Finance

The Goldman Sachs booth on the floor of the New York Stock ExchangeGetty ImagesU.S. stock futures were mostly flat on Monday night after the Dow Jones Industrial Average rose to almost 35,000 ahead of the second-quarter earnings season for banks, which kick off Tuesday.The Dow Jones Industrial Average futures fell 10 points, or 0.03%. The S&P 500 futures fell 0.06% and the Nasdaq 100 fell 0.002%.In the regular trading session the Dow rose 126.02 points to close just below 35,000. The S&P 500 and Nasdaq Composite gained 0.3% and 0.2%, respectively, to record closes.Investors are turning their attention to banks as they prepare to release their second quarter earnings this week, starting with JPMorgan and Goldman Sachs Tuesday before the opening bell. JPMorgan and Goldman Sachs ended the day 1.4% and 2.3% higher, respectively. Banks are expected to double this quarter, following the 138% earnings growth the sector saw in the first quarter. The S&P 500 broadly is expected to produce its strongest earnings growth since the fourth quarter of 2009.”High expectations for earnings and each companies’ forward guidance will push markets higher or disappointment may create a small pullback in equity markets,” said Jeff Kilburg, chief investment officer at Sanctuary Wealth. “Eyes will be on the major banks to set the tone for the next few weeks of earnings.”Bank of America, Citigroup, Wells Fargo and Morgan Stanley all ended the day higher as well. They will report their earnings later in the week.Federal Reserve Chairman Jerome Powell is scheduled to appear in front of Congress Wednesday and Thursday to provide an update on monetary policy. He has maintained that the Fed’s easy policies will remain intact until there’s more progress on its employment and inflation goals. More

Federal Reserve Chair Jerome Powell testifies during a U.S. House Oversight and Reform Select Subcommittee hearing on coronavirus crisis, on Capitol Hill in Washington, June 22, 2021.Graeme Jennings | Pool | ReutersFederal Reserve Chairman Jerome Powell is tasked this week with convincing Congress that the ultra-easy policies the central bank has followed during the pandemic are still the right ones.It might not be such an easy task this time around.While Powell’s parleys with Congress have been notably genial affairs, there’s at least a chance this time around that the questioning could get a little pointed. Some in congressional leadership, particularly on the Republican side, have pushed the Fed to start easing its foot off the policy pedal, specifically pertaining to the at least $120 billion a month in bond purchases still in play.Powell, then, will have to show that a rapidly improving economy that is contending with its highest inflationary pressures in well over a decade still needs crisis-level policies to pull it through.”The last time he spoke [on June 22] was in front of the House financial services committee. That was a complete waste of time,” said Peter Boockvar, chief investment officer at Bleakley Advisory Group. “Not many people challenge him. That’s the problem with these testimonies and congressional appearances.”Indeed, Powell only occasionally faces a tough question or two when appearing on Capitol Hill, as he will Wednesday and Thursday when he delivers his mandated semiannual testimony on the state of monetary policy.The Fed’s response to the Covid-19 crisis last year, in which it wheeled out an unprecedented set of tools to combat upset in the markets and tumult in the economy, generally received high grades in Congress.But things are changing.Inflation expectations on the riseThe economy is just about back to its pre-Covid self at least in terms of GDP, the stock market has continued to soar, and inflation is motoring higher. A consumer survey Monday from the New York Fed indicated that inflation expectations are the highest they’ve been in at least eight years, and that has come amid a continuing surge in housing prices that has sparked bubble fears.”I’m hoping he gets asked a question about housing,” Boockvar said. “Housing is obviously the most rate-sensitive part of the economy and thus most directly influenced by monetary policy.”If things go according to past exchanges between Powell and Congress, he likely would then say the Fed is watching the housing market closely for signs of overheating, but doesn’t see any yet.Still, the sentiment of those on the policymaking Federal Open Market Committee is shifting.At the June meeting, the group pulled forward the first post-crisis rate hikes to 2023, and was only one member’s “dot” away from bringing a move into next year, which the market already is pricing. Some itchy trigger fingers on the FOMC could make Powell’s task more challenging.”It’s definitely tricky now for them,” said Tom Graff, Brown Advisory’s head of fixed income. “They can’t know how much current inflation is transitory. Some definitely is transitory, but some isn’t. Therefore, they have to be careful about how much they promise. They can’t afford to be overly specific about how long they may be willing to leave policy so accommodative.”More recent Fed document releases show a central bank without a great deal of certainty about the future path of inflation specifically and the economy generally.Minutes from June’s meeting were filled with equivocation about how FOMC members viewed the road ahead. A report Powell will present along with his testimony, released Friday, noted that “upside risks to the inflation outlook in the near term have increased” even if policymakers are holding to their belief that they eventually will fade.Along with that, the Powell Fed has put high emphasis on the employment side of its dual mandate. Under its current mission statement, the central bank is looking for a return to employment that is both full and inclusive of racial, gender and income. While the unemployment rate is well below its Covid peak, the current 5.9% level is still considerably above the 3.5% pre-crisis rate.Powell’s “level of confidence that the labor market will make ‘substantial further progress’ could be a clue to his level of support for an earlier start to tapering” of the monthly asset purchases, wrote Citigroup economist Andrew Hollenhorst.Boockvar said he hopes, but does not expect, that Powell will provide some clear path to the exit from the current level of policy support.”It’s overkill. Policy that was fine a year ago is not fine now, and in fact you can argue that they ran it too hot,” Boockvar said. “A classic too much money chasing too few goods is in play here. We don’t have a demand problem, we have a supply problem.”Become a smarter investor with CNBC Pro.Get stock picks, analyst calls, exclusive interviews and access to CNBC TV.Sign up to start a free trial today. More

In this articleCOFTROWRCLCCLGSCAKEPedestrians wearing protective masks wait to enter a Disney store in San Francisco, California, on Wednesday, Dec. 23, 2020.David Paul Morris | Bloomberg | Getty ImagesCheck out the companies making headlines in midday trading.Virgin Galactic — Shares of Virgin Galactic were down 17% in midday trading after the space company filed to sell up to $500 million in common stock. The swoon came despite a successful test flight over the weekend with founder Sir Richard Branson. The stock, which trades under ticker SPCE, was halted for volatility earlier in the session.Cheesecake Factory — Shares of the restaurant chain jumped 4% after Raymond James upgraded its shares to outperform from market perform and said the market is underestimating the comeback for full-service restaurants. Cheesecake Factory particularly saw a boost in recent months from its footprint states that were slower to reopen, Raymond James’ Brian Vaccaro said.Didi Global, Tencent Music — Chinese stocks extended their sell-off with Didi falling more than 7% and Tencent falling more than 4% amid intensifying regulatory pressure. China has vowed to crack down on domestic companies that list on U.S. exchanges and it will also tighten restrictions on cross-border data flows and security. The Wall Street Journal reported that ByteDance, the Chinese owner of TikTok, scrubbed plans for an offshore listing.Financial firms — Companies in the financial services businesses are still broadly enjoying the rebound in bond yields and the period before earnings season, in which they’re expected to produce blowout results for the second quarter. Discover Financial jumped 3.4% while Morgan Stanley, T. Rowe Price, Goldman Sachs and Capital One traded higher by more than 2%.Travel sites — Booking websites are trading lower as parts of Asia, Europe and Australia reimpose travel restrictions to protect against the spread of the delta variant of Covid-19. Expedia shares fell 1.2% before regaining some of its losses, while TripAdvisor shares fell 2.6%.Cruise lines — Shares of cruise companies are also taking a hit in response to worries about the spread of the delta variant and a resurgence of Covid-19 cases. Carnival Corp’s stock is down 1.6%. Royal Caribbean Cruises and Norwegian Cruise Line fell more than 1% before regaining some of their losses.Disney — Shares of the media giant gained more than 4% following the release of “Black Widow.” The film brought in $80 million from the domestic box office, which is the highest of any film released following the pandemic. The latest Marvel movie also brought in more than $60 million globally from sales through Disney+ Premier Access.Clover Health – Clover’s stock fell 2.5% after JPMorgan downgraded it Monday morning to underweight from neutral, before climbing back up 4.4%. JPMorgan said uncertainty about the company’s business and a weak first-quarter report made the stock unattractive and that other managed care companies offer a more balanced risk/reward profile.Charter — Shares of Charter fell 2.2% after Bernstein downgraded the telecommunications and media company to market perform from outperform. “We remain convicted about Charter’s business plans, financial strategies, and structural competitive position in most of the U.S.,” the firm said. — CNBC’s Yun Li, Pippa Stevens, Hannah Miao and Tom Franck contributed reportingBecome a smarter investor with CNBC Pro. Get stock picks, analyst calls, exclusive interviews and access to CNBC TV. Sign up to start a free trial today More

Shares of Virgin Galactic rose slightly on Monday following the commercial spaceflight company’s successful test flight with founder Sir Richard Branson.Shares of Virgin Galactic — which trades under ticker SPCE —are up 2% in premarket trading after the company successfully completed its first fully crewed test flight into suborbital space on Sunday, a major milestone in the commercial space race and step towards the company’s goal for commercial service in early 2022. The shares were last at about $50.42 in premarket trading, off the highs of the session. The stock has doubled so far this year in anticipation of this progress toward commercial service.”We view Branson’s achievement as a massive marketing coup for Virgin Galactic that will be impossible for the public to ignore,” Canaccord Genuity equity analyst Ken Herbert told clients. The firm has a buy rating but $35 price target on the stock, which is below its current level.The company’s spacecraft VSS Unity launched above the skies of New Mexico on Sunday, with two pilots guiding the vehicle carrying the billionaire founder and three Virgin Galactic employees. VSS Unity fired its rocket engine and accelerated to faster than three times the speed of sound in a climb to the edge of space.”We see this as important on the path toward starting passenger flights, which we assume will happen in early 2022,” AB Bernstein analyst Douglas Harned told clients. The firm has a market perform rating on Virgin Galactic.Virgin Galactic’s VSS Unity is designed to hold up to six passengers along with the two pilots. The company has about 600 reservations for tickets on future flights, sold at prices between $200,000 and $250,000 each. While passenger ticket sales have yet to be announced, Bernstein expects them to come at a higher price point between $400,000 and $500,000.Virgin Galactic also announced it is partnering with sweepstakes company Omaze to offer a chance at two seats on “one of the first commercial Virgin Galactic spaceflights” early next year.”The flight is symbolically important for building consumer confidence in and demand for space tourism,” said Harned. “A successful test flight by Blue Origin including founder Jeff Bezos, scheduled for July 20, should generate further interest in the industry, which would benefit both companies.”Zoom In IconArrows pointing outwardsIn 2004, Branson founded Virgin Galactic to fly private passengers to space. Branson was not previously expected to fly on Sunday’s spaceflight but after fellow billionaire Jeff Bezos announced he would fly on his company Blue Origin’s first passenger flight on July 20, Virgin Galactic rearranged its schedule — aiming to fly Branson nine days before Bezos.Launching ahead of Bezos or Elon Musk, Sunday’s flight means Branson is the first of the billionaire space company founders to ride his own spacecraft.AB Bernstein said the flight’s success and subsequent ticket sales could well be an upward short-term catalyst for the stock but did not change their long-term forecast. The firm did note that it wouldn’t be short the stock, as it has seen huge volatility driven by retail investors reacting to events.— with reporting from CNBC’s Michael Sheetz and Michael Bloom. More

Getty ImagesTaxpayers who collected unemployment benefits this year shouldn’t expect another break in the next filing season, financial experts say.Jobless benefits are generally treated as taxable income. but federal lawmakers waived tax on a portion of such benefits received in 2020, after the Covid-19 pandemic led an unprecedented number of people to tap the unemployment system.People continuing to collect may not get a similar break for 2021 benefits, which could leave millions of them on the hook for those taxes when they file their returns next year.More than 14 million people were collecting benefits as of June 19, according to most recent Labor Department data.”That provision came up in a year when we had record levels of unemployment,” said Janet Holtzblatt, a senior fellow at the Urban-Brookings Tax Policy Center, referring to the tax break. “Fortunately, the economy has improved, which really reduces the probability it would be extended.”More from Personal Finance:Still no stimulus check? There is help availableNumber of workers unemployed for more than a year jumps by 248,000What to do if you plan to quit your jobThe American Rescue Plan, which President Joe Biden signed in March, excluded up to $10,200 of unemployment benefits collected in 2020 from federal income tax, per person. (Only those with less than $150,000 in income were eligible.) Some states followed with their own tax breaks.It’s unclear exactly how many people qualified for and received the federal tax break, since the IRS hasn’t yet processed all tax returns, according to an agency spokeswoman.The Century Foundation estimates about 40 million people collected jobless aid last year. Some would have gotten a bigger tax bill, or a surprise one, for 2020 without the partial federal tax break.That’s because states, which administer unemployment benefits, are supposed to offer recipients the option to withhold 10% of benefits to cover part or all their tax liability. But many cash-strapped jobless workers, many of them new to the unemployment system, may not have elected to withhold.Some states also didn’t offer the option to workers for certain pandemic-era unemployment programs, according to The Century Foundation.As a result, fewer than 40% of unemployment payments last year had taxes withheld, the group projected.”Last year, there were so many people unemployed for the first time in their lives,” Holtzblatt said. “They were really caught up with this big surprise at the end of the year.”Steps to takeThere are steps that those getting unemployment pay can take to prepare for a potentially hefty bill during tax season in early 2022.For one, recipients should elect to have the 10% tax withheld if they can afford to, according to Andrew Stettner, a senior fellow at The Century Foundation.They may complete Form W-4V, Voluntary Withholding Request and give it to the state agency paying benefits, according to the IRS.”If you can’t afford it, at least have in your mind that when you go back to work you need to save for it,” Stettner said.However, even a 10% withholding rate may not be high enough to fully cover taxes, depending on one’s income and other factors.Recipients who haven’t had taxes pulled from benefits or believe they’ve been underpaying may opt to make quarterly estimated tax payments, according to the IRS.Families poised to start getting advance payments of the child tax credit — up to $300 a month per child — in July may also set aside some of those funds, he said.”I don’t think it’s a done deal,” Stettner said of not having another tax break. “People should always prepare for the worst-case scenario instead of the best case.” More

In this articleSPCEJWNCAKEVirgin Galactic Founder Sir Richard Branson demonstrates a spacewear system, designed for Virgin Galactic astronauts, at an event October 16, 2019 in Yonkers, New York.Don Emmert | AFP | Getty ImagesTake a look at some of the biggest movers in the premarket.Virgin Galactic — Shares of the space company jumped 9% in premarket trading after CEO Richard Branson completed a long-awaited test flight to space on Sunday. It was the first spaceflight to date for Virgin Galactic carrying more than one passenger. Branson also became the first of the billionaire space company founders to ride his own spacecraft, beating Elon Musk and Jeff Bezos.Cheesecake Factory — The restaurant stock climbed more than 1% in premarket trading after Raymond James upgraded the shares to outperform from market perform. The Wall Street firm said the market is underestimating the comeback for full-service restaurants. Cheesecake Factory shares have fallen about 8% in the past month.Nordstrom — Shares of the department store dipped slightly after the company said Sunday it has acquired a minority stake in four apparel brands owned by the online U.K. fashion house Asos. The brands — Topshop, Topman, Miss Selfridge and the activewear label HIIT — target younger consumers in their 20s. Financial terms of the deal weren’t disclosed.JPMorgan, Bank of America — Major bank stocks traded lower across the board despite expectations for strong earnings reports this week. JPMorgan dipped 0.7%, while Goldman Sachs fell 0.5% and Bank of America shares traded 0.8% lower. The decline came as bond yields continued to drift lower. JPMorgan and Goldman Sachs kick off earnings season with results due out before the bell on Tuesday. Bank of America, Citigroup and Wells Fargo report on Wednesday.United Airlines, Carnival —Shares tied to the economic reopening were slightly weaker in premarket Monday. United Airlines fell more than 1% after losing 2.3% month to date. Boeing and Delta Air Lines both traded about 1% lower. Carnival, Norwegian Cruise Line and Royal Caribbean all fell over 1%. More

Sheldon Cooper | LightRocket | Getty ImagesByteDance, the Chinese owner of TikTok, reportedly scrubbed plans for an offshore listing after government officials asked the company to focus on data security risks.The Beijing-based tech giant had been weighing an initial public offering of all or some of its businesses in the U.S. or Hong Kong, the Wall Street Journal reported on Monday, citing people familiar with the matter.ByteDance founder Zhang Yiming decided it would be best to postpone the planned IPO indefinitely in late March after meetings with cyberspace and securities regulators who told the company to address data security and other issues, according to the Journal.ByteDance had other reasons for delaying the listing, including the fact that it didn’t have a chief financial officer at the time, the Journal reported. ByteDance hired Shou Zi Chew, a former executive at Chinese smartphone maker Xiaomi, as its CFO in March, fueling speculation about a potential IPO.”We don’t comment on rumors or speculation,” a ByteDance spokesperson told CNBC.The news comes after Chinese regulators launched a cybersecurity review into homegrown ride-hailing service Didi, which listed on the New York Stock Exchange last month. Beijing has been escalating its regulatory scrutiny of U.S.-listed Chinese companies of late.For more on ByteDance’s shelved IPO plans, you can read the full story from the Journal here. More

(Click here to subscribe to the new Delivering Alpha newsletter.)Climate change has been one of the biggest topics of 2021, but private capital specifically is still in a nascent stage in making progress in this space. TPG’s Executive Chairman Jim Coulter is raising one of the few climate funds in existence. Here he is on impact investing and the role of private capital in mitigating climate change risks. (The below has been edited for length and clarity.)Leslie Picker: Where did this idea come from? You’re co-managing partner of the Rise Fund [which] does impact investing specifically. What gave [you] the idea of raising a climate-focused fund? Jim Coulter: Five years ago we began to look at the question of why impact investing hadn’t scaled and whether it might be next year’s idea to begin to focus capital to impact companies. Out of that came the Rise Fund, which was the largest private equity fund focused on impact investing. One of the sectors we approached was climate. For a period of time, I have to admit, it was a little slow, because most climate investing was being done in the infrastructure market in contract renewables. But about two years ago, we noticed a fundamental change in the market for the quantity and quality of investments.Picker: So where are we in this cycle? Coulter: I’ve been fascinated by the pattern recognition of what I experienced as a technology investor through the ’90s and over the last 30 years and climate today. So it feels to me a bit like technology in 1998. It is a moment where society is beginning to realize that technology was going to touch everything just as climate is going to touch everything, and that the capital markets hadn’t quite set up for how they were going to deal with that. There were a few companies back in 1998 in technology, take AOL, which were famous. But roll to the future, AOL is no longer what it was. Homepages are not driving technology today. So we sit today where there’s a realization that climate change will drive investing opportunities for perhaps decades to come, but the markets are still forming. Picker: So if AOL was kind of the darling of the late ’90s, what do you think is the darling equivalent of the current stage for climate?  Coulter: Well it’s clear in the public markets that Tesla, in some ways, is garnering attention — it may not end like AOL ended — but it’s an early understanding of the importance of one sector of the climate-change universe. So EVs are a portion of what needs to happen. If you think about the climate-change world in an emissions way, how we travel is probably only 18% of our emissions problem. And yet if you look at the amount of focus on climate-related companies, a huge amount of focus is in that one corner of the market. Picker: With the tech cycle, we did see a big boom and a big bust and people have kind of drawn out different elements of that as they look at areas like SPACs and some of the activity in the public markets like you mentioned. Do you see some of this recent frenzy and this rush to invest in these areas, similar to that part of the tech boom and bust cycle as well? And, you know, an extension of that is, does that indicate that the climate ecosystem could be in a bubble right now?Coulter: I don’t see it as a bubble, but I see it as what will clearly be a twisting and interesting journey. So I don’t want to draw too strong an analogy, but in some ways, it feels like 1998. If you remember back in 1998, people were understanding the immensity of what could happen. Every company was trying to come up with a tech strategy and capital began to flow into the area. So what happened? A number of companies jumped to the public market probably ahead of where they should have. A few of them didn’t find a very hospitable resting place there. Others, like Amazon, got to a public market early but took a long time before they really found their footing in the marketplace. So fast forward a few years, what happened after that moment? The market rewired itself and the growth equity market grew in the private marketplace. Companies like Uber and Airbnb stayed private for 10 or 12 years and I think we’re going to see the same pattern in this cycle, in the climate revolution, where there’s going to be a lot of excitement in the early days. Companies may jump in and react to the excitement, but a long-term ecosystem of capital and capital solutions will grow and that’ll help the revolution unfold.Picker: If the climate situation does see some sort of revaluation to the downside, is that detrimental to the movement toward climate change? Is that something that could cause investors to take a step back and say, “I’m going to, you know, sit on the sidelines for a little bit, wait for this to play out,” and then, what does that mean for climate change and the efforts to solve all these problems? Coulter: As markets react day to day, what drives long-term returns are long-term trends. So I don’t get very bothered by the day-to-day back-and-forth in this market. It’s absolutely clear to me, though, that the long-term trend is developing. We’re not going back to a carbon-based world. The one thing that gives me some confidence on that is that there’s always a question as to whether green was an upmarket phenomenon and as soon as something went wrong, green would kind of fade away. We just went through a global pandemic, social upheaval, election uncertainty and we’re coming out of it with green more entrenched and with greater momentum. Picker: And why is that? People were really struggling last year and it was remarkable that so much attention was focused on how to improve the environment, climate change, just a real, huge difference in sentiment in a time that I wouldn’t have predicted that to happen. Coulter: I would have to say that Covid maybe was a moment where we understand that making nature angry at us, or that nature can surprise us in odd ways, has huge effects. So this was a moment that something we couldn’t control affected us all. And climate has some of those same attributes, where we had something that was going to take collective action and which will affect us all. It’s something that knows no boundaries, it knows no national containment, and therefore, maybe there was an awakening that has transferred some of its awareness over to climate. I also think that there was a moment within Covid where business and government came together against a problem: Operation Warp Speed and later the vaccine distribution, and that actually worked.Picker: What’s the role of private capital here? How does that differ from all the other sources of capital that are looking to change this problem?  Coulter: The private markets have a very important role to play, because we need to build the climate companies of tomorrow. And those companies are probably better built in the private market. And unlike what we just went through in technology, we’re going to require substantially more capital than a tech company to build. So, our goal is really to help play the role that venture capital played in the tech evolution, where venture capital had a really important role in giving birth to new companies that then went through growth equity into public markets. The same cycle needs to happen here where the private markets have to organize themselves to provide the capital to solve this problem.— Ritika Shah, producer at CNBC, contributed to this article.Enjoyed this article?For exclusive stock picks, investment ideas and CNBC global livestreamSign up for CNBC ProStart your free trial now More