Finance

Check out the companies making headlines before the bell:
Walgreens (WBA) – The drug store operator’s shares gained 2.9% in the premarket, after beating estimates on both the top and bottom lines for its latest quarter. Walgreens earned an adjusted $1.68 per share, compared with the $1.33 consensus estimate, boosted by demand for Covid-19 vaccinations and testing.

Bed Bath & Beyond (BBBY) – The housewares retailer tumbled 9.3% in premarket trading, after reporting an adjusted quarterly loss of 25 cents per share compared with a consensus estimate of breakeven. Overall and comparable-store sales also fell below Wall Street forecasts.
Constellation Brands (STZ) – The spirits producer’s stock initially fell 2% in the premarket after reporting earnings, before recovering that loss. Constellation earned an adjusted $3.12 per share, compared with a $2.76 consensus estimate, with sales also beating forecasts.
Conagra (CAG) – Conagra fell 1% in the premarket after missing estimates by 4 cents with an adjusted quarterly profit of 64 cents per share, although revenue was slightly above forecasts. Conagra did raise its full-year sales forecast on higher prices and strong demand for its frozen foods.
Helen of Troy (HELE) – Helen of Troy shares added 2.2% in premarket trading after the household products company beat consensus estimates in its latest quarter and raised its earnings outlook. Helen of Troy reported an adjusted quarterly profit of $3.72 per share, well above the $3.11 that analysts were expecting. Results were driven by double-digit growth in housewares and beauty products.
Pfizer (PFE), BioNTech (BNTX) – The CDC has recommended the use of the Pfizer/BioNTech Covid-19 vaccine as a booster shot for the 12 to 15 years old age group. The agency estimates that about half the group is fully vaccinated and that about a third of those will return for the booster shot. BioNTech rose 2.5% in premarket trading, while Pfizer was little changed.

Hasbro (HAS) – The toymaker named digital gaming business head Chris Cocks as its next CEO, effective February 25. He’ll replace interim CEO Rich Stoddart, who has been filling that role since the death of Brian Goldner last October.
Coinbase (COIN) – Coinbase reversed an earlier premarket slide and rose 1%, following an upgrade to “buy” from “neutral” at BofA Securities. Coinbase initially extended yesterday’s 6.4% loss after the cryptocurrency exchange operator’s shares fell for four straight days as crypto prices tumbled, with losses accelerating following yesterday’s release of Fed meeting minutes.
Datadog (DDOG) – Datadog shares added 2.2% in the premarket after the monitoring and security platform provider announced a new partnership with Amazon Web Services, which will focus on developing and tightening product alignment.
ADT (ADT) – ADT lost 2.1% in premarket trading after RBC Capital downgraded the home security products provider to “sector perform” from “outperform,” and cut its price target to $10 from $12 per share. RBC cites component and wage inflation, among other factors.
Allbirds (BIRD) – The footwear maker’s stock rallied 5.7% in the premarket after Morgan Stanley upgraded it to “overweight” from “equal-weight”. The firm said the company’s valuation is attractive relative to its peers because of a recent pullback in the stock as well as growth prospects.

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A trader works on the trading floor on the last day of trading before Christmas at the New York Stock Exchange (NYSE) in Manhattan, New York City, December 23, 2021.
Andrew Kelly | Reuters

Stock futures were slightly higher in overnight trading Wednesday after the major U.S. stock averages fell sharply in the first losing regular trading session of the year.
Futures on the Dow Jones Industrial Average added about 65 points, or 0.2%. S&P 500 futures ticked up 0.1% and Nasdaq 100 futures rose 0.1%.

Minutes from the Federal Reserve’s December meeting revealed the central bank discussed reducing its balance sheet in another move to aggressively dial back its pandemic-era easy monetary policy.
The Fed’s plan to reduce the number of Treasurys and mortgage-backed securities it holds comes as it is already tapering its bond purchases and is set to hike interest rates after the taper concludes.
“Almost all participants agreed that it would likely be appropriate to initiate balance sheet runoff at some point after the first increase in the target range for the federal funds rate,” the minutes stated.
Stocks slid following the release of the minutes. The blue-chip Dow Jones Industrial Average closed 392.54 points, or 1.07%, lower after hitting an intraday record earlier in the session. The S&P 500 fell 1.94%. The tech-heavy Nasdaq saw its biggest one-day loss since February, losing 3.34%.

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“If you ride a wave of liquidity to the upside and that liquidity starts to go away, I don’t think it’s terribly surprising that you’re going to see a reaction,” said Kathy Jones, head of fixed income at Charles Schwab.

“This was the year we were going to transition from extremely easy monetary policy and fiscal policy to less easy monetary and less expansive fiscal policy. That has to have some impact on risk assets that have risen because the discount rate was so low,” Jones added.
All 11 S&P 500 sectors fell in Wednesday’s session.
Investors await quarterly earnings reports from Walgreens Boots Alliance and Bed Bath & Beyond before the bell Thursday.
On the data front, the weekly jobless claims report is slated for released Thursday morning.
—CNBC’s Jeff Cox contributed to this report.

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Jeenah Moon | Getty Images News | Getty Images

Check out the companies making headlines in midday trading Wednesday:
Salesforce, Adobe — The software stocks fell more than 4% each after UBS downgraded both companies to neutral from buy. UBS said that enterprise tech spending was pulled forward by the pandemic, leading to slower growth for Salesforce and Adobe in 2022.

Enphase Energy — Shares of Enphase dropped 7.5% after Bank of America downgraded the stock to neutral from buy. The Wall Street firm also slashed its price target to $187 per share from $297 per share.
Microsoft — Some software, technology and chip stocks continued to fall after Tuesday’s sell-off. Okta lost 2.8%, DocuSign fell 2% and Snowflake slipped 3%. Microsoft lost 2.1%.
Alibaba — Shares of the Chinese e-commerce giant jumped almost 5% after Charlie Munger’s Daily Journal nearly doubled its stake in the stock. A regulatory filing Tuesday showed that Daily Journal now owns more than 600,000 shares of Alibaba.
Beyond Meat — Shares of the alternative meat company jumped 3% after KFC announced it will add Beyond Meat’s plant-based chicken to its menus starting Monday. The two companies have been testing the product for years, and the Beyond Meat fried chicken will be available for a limited time, according to KFC.
Pinterest– Shares of the image-sharing site rose nearly 2% after Piper Sandler upgraded the stock to overweight from neutral. The Wall Street firm said Pinterest’s share price could rebound by 60% after a 50% sell-off over the past year as concerns about user growth appear to be overblown.

Pfizer — Shares of the Covid-19 vaccine maker jumped 1.8% following an upgrade to buy from neutral from Bank of America. The firm noted that the financial success of the company’s Covid vaccines and oral treatments puts it on strong footing for years ahead.
Nikola — Shares of the electric truck maker added more than 3% in midday trading after logistics company USA Truck announced a deal to buy 10 electric Nikola trucks. 
Garmin — Shares of Garmin rose 3% after Deutsche Bank upgraded the stock to buy from hold. The Wall Street firm said it likes Garmin’s “high quality” financials.
— with reporting from CNBC’s Jesse Pound, Hannah Miao, Yun Li and Tanaya Macheel.

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NFTs could become “a much bigger, more fluid market” than bitcoin, “Shark Tank” investor Kevin O’Leary predicted.
His belief in NFTs stems from the idea that can they prove ownership of real-world items, such as designer watches or flash cars.
“We’ll see what happens but I’m making that bet and I’m investing on both sides of that equation,” O’Leary told CNBC.

“Shark Tank” investor Kevin O’Leary is a big believer in non-fungible tokens — he even thinks they have a shot at becoming bigger than bitcoin.
O’Leary, the chairman of O’Shares Investment Advisers, said his belief in NFTs stems from the idea that can they prove ownership of real-world items, such as designer watches or flash cars, digitally rather than with paper records.

NFTs are one-of-a-kind crypto tokens that serve to track the provenance and authenticity of rare virtual collectible items such as art and sports memorabilia. There have also been efforts to bring NFTs to physical assets.
“You’re going to see a lot of movement in terms of doing authentication and insurance policies and real estate transfer taxes all online over the next few years, making NFTs a much bigger, more fluid market potentially than just bitcoin alone,” O’Leary told CNBC’s “Capital Connection” Wednesday.
“We’ll see what happens but I’m making that bet and I’m investing on both sides of that equation.”
Barely anyone had heard of NFTs in 2020, but they became a huge phenomenon the following year. More than $20 billion worth of the tokens changed hands throughout 2021, according to some estimates. The trend gained particular public attention after a collage by the digital artist Beeple, whose real name is Mike Winkelmann, was sold for a record $69 million.

However, there are concerns about the sustainability of the market. Some have compared it to the initial coin offering frenzy of 2017, which saw several investors get defrauded by betting on start-ups through unregulated token sales. Meanwhile, there have been a number of scams and instances of stolen art, raising red flags for some traders.

Change of heart

The millionaire Canadian investor has changed his tune on crypto over the years, having previously called bitcoin “garbage.”
“It is a useless currency,” O’Leary told CNBC’s “Squawk Box” in May 2019. “It’s worthless.”
More recently, O’Leary has warmed to the space, viewing it as a way of diversifying from other assets such as real estate amid rising inflation. He is particularly bullish on “decentralized finance,” a trend that aims to replicate traditional financial products using blockchain.
O’Leary recently disclosed that his largest position is in ether, while he also owns some polygon, solana and bitcoin.
Around 40% of new checks O’Leary has written in the last six months were for crypto and blockchain-related ventures.

Regulation

O’Leary stressed the importance of ensuring crypto becomes regulated. Regulators in the U.S. and elsewhere are racing to catch up with developments in the market to prevent potential money laundering and protect consumers from financial harm.
“Different geographies have different policy regarding crypto,” O’Leary said. “You have to go and find jurisdictions that are more progressive.”

He cited Canada, his home country, as an example of a jurisdiction that is more progressive than others on the issue of crypto.
Canada was the first to approve an exchange-traded fund that gives investors exposure to bitcoin. Though the U.S. Securities and Exchange Commission has since greenlit a bitcoin-linked ETF, the product tracks futures contracts instead of investing in bitcoin directly.
O’Leary also cited the United Arab Emirates and Switzerland as other countries that are opening up to crypto.
“You have to be optimistic and constructive,” O’Leary said. “The floodgate of capital will come in through sovereign and pension plans that doesn’t exist yet.”
Of particular concern to regulators are stablecoins, digital tokens pegged to the value of sovereign currencies like the dollar. Economists worry notable stablecoins like tether and USD Coin may not have the appropriate reserves available to justify their claims of being backed by dollars.
“I think [stablecoins] will also get a chance to shine in the sun as a great way to get yield when you can’t get any yield on cash,” O’Leary said.

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Check out the companies making headlines before the bell:
Beyond Meat (BYND) – Beyond Meat surged 9% in premarket trading on news that KFC will roll out the company’s fried chicken substitute nationwide starting Monday, following tests in a number of markets.

Pfizer (PFE) – The drug maker’s shares gained 1.5% in the premarket following a Bank of America upgrade to “buy” from “neutral”. The upgrade is based on factors that include the rollout of the oral Covid-19 pill Paxlovid as well as significant pipeline investments. Additionally, Pfizer signed a new collaboration agreement with German partner BioNTech (BTNX) to develop an mRNA-based shingles vaccine. BioNTech rose 1.7%.
Nikola (NKLA) – Nikola gained 2.2% in premarket action after logistics company USA Truck (USAK) announced a deal to buy 10 electric Nikola trucks. Separately, Nikola has dropped a $2 billion patent lawsuit against Tesla (TSLA), according to a federal court filing in San Francisco. The electric car maker had sued Tesla in 2018, accusing its rival of copying several of its designs.
Alibaba (BABA) –Daily Journal Corp. has nearly doubled its stake in the Chinese e-commerce giant, according to a regulatory filing. Berkshire Hathaway’s Charlie Munger is chairman of Daily Journal. Alibaba fell 1% in the premarket.
Sony (SONY) – Sony announced plans to create an electric vehicle unit, and displayed a prototype sport utility vehicle at the Consumer Electronics Show in Las Vegas. Shares rallied 4.2% in the premarket.
MillerKnoll (MLKN) – The office furniture maker’s stock slid 3.1% in premarket action following a weaker-than-expected quarterly report. MillerKnoll earned an adjusted 51 cents per share, 6 cents below estimates, with revenue also below Wall Street forecasts. Order demand was strong, but the company was hurt by supply chain and labor disruptions.

Garmin (GRMN) – Garmin was upgraded to “buy” from “hold” at Deutsche Bank, with the firm citing several factors including valuation of the GPS device maker’s shares as well as the high quality of its financials and a favorable business environment. Garmin added 1.2% in premarket trading.
Adobe (ADBE) – The software maker slid 2.2% in the premarket after being downgraded to “neutral” from “buy” at UBS after the firm spoke with more than a dozen IT executives about their 2022 spending plans. UBS thinks more spending was pulled forward into 2020 and 2021 than is generally assumed.
Pinterest (PINS) – The image-sharing site’s stock added 1.7% in premarket trading after Piper Sandler upgraded it to “overweight” from “neutral”. Piper said the recent sell-off in the stock presents a good buying opportunity, with user trends improving and a stable mobile user base.

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Stock futures were flat in overnight trading Tuesday after the Dow Jones Industrial Average notched a record close as investors flocked to shares that stand to benefit from an economic recovery.
Futures on the blue-chip Dow dipped 15 points. S&P 500 futures were little changed and Nasdaq 100 futures edged 0.1% lower.

On Tuesday, while the Dow climbed 200 points to a new high, the tech-focused Nasdaq Composite suffered a sell-off, down 1.3%, amid a rapid rise in Treasury yields. The closely-watched benchmark 10-year Treasury yield was as high as 1.71% Tuesday, triggering selling in growth-oriented technology stocks.
Megacap tech stocks underperformed the S&P 500 Tuesday as “investors reconsidered the value of such long-duration assets in the wake of higher rates,” Chris Hussey, a managing director at Goldman Sachs, said in a note.
Investors awaited the release of the Federal Reserve’s minutes from its December meeting. The central bank announced it would speed up the tapering of its bond buying program. The Fed has also forecast three interest rate hikes for 2022.

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“The Fed is accelerating its removal of liquidity because inflation has broadened, which has the potential to push 10-year yields higher,” Ed Al-Hussainy, senior rates strategist at Columbia Threadneedle, said in a note. “But the central bank must be careful not to act too aggressively, which could derail the economic recovery and cause a recession.”
Wall Street strategists are expecting a bumpier road ahead for the stock market as the Fed begins to tighten its ultra-easy monetary policy. The median year-end target for the S&P 500 now stands at 5,050, only a 5% gain from Tuesday’s close of 4,793.54, according to CNBC’s Strategist Survey.
On the data front, ADP will release its private payroll report for December with economists polled by Dow Jones estimating a total of 375,000 jobs added.

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The 5% Apple stake Berkshire Hathaway acquired in 2018 for $36 billion is now worth $160 billion as the tech giant hit the $3 trillion milestone.
Warren Buffett’s conglomerate has also enjoyed regular dividends from Apple, averaging about $775 million annually.
Berkshire’s Apple stake now makes up more than 40% of its equity portfolio.

Billionaire investor Warren Buffett, chairman of Berkshire Hathaway, speaks on a mobile phone during an interview in New York, U.S., on Wednesday, June 25, 2008.
Bloomberg | Getty Images

Warren Buffett’s out-of-character bet on Apple may end up being one of his winningest investments, making more than $120 billion on paper as the tech giant shattered yet another record to top a $3 trillion market valuation this week.
Berkshire Hathaway began buying Apple stock in 2016 and by mid-2018, the conglomerate accumulated 5% ownership of the iPhone maker, a stake that cost $36 billion. Flash forward to 2022 and the Apple investment is now worth $160 billion as the massive rally extended into the new year.

“Without a doubt, it is one of the strongest investments that Berkshire has made in the last decade,” said James Shanahan, Berkshire analyst at Edward Jones.
Other than Apple’s giant appreciation in share price, it has also been a lucrative bet for Berkshire because of its hefty payouts. Berkshire has enjoyed regular dividends, averaging about $775 million annually.

Arrows pointing outwards

Buffett’s aversion to high-flying tech stocks has been well documented, but the “Oracle of Omaha” warmed up to the sector in the last decade with help from his investing deputies Todd Combs and Ted Weschler. Berkshire’s Apple stake now makes up for more than 40% of its equity portfolio, according to InsiderScore.com calculations. The conglomerate is Apple’s largest shareholder, outside of index and exchange-traded fund providers.
The billionaire investor has called Apple Berkshire’s “third-largest business,” after its insurance and railroad interests. Buffett previously said the iPhone is a “sticky” product, keeping people within the company’s ecosystem.
“It’s probably the best business I know in the world,” Buffett said in a CNBC interview in February 2020. “I don’t think of Apple as a stock. I think of it as our third business.”

But you’re not likely to hear from Buffett crowing about the winning trade since that’s not his style and he is often quick to point out when shares appreciate that the gains are not real yet and subject to further fluctuations.Still, the investor has realized some of that profit in real terms over the years. Since 2018, Berkshire has been trimming its Apple stake slightly with the conglomerate pocketing $11 billion in 2020. However, because of Apple’s repurchase programs, which shrank the number of its outstanding shares, Berkshire’s overall stake in the tech company has actually gotten bigger.

Arrows pointing outwards

“Berkshire’s investment in Apple vividly illustrates the power of repurchases,” the conglomerate said in its 2020 annual report. “Despite that sale [in 2020] – voila! – Berkshire now owns 5.4% of Apple. That increase was costless to us, coming about because Apple has continuously repurchased its shares, thereby substantially shrinking the number it now has outstanding.”
“But that’s far from all of the good news. Because we also repurchased Berkshire shares during the 2 1⁄2 years, you now indirectly own a full 10% more of Apple’s assets and future earnings than you did in July 2018,” Berkshire said in the report.
The investment in the tech giant played a crucial role in helping the conglomerate weather the Covid-19 crisis in 2020 as other pillars of its business, including insurance and energy, took a huge hit.

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A general view of the Halewood Ford transmission assembly plant after Ford announced a 230 GBP investment on October 18, 2021 in Halewood, England.
Christopher Furlong | Getty Images

Check out the companies making headlines in midday trading.
Ford Motor – Shares of Ford surged 11.7% after the company announced plans to nearly double the production of its new all-electric F-150 Lightning pickup truck to 150,000 annually by mid-2023. The company opened orders this week for the electric truck, which it had previously shut down due to an overwhelming response.

Warner Music Group – Warner Music slid 3.9% a day after the company announced a sale of 8.56 million shares by affiliates of Access Industries. Warner Music will not receive any proceeds from the sale and is not selling any shares of common stock in the offering.
Bank of America, American Express – Financial stocks rallied as the benchmark 10-year Treasury yield climbed. Bank of America jumped 3.9% after Wells Fargo Equity Research named the stock a top pick in the financial sector for 2022. American Express gained 3.2%, and Signature Bank jumped 2.4% after also being named as top picks at Wells Fargo.
Occidental Petroleum, Coterra Energy, Halliburton – Energy stocks rose as oil prices moved higher with OPEC and its allies agreeing to raise its output target. Occidental jumped about 7.5%, Coterra rallied 6.9% and Halliburton added 6%.
Foot Locker – Shares of Foot Locker dipped 2.6% after JPMorgan downgraded the stock to underweight from neutral. The firm cited cost pressures and tougher competition for the athletic footwear and apparel retailer.
Under Armour – Under Armour shares rose 3.6% after Baird upgraded the stock to an outperform rating from neutral. Baird said it likes stocks with “visible cyclical earnings recovery prospects.”

Coca-Cola – The beverage stock rose 1.7% on Tuesday after investment firm Guggenheim upgraded Coca-Cola to buy from neutral. The firm said in a note to clients that Coca-Cola’s on-premise and emerging markets businesses were rebounding faster than expected from the pandemic.
Hewlett Packard Enterprise – Hewlett Packard Enterprise shares jumped 4.3% after Barclays upgraded the stock to overweight from equal weight. “We believe core Server and Storage is stabilizing and moving to as-a-service, while Networking and HPC should see solid growth. Valuation is lowest in the group,” the firm said in its upgrade.
General Electric – Shares of GE jumped about 3.3% after Credit Suisse upgraded the stock to outperform. GE’s stock has struggled since it announced a three-way split in November, but Credit Suisse said that shares had upside of more than 25%.
Toyota Motor – Shares of Toyota gained 6.9% after Japan’s Nikkei news service reported the company plans to launch its own automotive operating system by 2025.
— CNBC’s Jesse Pound and Tanaya Macheel contributed reporting

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