Stocks Sink as Treasury Yields Jump, U.S. Expands Chip Restrictions

Market Volatility Boosts Goldman Sachs’ Trading Revenue, but Profit Shrinks by a Third

24 minutes ago

Goldman Sachs Group’s (GS) third-quarter profit shrank by about 33% to $2.06 billion or $5.47 per share due to impairments in real estate and losses from its consumer banking missteps despite a boost from higher trading revenues.

Volatile equity markets helped Goldman’s equities trading revenue jump 8% to $2.96 billion but that was offset by the hit the bank took as a result of $358 million in impairments to its real estate investments.

CEO David Solomon’s retail banking strategy has garnered widespread criticism for its high costs and subsequent company backpedaling. Just last week, Goldman announced the sale of GreenSky for an expected hit to third-quarter earnings of $0.19 per share after struggling for months to find a buyer.

Goldman shares were nearly 2% lower Tuesday morning, bringing their year-to-date decline to about 10%.

-Nathan Reiff

Retail Sales Surprise Sends Treasury Yields Highers

49 minutes ago

U.S. retail spending was surprisingly robust in September, suggesting consumers can and will continue to increase their spending despite rising prices and tighter economic conditions.

The Census Bureau estimates retail sales increased by 0.7% in September to almost $705 billion. Economists had expected sales to rise just 0.2%. The government also revised its August retail sales estimate up to 0.8% from 0.6%.

The release adds to evidence the Fed will need to raise interest rates further to sustain its success in bringing inflation down from 40-year highs. Policymakers have taken a less aggressive stance lately, but Tuesday’s data could throw a wrench in their pivot. Markets now see a 15% chance of a rate hike when the Fed meets again in two weeks, up from just 5% yesterday.

The report and threat of higher rates sent Treasury yields soaring Tuesday morning, with the 10-year yield jumping over 4.8% and the 30-year climbing above 4.95%.

Stocks Making the Biggest Moves Premarket

1 hr 38 min ago

Gains: 

• Wyndham Hotels & Resorts Inc. (WH): Shares jumped 12% after Choice Hotels (CHH), the operator of Radisson Hotels and Quality Inns, offered to buy the hotel operator for about $8 billion, or $90 per share. Wyndham stock traded at about $77.50 with Tuesday morning’s jump. Choice shares fell more than 4% premarket.
• Dollar Tree Inc. (DLTR): Shares of the discount retailer rose 2% after Goldman Sachs upgraded the stock to buy from neutral, citing the company’s “improving traffic trends with sticky new customers.” 
• Bank of America Corp. (BAC): Shares rose about 1% after the bank reported better-than-expected third-quarter profit after revenue got a boost from higher interest rates. 

Losses:

• Nvidia Corp. (NVDA): Shares tumbled more than 3% after the Biden administration said it was expanding restrictions on advanced semiconductor sales to China to include chips Nvidia made specifically for China after last year’s chip restrictions were first announced. Shares of other chip companies ASML Holding (ASML) and Advanced Micro Devices (AMD) were also lower premarket. 
• Baidu Inc. (BIDU): The Chinese tech company’s American depositary receipts (ADRs) fell about 3% as China-U.S. tensions intensified amid the U.S. expansion of chip restrictions and the Chinese government’s welcoming Russian President Vladimir Putin for an official visit. 
• Lockheed Martin Corp. (LMT): Shares of the defense company fell more than 1% after reporting a bigger-than-expected drop in revenue at its aeronautics unit, as deliveries of its F-35 jet were hamstrung by parts shortages.

5 Things to Know Before Markets Open

1 hr 53 min ago

Here’s what investors need to know to start their day:

1. Bank of America (BAC) reported better-than-expected earnings on net interest income gains driven by higher interest rates and loan growth.
2. Johnson & Johnson‘s (JNJ) quarterly results topped analyst expectations, with the company pointing to a jump in sales at its medical devices and pharmaceutical business divisions.
3. NetScout Systems Inc (NTCT) plummeted nearly 25% in pre-market trading after the cybersecurity company cut its annual guidance, pointing to slower order conversions.
4. Apple (AAPL) CEO Tim Cook made a surprise visit to China where the company was recently overtaken by competitor Huawei as the country’s most popular smartphone maker.
5. U.S. retail sales rose more than expected last month, increasing 0.7% from August compared with economists’ estimate of a 0.2% increase.

-Terry Lane

Stock Futures Slip Premarket as Treasury Yields Rise

2 hr 30 min ago

Treasury yields climbed before equity markets opened Tuesday, sending Dow Jones Industrial Average futures contracts 0.2% lower in premarket trading.

Futures contracts connected to the S&P 500 were dow 0.3%.

Nasdaq 100 futures slumped 0.4%.