U.S. stocks were mixed on Tuesday as investors weighed a trove of fresh economic data, including a new read on the ISM Manufacturing Index and the Labor Department’s latest job openings.
On the employment side, latest prints indicate demand for workers was historically high in November, pointing to continued labor shortages that have strained employers looking for workers. Meanwhile, the ISM’s release showed manufacturing slowed in December amid some cooling in demand for goods, but supply constraints are starting to ease.
The Dow Jones Industrial Average extended its rally while the S&P 500 ticked down after both indexes set records in Monday’s session. The Nasdaq shed 1.8%, or 280 points in intraday trading.
“When I think about the market and the economy right now, I think about momentum,” Baird market strategist Michael Antonelli told Yahoo Finance Live.
“Momentum is one of the most durable factors when it comes to the stock market,” he said. “If you looked at new all-time highs last year, there were actually more new all-time highs than in the entire ’70s and 2000s combined, those two decades — we’ve got a lot going for us right now.”
The S&P 500’s performance on Monday showed the index was powered by its own velocity indeed, picking up right where it left off in 2021, ending a banner year with 70 closing records and its third annual double digit increase of 27%.
The Nasdaq also powered on to start 2022 trading, lifted mostly by landmark days for Apple (AAPL) and Tesla (TSLA), some of its most heavily-weighted stocks. Apple (AAPL) rallied 3% on Monday to briefly cross a $3 trillion market capitalization, making it the first company to reach that milestone. Shares were mostly flat in intraday trading on Tuesday at $182.12 a piece
The “January Effect” seems so far underway. Wall Street theorizes this perception of a seasonal rise in U.S. equities during the first month of the year is caused by an increase in purchasing following the drop in prices that occurs in December when investors sell positions that have declined in order to take the capital loss in that calendar year’s taxes. Some also think the anomaly is the result of traders using year-end cash bonuses to purchase equities the following month.
Strategists have made more than 5,000 calls for year-end S&P 500 targets. With profits expected to trend up, lofty equity valuations growing higher, and a strong pipeline for IPOs in the works, many think stocks will go up — some just believe that not as much.
Among them, Insigneo Financial Group CIO Ahmed Riesgo said an internal rotation is likely in 2022, with stocks that performed very well last year set to potentially underperform and drag the market down a bit while the vast majority of stocks will shoot up. Riesgo predicted mid- to single-digit returns for the [S&P 500] next year.”
Royce Investments co-CIO Francis Gannon shared similar sentiments with Yahoo Finance Live.
“You’re going to see more muted returns in the market this year,” he said. “But I do think that small caps have an edge here over their large-cap brethren just because of the fact that you’re going to see very strong earnings growth.”
11:20 a.m. ET: Apple turns red after reaching $3 trillion milestone
Toyota sold 2.332 million vehicles in the United States in 2021, beating 2.218 million for General Motors, the companies reported on Tuesday. GM’s U.S. sales slumped 13% for 2021, while Toyota was up 10%. In 2020, GM’s U.S. sales totaled 2.55 million, compared with Toyota’s 2.11 million and Ford’s 2.04 million.
Shares of GM were up more than 5% in morning trading to $64.25 a piece. Toyota was up nearly the same amount, trading 4.92% higher at $195.45.
10:21 a.m. ET: Manufacturing slips amid lower demand for goods
December’s print came in below consensus estimates of 60.2 and lower than the previous month’s read of 61.1, according to Bloomberg Data. Readings above 50 indicate an expansion in manufacturing
Meanwhile, data showed that supply chain constraints are starting to ease. The ISM survey’s measure of supplier deliveries declined to 64.9 from 72.2 in November, with prints above 50% suggesting slower deliveries to factories.
10:05 a.m. ET: Job openings hold near a record high
The Department of Labor reported 10.562 million job openings in November in a fresh read out Tuesday on its Labor Turnover Summary (JOLTS).The figure came in below October’s print of 11.033, based on the government’s first estimate for the month. Consensus economist estimates pointed to a 11.079 million in November, according to Bloomberg data.
The data does not yet meaningfully capture the impact of rising cases of COVID on employment in the latest wave of the virus. Some economists suggested labor shortages may be worsened in the near-term due to the latest surge.
“Looking ahead, the Omicron variant wave will likely lead to some short-term weakness in the labor market,” Sam Bullard, senior economist for Wells Fargo, wrote in a note published earlier this week. “However, we believe this will be temporary and that the pace of hiring should pick back up by the spring.”
9:54 a.m. ET: Ford gets a move on EV truck production
Ford Motor Company (F) plans to nearly double annual production capacity for its popular F-150 Lightning electric pickup to 150,000 vehicles to keep up with a surge in demand ahead of its arrival at U.S. dealers this spring, the company said on Tuesday.
The model has attracted nearly 200,000 reservations already, far outpacing the automaker’s initial production capacity for 70,000-80,000 vehicles.
Ford’s announcement comes as its electric truck vehicle race heats up with competitor General Motors Co (GM), which is scheduled to unveil the Chevrolet Silverado electric pickup on Wednesday set to go on sale in early 2023.
Shares of Ford climbed 6.64% at open to $23.22 a piece. Rival GM was also up 2.56% to $63.73 per share.
9:30 a.m. ET: Markets charge forward into second straight day of gains
Here’s what happened in the markets at the start of the day’s trading session:
shares tumbled 38% in Wednesday’s after-hours trading, after the remote healthcare provider reported deeper-than-expected losses for the first quarter and cut its financial projections for the year. The stock already had slid 70% over the past 12 months as the company struggled to shake off concerns that it’s just a pandemic play.
(ticker: TDOC) posted a loss of $6.67 billion, or $41.58 a share. Analysts polled by FactSet had been expecting a loss of just 60 cents a share, on average. In the same quarter last year, the telemedicine company lost $199.6 million, or $1.31 per share.
The loss in the first quarter was mainly driven by a noncash goodwill impairment charge of $6.6 billion, which is often recorded on the income statement after a company acknowledges that an asset has lost value or become completely worthless.
In Wednesday’s news release, Teladoc didn’t disclose many details about the goodwill impairment charge, but a large part of goodwill on its books came from its $18.5 billion acquisition of Livongo in 2020, according to the company’s filings with the Securities and Exchange Commission. Livongo is a digital health-management and coaching platform for people with chronic conditions like diabetes.
The goodwill impairment was triggered by the sustained decline in Teladoc’s share price, which is driven by the increased discount rate of the company’s future cash flows and decreasing valuations for peers in the high-growth digital healthcare space, said Chief Financial Officer Mala Murthy during a conference call Wednesday afternoon.
(ONEM), two of Teladoc’s major competitors in the telemedicine space, have seen their shares lose 80% and 83%, respectively, over the past 12 months.
Teladoc revenue increased 25% from the year-ago quarter to reach $565.4 million. The firm demonstrated “significant progress” in a number of strategic initiatives, said Teladoc CEO Jason Gorevic in a statement. Still, the number came in slightly lower than the $568.7 million estimates from Wall Street analysts.
For the fiscal year, Teladoc now expects to see revenue between $2.4 billion and $2.5 billion, and earnings before interest, taxes, depreciation and amortization, or Ebitda, ranging from negative $7 million to negative $52 million. The company has previously projected $2.55 billion to $2.65 billion in revenue and $18 million to $48 million in Ebitda.
“We are revising our 2022 outlook to reflect dynamics we are currently experiencing in the direct-to-consumer mental health and chronic condition markets,” says Gorevic, noting that higher advertising costs in some channels have dragged on the yield of its marketing spending. The firm is also seeing an “elongated sales cycle” in the chronic-condition market, he says, as employers and health plans evaluate their long-term strategies.
Following the disappointing earnings report, Teladoc shares, which had already fallen 3.1% during Wednesday’s trading to $55.99, slid further after hours to reach $34.50. If the losses are retained at Thursday’s market open, it will be the lowest level for the stock since March 2018 and cause significant losses for some of its largest shareholders.
TORONTO (Reuters) – Canada is locking up more people in immigration detention without charge after the numbers fell during the pandemic, government data obtained by Reuters shows.
Authorities cite an overall rise in foreign travelers amid easing restrictions but lawyers say their detained clients came to Canada years ago.
Canada held 206 people in immigration detention as of March 1, 2022 – a 28% increase compared with March 1 of the previous year. Immigration detainees have not been charged with crimes in Canada and 68% of detainees as of March 1 were locked up because Canada Border Services Agency (CBSA) fears they are “unlikely to appear” at an immigration hearing, according to the data.
The rise puts Canada at odds with Amnesty International and other human rights groups that have urged Ottawa to end its use of indefinite immigration detention, noting CBSA has used factors such as a person’s mental illness as reason to detain them.
A CBSA spokesperson told Reuters that “when the number of entries (to Canada) goes up, an increase in detention is to be expected.” CBSA has said in the past it uses detention as a last resort.
A lawyer told Reuters her detained clients have been in Canada for years.
In the United Kingdom, too, immigration detention levels rose last year after dropping earlier in the pandemic, according to government statistics. Unlike Canada, the United States and Australia, European Union member states have limits on immigration detention and those limits cannot exceed six months.
The rise in detentions puts people at risk of contracting COVID-19 in harsh congregate settings, refugee lawyers say.
Julia Sande, Human Rights Law and Policy Campaigner with Amnesty, called the increase in detentions “disappointing but not surprising,” although she was reluctant to draw conclusions from limited data.
The number of immigration detainees in Canada dropped early in the pandemic, from a daily average of 301 in the fourth quarter (January through March) of 2019-20 to 126 in the first quarter (April through June) of 2020-21.
FEW NO-SHOWS AS DETENTIONS DROPPED
Detaining fewer people did not result in a significant increase in no-shows at immigration hearings – the most common reason for detention, according to Immigration and Refugee Board data.
The average number of no-shows as a percentage of admissibility hearings was about 5.5% in 2021, according to that data, compared to about 5.9% in 2019.
No-shows rose as high as 16% in October 2020, but a spokesperson for the Immigration and Refugee Board said this was due to people not receiving notifications when their hearings resumed after a pause in the pandemic.
Refugee lawyer Andrew Brouwer said the decline in detention earlier in the pandemic shows Canada does not need to lock up as many non-citizens.
“We didn’t see a bunch of no-shows. We didn’t see the sky fall … It for sure shows that the system can operate without throwing people in jail,” Brouwer said.
He added that detainees face harsh pandemic conditions in provincial jails – including extended lockdowns, sometimes with three people in a cell for 23 hours a day.
Refugee lawyer Swathi Sekhar said CBSA officials and the Immigration and Refugee Board members reviewing detentions took the risk of COVID-19 into account when deciding whether someone should be detained earlier in the pandemic but are doing so less now.
“Their position is that COVID is not a factor that should weigh in favor of release,” she said.
“We also see very, very perverse findings … [decision-makers] outright saying that individuals are going to be safer in jail.”
The Immigration and Refugee Board did not immediately respond to a Reuters request for comment.
Stock futures rose in overnight trading as the market shook off the April sell-off and investors reacted positively to earnings from Meta Platforms.
Futures on the Dow Jones Industrial Average added 70 points or 0.2%. S&P 500 futures gained 0.7% and Nasdaq 100 futures jumped 1.2%.
The moves came as shares of Meta surged more than 18% after hours following a beat on earnings but a miss on revenue, a sign that investors may see signs of relief in the beaten-up tech sector. Shares were down 48% on the year heading into the results.
Meanwhile, shares of Qualcomm gained 5.6% in extended trading on the back of strong earnings while PayPal rose 5% despite issuing weak guidance for the second quarter.
“I think a lot of people want to believe that earnings are going to pull us out of this, but earnings are not what got us into this,” SoFi’s Liz Young told CNBC’s “Closing Bell: Overtime” on Wednesday. “… But the reality is there are so many macro headwinds still in front of us in the next 60 days that the market is just hard to impress.”
The after-hour activity followed a volatile regular trading session that saw the Nasdaq Composite stoop to its lowest level in 2022, as stocks looked to bounce back from a tech-led April sell-off. The index is down more than 12% since the start of April.
In Wednesday’s regular trading, the tech-heavy Nasdaq ended at 12,488.93, after rising to 1.7% at session highs. The Dow Jones Industrial Average rose 61.75 points, or 0.2%, to 33,301.93 propped up by gains from Visa and Microsoft, while the S&P 500 added 0.2% to 4,183.96.
Investors await big tech earnings on Thursday from Apple, Amazon and Twitter, along with results from Robinhood. Jobless claims are also due out Thursday.