggar said. “It almost feels like the market is behaving a little incoherently, not knowing which way to go – go down because the Fed is tightening or go up because the Fed is finally acting to rein in inflation and is loading up on ammunitions while economic growth remains strong.”

The Fed is slated to conclude a two-day policy meeting Wednesday, with an announcement coming at 2 p.m. ET. The central bank isn’t expected to announce any policy changes, but investors will look for clues on when — and by how much — the Fed will raise interest rates later this year. Investors will also look for hints on the next steps the Fed will take to further unwind the stimulative measures taken in 2020 to support the economy at the pandemic’s onset.
“Between rate hikes and tapering the $9tn balance sheet, we could be looking at a monetary regime that is changing quickly,” Gaggar said.
Treasury yields have jumped sharply to start the year in anticipation of tighter monetary policy from the Fed. Last week, the benchmark 10-year note yield briefly broke above 1.9%. On Tuesday, the yield closed at 1.77% — that’s still more than 20 basis points above where it ended 2021.
On the data front, International trade numbers are slated for release Wednesday at 8:30 a.m. ET. New home sales data are set to come out at 10 a.m. ET.
The corporate earnings season also continues Wednesday, with Dow member Boeing and AT&T reporting before the bell. Tesla and Intel are scheduled to post their latest quarterly figures after the close.
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The IMF is urging El Salvador to discontinue bitcoin’s status as legal tender.
In September 2021, El Salvador became the first country to adopt the world’s biggest cryptocurrency as legal tender, alongside the U.S. dollar.

A woman vends by a sign that reads, “Bitcoin accepted here”, outside a store where the cryptocurrency is accepted as a payment method in San Salvador, El Salvador September 24, 2021.
Jose Cabezas | Reuters

The International Monetary Fund is pushing El Salvador to ditch bitcoin as legal tender, according to a statement released on Tuesday.
IMF directors “stressed that there are large risks associated with the use of bitcoin on financial stability, financial integrity, and consumer protection, as well as the associated fiscal contingent liabilities.”

The report, which was published after bilateral talks with El Salvador, went on to “urge” authorities to narrow the scope of its bitcoin law by removing bitcoin’s status as legal money. In September 2021, the Central American nation became the world’s first country to adopt the cryptocurrency as legal tender, alongside the U.S. dollar.
Salvadoran President Nayib Bukele — who has tethered his political fate to the success of the country’s bitcoin experiment — has added hundreds of bitcoin to the country’s balance sheet in recent months. On Friday, the president tweeted that he bought an additional $15 million of “really cheap” bitcoin, as the crypto market plummeted. Bitcoin is down about 50% from its November record high.

The IMF report went on to say that some directors had expressed concern over the risks associated with issuing bitcoin-backed bonds, referring to the president’s plan to raise $1 billion via a “Bitcoin Bond” in partnership with Blockstream, a digital assets infrastructure company.
Part of El Salvador’s nationwide move into bitcoin also involved launching a national virtual wallet called Chivo that offers no-fee transactions and allows for quick cross-border payments. For a country where 70% of citizens do not have access to traditional financial services, Chivo is meant to offer a convenient onramp for those who have never been a part of the banking system.
IMF directors agreed that the Chivo e-wallet could facilitate digital means of payment, thereby helping to “boost financial inclusion,” though they emphasized the need for “strict regulation and oversight.” Many Salvadorans have reported cases of identity theft, in which hackers use their national ID number to open a Chivo Wallet, in order to claim the free $30 worth of bitcoin offered by the government as an incentive to open a digital wallet.

For months, the IMF has bemoaned Bukele’s bitcoin experiment.
Tuesday’s statement echoes a report shared by the IMF in November, in which the financial regulator wrote that bitcoin’s high price volatility translated to significant risks to consumer protection and noted that bitcoin should not be used as legal tender.
El Salvador has also been trying since early 2021 to secure a $1.3 billion loan from the IMF — an effort that appears to have soured over this bitcoin row.
The country will need to figure out some other backstop to shore up its finances. The IMF predicts that under current policies, public debt will rise to 96% of GDP by 20216, putting the country on “an unsustainable path.” More

Microsoft CEO Satya Nadella speaks at Microsoft Developer Day in Singapore on May 27, 2016.
Charles Pertwee | Bloomberg | Getty Images

Check out the companies making headlines after the bell Tuesday:
Texas Instruments — Shares of the semiconductor company popped more than 4% on the back of a better-than-expected quarterly revenue figure. Texas Instruments reported fourth-quarter revenue of $4.83 billion, topping a Refinitiv estimate of $4.43 billion. The company also issued strong earnings and revenue guidance for the current quarter.

Microsoft — Microsoft shares slid about 5% even after the tech giant posted stronger-than-expected results for the previous quarter. The company reported a profit of $2.48 per share on revenue of $51.73 billion. Analysts expected earnings per share of $2.31 on revenue of $50.88 billion.
F5 — F5 shares dropped more than 13% after the company issued current-quarter revenue guidance that was well below expectations. F5 said it sees fiscal second-quarter revenue ranging between $610 million and $650 million. According to StreetAccount, analysts expected guidance of around $693 million. F5 cited supply chain constraints for the disappointing forecast. The company also slashed its full-year revenue growth estimates.
Navient — Shares of the student loan services giant slid 5.5% on the back of a disappointing quarterly profit. Navient reported adjusted core earnings per share of 78 cents. Analysts expected earnings of 87 cents per share, according to StreetAccount.

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Scott Eells | Bloomberg | Getty Images

Check out the companies making headlines in midday trading.
General Electric — Shares fell 6% after the company missed revenue estimates for the fiscal fourth quarter. The conglomerate reported 92 cents in adjusted earnings per share on $20.3 billion in revenue. Analysts surveyed by Refinitiv were looking for 85 cents on $21.53 billion of revenue. The company said supply chain issues weighed on its sales.

American Express — The credit card stock surged 8.9% after American Express beat estimates on the top and bottom lines for the fourth quarter. The payments company earned $2.18 per share on $12.15 billion in revenue. Analysts surveyed by Refinitiv were expecting $1.87 in earnings per share on $11.5 billion of revenue. American Express also said it expected revenue growth of 18% to 20% in 2022.
ARK Innovation — Shares of Cathie Wood’s flagship exchange-traded fund fell 2.9% in midday trading as growth names continued their downward spiral. Coinbase, one of the fund’s largest holdings, fell 2.5%. Tesla dropped more than 2% and Unity Software lost 5.8%. Exact Sciences and Twilio fell 5.6% each.
IBM — The software and services company’s stock climbed 5.7% following a better-than-expected quarterly report. IBM reported that its revenue climbed 6% in the fourth quarter, surpassing expectations. The company spun out its managed infrastructure services unit during the quarter into a publicly held company named Kyndryl.
PetMed Express – Shares of the pet products seller jumped 9% despite a disappointing earnings report. PetMed Express reported quarterly profit of 21 cents per share, 9 cents shy of consensus estimates, according to Refinitiv. Its revenue also came below expectations.
Xerox — The digital printing company fell 4.8% in midday trading after missing Wall Street’s revenue forecast for its fourth-quarter earnings. Xerox made $1.78 billion in revenue, lower than he forecast $1.82 billion, according to Refinitiv. The company did, however, beat on earnings.

Allscripts Healthcare Solutions — Shares soared 16% after the company issued preliminary quarterly earnings and revenue results that topped Wall Street forecasts. The provider of physician practice management technology also announced a new $250 million share repurchase program. 
Johnson & Johnson – The vaccine maker gained 2.9% after the company reported quarterly earnings of $2.13 a share, which beat estimates by a penny. Revenue came in below analysts’ expectations, but Johnson & Johnson also gave an upbeat full-year forecast. 
Ericsson – The Swedish telecom equipment maker saw its shares jump 7.3% after it reported better-than-expected quarterly earnings. The company also said it benefited from the accelerating rollout of global 5G networks.
— with reporting from Tanaya Macheel, Jesse Pound and Yun Li.

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Warren Buffett at Berkshire Hathaway’s annual meeting in Los Angeles California. May 1, 2021.
Gerard Miller | CNBC

Berkshire Hathaway said Tuesday its annual shareholders meeting will be held in person on April 30 after two years of virtual gathering due to Covid-19 restrictions.
The so-called Woodstock for Capitalists has drawn tens of thousands of attendees for years and will be webcast this year as usual. The event offers a rare chance for investors to hear from legendary investor Warren Buffett, who usually participates in a marathon Q&A session for a few hours.

Last year, the meeting took place without attendees in Los Angeles, where 98-year-old Berkshire Vice Chairman Charlie Munger resides, marking the first time the event was held outside of Omaha, Nebraska.
In 2020 during the height of the pandemic, Buffett, now 91, led the annual meeting in an empty arena in Omaha in the absence of his usual sidekick Munger.
Berkshire’s other vice chairmen, Ajit Jain, 70, and Greg Abel, 59, are expected to be on hand to answer questions this year. Abel, vice chairman of noninsurance operations, has been a top contender to be Buffett’s eventual successor. 
Berkshire’s fourth-quarter earnings and 2021 annual report will be released Feb. 26, the company said.
Last quarter, Berkshire saw another double-digit increase in its operating profit thanks to a continuous rebound in its railroad, utilities and energy businesses from the pandemic. The company’s cash pile hit a record high as Buffett continued to sit on the sidelines.

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SEC chairman Gary Gensler said Monday that agency staff are considering tougher cybersecurity rules for an array of financial actors, like advisors, brokerage firms and publicly traded companies.
Economic loss from cyber hacks extends into the billions and perhaps trillions of dollars.
Investors are at risk of losing savings and personally identifiable information to criminals, Gensler said.

SEC chairman Gary Gensler testifies before a Senate Banking, Housing, and Urban Affairs Committee hearing on Sept. 14, 2021 in Washington.
Evelyn Hockstein-Pool/Getty Images

Securities and Exchange Commission chairman Gary Gensler is eyeing tougher cybersecurity rules to protect investors against financial loss and theft of personal data by hackers, he said in a speech Monday.
The agency’s top official is considering more stringent requirements for a diverse set of firms underpinning the country’s financial infrastructure, including publicly traded companies, financial advisors, brokerage houses, trading systems, and firms that custody client assets, among others.  

The economic costs of cyberattacks extend into the billions and perhaps even trillions of dollars, Gensler said. The state and non-state hackers perpetuating the crimes often try to steal data, intellectual property or money; lower confidence in the financial system; and disrupt economies, he said.
“All this puts our financial accounts, savings, and private information at risk,” Gensler said Monday at Northwestern Pritzker School of Law’s Annual Securities Regulation Institute.
“The financial sector remains a very real target of cyberattacks,” he added. “What’s more, it’s become increasingly embedded within society’s critical infrastructure.”

New rules?

At a meeting on Wednesday, SEC commissioners will consider whether to propose new cyber standards for Treasury trading platforms, Gensler said.
Specifically, the agency would bring the platforms under the umbrella of an existing rule — Regulation Systems Compliance and Integrity — which currently covers entities like stock exchanges and clearinghouses. The measure ensures firms have sound technology programs, business continuity plans, testing protocols and data backups, Gensler said.

The bureau chair has also asked staff to recommend reforms in a few other domains.
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For example, Gensler suggested rules to reduce risk among investment companies, investment advisors and broker-dealers by improving their “cybersecurity hygiene and incident reporting.”
Gensler also wants the agency to consider updating the reporting and disclosures brokerages and financial advisors make to customers following a cyber breach. The agency may also update cyber practices and risk disclosures that public companies make to their investors, Gensler said.
“I think companies and investors alike would benefit if this information were presented in a consistent, comparable, and decision-useful manner,” Gensler said of publicly traded companies.
Lastly, he asked staff to weigh tougher standards for financial service providers like fund administrators and custodians.

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Take a look at some of the biggest movers in the premarket:
3M (MMM) – 3M rose 1.9% in the premarket after reporting quarterly earnings of $2.31 per share, 30 cents a share above estimates. Revenue also topped estimates, and 3M said its business improved during December as supply chain issues, omicron and other concerns abated.

Johnson & Johnson (JNJ) – Johnson & Johnson beat estimates by a penny a share, with quarterly earnings of $2.13 per share. The company gave an upbeat full-year forecast, however fourth-quarter revenue came in below analysts’ forecasts. Its shares fell 1.6% in premarket trading.
General Electric (GE) – GE slid 2.8% in premarket action as fourth-quarter revenue fell below Street forecasts. Quarterly earnings came in at 92 cents a share, compared to a consensus estimate of 85 cents a share. The company also forecast improved cash flow for 2022.
American Express (AXP) – Record card spending helped American Express report better-than-expected profit and revenue for the fourth quarter. Earnings came in at $2.18 per share, well above the $1.87 a share consensus estimate.
Polaris Industries (PII) – The recreational vehicle maker beat estimates by 13 cents a share, with quarterly profit of $2.16 per share. Revenue also topped consensus. Profit was lower than a year ago as Polaris dealt with higher costs for components and logistics.
IBM (IBM) – IBM beat estimates by 5 cents a share, with quarterly profit of $3.35 per share. Revenue also beat estimates on strength in IBM’s cloud computing business. IBM shares experienced some volatility in after-hours trading after the company declined to give an earnings forecast, but shares recovered to gain 1.5% in premarket trading.

Ericsson (ERIC) – Ericsson reported better-than-expected quarterly earnings, with the Swedish telecom equipment maker benefiting from the accelerating rollout of 5G networks around the world. Shares surged 5.5% in the premarket.
Logitech (LOGI) – Logitech sales fell 2% for its latest quarter, with the maker of computer peripheral equipment facing tough comparisons to elevated pandemic-induced demand a year ago. Logitech raised its sales forecast for the current quarter, however, and its shares jumped 4.5% in premarket trading.
PetMed Express (PETS) – PetMed Express fell 9 cents a share shy of consensus estimates, with quarterly profit of 21 cents per share. The pet products seller’s revenue also came in short of analysts’ forecasts. The stock dropped 2.7% in the premarket.
Zions Bancorporation (ZION) – Zions shares rose 1.1% in the premarket after beating top and bottom line estimates for its latest quarter. It’s the latest in a series of upbeat reports from regional banks.
Allscripts Healthcare Solutions (MDRX) – Allscripts issued preliminary quarterly earnings and revenue numbers that exceeded Wall Street forecasts. The provider of physician practice management technology also announced a new $250 million share repurchase program. The stock surged 8.6% in premarket action.

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Bitcoin, the world’s largest virtual currency, briefly plunged below $33,000 Monday to its lowest level since July.
It’s since recovered back above $36,000, but is still down almost 50% from a record high of nearly $69,000 in November.
That’s got some crypto investors talking about the possibility of a “crypto winter.”

Two commemorative bitcoins pictured in front of a Tesla car during cold weather on Jan. 7, 2022.
Artur Widak | NurPhoto via Getty Images

As cryptocurrency investors reel from the sharp sell-off in bitcoin and other digital currencies, some fear the worst is yet to come.
Bitcoin, the world’s largest virtual currency, briefly plunged below $33,000 Monday to its lowest level since July. It’s since recovered back above the $36,000 mark, but is still down almost 50% from a record high of nearly $69,000 in November.

Meanwhile, the entire crypto market has shed more than $1 trillion in value since bitcoin’s all-time high, as top tokens such as ether and solana followed the No. 1 digital currency to trade sharply lower. Ether has more than halved in value since reaching its peak in November, while solana has suffered an even steeper decline, falling 65%.
That’s got some crypto investors talking about the possibility of a “crypto winter,” a phrase referring to major bear markets in the young digital currency market’s history. The most recent such occurrence happened in late 2017 and early 2018, when bitcoin crashed as much as 80% from all-time highs.
David Marcus, the former head of crypto at Facebook-parent Meta, appeared to admit a crypto winter has already arrived. In a tweet Monday, he said: “It’s during crypto winters that the best entrepreneurs build the better companies. This is the time again to focus on solving real problems vs. pumping tokens.”
Nadya Ivanova, chief operating officer at the BNP Paribas-affiliated tech research firm L’Atelier, said she’s not convinced a crypto winter has arrived yet — but the market is “now in a cooling off period.” That might not be so bad, she says.
“Over the last year — especially with all the hype in this market — a lot of developers seem to have been distracted by the easy gains from speculation in NFTs (non-fungible tokens) and other digital assets. A cooling off period might actually be an opportunity to start building the fundamentals of the market,” Ivanova told CNBC’s “Squawk Box Europe.”

Crypto’s rout has come in tandem with a slide in global stocks. Experts say that involvement from large institutional funds has meant digital assets are becoming more intertwined with traditional markets.
The S&P 500 has fallen 8% since the start of the year, while the tech-heavy Nasdaq index is down over 12%. And the correlation between bitcoin’s performance and that of the S&P 500 has been on the rise lately.
Traders fear potential interest rate hikes and aggressive monetary tightening from the Federal Reserve will drain liquidity from the market. The U.S. central bank is considering making such moves in response to surging inflation, and some analysts say it could result in the end of the era of ultra-cheap money and sky-high valuations — especially in high-growth sectors like tech, which benefits from lower rates since companies often borrow funds to invest in their business.
“I think it’s related to the rout and withdrawal from risky assets overall,” Ivanova said of bitcoin’s recent decline.

The moves lower in major digital coins has been a boon to stablecoins, or digital currencies that track the value of sovereign currencies like the U.S. dollar. USD Coin, the second-largest stablecoin, has added over $5 billion in market value since Sunday, according to data from CoinGecko.

Correction?

Vijay Ayyar, vice president of corporate development and international at crypto exchange Luno, thinks the recent slump in crypto is more of a “correction” than a sustained downturn.
Bitcoin has typically seen “blow-off tops” before diving 80% or more, he said. This refers to a chart pattern which shows a steep increase in price and trading volume followed by a sharp fall in price.
“Corrections for BTC usually are in the 30-50% range, which is where we are currently, so still within normal correction territory,” Ayyar said.

Looking ahead, he says a key level to watch for bitcoin is $30,000. If it closes below that point in a week or more, “that would definitely indicate high likelihood of a bear market,” he said. A decline of around 80% from bitcoin’s recent peak would indicate a price of less than $15,000. Ayyar doesn’t think such a scenario is on the table.
Still, investors are worried about the prospect of further regulatory crackdowns on the crypto industry. Last week, Russia’s central bank proposed banning the use and mining of cryptocurrencies, mimicking a similar move from neighboring China. And the U.S. government is reportedly preparing to release a strategy to regulate crypto as early as next month.

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