BoA Warns of Tech Bubble
Michael Hartnett, a strategist at Bank of America Corp.(NYSE:BAC), has reiterated his recommendation to sell US stocks, citing concerns about a bubble forming in the tech and artificial intelligence sectors. Hartnett also believes that the Federal Reserve’s rate hikes may not be complete, and rising bond yields pose a risk. He had accurately predicted last year’s stock exodus fueled by recession fears and recommends selling the S&P 500 (SPI:SP500) at its current level of 4,200.
Foot Locker Stock Plunges
Foot Locker (NYSE:FL), a sports clothing company, witnessed a significant crash in its stock price during pre-trading, plummeting by 23.5%. This decline followed disappointing first-quarter results that fell short of market expectations. The company’s revenue dropped by 11.4% to $1.93 billion, contrary to analysts’ forecast of $1.99 billion. Sales in physical stores declined by 9.1% during the quarter, further undershooting market expectations. Additionally, Foot Locker slashed its annual profit forecast, reducing the adjusted profit outlook to a range of $2.00 to $2.25 per share, down from $3.35 to $3.65 per share. Interestingly, the stock had actually increased by 10% since the beginning of the year.
Morgan Stanley CEO Plans Departure Within a Year
James Gorman, the chief executive of Morgan Stanley (NYSE:MS), announced his plans to step down within the next 12 months. Gorman, who has led the Wall Street bank for 13 years and transformed it into a wealth management powerhouse, disclosed his intention at the annual shareholder meeting. While the specific timing of the CEO transition remains undecided, both Gorman and the board expect it to occur within the next year.
Deere Raises Profit Outlook
Deere (NYSE:DE), known for its agricultural equipment, raised its profit outlook for the full year due to eased supply-chain challenges and a robust farm economy that drove increased demand for farm equipment, even at higher prices. The company, headquartered in Moline, Illinois, and the largest supplier of farm equipment in the U.S., witnessed a 30% surge in sales during the fiscal second quarter, reaching $17.39 billion, surpassing Wall Street analysts’ expectations of $14.89 billion. Sales improved across all three segments, propelled by higher prices and volume.
WestJet Pilots Reach Agreement
WestJet Group (TSX:WJA), Canada’s second-largest airline, reached a tentative agreement with its pilots on pay, job security, and scheduling, thereby averting a strike that could have disrupted flights during the country’s summer-travel season. The agreement was reached with the Air Line Pilots Association (ALPA), the union representing the pilots. While specific details of the deal were not immediately available, it ensures operational continuity for the airline.
Optimism Sparks Global Market Rally
Optimism surged in markets as leaders in Washington appeared to be nearing a deal to raise the debt ceiling. This development triggered a widespread rally in stocks across Europe and Japan. The DAX Index (DBI:DAX) was on track to achieve its first record since January 2022, oil was set to conclude its best week since mid-April, and the Nikkei 225 (NIKKEII:NI225) closed at a 33-year high, following the positive momentum from Wall Street. Futures for the S&P 500 also ticked higher after the index reached a nine-month high on Thursday.
No Regulatory Failure in Adani Group
In its interim report, an expert committee appointed by India’s top court has concluded that there is no evidence of regulatory failure concerning the stock rallies and subsequent downturn of the Adani Group (NSE:ADANIENT) in recent years. This assessment also includes the period since January when the conglomerate faced a short seller attack. The report dismisses any regulatory misconduct or oversight in relation to these events.
Lazard CEO Ken Jacobs to Step Down
Ken Jacobs, the long-serving Chief Executive of Lazard (NYSE:LAZ), is reportedly preparing to step down as the renowned investment bank seeks to revitalize its performance. People familiar with the matter indicate that Peter Orszag, a former Obama administration official who has been leading Lazard’s financial-advisory unit since 2019, is expected to assume the top position. Jacobs, aged 64, intends to remain at the firm, continuing to work with clients.
TikTok Creators Sue Montana
A group of TikTok creators has filed a lawsuit against Montana’s state attorney general in response to the state’s recent ban on the social media platform. This legal action mirrors efforts made by TikTok enthusiasts during the Trump era to counter restrictions on the app. The lawsuit was submitted on Wednesday to the U.S. District Court of Montana, and it names Austin Knudsen, the state attorney general responsible for enforcing the legislation. The creators argue that the ban violates various laws, including the First Amendment, and is unconstitutional.
Grayscale Pursues ETF Launch
Grayscale, the manager of the world’s largest cryptocurrency fund, has faced regulatory hurdles in its pursuit of converting its flagship vehicle into an exchange-traded fund (ETF). However, it may have discovered a workaround to partially circumvent the restrictions imposed by the U.S. Securities and Exchange Commission (SEC). Grayscale has submitted a filing to launch a U.S.-listed ETF that would invest partially in “spot” bitcoin exchange-traded products already operating in other countries. This approach allows Grayscale to navigate the regulatory landscape and provide investors with exposure to cryptocurrencies through an ETF structure.