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Before the Bell: Nikola's 90 Million New Shares; Bitcoin Sells Off; Facebook to Reject Political Ads in Europe?
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Premarket action on Friday had the three major U.S. indexes trading mixed. The Dow Jones industrials were up 0.26% and the S&P 500 is 0.18%, while the Nasdaq was 0.08% lower.
Ten of 11 market sectors closed higher Thursday. Real estate (1.22%) and technology (1.14%) posted the day’s best gains. Financials (−0.29%) posted the day’s only loss. The Dow closed up 0.43%, the S&P 500 up 0.57% and the Nasdaq up 0.73% on Thursday.
Two-year Treasuries rose two basis points to end Thursday at 4.1%, and 10-year notes slipped by two basis points to close at 3.55%. In Friday’s premarket, two-year notes were trading at around 4.15% and 10-year notes at about 3.57%.
Thursday’s trading volume was below the five-day average. New York Stock Exchange winners outpaced losers by 2,096 to 924, while Nasdaq advancers led decliners by about 6 to 5.
Thursday’s weekly report on new claims for jobless benefits showed initial claims rose from 191,000 in the prior week to 198,000 and continuing claims rose from 1.685 million to 1.689 million. The modest softening of the labor market has yet to show the full impact of the massive layoffs that already have been announced in the technology, financial and media sectors.
Before markets open Friday morning, the Bureau of Economic Analysis will release the February personal consumption and expenditures (PCE) report, along with the PCE inflation index. Income is forecast to increase by 0.2%, well below the January increase of 0.6%. Spending is expected to fall even more sharply, from a January increase of 1.8% to 0.3%. The PCE index is pegged to fall by 0.4%, less than the January drop of 0.6% and the core PCE index is forecast to fall from 0.6% to 0.4%. If it works out that way, it will be another indication of disinflation. Big if.
Thursday’s winner among S&P 500 stocks was Zebra Technologies Corp. (NASDAQ: ZBRA), a manufacturer of specialized printers and other hardware and software used for enterprise asset intelligence solutions. Think wristband and driver’s license printers. The company appointed a new chief products and solutions officer on Thursday.
Charles Schwab Corp. (NYSE: SCHW) posted Thursday’s biggest loss among the S&P 500 stocks, down 4.96% after the company was downgraded from Overweight to Equal Weight by Morgan Stanley. The analyst was concerned that clients moving cash out of Schwab into higher yielding options will cause a sharp decrease in earnings.
Friday’s premarket movers included electric and hybrid electric-hydrogen truck maker Nikola Corp. (NASDAQ: NKLA). After markets closed last night, Nikola announced that it had priced an offering of about 90 million shares at $1.12, below the company’s all-time low of $1.35 posted just last week. About 30 million of the new common shares will be sold to the public, while the rest will be sold to an investor in a direct offering. Nikola expects gross proceeds of $100 million from the stock sale. Shares dropped about 6.7% on Thursday and were down another 5% in Friday’s premarket.
Other stocks making moves Friday morning were Comerica Inc. (NYSE: CMA) and Zions Bancorporation (NASDAQ: ZION), both trading up about 3% in the premarket session. Utility company AES Corp. (NYSE: AES) and alcoholic beverage giant Constellation Brands Inc. (NYSE: STZ) were down about 3%.
Friday was expiration day for Bitcoin options, and investors took the opportunity to flee. From a low of around $19,900 earlier this month to a high of about $29,100 on Thursday, Bitcoin appeared to the faithful to be on its way to putting $30,000 in the rearview mirror. Options traders have apparently lost faith in that target and dumped their holdings in BTC. Some made bearish bets on Ethereum-based Wrapped Bitcoin (WBTC), a tokenized version of Bitcoin that can be swapped one-for-one for BTC.
The Financial Times reported Thursday that Meta Platforms Inc. (NASDAQ: META) may decide to reject all European Union political advertising on Facebook and Instagram once new regulations come into effect next year. According to Financial Times sources, CEO Mark Zuckerberg “is concerned” that the new rules will be so broad “that it will be easier to refuse all paid-for political campaigns on the company’s sites.” The big issue is how the rules will limit the ability of companies like Meta and Alphabet Inc. (NASDAQ: GOOGL) to collect and use data from targeted political advertising.
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