Finance

Powering the Future

SSE’s renewable assets produced 32% less power than expected between April and September as low speeds and dry conditions hit wind and hydro output.
The summer was “one of the least windy across most of the UK and Ireland and one of the driest in SSE’s Hydro catchment areas in the last seventy years,” the company said Wednesday.
German utility RWE and Denmark’s Orsted also warned about the impacts from low wind speeds.

A wind turbine photographed in, Camelford, Cornwall, at sunset.
Ashley Cooper | Corbis | Getty Images

Energy giant SSE said its renewable assets produced 32% less power than expected between April 1 and Sept. 22 thanks to historically dry and low-wind conditions. This equates to 11% of its full-year output target.
“This shortfall was driven by unfavourable weather conditions over the summer, which was one of the least windy across most of the UK and Ireland and one of the driest in SSE’s Hydro catchment areas in the last seventy years,” the Perth, Scotland-based company said Wednesday in a statement.

Low-wind output over the summer has contributed to the European energy crunch, which sent power prices to record highs in recent days. Other factors include a colder-than-expected winter last year, production cuts during the pandemic, low imports from Russia, high carbon prices and growing demand from Asia for liquefied natural gas.
SSE is not the first renewable energy producer to warn about the financial impacts from the summer’s slow wind speeds.
In August, German utility RWE reported “much lower” wind volumes across its Northern and Central Europe portfolio for the first half of 2021.

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Danish energy company Orsted made similar comments, saying “earnings from our offshore and onshore wind farms in operation were DKK 0.3 billion lower compared to the same period last year.”
“The increased generation capacity from new wind farms in operation was more than offset by significantly lower wind speeds across our portfolio,” the company said in August, while reiterating it expects to meet its full-year financial targets.

More specifically, Orsted said that during the second quarter, wind speeds averaged 7.8 meters per second, which was “significantly lower” than normal speeds of 8.6 meters per second.
Still, SSE’s management on Wednesday emphasized that these operational issues are “time limited.” Management noted that performance over recent months was also impacted by hedging requirements in volatile markets.
Despite the summer slowdown, SSE said it “remains confident” about delivering on its financial goals for the full year. The company also announced an expansion into the Japanese offshore wind market.
— CNBC’s Anmar Frangoul contributed reporting. More

House Ways and Means Committee Democrats passed a proposal to cut the estate tax threshold to $5 million, subjecting more wealthy households to the tax each year.
Just 0.2% of U.S. adults who die have owed estate tax in recent years, according to IRS data. That’s lower than the historical 1% to 2% share.
There were 2,570 taxable estate-tax returns filed in 2019. They owed $13.2 billion. The House proposal would raise an estimated $52.3 billion over five years.

Jodi Jacobson | E+ | Getty Images

House Democrats proposed a change to the estate tax that would lead to more households having to pay up each year.
But just how many people actually pay the tax, and how might the proposal change that share?

The short answers: Few people pay it now, and the share wouldn’t grow by much.
“It’s a tiny fraction of decedents who pay any estate tax at all,” said Beth Shapiro Kaufman, an estate planner at the law firm Caplin & Drysdale.
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The estate tax, which is owed at death, is a tax on wealth transfer. Taxes are levied on cumulative property like stock and real estate valued over a certain level before they’re passed to heirs.
Lawmakers created the federal estate tax in 1916. Since then, Congress has changed elements like the tax rate and estate size at which the tax applies.

Currently, a 40% federal tax applies to estate values exceeding $11.7 million for single individuals and $23.4 million for married couples.

There were 6,409 estate tax returns filed in 2019, according to IRS data. About 40% of them (2,570 returns) were taxable. They owed $13.2 billion in net estate tax.
Publicly held stock accounted for the biggest portion of property held by taxable estates. It represented $23 billion, or 30%, of taxable estates.

0.2% owe tax

Historically, between 1% and 2% of U.S. adults who die each year owe estate tax, Kaufman said.
But the share fell to about 0.2% annually from 2011 to 2016, according to most recently available IRS data. That’s the lowest percentage on record, dating to 1934.
Democrats on the House Ways and Means Committee proposed and passed a plan to cut the taxable asset threshold to $5 million per individual, the same level as in 2010. (The measure is part of a $3.5 trillion budget plan Democrats are weighing.)

It’s a tiny fraction of decedents who pay any estate tax at all.

Beth Shapiro Kaufman
estate planner at Caplin & Drysdale

In the short-term, the change would likely increase the taxable share to about 0.3% or 0.4% of deceased adults, Kaufman said.
While House Democrats’ proposal wouldn’t significantly raise the share of people subject to estate tax, the policy would raise $52.3 billion over the next five years, according to an estimate from the Joint Committee on Taxation, the nonpartisan tax scorekeeper for Congress. That’s about four times more than tax revenues from 2019 returns.

Declining tax base

The record-low share of estates that owe tax each year is largely attributable to an increase in the taxable asset threshold. That increase effectively reduces the number of estates that owe taxes.
For example, estates of more than $1 million were taxable in the early 2000s. By 2009, that threshold jumped to $3.5 million, and then to roughly $5 million for several years last decade. In 2017, Republicans passed a tax law that doubled the asset threshold to about its current level.
As a result, the number of estate tax returns filed each year decreased by almost 60% from 2010 to 2019, according to the IRS.
The asset threshold would roughly halve after 2025, even without action by Democrats, due to a provision in the Republican tax law.

Total tax revenues

Tax revenues from wealthy estates have also been low by historical standards in recent years.
The $13.2 billion in net estate tax for returns filed in 2019 represented about 0.4% of federal tax receipts in 2018 (i.e., the corresponding year of death).
By comparison, revenue from federal estate and gift taxes has generally hovered between 1% and 2% of federal budget receipts since World War II, with limited exception, according to a historical account of the estate tax by IRS economists.
The share of revenue hit a post-war high of 2.6% in 1972. (There was a top 77% federal estate tax rate from 1942 to 1976; estates of more than $60,000 were subject to tax, according to the IRS account.)

Politics

House Democrats may not be successful in wrangling more estates into taxation. President Joe Biden didn’t propose such a measure as part of his tax plan issued earlier this year. Senate Democrats haven’t yet unveiled their plan to levy higher taxes on wealthy Americans to help fund the $3.5 trillion budget measure.
Congressional Republicans have generally been loath to scale back any parts of their 2017 tax law.
“Proponents have frequently advocated that these taxes are effective tools for preventing the concentration of wealth in the hands of a relatively few powerful families, while opponents believe that transfer taxes discourage capital accumulation, curbing national economic growth,” according to IRS economists.

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Check out the companies making headlines before the bell:
Micron Technology (MU) – Micron reported adjusted quarterly earnings of $2.42 per share, 9 cents above estimates, with the chip maker’s revenue also topping Street forecasts. However, its current-quarter forecast fell below consensus, due to computer-making customers facing shortages of other parts, and the stock fell 3.6% in the premarket.

Eli Lilly (LLY) – The drugmaker’s stock gained 2.2% in premarket trading after Citi upgraded it to “buy” from “neutral.” Citi points to valuation following a more than 15% drop in the share price, as well as its above-Street consensus earnings outlook for Lilly following a recent meeting with management.
Netflix (NFLX) – Netflix rose 1% in the premarket after announcing that it bought videogame maker Night School Studio in a move to diversify its revenue sources. Night School Studio is best known for the supernatural-themed video game “Oxenfree.”
Lucid Group (LCID) – Lucid plans to deliver its first electric luxury sedans in late October, after kicking off production at its Arizona factory on Tuesday. Lucid said its vehicles will have a greater driving range than comparable cars from rival Tesla (TSLA). The stock surged 7.3% in premarket trading.
Dollar Tree (DLTR) – Dollar Tree jumped 3.7% in the premarket after the discount retailer increased its share repurchase authorization by $1.05 billion to a total of $2.5 billion.
ASML (ASML) – ASML raised its annual sales outlook and the maker of semiconductor manufacturing equipment said it would see 11% annual growth through 2030 as demand for its products booms. The stock added 1% in the premarket.

AbbVie (ABBV) – AbbVie won FDA approval for its once-daily oral migraine treatment. The drug known as Qulipta was one of the treatments acquired in AbbVie’s $63 billion purchase of Allergan last year.
Sherwin-Williams (SHW) – Sherwin-Williams cut its third-quarter guidance with the paint maker pointing to raw-material shortages and higher input costs. It said it no longer expects to see improved supply or lower prices for raw materials during the fourth quarter as it had previously projected. Sherwin-Williams fell 2% in premarket action.
Affirm Holdings (AFRM) – The financial services company said it will offer a debit card as well as allow customers to execute cryptocurrency transactions directly from savings accounts. Affirm shares jumped 3.6% in the premarket.
Cal-Maine Foods (CALM) – Cal-Maine rallied 4.4% in premarket trading after it reported a smaller-than-expected loss for its latest quarter. The egg producer’s revenue topped Street forecasts as it benefited from higher egg prices.
Warby Parker (WRBY) – The eyewear maker debuts on Wall Street today, going public via a direct listing at a reference price of $40 per share. That gives the company an initial valuation of nearly $5 billion.

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Treasury Secretary Janet Yellen told House Speaker Nancy Pelosi that Congress has just under three weeks to address the looming debt ceiling and avoid economic calamity.
“We now estimate that Treasury is likely to exhaust its extraordinary measures if Congress has not acted to raise or suspend the debt limit by October 18,” Yellen wrote.
Senate Minority Leader Mitch McConnell later Tuesday blocked a motion from Majority Leader Chuck Schumer that would’ve allow Democrats to address the debt limit with a majority vote.

Treasury Secretary Janet Yellen testifies during a Senate Banking, Housing and Urban Affairs Committee hearing on the CARES Act, at the Hart Senate Office Building in Washington, DC, U.S., September 28, 2021.
Kevin Dietsch | Reuters

Treasury Secretary Janet Yellen on Tuesday told House Speaker Nancy Pelosi that Congress has just under three weeks to address the looming debt ceiling and avoid near-certain economic calamity.
“We now estimate that Treasury is likely to exhaust its extraordinary measures if Congress has not acted to raise or suspend the debt limit by October 18,” she wrote in a letter. “At that point, we expect Treasury would be left with very limited resources that would be depleted quickly.”

Yellen, who will testify before the Senate later Tuesday morning, warned in a separate statement to lawmakers that failure to suspend or raise the debt limit would lead to the first-ever U.S. default and have severe consequences for the U.S. economy.

“It is imperative that Congress swiftly addresses the debt limit. If it does not, America would default for the first time in history,” she said in her remarks to the Senate Banking Committee. “The full faith and credit of the United States would be impaired, and our country would likely face a financial crisis and economic recession.”
Senate Minority Leader Mitch McConnell, R-Ky., later Tuesday blocked Schumer’s motion that would allow Democrats to address the debt limit with a simple majority vote. It needed unanimous support.
The move would have allowed Democrats to bypass a Republican filibuster and suspend or raise the ceiling without a GOP vote.
Because the U.S. has never defaulted on its debt before, economists have to rely on forecasts and guesswork when trying to estimate the economic fallout a default would bring. Still, most economists say such a default would bring about financial calamity that could trigger a broad market sell-off and economic downturn amid a spike in interest rates.

“You would expect to see an interest rate spike if the debt ceiling were not raised,” Yellen said during live testimony on Tuesday. “I think there would be a financial crisis and a calamity. Absolutely, it’s true that the interest payments on the government debt would increase.”
Yellen’s letter to Pelosi, D-Calif., is the latest in a string of communications between the Treasury secretary and congressional leadership as the U.S. nears missing a payment to its debtholders. A spokesman for the House speaker did not respond to a request for comment.
Pelosi and Senate Majority Leader Chuck Schumer, D-N.Y. have in recent weeks called upon Republicans to pass a suspension to the debt ceiling as a bipartisan duty.
“Now, as Minority Leaders McCarthy and McConnell welcome a disaster they both know is coming, Republican luminaries, former Treasury Secretaries, business groups, and top economists are joining the growing chorus of Americans demanding that they stop putting politics over the health of the U.S. economy,” Pelosi’s office said last week, before Yellen’s latest letter.
Senate Republicans on Monday blocked a bill that would fund the government and suspend the U.S. borrowing limit. The GOP opposed the House-approved bill because it included a provision to suspend the debt ceiling, a task Republicans say ought to be up to Democrats alone.
McConnell responded to Yellen’s latest warning to Congress later Tuesday morning.

CNBC Politics

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“If Democrats want to use fast-track, party-line procedures to ram through trillions more in inflationary socialism, they’ll have to use the same tools to handle the debt limit,” he said from the Senate floor.
“It’s time for our democratic colleagues to stop dragging their heels and get moving,” the Republican leader added. “But Democrats in congress don’t seem to be acting with any urgency.”
Republicans want Democrats to raise or suspend the debt ceiling by including a provision in their $3.5 trillion reconciliation bill.
Government funding and the debt ceiling are separate issues.
The U.S. government will shut down at the end of September if lawmakers fail to approve a new funding or appropriations bill. In that case, government agencies must send thousands of federal employees home and operate at a limited capacity until funding is resumed.
The debt ceiling is viewed as the greater economic threat since failing to suspend or raise the U.S. borrowing limit would result in a first-ever default and untold economic havoc.
Raising or suspending the debt ceiling does not authorize new federal spending, but rather allows the Treasury to honor debts already incurred during the Trump and Biden administrations. Even if the Biden administration had passed no new spending initiatives in 2021, lawmakers would still have to raise or suspend the ceiling.
Republicans approved three such debt ceiling increases or suspensions during the Trump administration, under which the national debt rose by roughly $8 trillion.

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ADD “MALICIOUS price-cutting” to the growing lexicon of Xi Jinping’s China. The phrase has cropped up in the past but is being increasingly used by provincial authorities to decry property developers’ attempts to slash home prices. Some developers, desperate to bring in revenue, are offering discounts of as much as 30%. Officials, fearing that the price cuts might frustrate recent homebuyers and lead to protests and distortions in the property market, have banned discounts and regard them as undermining social stability. In the central city of Yueyang the government has told developers to stop increasing prices but also to refrain from reducing them by more than 15%.In such cases both regulators and developers are walking a tightrope, teetering between sky-high prices and a damaging downturn. The property market is probably the single largest driver of the country’s economy. Urban Chinese have flocked to it as a haven. House prices have soared over the past 15 years, often by more than 10% a year in large cities. Yet developers have borrowed huge amounts in the process. The industry’s total debt is about 18.4trn yuan ($2.8trn, equivalent to 18% of GDP), according to Morgan Stanley, a bank. Housing costs, relative to incomes, now make large Chinese cities some of the least affordable places in the world.These trends have collided with officials’ goals of reducing corporate indebtedness and inequality, which lie at the heart of Mr Xi’s mission to bring “common prosperity” to China. The campaign has already brought down several large real-estate companies as regulators have tightened their access to credit. The latest is Evergrande, a developer with about $300bn in liabilities that has started to miss payments on dollar bonds. (As this article was published it was unclear whether it had been able to make another offshore-bond payment due on September 29th.) The fear for officials is not just that the unwinding of the group will unleash systemic financial risks. If the property sector were to tip into a correction, everything from local-government and household finances to the country’s growth model would be imperilled.China’s leaders have cheered on the property boom for the best part of 30 years. When the central government overhauled the tax system in 1994, local authorities lost a large chunk of revenue. At the same time, local governments were prevented from issuing debt. Yet they were tasked with hitting high economic-growth targets, sometimes exceeding 10% a year. Selling land became one of the few things municipal officials could do to generate revenues, which would in turn finance roads and other public works. They could also set up companies that could borrow from banks and raise debt from other sources. This arrangement meant economic growth was tightly bound to booming property.Between 1999 and 2007 the quantity of rural land transferred to urban use increased by an average annual rate of almost 23%, and public-land sales soared by an average of 31% a year. Soon the property market became the prime lever for controlling economic growth. During the global financial crisis much of China’s $586bn stimulus package came in the form of loans and shadow-banking funds for developers. “The property market was a vehicle for delivering the stimulus,” says Kevin Lai of Daiwa Capital Markets, a broker. By 2010 land sales accounted for more than 70% of municipal incomes a year, although the rate varied between regions.The failure to break away from this setup is one of China’s biggest economic blunders of recent decades. The relationship between the property market and overall growth remains as strong as ever. Residential investment alone makes up 15% of GDP; the economic importance of property rises to 29% once construction and other related industries are added in, according to an estimate by Kenneth Rogoff of Harvard University and Yuanchen Yang of Tsinghua University. As a result, homebuyers and developers alike have considered the housing market too important to fail, finds Hanming Fang of the University of Pennsylvania. They have treated their investments as one-way bets.The Evergrande crisis and some property indicators are beginning to threaten that long-held belief. Malicious price-cutting may be in the headlines, but only especially cash-strapped developers have resorted to it. Yet demand is weakening from its high base. One gauge is growth in prices, which has slowed in recent months. Another is the secondary market, where speculative investors cash out. In Shenzhen, a southern boomtown, monthly transactions fell for four consecutive months to 2,423 in August, compared with a monthly average 8,376 in 2020, according to Rhodium Group, a consultancy.The easy stream of credit that kept construction sites buzzing is drying up. Access to bank and shadow-bank loans, as well as demand for on and offshore bonds, is weakening for the industry in general, says Cedric Lai of Moody’s, a rating agency. Net offshore dollar-bond issuance has turned negative for developers for the first time in at least a decade (see chart 1). Land sales for residential projects declined in the first half of the year, primarily owing to government limits on bank exposures to developers. S&P, another rating agency, has downgraded many developers to junk. Moody’s agency, says its outlook on China’s property sector is now negative.Such news has grabbed the attention of local officials. Declining demand for homes and a shortage of funds will mean less demand for land. The development of a municipal-bond market over the past decade has helped some regions move away from land sales. But on the whole local officials have only become more addicted. Total government sales revenue has climbed since 2015 and reached about 8.3% of GDP in 2020 (see chart 2). Any decrease bodes ill for the economies of smaller cities.Households, meanwhile, are on some measures more exposed to property than ever. In 2019 housing represented about 60% of their total assets (financial assets account for just 20%). This overreliance has driven up mortgage debt to about 76% of total household liabilities. As developers lost other forms of funding over the past five years they became heavily reliant on pre-sales income, where buyers pay for their homes, sometimes in full, months or years before completion. Between 2015 and July 2021 the share of pre-sale funds as a source of funding for developers rose from 39% to 54%, according to Natixis, a French bank. Some of the people who paid in advance for Evergrande homes or bought one of the company’s wealth-management products have protested outside its offices.Investors are now waiting for government action. Some expect that, as the economic outlook darkens, officials will ease monetary conditions. Most banks have used up government quotas for property-sector loans this year, says Zhang Zhiwei of Pinpoint Asset Management, a hedge fund based in Shanghai. The quotas will be renewed in January, leading to a burst in lending, he says. Raymond Yeung of ANZ, a bank, thinks that regulators are well enough informed of the risks that few other developers will encounter the same problems as Evergrande. A property slowdown might knock a half of a percentage point off GDP growth this year, he says. Mo Ji of Fidelity International, an asset manager, says she expects the turbulence to take a percentage point off growth.The short-term outlook, however, might ignore a bigger secular shift. Mr Lai of Daiwa says the market is “very close to the end of the housing boom”, because the accumulation in debt cannot continue. Efforts to make China more equal could mean more moderate price rises in future, says Oxford Economics, a consultancy. Whether China’s unfavourable demographics can continue to support a market of this size over the next decade is an open question, reckons Mr Yeung.Few options for decoupling economic growth from housing exist. China should have focused more of its construction on megacities, which tend to have diverse sources of funding and competent administrators, says Andy Xie, an economist. Instead local officials in small towns have squandered land revenues, often spending on vanity projects even as young workers leave for large cities. For the economy to end its unhealthy dependence on property development, it may be necessary for many local governments to cease to exist. More

U.S. stock futures were mostly flat Tuesday night after the Nasdaq plummeted in its worst day since March as a spike in bond yields sent stocks tumbling.
Dow Jones Industrial Average futures rose 78 points, or 0.23%. S&P 500 and Nasdaq 100 futures added 0.16% and 0.08%, respectively.

Shares of the semiconductor company Micron fell more than 4% in extended trading after it reported earnings and revenue outlook for the first quarter of 2022 that missed consensus estimates.
In regular trading, the Nasdaq Composite dropped 2.83% to 14,546.68 for its worst day since March. The S&P 500 shed 2.04% and the Dow Jones Industrial Average lost 569.38 points, or 1.63%.
The Dow and S&P are mow down 3% for September. The Nasdaq is down more than 4.5%.
Stocks across industries slid as the benchmark 10-year Treasury yield touched a high of 1.567% Tuesday. Tech stocks led the broader markets lower with Facebook, Microsoft and Alphabet losing more than 3%. Amazon fell more than 2%. Rising bond yields hurt growth stocks, including tech stocks, because they lower the relative value of future earnings. The tech-heavy Nasdaq hit its 10th down day in the past 15 sessions.

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“Some may believe that sentiment has become too ebullient which contrarians believe sets the stage for a market pullback like we’re seeing today,” said Brian Price, head of investment management for Commonwealth Financial Network. “If interest rate increases moderate from here on the back of declining inflation expectations, then it wouldn’t surprise me to see the market resume its march higher as we move into the fourth quarter.”

The debt ceiling debate in Washington also weighed on equities, as well as continued concern about supply chain issues and rising consumer prices. Federal Reserve Chair Jerome Powell said Tuesday to the Senate Banking Committee that inflation could persist longer than expected as a result of supply chain issues and reopening pressures.
“Today’s interest rate induced sell-off is a reminder of how impactful monetary stimulus has been with the Fed signaling a swift removal of the emergency stimulus measures is coming soon,” said Charlie Ripley, senior investment strategist for Allianz Investment Management. “This is an uncomfortable period for market participants as the removal of Fed support will be underway soon and equity markets will have to learn how to stand on their own again. However, we should be reminded that it is unlikely the Fed would move forward with tapering bond purchases if they didn’t think the economy was ready.”
Pending home sales data is due out on Wednesday.

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Micron Technology headquarters in Biose, Idaho, March 28, 2021.
Jeremy Erickson | Bloomberg | Getty Images

Check out the companies making headlines after the bell Tuesday:
Sherwin-Williams — The paint company saw its stock fall 3% in extended trading after the company lowered its third-quarter sales guidance. “The persistent and industry-wide raw material availability constraints and pricing inflation we have previously reported have worsened, and we do not expect to see improved supply or lower raw material pricing in our Q4 as anticipated,” management said Tuesday. It also announced that it has reached an agreement to acquire Specialty Polymers, a manufacturer and developer primarily of water-based polymers.

Micron Technology — Shares of the semiconductor company fell 4% after it reported earnings and revenue outlook for the first quarter of 2022 that were below estimates. Micron reported fourth-quarter earnings of $2.42 per share, beating estimates of $2.33 per share, according to Refinitiv.
Lucid Motors — Shares of the electric vehicle company got a 7% boost after it said production of its first car has begun and that deliveries are scheduled to begin in late October. Pricing for an entry-level version of the car starts at $77,400 and the company said it has received more than 13,000 reservations.

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Internet company Microsoft’s China office building is seen in Shanghai, China, Dec. 8, 2020.
Costfoto | Barcroft Media | Getty Images

Check out the companies making headlines in midday trading.
Tech stocks — Tech stocks dropped as the benchmark 10-year Treasury yield touched a high of 1.567% Tuesday. Twitter fell 4.4%, Microsoft and Google lost more than 3%, Salesforce slipped by 2.6%. Rising bond yields hurt growth stocks like tech stocks because they lower the relative value of future earnings. The tech-heavy Nasdaq is on pace for its 10th down day in the past 15 sessions.

Applied Materials — Shares of the semiconductor stock dropped 6.9% after New Street downgraded the stock to neutral from buy. The Wall Street firm cited Applied Material’s sky-high valuation for the downgrade. Other semis fell as well, with Advanced Micro Devices over 6% lower and Micron Technology, which will report earnings after the bell, down more than 2%. 
BioNTech, Moderna — Vaccine makers BioNTech and Moderna fell 9.9% and 6%, respectively, after the French drugmaker Sanofi announced positive results from a study of its MRNA-based Covid vaccine. Sanofi said it would halt further development because the market is so already so well dominated by Pfizer and Moderna. Instead, it’ll focus on using MRNA technology for other vaccines and developing a protein-based Covid vaccine with GlaxoSmithKline. 
Wells Fargo — Shares of Wells Fargo fell 3.4% after Morgan Stanley downgraded the stock to equal weight from overweight, citing persistent regulatory challenges. The call comes after Federal Reserve Chair Jerome Powell said last week the central bank would maintain its $1.95 trillion asset cap on Wells Fargo “until the firm has comprehensively fixed its problems.” Morgan Stanley predicts overcoming these regulatory issues will hike Wells Fargo’s expenses.
Huntsman Corp. — The chemical maker’s stock gained over 6% after the activist hedge fund Starboard Value took an 8.4% stake in the company, according to the Wall Street Journal. Starboard said the shares were undervalued and that it will push for changes to improve its stock performance, the Journal reported.
United Natural Foods — The food distributor surged more than 23% after the company reported quarterly earnings of $1.18 per share, which beat the consensus estimate of 80 cents per share. Revenue came in below consensus estimates. The company saw strong pandemic-driven demand by customers from the same quarter a year ago, it reported.

Thor Industries — The vehicle maker’s stock jumped 7.9% after the company reported quarterly earnings of $4.12 per share that beat analysts’ estimates of of $2.92 a share. Revenue also topped Wall Street forecasts. Thor cited continued demand for RVs and said backlogs are at a record high.
FactSet — Shares of the financial data and software company ticked 3.8% higher after beating on the top and bottom lines of its quarterly results. FactSet reported earnings per share of $2.88 on revenue of nearly $412 million. Wall Street expected earnings of $2.72 on revenue of $405 million, according to Refinitiv.
Energy stocks — Energy stocks mostly continued their rally as the international oil benchmark Brent crude and the U.S. benchmark West Texas Intermediate crude futures climbed on Tuesday before retreating. Cabot Oil & Gas and Cimarex each added more than 1% midday, though they closed in the red as the broader market sell-off hit equities across all sectors. Halliburton rose more than 1%.
 — CNBC’s Maggie Fitzgerald, Yun Li and Hannah Miao contributed reporting

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