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J.C. Penney Co. Inc. shares fell 10.2% in Friday premarket, and more than 11% after the market opened following a late-Thursday report that it has hired advisors to restructure its debt in order to allow for more time for a turnaround. J.C. Penney stock has fallen 65% over the past year while the S&P 500 index has risen 6.1% over the period. As of May 4, 2019, the company had total long-term debt of about $3.9 billion, according to FactSet. Restructuring plans are in the early stages, according to Reuters. "Although we recognize that J.C. Penney continues to maintain good liquidity, with about $1.75 billion of revolver availability and cash, our downgrade to Caa1 stable reflects the reality that leverage remains extremely elevated as the company embarks on its turnaround," Moody's wrote in a June 17 note. "Despite the areas of opportunity for improvement, which include its assortments, management of shrink and online, significant progress will take time. In addition, the magnitude of the improvement needed to refinance the capital structure long term is also significant." J.C. Penney released a statement late Friday saying the company "routinely" hires outside advisors, which is helping it to take measures to improve the business. "We have no significant debt maturities coming due in the near term, and we continue to maintain a strong liquidity position," the company said. "Also, given our strong liquidity position we can confirm that we have not hired any advisors to prepare for an in-court restructuring or bankruptcy." J.C. Penney stock closed Friday down 17%.
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Walmart Inc. is reorganizing some of its leadership team in the wake of the decision to absorb Jet.com into its digital business. In the memo sent to associates, which was also sent to MarketWatch, Greg Smith has been named to head the combined supply chain team, which will bring together supply chain heads for grocery, e-commerce, fleet operations, and other business functions. Nate Faust, who had been leading the e-commerce fulfillment process, will help with this transition and then move to another post within the company, which will be discussed at a later time. Michael Dastugue has been named Walmart U.S. chief financial officer and Steve Schmitt, who is currently the CFO for Sam's Club, has been named U.S. e-commerce CFO. Brandi Joplin, currently chief audit executive, will take on the role of Sam's Club CFO and Todd Sears, currently assistant controller, will become chief audit executive. Ashley Buchanan has been named U.S. e-commerce chief merchandising officer. And Jeff Shotts, who is currently the e-commerce CFO, will now lead the U.S. marketplace business, reporting to Marc Lore. There are now openings for chief experience and strategy officer, chief product officer, and leader of the customer care team. Walmart stock has rallied more than 23% for the year to date while the Dow Jones Industrial Average is up 17% for the period. Read: Walmart CEO McMillon says the retailer has been playing ‘catch up’ in e-commerce
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U.S. stocks finished firmly lower Friday, capping the worst week for equities since the end of May, as doubts about the magnitude of an expected rate cut by the Federal Reserve softened the buying mood on Wall Street. The Dow Jones Industrial Average closed down 0.3% at 27,154, off 69 points, the S&P 500 index retreated 0.6% at 2,977, while the Nasdaq Composite Index pulled back 0.7% to end at 8,146. For the week, the Dow booked a 0.7% decline, the S&P 500 finished with a weekly slide of 1.2%, while the Nasdaq logged a 1.2% drop over the five-session period. For all three stock gauges it was the steepest weekly decline since the period ended May 31, according to FactSet data. Reports of Iran seizing oil tankers in the Strait of Hormuz added to uncertainty on the day and Federal Reserve officials attempted moderate comments made by NY Fed boss John Williams, whose comments investors appeared to interpret as implying a 50-basis-point rate cut at the end of this month.
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Shares of Chesapeake Energy Corp. surged 3.4% in afternoon trading Friday, to bounce off a 20-year closing low, as a a rebound in oil prices helped provide a boost. The oil and gas company's stock had tumbled 7.1% on Thursday, and sank 18% amid a four-session losing streak, to the lowest close ($1.58) since April 1999. On Friday, crude oil futures rose 0.7% to snap a four-session losing streak, helped by reports that Iran seized a U.K.-flagged ship in the Gulf of Oman. The correlation coefficient between Chesapeake's stock and crude oil futures, over the past two decades, has been 0.78, in which 1.00 would mean they move perfectly in sync. In comparison, Chesapeake's correlation with the S&P 500 is negative 0.28.
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U.S. stocks traded lower after The Wall Street Journal published a report saying "Fed officials signal quarter-point rate cut likely at July meeting." The S&P 500 lost 7 points, or 0.2%, to 2,988 after rising as many as 9.49 points at session highs, the Dow Jones Industrial Average rose 19 points, or 0.1%, to 27,242, though it traded more than 100 points higher earlier Friday afternoon. The Nasdaq Composite index lost 26 points, or 0.3% to 8,181. The report said Fed officials "aren't prepared for bolder action by making a half-point cut, as analysts and traders have speculated in recent days," citing public remarks and interviews.
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Oil futures finished higher Friday after reports that Iran seized a U.K.-flagged ship in the Gulf of Oman. Prices still settled lower for the week, however, on worries about a slowdown in demand. The market saw an "insane downward trend in crude oil this week," said James Hatzigiannis, senior commodities associate at Long Leaf Trading Group. "I think it is a bit of an overreaction and you should see prices recover next week if there [is] any progress on the U.S./China trade front or any escalation of tensions between the U.S. and Iran," he said. August West Texas Intermediate oil added 33 cents, or 0.6%, to settle at $55.63 a barrel on the New York Mercantile Exchange. It fell 7.6% for the week after settling Thursday at its lowest in a month.
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Short-term Treasury yields climbed after The Wall Street Journal reported that the Federal Reserve was signaling a 25 basis point rate cut at its July 30-31 meeting. The 2-year Treasury note yield , sensitive to expectations for monetary policy, surged 4.6 basis points to 1.822%. The 10-year Treasury note yield rose by a more subdued 1.5 basis points to 2.055%. Debt prices move in the opposite direction of yields. Expectations for a sharp 50 basis point rate cut in July have risen and fallen after speeches by senior Federal Reserve officials. New York Fed President John Williams suggested on Thursday there was a strong case for central banks acting aggressively and swiftly to early signs of economic weakness. Since then, a New York Fed spokesperson downplayed the policy implications of his comments. In addition, St. Louis Fed President James Bullard said on Friday that a 50 basis point cut would be excessive.
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Oil futures moved higher ahead of Friday's settlement, following a report from BBC News that the Iranian Revolutionary Guard has seized a U.K.-flagged oil tanker in the Gulf of Oman. Worsening tensions raise the potential for disruptions to oil flow in the Strait of Hormuz. West Texas Intermediate oil prices, which had been trading little changed ahead of the news, saw its August contract rise by 65 cents, or 1.2%, to $55.95 a barrel, while September Brent crude added 63 cents, or 1%, to $62.56 a barrel.
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Gold futures lost steam to finish lower on Friday, giving up earlier gains as prices took a break from a two-session rally that lifted prices to their highest levels in more than six years. "Some of the hot money driving prices higher in futures and options has clearly closed out the week by taking profit," said Adrian Ash, director of research at BullionVault. "Big picture, the switch to weaker interest rates and new stimulus looks set to keep gold on the boil." August gold declined by $1.40, or 0.1%, to settle at $1,426.70 on Comex. It tallied a weekly rise of 1%. It had settled at $1,428.10 on Thursday, the highest finish for a most-active contract since mid-May 2013, according to FactSet data.
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Baker Hughes on Friday reported that the number of active U.S. rigs drilling for oil fell by 5 to 779 this week. That followed declines in each of the last two weeks. The total active U.S. rig count, meanwhile, also fell by 4 to 954, according to Baker Hughes. August West Texas Intermediate crude saw little reaction to the oil-rig count. It was down a penny at $55.29 a barrel.
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Shares of MSG Networks Inc. sank 3.6% toward a 13-month low in midday trading Friday, after J.P. Morgan analyst Alexia Quadrani downgraded the sports entertainment network operator on the expectation that affiliate revenue growth will decelerate as industry trends worsen. Quadrani cut her rating to underweight, after being at neutral since at least November 2016, and lowered her stock price target to $19 from $23. That makes Quadrani the most bearish of the 10 analysts surveyed by FactSet that cover MSGN. Quadrani said the growth in virtual multichannel television programming distributors (MVPDs) is accelerating the trend in cord cutting, which is an "ongoing challenge" for MSGN. She said its carriage agreement with one of its largest affiliates, Altice, expires at the end of the year, could remain an overhang for the stock on concerns the MVPD will seek lower carriage minimums. "We view the risk/reward for shares through year-end as skewed to the downside given worsening trends for legacy video subscribers, which could lead to lower consensus estimates and further multiple contraction," Quadrani wrote in a note to clients. The stock, on track for the lowest close since June 2018, has tumbled 17.4% year to date while the Dow Jones Industrial Average has gained 17.0%.
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Shares Michaels Companies Inc. tumbled 7.7% to pace the retail sector's decliners, after Bank of America Merrill Lynch turned bearish, citing potentially long-term struggles that are "unlikely to resolve" until a new CEO is named. The company had announced in February that then-CEO Chuck Rubin was agreed to step down after six years in charge. Analyst Elizabeth Suzuki cut her rating to underperform from neutral, while slashing her price target to $5, which is 35% below current levels, from $9. She said a proprietary survey of over 2,000 U.S. consumers has provided some insight into the "opaque" arts and crafts retail sector, suggesting the sector has struggled with "a lack of compelling trends" and an increase in competition. As the only publicly traded "pure-play" arts and crafts retailer, Suzuki expects Michaels to cut its full-year outlook for same-store sales, after the company has been reporting decelerating sales but recently maintained its full-year outlook. "[Michaels's] expectation for a [second-half] rebound appears overly optimistic, in our view, and we expect guidance to be lowered in the upcoming quarters," Suzuki wrote in a note to clients. The stock, which was the biggest decliner in the SPDR S&P Retail ETF has lost 43% year to date, while the retail ETF has gained 3.7% and the S&P 500 has rallied 20%.
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Medallia Inc. launched its life as a public company with it's shares rocketing higher on heavy volume, after its upsized initial public offering priced well above the previously expected range. The first trade for the San Francisco-based experience management enterprise software company's stock was at $34 at 10:58 a.m. Eastern for 2.95 million shares, or 62% above the $21 IPO price. The stock has extend its gains, to be up 64% in recent trading. The stock's gain helped boost its market valuation to about $4.18 billion. Medallia went public at a time the Renaissance IPO ETF has run up 40.3% year to date, more than double the S&P 500's gain of 19.6%.
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Shares of Kansas City Southern surged 2.4% in morning trading Friday, after the railroad operator reported second-quarter earnings and revenue that beat expectations. The rally was enough to pace the Dow Jones Transportation Average's gainers, as the Dow transports rose 77 points, or 0.7%. The company reported earlier net income that fell to $128.7 million, or $1.28 a share, from $148.2 million, or $1.45 a share, in the same period a year ago. Excluding non-recurring items, adjusted EPS rose 6% to $1.64, above the FactSet consensus of $1.54. Revenue increased 5% to $714.0 million, beating the FactSet consensus of $706.5 million. The company said operational efficiency helped boost its performance. " We're handling the same volume levels overall that we handled last year with 12% fewer locomotives, 7% fewer railcars and 10% fewer crew starts," said Chief Executive Patrick Ottensmeyer on the post-earnings conference call with analysts, according to a transcript provided by FactSet. The stock has run up 26.7% year to date, while the Dow transports has advanced 15.7% and the Dow Jones Industrial Average has gained 16 .8%.
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Red Robin Gourmet Burgers Inc. stock jumped 13% in Friday trading after the restaurant chain confirmed that it has received an unsolicited conditional proposal from Vintage Capital Management to acquire all outstanding common shares at $40 apiece in cash. Red Robin said in a statement that it will carefully review the proposal. Vintage Capital already owned 1.5 million Red Robin shares, or 11.6%. Vintage Capital previously urged Red Robin to consider strategic alternatives, including a sale, and said it was prepared to make this offer. Red Robin stock is down 31% over the past year while the S&P 500 index is up 7% for the period.
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Skechers USA Inc. stock soared 14% in Friday trading after blowout earnings were followed by a stock upgrade at Wedbush to outperform from neutral. Wedbush raised its price target to $46 from $31. "In our view, international wholesale and global direct-to-consumer can continue to outperform into the second half of 2019, driving improved leverage and earnings per share upside," wrote Wedbush analysts led by Christopher Svezia. Analysts are also encouraged by the U.S. business based on off-price comparisons, growth in the wholesale Amazon.com Inc. account, and the product pipeline. Skechers also saw its price target raised at at least three research groups: Susquehanna Financial Group (up to $42 from $37), Cowen (up to $40 from $32) and Stifel (up to $44 from $35). "We are highly encouraged by the combination of strong end-market demand and SG&A [sales, general and administrative expenses] efficiency," Stifel wrote. "While still mindful of necessary systems investments and process improvements to support the current scale of the business, we see double-digit growth and leverage capacity as deserving of a higher multiple." Stifel rates Skechers stock buy. Skechers shares have soared 73.5% in 2019 so far while the S&P 500 index is up 19.8% for the period.
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Shares of Boeing Co. surged 3.9% in morning trading Friday, enough to keep the Dow Jones Industrial Average in positive territory, in the wake of the aerospace giant's announcement of a 737 Max-related charge of $5.6 billion. The stock's price gain of $13.99 was adding about 95 points to the Dow's price, which was up 89 points. J.P. Morgan analyst Seth Seifman said despite the larger-than-expected charge, he believes Boeing's decision to keep 737 Max production at 42 per month and its plan to boost production to 57 per month in 2020 "is likely a relief" for investors.
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President Donald Trump on Friday tweeted that he liked a speech by New York Federal Reserve President John Williams better than a statement that followed. Speaking Thursday, Williams said the most effective strategy for the Fed is to cut rates at the first sign of trouble. Investors saw Williams' comments as endorsing a half-point rate cut at the next policy meeting on July 30-31. But a New York Fed spokesman later said the talk was theoretical. Trump has routinely called for the Fed to cut rates.
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Shares of Gannett Co. Inc. soared 21% in morning trading Friday, after The Wall Street Journal reported that the publisher of the USA Today newspaper was nearing a deal to be acquired by GateHouse Media. The WSJ report, out late Thursday, said the companies were discussing a cash-and-stock deal, which would join the U.S.'s two largest newspaper groups by circulation. On May 30, the WSJ had reported that Gannett and GateHouse were in merger talks. And in January, the WSJ reported Gannett was approached by hedge-fund backed MNG Enterprises Inc., better known as Digital First Media. Gannett's stock has lost 5.7% over the past 12 months, while the S&P 500 has advanced 7.1%.
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Stocks opened higher Friday, lifted as investors appeared cheered by the latest round of earnings reports and continued to look ahead to an expected rate cut by the Federal Reserve at the end of the month. The S&P 500 rose 9.27 points, or 0.3%, to trade at 3,004.38, while the Dow Jones Industrial Average advanced 94.1 points, or 0.4%, to 27,317.07. The Nasdaq Composite rose 33.69 points, or 0.4%, to 8,240.93. Shares of Microsoft Corp. were up more than 2% at $139.24, after trading at an all-time high at $140.67, following a stronger-than-expected earnings report.
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Pier 1 Imports Inc. said Friday that it has named two new executives, both to assume their roles on July 22. Douglas Diemoz will become president, a newly-created position responsible for day-to-day operations at the ailing home retailer, including global supply chain, information technology and human resources. He was most recently chief executive of Crate & Barrel. Pier 1 is creating an office of the chief executive officer that will be led by Cheryl Bachelder, the company's interim CEO, and will include Diemoz and others. The office will supervise and direct the company's strategy, including its previously announced evaluation of strategic alternatives. Robert Riesbeck will become chief financial officer, succeeding Deborah Rieger-Paganis, who has served in the role on an interim basis since April. He was most recently CFO of FullBeauty brands. Pier 1 stock has plummeted more than 37% this week, and is down 71.2% for the past month. The company announced a 1-for-20 reverse stock split in late June. The S&P 500 index is up 2.4% for the past month.
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Home builder NVR Inc. reported Friday a second-quarter profit and revenue that rose above expectations as new orders increased, although the average price of homes ordered declined. Net income increased to $210.2 million,or $53.09 a share, from $203.2 million, or $49.05 a share, in the same period a year ago. The FactSet consensus for earnings per share ws $45.60. Homebuilding revenue edged up to $1.76 billion from $1.75 billion, topping the FactSet consensus of $1.68 billion. New orders increased 6% to 5,239 units, above expectations of 5,186 units. The average sales price of new orders declined 5% to $358,000, primarily because of the continued shift to smaller, lower-priced products, as well as a shift to markets with lower average sales prices. The stock, which was still inactive ahead of the open, has rallied 43.9% year to date, while the SPDR S&P Homebuilders ETF has hiked up 30.3% and the S&P 500 has climbed 19.5%.
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The U.S.-listed shares of Midatech Pharma PLC rocketed 113% on very heavy volume in premarket trading Friday, after the U.K.-based research and development company focused on rare disease products and cancer treatments disclosed "positive" results from a first in-human study of its MTX102 immuno-tolerising vaccine candidate in diabetes. Trading volume topped 2.9 million shares, enough to make the stock the most actively traded ahead of the open, and compared with the full-day average of about 88,000 shares. The company had recruited five recently diagnosed Type I diabetes patients in the phase 1 study, which was focused on assessing safety of MTX102. "MTX102 was well tolerated, with asymptomatic local injection site reactions being the only drug-related finding, and no serious adverse events were reported," the company said. The stock had tumbled 80.7% over the past 12 months through Thursday, while the S&P 500 has gained 6.8%.
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Gilead Sciences Inc. has licensed three pre-clinical anti-viral programs from rival pharmaceutical giant Novartis AG , the companies announced Friday. Under the terms of the agreement, Gilead will get exclusive rights to develop and commercialize several small molecules that have the potential to treat human rhinovirus, influenza and herpes. Novartis will receive an upfront payment, the amount for which was not disclosed, and will be eligible to get an additional $291 million in potential milestone payments and royalties on annual net sales. Shares of both Gilead and Novartis were up slightly in premarket trade. Gilead's stock has gained 7.5% in the year to date through Thursday, while Novartis shares have gained 24.2%. The S&P 500 has gained 19.5%.
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Hurricane Barry, which battered Louisiana in early July, is estimated to have caused $500 million to $900 million of flood and wind losses, according to real estate services provider CoreLogic . The storm caused flood losses of $200 million to $400 million to residential and commercial properties, including from storm surge and inland flooding. Wind losses are estimated at an additional $300 million to $500 million. Excluding National Flood Insurance Program losses, insured flood and wind losses are estimated at $300 million to $600 million. "Insured residential and commercial flood loss covered by the NFIP is estimated to be between $100 million and $200 million," CoreLogic said in a statement. "Uninsured flood loss is estimated to be approximately $100 million. "
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Huntington Bancshares Inc. said Friday it will raise its quarterly dividend by 7%, which effectively increases the regional bank's dividend yield to nearly double its peer group, and more than double the broader stock market. The Ohio-based bank said it will raise its dividend to 15 cents a share from 14 cents, with the new dividend payable Oct. 1 to shareholders of record on Sept. 17. Based on Thursday's stock closing price of $13.76, the new annual dividend rate implies a yield of 4.36%, compared with the yield on the SPDR S&P Regional Bank ETF of $2.26% and the implied yield for the S&P 500 of 1.93%, according to FactSet. Huntington's stock has rallied 15.4% year to date, while the regional bank ETF has advanced 13.1% and the S&P 500 has climbed 19.5%.
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Weight Watchers International Inc. shares rose 6% in premarket trade Friday, after DA Davidson upgraded the stock to buy from neutral and said investor expectations for the 2020 diet season are too subdued. "WW has already reported improved recruitment trends, chatter on app download data indicates stabilization of subscriber trends, and our proprietary analysis of Reddit comments indicates keto interest could be fading," analyst Linda Bolton Weiser wrote in a note to clients. "Our data also show improved sentiment toward the meeting experience in 2Q19 vs. 1Q19. We believe 2019 earnings risk is low." The analyst said proprietary research finds brand sentiment up strongly in the second quarter after a decline in the first quarter. DA Davidson generates monthly and quarterly sentiment scores by scraping relevant comments from Reddit and YoutTube. The investment firm raised its stock price target to $32 from $24.50. Weight Watchers shares have fallen 35% in 2019, while the S&P 500 has gained 19%.
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Medallia Inc. raised by 7.5% the number of shares it was offering in its initial public offering, which priced well above expectations. The San Francisco-based experience management enterprise software company said the IPO priced at $21 a share, above the previously expected range of $16 to $18. Medallia also increased its share offering by 7.5% to 14,325,000 shares from 13,250,000, to raise about $300.8 million. Selling shareholders are offering an additional 1,175,000 shares in the offering, in line with previous plans. The stock is set to start trading Friday on the NYSE under the ticker symbol "MDLA." The company said earlier this month that it will have 121,603,976 shares outstanding after the IPO, which would give it a market valuation of about $2.55 billion. Medallia is going public at a time the Renaissance IPO ETF has gained 8.5% over the past three months and the S&P 500 has tacked on 3.1%.
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Shares of American Express Co. swung to a loss of 1.3% in premarket trading Friday, erasing earlier gains, after the credit card and payments company reported a second-quarter profit that beat expectations while affirming its full-year outlook. AmEx also said it expected to raise its dividend by 10%. Net income rose to $1.76 billion, or $2.07 a share, from $1.62 billion, or $1.84 a share, in the year-ago period. The FactSet consensus was for earnings per share of $2.03. Revenue increased 8% to $10.84 billion, just above the FactSet consensus of $10.83 billion, as revenue for consumer services increased 10%, for commercial services grew 7% and for merchant and network services rose 5%. The company affirmed its 2019 outlook for revenue growth of 8% to 10% and for adjusted EPS of $7.85 to $8.35. The company said it expects to raise its quarterly dividend to 43 cents a share from 39 cents in the third quarter. The stock has soared 34.7% year to date through Thursday, while the Dow Jones Industrial Average has climbed 16.7%.
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Shares of Schlumberger Ltd. swung to a premarket gain of 1.0% Friday, after the oil services company reported second-quarter revenue that beat expectations, while profit that matched. Before the results, the stock was down over 1% after the company said CEO Paal Kibsgaard will retire after 8 years in the role. Net income rose to $492 million, or 35 cents a share, from $430 million, or 31 cents a share in the year-ago period. Excluding non-recurring items, adjusted EPS fell to 35 cents from 43 cents, in line with the FactSet consensus. Revenue was little changed at $8.27 billion, but was above the FactSet consensus of $8.11 billion, as reservoir characterization, production and Cameron revenue topped expectations while drilling came up a bit shy. The stock has lost 14.9% over the past three months through Thursday, while the VanEck Vectors Oil Services ETF has tumbled 22.9% and the S&P 500 has gained 3.1%.