Consumer price index for December matches expectations
The consumer price index fell 0.1% in December, matching a Dow Jones estimate. That was the biggest monthly decline since April 2020. The so-called core CPI, which strips out volatile food and energy prices, also met expectations with a 0.3%. gain.
On a year-over-year basis, the index rose 6.5%, still well above the Fed’s 2% inflation target.
— Fred Imbert
Disney, American Airlines among stocks making the biggest moves premarket
Bed Bath & Beyond could see a short-squeeze, S3 Partners says
The big move in Bed Bath & Beyond on Wednesday may not have been a short-squeeze yet, but that could come soon, according to Ihor Dusaniwsky of S3 Partners.
The stock spiked more than 68% to $3.49 per share on Wednesday. It has continued to climb higher in extended trading, pushing above $4 per share.
“We could see some near-term short sellers exit their positions and begin to pocket (realize) the profits they earned in 2022,” Dusaniwsky said.
Bed Bath & Beyond was threatening to move higher again on Thursday.
Bed Bath & Beyond has short interest of about 52%, according to S3. While those who began this trade in the last month may be sitting on losses, the stock did trade as high as $30 per share in August — meaning others may be comfortably able to ride out a process that may end in bankruptcy.
“The crucial difference between BBBY and other crowded shorts is that there is a definite threat of bankruptcy, which could embolden shorts to hold onto their positions, incur some temporary losses, and wait out this rally in anticipation of a $0.00 stock price in bankruptcy,” Dusaniwsky said.
— Jesse Pound
Netflix rises after Jefferies upgrade
Jefferies upgraded Netflix to buy from hold, citing a potential increase in revenue as the streaming giant cracks down on password sharing. The stock gained 1.3% in premarket trading.
“We’re upgrading Netflix to buy based our belief that a well-executed strategy of launching [advertising-based video on demand] with password sharing changes will drive revenue and adjusted EBTIDA well above Street estimates, resulting in margin upside and valuation expanding back towards historical averages,” Jefferies said.
American Airlines raises guidance, shares gain
American Airlines shares rose 3% in the premarket after the airline hiked its fourth-quarter earnings guidance. The company now expects earnings for the quarter to come in between $1.12 and $1.17 per share, up from a previous range of 50 cents to 70 cents.
— Fred Imbert
Morgan Stanley upgrades Cleveland-Cliffs
Cleveland-Cliffs shares rose more than 2% in the premarket after Morgan Stanley upgraded the steel producer to overweight from equal-weight, citing a boost from higher fixed annual steel price contracts.
“We believe the recently announced increase in fixed annual steel price contracts (see here) should allow CLF to cope with lower forecast spot steel prices and generate robust FCF yields in the coming years as the company has no major planned capital expenditures,” analyst Carlos De Alba wrote in a note.
— Carmen Reinicke
European markets nudge higher
European markets were higher on Thursday as global investors geared up for the December reading of U.S. consumer prices.
The pan-European Stoxx 600 index was up 0.5% in early trade, with telecoms adding 0.9% to lead gains as all sectors and major bourses entered positive territory.
Disney up 1.5% after naming Nike’s Mark Parker chairman
Shares of Disney rose 1.5% in after-hours trading after the media giant announced that it has named Mark Parker, the executive chairman of Nike, its next chairman of the board.
Disney also said that it is opposing activist investor Nelson Peltz’s attempt to join the board. Nearly two months ago, Peltz’s Trian Fund Management took an approximately $800 million stake in the company and began seeking a board seat.
— Yun Li
Too early to celebrate falling inflation?
It might be too soon to cheer the the early signs of inflation easing as services inflation could keep price pressures elevated, according Andrew Patterson, Vanguard’s senior economist.
“The main upside risk to core inflation comes from the ex-shelter services components,” Patterson said in a note. “Persistent wage growth could keep services inflation running hot in 2023. Recent slowing in wages while welcome, does not yet suggest a broader slowing of labor market.”
While goods deflation is a welcome sign, we would still need two more ingredients to call peak inflation —a slowing labor market and persistently cooling shelter inflation, Patterson said.
— Yun Li