2024-09-30 21:33

More than 60% of S&P 500 components outperformed index in the quarter Fed rate cuts boost regional banks, industrials, and small-cap stocks Eight of S&P 500's 11 sectors outperforming the index in Q3 NEW YORK, Sept 30 (Reuters) - More stocks are participating in the S&P 500’s latest march to record highs, easing concerns over a rally that has been concentrated in a handful of giant technology names for much of 2024. The S&P 500 (.SPX) , opens new tab gained 5.5% in the third quarter. This time, however, optimism that the Federal Reserve’s rate cuts will boost U.S. growth is pushing investors into shares of regional banks, industrial companies and other beneficiaries of a strong economy and lower rates, in addition to the tech-focused stocks that have already seen massive gains this year. More than 60% of S&P 500 components outperformed the index this quarter, compared to around 25% in the first half of the year. At the same time, the equal-weight version of the S&P 500 (.SPXEW) , opens new tab -- a proxy for the average index stock -- gained 9% in the quarter, outperforming the S&P 500, which is more influenced by the heavily weighted shares of megacaps such as Nvidia (NVDA.O) , opens new tab and Apple (AAPL.O) , opens new tab. The broadening rally is an encouraging sign for stocks, investors said, following concerns that the market could be vulnerable to a reversal if the cluster of tech names propping it up fell out of favor. The “soft-landing” narrative of resilient growth will be tested by employment data at the end of the week and the start of corporate earnings season in October. The second half of the year so far is "almost a mirror image of what the first half was," said Kevin Gordon, senior investment strategist at Charles Schwab. "Even if the megacaps aren't contributing as much, as long as the rest of the market is doing well... I think that's a healthy development.” The Fed kicked off its first rate cutting cycle in four years earlier this month with a 50-basis point reduction, a move Chairman Jerome Powell said was meant to safeguard a resilient economy. Traders are pricing in some chance of another jumbo-sized reduction when the central bank meets again in November and project about 190 basis points of cuts through the end of 2025, according to LSEG data. Various corners of the stock market are benefiting from expectations of lower rates and steady growth. The S&P 500’s industrial (.SPLRCI) , opens new tab and financials (.SPSY) , opens new tab sectors - seen by investors as among the most economically sensitive areas - rose 11% and 10%, respectively, in the third quarter. Falling rates are also a boon to shares of smaller companies, which disproportionately struggle with elevated borrowing costs. The small-cap focused Russell 2000 (.RUT) , opens new tab climbed about 9% in the quarter. The market’s bond proxies - stocks with strong dividends - are also attracting investors seeking dividend income as bond yields fall alongside interest rates. Two such sectors, utilities (.SPLRCU) , opens new tab and consumer staples (.SPLRCS) , opens new tab, rose over 18% and 8%, respectively, in the period. Mark Hackett, chief of investment research at Nationwide, said the broadening builds on a trend that appeared before the September 17-18 Fed meeting. "We were going to have this greater participation, this leveling of performance among sectors, and then you had the Fed cut more aggressively and that's leading to... an acceleration of that trend," he said. 'QUITE HEALTHY' In all, eight of the S&P 500's 11 sectors outperformed the index in the third quarter. By comparison, only technology and the communications sector, which includes Google parent Alphabet (GOOGL.O) , opens new tab and Facebook owner Meta Platforms (META.O) , opens new tab, outperformed the broader index in the first half of the year. The S&P 500 is up more than 20% year-to-date, at record-high levels. Meanwhile, the overall influence of the megacaps has moderated. The combined weight in the S&P 500 of the "Magnificent Seven" -- Apple, Microsoft (MSFT.O) , opens new tab, Nvidia, Amazon (AMZN.O) , opens new tab, Alphabet, Meta and Tesla (TSLA.O) , opens new tab -- has declined to 31% from 34% in mid-July, according to LSEG Datastream. "I find it to be quite healthy that tech has kind of consolidated," said King Lip, chief strategist at BakerAvenue Wealth Management. "We're not in a bear market for tech by any means. But you've definitely seen some evidence of rotation." Investors would likely need to see further proof of economic strength for the broadening trend to continue. Jobs data on Oct. 4 will be one test of the soft landing scenario, after the prior two employment reports were weaker than expected. Market participants will also want to see non-tech firms deliver strong earnings in the months ahead to justify their gains. Magnificent Seven companies are expected to increase earnings by about 20% in the third quarter, against a profit rise of 2.5% for the rest of the S&P 500, according to Tajinder Dhillon, senior research analyst at LSEG. That gap is expected to shrink in 2025, with the rest of the index expected to increase earnings by 14% for the full year against a 19% rise for the megacap group. In a soft landing scenario, the Magnificent Seven "should not have to carry the profit rebound alone," Lisa Shalett, chief investment officer at Morgan Stanley Wealth Management, said in a recent report. "We are in the 'show me' stage for the soft landing," Shalett said. Sign up here. https://www.reuters.com/markets/us/broadening-gains-us-stock-market-underscore-optimism-economy-2024-09-30/

2024-09-30 21:21

Sept 30 (Reuters) - Chain Bridge Bancorp, a lender popular among Republicans since its inception, is targeting a valuation of up to $167 million in its initial public offering in the United States. The IPO, relatively uncommon in the banking sector, comes just about a month before the U.S. presidential election. The McLean, Virginia-based bank, which only has one branch and 84 employees, has beaten bigger financial rivals to become a must-have partner for political work. Strong debuts from recently listed companies have also boosted the IPO market, particularly for profitable companies. Chain Bridge is seeking proceeds of up to $48.1 million via a sale of 1.85 million shares priced between $24 and $26 each, it said on Monday. Founded by former Republican Senator Peter Fitzgerald, Chain Bridge has worked with the campaign of every presidential nominee from the Grand Old Party since John McCain in 2008, Reuters reported in July. The bank's fortunes are closely tied to the Party. Chain Bridge has warned in its paperwork that "any event that negatively impacts the Republican Party … could lead to significant deposit outflows." Still, the bank's strong credit quality might appeal to investors at a time when worries about bad loans have battered many industry players. Chain Bridge has had no non-performing loans in the last 12 years, it said. "Chain Bridge is timing its listing very intentionally," said Angelo Bochanis, data and index associate at Renaissance Capital. "Regardless of what happens this November, it doesn't seem like the Republican Party is going anywhere anytime soon, and there is a long-term trend of more money entering American elections that Chain Bridge may stand to benefit from." The lender is planning to use proceeds from the IPO for general corporate purposes, such as funding its expansion and for repaying debt. Piper Sandler, Raymond James and Hovde Group are the underwriters for the IPO. Chain Bridge will seek a listing on the New York Stock Exchange under the symbol "CBNA." Sign up here. https://www.reuters.com/markets/deals/republican-partys-top-bank-chain-bridge-seeks-up-48-mln-us-ipo-2024-09-30/

2024-09-30 20:49

NEW YORK, Sept 30 (Reuters) - A federal judge dismissed a U.S. Department of Justice lawsuit accusing eBay (EBAY.O) , opens new tab of violating environmental laws by allowing the sale of hundreds of thousands of harmful products on its platform, including pesticides and devices to evade motor vehicle pollution controls. U.S. District Judge Orelia Merchant in Brooklyn ruled on Monday that Section 230 of the federal Communications Decency Act, which protects online platforms from liability over user content, shielded eBay from liability in the civil lawsuit. The judge said eBay's administrative and technical support to sellers "does not materially contribute to the products' alleged unlawfulness" and does not make the San Jose, California, company a "publisher or speaker" on sellers' behalf. Merchant also said eBay was not a "seller" of some of the challenged products, because it did not physically possess them or hold title. She rejected the government's argument that eBay was a seller because it exchanged the products for money. The Justice Department declined to comment. EBay said maintaining a "safe and trusted marketplace" was fundamental to its business, and said it would continue to invest significant resources to prevent prohibited items from being sold on its platform. In its Sept. 2023 complaint, the Justice Department accused eBay of illegally allowing the sale of more than 343,000 aftermarket "defeat" devices that help vehicles generate more power and get better fuel economy by evading emissions controls. The company also was accused of allowing sales of 23,000 unregistered, misbranded or restricted-use pesticides. EBay also allegedly distributed more than 5,600 paint and coating removal products that contained methylene chloride, a chemical linked to brain and liver cancer and non-Hodgkin lymphoma. The government said eBay's conduct violated the Clean Air Act; the Federal Insecticide, Fungicide, and Rodenticide Act; and the Toxic Substances Control Act. The case is U.S. v eBay Inc, U.S. District Court, Eastern District of New York, No. 23-07173. Sign up here. https://www.reuters.com/legal/ebay-wins-dismissal-us-lawsuit-over-alleged-sale-harmful-products-2024-09-30/

2024-09-30 20:24

Sept 30 (Reuters) - The three largest U.S. energy exploration companies paid more than $42 billion to foreign governments last year, about eight times more than what they paid in the United States, according to regulatory filings. The disclosures from Exxon Mobil (XOM.N) , opens new tab, Chevron Corp (CVX.N) , opens new tab, and ConocoPhillips (COP.N) , opens new tab were required this year for the first time ever under a new Securities and Exchange Commission requirement. Transparency advocates had been pushing for the rule for more than a decade to shine a light on Big Oil’s foreign financial transactions in its global quest for oil, and provide a sense of whether U.S. taxpayers are getting a fair share of the value of soaring U.S. production. The United States has become the world's largest oil and gas producer in recent years, thanks mainly to a boom in the massive Permian Basin in Texas and New Mexico. "The truth is, here in the U.S., we get one of the worst deals for the extraction of our natural resources," said Michelle Harrison, deputy general counsel for EarthRights International, an environmental advocacy group. About 90% of Exxon’s nearly $25 billion in global payments went to foreign governments in 2023, even though close to a quarter of Exxon’s global exploration and production earnings come from the United States. The Texas-based oil giant paid out $22.5 billion in taxes, royalties and other items overseas, with the United Arab Emirates ($7.4 billion), Indonesia ($4.6 billion) and Malaysia ($3.2 billion) topping the list, according to the disclosures. By contrast, Exxon made about $2.3 billion in U.S.-based payments in 2023, including just $1.2 billion to the U.S. Internal Revenue Service, according to Exxon's report. Exxon's U.S.-based upstream earnings totaled $4.2 billion, compared to $17.1 billion in non-U.S. markets, according to Exxon’s 2023 annual report. In the preamble of Exxon's SEC report, the company complained that comparisons between U.S. and overseas payments were not fair and said U.S. government payments totaled $6.6 billion last year when you include more than $4 billion in state and local taxes omitted by the regulations. Exxon declined to comment further. Chevron, meanwhile, paid $14.6 billion to foreign governments in 2023, including $4 billion to Australia alone, according to the filings. The company paid just $2 billion in the U.S., according to the filings. A Chevron spokesperson said the company's overhead in the U.S. can be much lower than in overseas oil fields. Chevron's holdings in the Permian Basin, for example, total about 2.2 million acres with about 75% of that land connected to either low or no royalty payments. Chevron executives see that as a huge advantage and one that creates shareholder value, according to presentations by the company. Last year, most of Chevron's upstream profits were from international markets - at $17.4 billion compared to $4.1 billion in the United States - according to Chevron's 2023 annual report. Chevron did not criticize the disclosure parameters in its filing, and told Reuters it would continue to work with relevant agencies toward transparency and accountability between governments and the industry. For ConocoPhillips, just $1.3 billion of a total $6.5 billion in total global payments last year went to the U.S., according to the disclosures. The company declined to comment. Section 1504 of the Dodd-Frank Act opened the door for the new disclosures around overseas activities by energy exploration and production companies. A divided SEC adopted the rules in 2020 in a 3-2 vote, as the burgeoning ESG movement, which focuses on environmental, social and governance matters, demanded more transparency on behalf of millions of U.S. investors. The adoption of the rule, however, came after a pitched years-long battle: A federal court in 2013 vacated the SEC’s first attempt at imposing the mandate, and Congress blocked a second attempt in 2017. Sign up here. https://www.reuters.com/business/energy/big-us-oil-companies-reveal-massive-payments-foreign-governments-2024-09-30/

2024-09-30 20:13

Sept 30 (Reuters) - U.S. utility firm PG&E Corp (PCG.N) , opens new tab said on Monday it has cut power for over 9,000 customers in northern California as a precaution against heightened wildfire risks from high winds. The company said it was monitoring weather conditions across its service territories in California as parts of the state are expected to experience gusty winds, high temperatures and low humidity levels. PG&E initiated a "public safety power shutoff (PSPS)", cutting off power for homes and businesses across Sacramento Valley and surrounding foothills, according to a post on its website. The company earlier said it expects the PSPS would impact over 12,000 customers in eleven counties and two tribal areas. The Oakland, California-based company has been linked to major wildfires in the state, including the 2020 Zogg Fire and the 2021 Dixie Fire, which was the state's second-largest wildfire. Sign up here. https://www.reuters.com/business/energy/californian-utility-pge-shuts-power-customers-over-wildfire-risks-2024-09-30/

2024-09-30 20:12

Canadian dollar weakens 0.1% against the greenback For the quarter, the loonie advances 1.1% Price of U.S. oil settles 1 cent lower Canada's bond market closed for holiday TORONTO, Sept 30 (Reuters) - The Canadian dollar edged lower against its U.S. counterpart on Monday as Federal Reserve Chair Jerome Powell kept in check expectations for another supersized interest rate cut, but the loonie held on to much of its quarterly advance. The loonie was trading 0.1% lower at 1.3530 to the U.S. dollar, or 73.91 U.S. cents, after touching its weakest level since Sept. 24 at 1.3537. For the month, the currency lost 0.3%, while it notched a third-quarter gain of 1.1%. The Canadian dollar's move on Monday was "more related to (U.S.) dollar strength" as investors reassessed prospects of another larger-than-usual interest rate cut by year end, said Amo Sahota, director at Klarity FX in San Francisco. The U.S. dollar (.DXY) , opens new tab rose against a basket of major currencies and U.S. bond yields climbed as Powell said that Fed policy was not on a preset course and that the risks are "two-sided". Investors see a 65% chance the Fed will cut by a quarter of a percentage point in November rather than repeating the half-percentage-point move from earlier this month. Speculators have cut their bearish bets on the Canadian dollar to the lowest level since April, data from the U.S. Commodity Futures Trading Commission showed on Friday. As of Sept. 24, net short positions had decreased to 65,589 contracts from 73,150 in the prior week. The price of oil , one of Canada's major exports, settled 1 cent lower at $68.17 a barrel on Monday as concerns about waning global demand offset fears of a widening Middle East conflict. Unionized workers have begun a three-day strike at two terminals of the port of Montreal as talks over a new contract have yet to result in a labor agreement. Canada's bond market was closed for the National Day for Truth and Reconciliation. Sign up here. https://www.reuters.com/markets/currencies/c-hits-6-day-low-powell-remarks-posts-quarterly-gain-2024-09-30/