Finance

Traders on the floor of the New York Stock Exchange.Source: NYSEMonday’s aggressive stock market rally came despite the fears of one Wall Street firm that investors still aren’t appreciating how quickly the Federal Reserve could start raising interest rates.After getting hammered in the final three trading days last week, Wall Street came roaring back with a move that sent the Dow Jones Industrial Average up more than 1.5%.”The market is getting back to its comfortable mode,” Mohamed El-Erian, the chief economic advisor at Allianz, told CNBC’s “Squawk Box.” “Growth is strong. They still believe inflation is transitory. They believe the Fed is going to be relatively slow in tapering [monthly asset purchases], and that’s why you’re seeing” stocks higher.That sanguine view of Fed policy is a mistake, according to Bank of America credit strategist Hans Mikkelsen.Last week’s Federal Open Market Committee meeting concluded with officials indicating they now see two rate increases coming as soon as 2023, more quickly than the market had been anticipating.But Mikkelsen’s view is that tighter monetary policy may come even sooner.”Expect the Fed to soon begin tapering its [quantitative easing] purchases, and to start hiking interest rates earlier than expected – and most importantly much faster than currently priced in markets,” he said in a note to clients.The bank’s analysis noted the committee was only “two dots,” or the projections of two members of the 18-person committee, away from pulling the first rate increase into 2022. The panel split evenly on whether rates should move next year, while eight members saw as many as three hikes for 2023.Stock picks and investing trends from CNBC Pro:The bull market will get a $500 billion cash injection by year-end, Goldman saysSmall caps have slumped, but Jefferies says these cheap stocks are primed for a comebackHere’s why Tom Lee says energy stocks still have the ‘most upside’ of any sectorTaken collectively, the members’ sentiment about where policy should go offered a significant deviation from what has been a historically easy Fed.Mikkelsen said the credit market, which sent rates sharply lower despite the hawkish Fed, is misjudging which way the central bank is heading. From the market’s perspective, it is seeing just a 41% chance that the Fed hikes rates by July 2022, according to the CME’s FedWatch tracker.”The key mispricing in the rates market, as our rates strategists continue to point out, is not the taper, not the timing of the first rate hike, but the pace of hikes from that point on, which is way too shallow compared with normal hiking cycles in the past,” he wrote.Mikkelsen pointed out that the Fed in effect has already begun tapering with its moves to unwind the small portfolio of corporate bonds it purchased during the Covid-19 pandemic. That move, “which was 100% unexpected as the Fed has a poor track record selling assets – was a signal the Fed increasingly feels emboldened to exit their super-easy monetary policy stance, even if that means defying market expectations.”Changes in the FedFor their part, Fed officials are indicating the landscape indeed is shifting, as reflected in the dot-plot projections released Wednesday.New York Fed President John Williams, in a speech Monday, reflected the consensus view when he said he sees inflation as transitory and Fed policy as appropriate given the current and expected conditions.”It’s clear that the economy is improving at a rapid rate, and the medium-term outlook is very good. But the data and conditions have not progressed enough for the FOMC to shift its monetary policy stance of strong support for the economic recovery,” Williams said in prepared remarks.But within the Fed, opinions are diverging.St. Louis Fed President James Bullard jolted the market Friday when he told CNBC he was one of the FOMC members who thinks a rate hike in 2022 would be appropriate. Bullard is not a voter this year but will be one next year.But Dallas Fed President Robert Kaplan said Monday he is more focused on reducing the pace of bond purchases – tapering – for now, and sees the rates question as one to be answered another day.”I would rather see us act sooner rather than later on asset purchases, then we’ll make a decision down the road in 2022 and beyond about the additional steps that are necessary,” said Kaplan, who appeared jointly with Bullard for a discussion presented by the Official Monetary and Financial Institutions Forum. “But I think the issue on the table today and in the near term is the timing and adjustment of these purchases.”Both officials noted the progress the economy has made and see reason that the inflation that has arisen in recent months may be a little stickier than the Fed had anticipated.”The supply-demand imbalances, some of them we think will resolve themselves in the next six to 12 months,” Kaplan said. “But again some of them we think are likely to be more persistent, driven by a number of structural changes in the economy.”For example, he cited changes in the energy industry – a key component of Kaplan’s district – toward sustainable power as contributing to longer-lasting inflationary pressures.Bullard spoke of the evolving labor market as an important consideration for future Fed policy.”We have to be ready for the idea that there’s upside risks to inflation,” he said. “Certainly, the anecdotal evidence is overwhelming that this is a very tight labor market.”If those inflationary pressures are hotter than Fed officials think, it would force them into tightening policy faster than they would like. That would hit the stock market and broader economy, both of which are dependent on lower rates.A tight Fed would drive up borrowing costs for a government that has been on a spending binge over the past year and wants to do even more with infrastructure.”Right now, inflation is transitory. But if you overlay that with significant further stimulus, then you run the risk of making something transitory permanent,” Natixis chief economist for the Americas Joe LaVorgna said. “So, you’re in a really tricky spot. I think the Fed’s best approach is to say less.”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 articleJPMLBPedestrians walk past a Bath & Body Works store.Craig Warga | Bloomberg | Getty ImagesLingerie retailer Victoria’s Secret is taking out a $500 million loan to finance its split from Bath & Body Works, Bloomberg News reported Monday.The loan is due 2028 and could pay interest that’s 300 to 325 basis points above Libor, Bloomberg reported, citing an unnamed source. JPMorgan Chase is overseeing the sale, with investor orders due by June 30, the report said.The report comes after parent company L Brands announced the spin-off last month that would separate the two brands into independent, publicly traded companies by August.Representatives for Victoria’s Secret, Bath & Body Works, L Brands and JPMorgan Chase did not immediately respond to CNBC’s requests for comment.Last month, L Brands reported quarterly numbers that beat analyst expectations. The company said its results were driven by more customers paying full price for products and strong momentum across its different divisions. Read more about the new loan in Bloomberg. More

Even though the Dow just had its best day since March 5, Invesco’s Kristina Hooper isn’t sounding the all clear.She warns the broader market is vulnerable to a 10% to 15% correction.”We’re in something of a precarious period … because we’ve gone so long without any kind of significant sell-off for the stock market. In addition, we’re watching the Fed try to maneuver into a very different position,” the firm’s chief global market strategist told CNBC’s “Trading Nation” on Monday. “There’s always a risk when you have a market that has been driven largely by the Fed.”Despite her warning, Hooper is a market bull and plans to take advantage of weakness. If stocks fall sharply, she expects a quick recovery due to the economic recovery’s strength.’I would be a buyer'”I would be a buyer on that pullback as soon as we saw a drop of 8% to 10%,” said Hooper. “This could be a significant opportunity — one that investors have been waiting for.”Hooper expects stocks tied to the economic recovery to outperform growth stocks during the year’s second half.”Keep in mind that this is a strong economic recovery,” she said. “That would favor cyclicals and smaller caps.”However, Hoover also sees benefits to owning growth, particularly Big Tech stocks, which could see near-term pressure as the Fed looks to gradually step away from easy-money policies.Her reasoning: It looks like a large portion of corporate America will permanently adopt stay-at-home hybrid work models for employees after the pandemic. Plus, she predicts increases in cap-ex spending.”Over the longer term, I am very excited about the tech sector,” she added. “There are a lot of strong catalysts there, and I think it really is going to be an outperformer when we look out one to three years.”On Monday, the major indexes staged a strong rebound from last week’s losses. The Dow rallied 586.89 points, or 1.8%. The S&P 500 also got a boost, and it’s now 1% from its all-time high. The tech-heavy Nasdaq also had a positive day.Disclaimer More

Jerome Powell, chairman of the U.S. Federal Reserve, speaks during a House Select Subcommittee on the Coronavirus Crisis hearing in Washington, D.C., U.S., September 23, 2020.Stefani Reynolds | ReutersFederal Reserve Chairman Jerome Powell said in testimony prepared for delivery to Congress this week that the economy is growing but faces continued threats from the coronavirus pandemic.The central bank leader also highlighted rising inflation pressures that he expects to lessen over time.As the economy recovers from the pandemic, he also pledged continued support from policies the Fed put into place in the early days of the Covid-19 threat.”Since we last met, the economy has shown sustained improvement,” Powell said in remarks he will deliver Tuesday to the House Select Subcommittee on the Coronavirus Crisis.”Widespread vaccinations have joined unprecedented monetary and fiscal policy actions in providing strong support to the recovery. Indicators of economic activity and employment have continued to strengthen, and real GDP this year appears to be on track to post its fastest rate of increase in decades,” he added. “Much of this rapid growth reflects the continued bounce back in activity from depressed levels.”Though vaccines have dramatically slowed the pace at which the virus has spread through the nation, he said threats remain.”The pandemic continues to pose risks to the economic outlook,” he said. “Progress on vaccinations has limited the spread of COVID-19 and will likely continue to reduce the effects of the public health crisis on the economy. However, the pace of vaccinations has slowed and new strains of the virus remain a risk.”The Fed has kept its benchmark short-term lending rate anchored near zero and is buying at least $120 billion of bonds each month.But last week’s Federal Open Market Committee meeting indicated that members are looking ahead to when they will start pulling back on policy accommodation.One worry is that inflation is rising at its fastest pace since the financial crisis and might force the Fed into raising interest rates faster than it wants. Powell said price pressures have increased “notably,” but repeated his belief that after special factors ease, inflation will drift back to the Fed’s longer-term 2% target.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

Budrul Chukrut | LightRocket | Getty ImagesChina’s central bank on Monday said it had urged several payment firms and banks to clamp down on cryptocurrency speculation, adding to calls from Beijing for restrictions on bitcoin and other digital currencies.The People’s Bank of China said it summoned major lenders including the Industrial and Commercial Bank of China and the Agricultural Bank of China, and Alipay, the mobile payments service run by Alibaba affiliate Ant Group, to tell them they must not provide crypto-related services.The comments reinforce Beijing’s hard line on crypto. In 2017, the Chinese government banned so-called initial coin offerings, a way to issue new digital tokens and raise money. Authorities have also cracked down on businesses involved in crypto operations, such as local exchanges.In May, China said financial institutions and payment companies were banned from providing services related to crypto transactions.Alipay said Monday it would “continue to conduct a comprehensive investigation and strike against virtual currency transactions” and “intensify” its crackdown on crypto.”We reiterate that Alipay does not conduct or participate in any business activity related to virtual currencies and does not provide any assistant technical service or capability,” the company said, according to an English translation of a post on the social media site Weibo.”Alipay will immediately cut its payment service related to any virtual currency transaction it spots. Alipay will firmly remove any merchant involved in virtual currency transactions.”Bitcoin’s price fell to a two-week low Monday on news that China’s clampdown on crypto mining has extended to the southwestern province of Sichuan, a region known for its rich hydropower resources.– CNBC’s Arjun Kharpal contributed to this report. More

In this articleSAFMGSATFANGPPCA worker wearing a protective mask fulfills an online order at a Stew Leonard’s supermarket in Paramus, New Jersey, on Tuesday, May 12, 2020. Stew Leonard Jr. said that the meatpacking plant the company uses is operating at about 70% capacity, and he expects it to rebound to full capacity in about a month, CT Post reported.Angus Mordant | Bloomberg | Getty ImagesCheck out the stocks making moves after the bell on Monday:Sanderson Farms — The chicken producer’s stock rose nearly 10% after a report said the company is exploring a sale. Sanderson is the third-largest chicken producer in the U.S. and has a market value of $3.5 billion.Globalstar — The satellite communications company’s stock fell 1.3% after jumping 17% during regular trading. Earlier in the day, B. Riley began coverage of Globalstar with a buy rating, saying it has “moved through the high-risk portion of its history and is now poised to start generating returns.”Pilgrim’s Pride — Shares of Pilgrim’s Pride rose about 1%. The company on Thursday entered an agreement to purchase the meats and meals business of Ireland’s Kerry Consumer Foods.Diamondback Energy — The oil company rose slightly after the bell as it looks to build on its sharp gains this year. Year to date, Diamondback Energy is up 89.1%, and it ended Monday’s regular session up more than 6%. The moves come as the S&P 500 energy sector is on pace for its best year in three decades. 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 articleGSBDACIRafael Henrique | LightRocket | Getty ImagesCheck out the companies making headlines in midday trading.DoorDash — Shares of DoorDash added 3.55% after the food delivery company announced a partnership with Albertsons on same-day grocery delivery from nearly 2,000 stores. “Leveraging our extensive logistics network and Albertsons’ wide selection of fresh groceries, we are creating a one-stop shop for customers to access any of the essentials they need, delivered to their doorstep within an hour,” Fuad Hannon, head of new verticals at DoorDash, said in a press release.MicroStrategy — Business intelligence firm MicroStrategy’s stock fell 9.7% after the price of bitcoin fell below $32,000 for the first time since June 8. The company, which already held tens of thousands of bitcoins on its balance sheet, bought 13,005 units of the digital currency Monday morning, bringing its total bitcoin holdings to more than 100,000, worth more than $3 billion.Coinbase — Shares of the largest cryptocurrency exchange in the U.S. fell 2.9% following bitcoin’s price decline. Coinbase’s business so far is closely tied to the price of bitcoin and ether, though that may change in the future as it expands.Nvidia — The semiconductor stock shed 1.1% after bitcoin dropped. The company makes chips used in cryptocurrency mining.Raven Industries — Shares of Raven Industries soared 49.3% after the agriculture technology company announced it would be acquired by CNH Industrial for $58.00 per share, or $2.1 billion. The selling price per share was a 33.6% premium to Raven Industries’ four-week volume-weighted average stock price.ZipRecruiter — Shares of the company jumped 11.6% after Goldman Sachs and Evercore ISI began coverage on the stock with buy-equivalent ratings. “We believe the risk/reward in owning ZIP shares into a favorable employer demand environment is positive,” Goldman said. The firm sees shares rising to $28, which is about 32% higher than the stock’s closing price on Friday. Evercore has a $31 price target on the stock.Boston Beer — The beverage stock rose about 1.7% on Monday after Guggenheim named Boston Beer one of its best ideas. The firm said in a note that concerns about slowing retail sales for alcohol were overshadowing strong growth for the company’s Truly brand.Paylocity — Paylocity shares increased 2% after Cowen named the cloud-based payroll and human capital management software company a top idea. The bank called Paylocity an “attractive” growth investment.Nike — Shares of Nike rose 1.3% after Telsey reiterated its rating on the sportswear brand as outperform. The Wall Street firm said Nike likely faces some “near-term pressures” but the positive momentum is continuing. Telsey noted that demand for athletic apparel, footwear and Nike products in the U.S, was strong.Uber — Uber’s stock dipped 3.2% despite being named a top pick for the second half of 2021 by Bank of America. The Wall Street firm said several important catalysts are coming for Uber, including potential IPOs in the sector that could change comps or asset values, competitive launches, and the end of U.S. unemployment stimulus.Figs — Figs shares added 17% after Credit Suisse and KeyBanc initiated coverage of the medical apparel company with outperform and overweight ratings. “FIGS is disrupting the innovation-starved and stagnant $12B US healthcare apparel industry by reengineering the core scrubs category, using cues from performance sportswear brands (like Lululemon) to replace low-fashion, ill-fitting incumbents,” Credit Suisse said in a note.— CNBC’s Tanaya Macheel, Yun Li, Maggie Fitzgerald, Pippa Stevens and Jesse Pound 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

In this articleBTC.CM=A bitcoin mine near Kongyuxiang, Sichuan, China on August 12, 2016.Paul Ratje | The Washington Post | Getty ImagesBitcoin sank Monday on reports that China has intensified its crackdown on cryptocurrency mining.The world’s largest digital currency fell 7% to a price of $32,801 Monday morning, dropping below $33,000 for the first time since June 8, according to data from Coin Metrics. It was last trading at $33,243 as of 5:50 a.m. ET. Smaller rivals like ether and XRP also tumbled, down 8% and 7% respectively.Many bitcoin mines in Sichuan were shuttered Sunday after authorities in the southwestern Chinese province ordered a halt to crypto mining, according to a report from the Communist Party-backed newspaper Global Times. More than 90% of China’s bitcoin mining capacity is estimated to be shut down, the paper said.Bloomberg and Reuters also reported on the move from Sichuan authorities. It follows similar developments in China’s Inner Mongolia and Yunnan regions, as well as calls from Beijing to stamp out crypto mining amid worries over its massive energy consumption.Separately, China’s central bank said Monday it had summoned Alipay, the payments service run by Alibaba affiliate Ant Group, and some major banks urging them to crack down on crypto trading. China had already banned financial institutions from providing crypto-related services.China’s crackdown appears to have led to a significant decline in bitcoin’s hash rate — or processing power — which has fallen sharply in the last month, according to data from Blockchain.com. An estimated 65% of global bitcoin mining is done in China.Bitcoin’s network is decentralized, meaning it doesn’t have any central party or middleman to approve transactions or generate new coins. Instead, the blockchain is maintained by so-called miners who race to solve complex math puzzles using purpose-built computers to validate transactions. Whoever wins that race is rewarded with bitcoin.This power-intensive process has led to growing concerns over the potential environmental harm of bitcoin, with everyone from Tesla CEO Elon Musk to U.S. Treasury Secretary Janet Yellen raising the alarm. China, where most bitcoin mining is concentrated, relies heavily on coal power. Last month, a coal mine in the Xinjiang region flooded and shut down, taking nearly a quarter of bitcoin’s hash rate offline.However, miners in China often migrate to places like Sichuan, which are rich in hydropower, in the rainy season. And some industry efforts have been launched — including the Bitcoin Mining Council and the Crypto Climate Accord — in an effort to reduce cryptocurrencies’ carbon footprint. More