Before the Bell: More Banks, EV Tax Credits, More Ryan Cohen Drama With Bed Bath & Beyond

Investing

Published: April 18, 2023 7:33 am

Premarket action on Tuesday had the three major U.S. indexes trading higher: the Dow Jones industrials by 0.34%, the S&P 500 by 0.38% and the Nasdaq by 0.61%.

Nine of 11 market sectors closed higher on Monday. Real estate (2.23%) and financials (1.13%) posted the day’s best gains. Energy and communications services (both −1.27%) lagged. The Dow closed up 0.30%, the S&P 500 up 0.33% and the Nasdaq up 0.28%.

Two-year Treasuries added 10 basis points to end Monday at 4.18%, and 10-year notes rose by eight basis points to close at 3.60%. In Monday’s premarket, two-year notes were trading at around 4.18% and 10-year notes at about 3.59%.

Monday’s trading volume was right around the five-day average. New York Stock Exchange winners outpaced losers by 1,835 to 1,160, while Nasdaq advancers led decliners by about 3 to 2.

The Census Bureau will release March data on new housing starts and building permits before U.S. markets open on Tuesday. Consensus forecasts call for new starts to fall from 1.524 million (seasonally adjusted annual rate) to 1.407 million in March. Building permits issued last month are forecast to rise slightly, from 1.45 million to 1.458 million.

Monday’s best performer among S&P 500 companies was M&T Bank Corp. (NYSE: MTB), adding 7.78% to its share price after reporting results that included better-than-expected earnings and only a slight revenue miss. Interest income doubled year over year, while deposits fell by just 3% sequentially. Given the potential for a disastrous quarter, M&T put on a good show. Or, more accurately, the Fed taketh away, and the Fed giveth back.

The other side of the banking coin was represented on Monday by State Street Corp. (NYSE: STT), which was down by 9.18% after reporting results that missed both earnings and revenue estimates. The custody and trust bank saw outflows of $26 billion in the quarter, and fee revenue fell by 9% year over year.

Before markets open on Tuesday, Bank of American Corp. (NYSE: BAC), Bank of New York Mellon (NYSE: BK) and Goldman Sachs Group Inc. (NYSE: GS) are scheduled to report quarterly results. Morgan Stanley (NYSE: MS) reports Wednesday morning, and that is the last we will hear from the big banks until three months pass. Over the past five trading sessions, only BNY Mellon and State Street have posted share price declines. The leading gainers have been JPMorgan Chase & Co. (NYSE: JPM), up 9.34%; BofA, up 8.7%; and Western Alliance Bancorp (NYSE: WAL), up 7.05%, before reporting earnings after markets close Tuesday.

The U.S. Treasury Department has issued its final list of EVs and plug-in EVs eligible for the $7,500 tax credit to buyers of the vehicles. Four Tesla Inc. (NASDAQ: TSLA) vehicles qualify for the full tax credit (Model 3 Performance and three versions of the Model Y), and one (the Model 3 standard range rear-wheel drive) qualifies for a 50% credit. Six General Motors Co. (NYSE: GM) EVs qualify for the full credit, including the Cadillac Lyriq, and three from Ford Motor Co. (NYSE: F), including the Lincoln Aviator Grand Touring, qualify for $7,500, and five more qualify for $3,750. All told, just 14 vehicle models, including one plug-in hybrid, qualify for the full tax credit and another eight for the partial credit. The Chevrolet Blazer, Equinox and Silverado are included in this count but are not yet available for sale.

More than 336 million shares of Bed Bath & Beyond Inc. (NASDAQ: BBBY) changed hands on Monday. That is roughly one of every six Nasdaq-traded shares for the day. Granted that the shares started trading at just $0.24, so not a lot of value was changing hands (less than $81 million. Still, shares added $0.04 and traded up another $0.03 early Tuesday.

ALSO READ: With Gold Poised to Hit All-Time Highs, Buy These 6 ‘Strong Buy’ Dividend Leaders on the Pullback

There was no news, of course, just some chatter, likely the result of this tweet from Ryan Cohen:

I just got off the phone with what was once a great American brand. Lots of problems, no accountability for high paid execs and little interest in my help (at no cost). This could get interesting.

— Ryan Cohen (@ryancohen) April 12, 2023

Was Cohen, who is the chairperson of another great meme stock company, GameStop Corp. (NYSE: GME), and the investor who once saved Bed Bath & Beyond only to tank it a few weeks later, referring to BBBY? Who knows? At just $0.24 per share, let’s load up and see what happens. What could go wrong?

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