Senate passes $1.66T spending bill, sends to House
The U.S. Senate passed a $1.66 trillion government spending bill, sending it to the House of Representatives to approve and send to President Joe Biden for his signature, averting a partial government shutdown.
The legislation provides funding through Sept. 30, 2023 for the U.S. military and an array of non-military programs.
The legislation provides Ukraine with $44.9 billion in wartime aid and bans the use of Chinese-owned social media app TikTok on federal government devices.
While the spending bill is expected to pass in the Democratic-led House as well, most Republicans there have come out against it, criticizing the package for increasing spending without addressing priorities such as securing the U.S.-Mexico border.
House Republicans wanted to delay negotiations on the full-year legislation until early next year, after they take the majority.
Stocks snap two-day winning streak
Stocks had their second losing session for the week while the dollar gained. Solid economic data increased concerns that the Federal Reserve’s monetary policy will hover at restrictive levels for longer than many market participants may have hoped.
• The Dow Jones Industrial Average fell 1%.
• The S&P 500 dropped 1.4%.
• The Nasdaq Composite slide 2.2%
The sell-off helped bolster the greenback against a basket of world currencies.
“It’s a flight to safety because investors are becoming increasingly concerned of a recession coming in 2023,” said Sam Stovall, chief investment strategist of CFRA Research in New York.
The drop comes after gross domestic product increased at a 3.2% annualized rate in the third quarter, the government said in its third estimate of GDP. That was revised up from the 2.9% pace reported last month. The economy had contracted at a 0.6% rate in the second quarter.
A separate report on Thursday showed the number of Americans filing new claims for unemployment benefits increased less than expected last week, pointing to a still tight labor market.
The Conference Board’s leading indicator, a gauge of future U.S. economic activity, also fell for a ninth straight month in November.
The release on Friday of personal consumption expenditures data will provide further clues on whether inflation is continuing to moderate.
Front Month Nymex Crude for February delivery lost 80 cents per barrel, or 1.02% to $77.49.
Reuters contributed to this report.
Airlines scrap 2,700 U.S. flights as winter storm disrupts holiday travel
Airlines canceled more than 2,700 U.S. flights Thursday and Friday, disrupting holiday travel for thousands, as a powerful winter storm hit the United States.
The extreme weather coincided with the start of a holiday travel season that could be one of the busiest ever.
The Federal Aviation Administration said Thursday that the winter storm was bringing blizzard conditions to the Midwest with major travel disruptions expected in Chicago, Detroit and Minneapolis-St. Paul.More than 1,830 U.S. flights had been canceled Thursday and another 900 flights for Friday were scrapped, according to flight tracking website FlightAware.
Disney to spinoff ESPN and ABC network — Wells Fargo
The ABC broadcast network and ESPN may be leaving the Walt Disney family, predicts Wells Fargo.
The bank’s analysts say spinning off the two networks is the best path forward and a probable late 2023 event.
A divestiture would leave Disney as an attractive pure play intellectual property company, the bank predicted.
FTX founder Bankman-Fried to be released on $250M bond
Sam Bankman-Fried will be released on a $250 million bond package while he awaits trial on fraud charges related to the collapse of the FTX crypto exchange, a federal magistrate judge said on Thursday.
Federal prosecutors in Manhattan have accused him of stealing billions of dollars in FTX customer funds to plug losses at his hedge fund, Alameda Research.
Bankman-Fried was not asked to enter a plea on Thursday. He has previously acknowledged risk-management failures at FTX, but has said he does not believe he has criminal liability. His defense lawyer, Mark Cohen, declined to comment after the hearing in Manhattan federal court.
Nicolas Roos, a prosecutor, told U.S. Magistrate Judge Gabriel Gorenstein that the bail package would require Bankman-Fried to surrender his passport and remain in home confinement at his parents’ home in Palo Alto, California. He would also be required to undergo regular mental health treatment and evaluation.Roos called the package the “largest ever pretrial bond.”
AMC to raise $110M through preferred stock sale
AMC Entertainment Holdings said on Thursday it would raise $110 million in new equity capital through the sale of its preferred stock, sending the cinema chain’s shares down about 28% before the bell.
Antara Capital will buy APE at an average price of 66 cents per share. APE shares surged about 98% to $1.35.Antara, a current AMC debt holder, will also exchange $100 million in debt for about 91 million APE units, which would reduce AMC’s annual interest expense by about $10 million.
AMC in August announced APE as a special dividend for shareholders and a means to raise capital in the future. The company in the same month listed the stock in New York under the ticker ‘APE’.
Average long-term US mortgage rate falls a 6th straight week
The average long-term U.S. mortgage rate declined for the sixth straight week, giving potential homebuyers a tiny amount of relief after rates topped out over 7% last month.
Mortgage buyer Freddie Mac reported Thursday that the average on the benchmark 30-year rate dipped to 6.27% this week from 6.31% last week. A year ago the average rate was 3.05%.The average long-term rate reached 7.08% in late October and again in early November as the Federal Reserve has continued to crank up its key lending rate this year in an effort to cool the economy and tame inflation.
SEC Charges Caroline Ellison and Gary Wang with defrauding FTX investors
Former associates of FTX founder Sam Bankman-Fried are cooperating with authorities.
Former Alameda Research CEO Caroline Ellison, 28, and former Chief Technology Officer of FTX Trading LTD Zixiao (Gary) Wang, 29, secretly pleaded guilty to charges including wire fraud, securities fraud and commodities fraud.
The Securities and Exchange Commission charged Ellison and Wang for their roles in a multiyear scheme to defraud equity investors in FTX.
Investigations into other securities law violations and into other entities and persons relating to the alleged misconduct are ongoing.
Netflix to convert former military base into production facility
Governor Phil Murphy (D-N.J.) and Netflix today announced the entertainment company will develop a state-of-the-art East Coast production facility on the former Fort Monmouth campus in Monmouth County.
The move is expected to create more than 1,500 permanent production jobs and more than 3,500 construction-related jobs in New Jersey.
Netflix plans to commit $848 million in capital investments to develop the more than 292-acre parcel into 12 state-of-the-art soundstages totaling nearly 500,000 square feet of new development, with the remainder of the property slated for redevelopment with supporting film uses and several community amenities.
Netflix’s plans for a sustainable, integrated film studio campus will be completed in two phases over the course of several years.
The first phase of the project will include the construction of 12 soundstages that will range in size from 15,000 square feet to 40,000 square feet each with a minimum total buildout of 180,000 square feet and a maximum buildout of 480,000 square feet.
Additional and ancillary improvements may include office space, production services buildings, mill space, and studio backlots, among other uses customary to the film industry, with the potential for consumer-facing components, such as retail and consumer experiences.
U.S. weekly jobless claims rise slightly; third-quarter GDP revised higher
The number of Americans filing new claims for unemployment benefits increased less than expected last week, pointing to a still tight labor market, while the economy rebounded faster than previously estimated in the third quarter.
Initial claims for state unemployment benefits rose 2,000 to a seasonally adjusted 216,000 for the week ended Dec. 17, the Labor Department said on Thursday. Economists polled by Reuters had forecast 222,000 claims for the latest week.Claims have swung up and down in recent weeks, but have remained below the 270,000 threshold, which economists said would raise a red flag for the labor market. A raft of layoffs in the technology sector and interest-rate sensitive industries like housing have not had a material impact on claims.
Gross domestic product increased at a 3.2% annualized rate last quarter, the government said in its third estimate of GDP. That was revised up from the 2.9% pace reported last month. The economy had contracted at a 0.6% rate in the second quarter.
Despite mounting recession fears and a housing market slump, growth estimates for the fourth quarter are as high as a 2.7% pace, with consumers doing the heavy lifting, also buttressed by savings accumulated during the pandemic
.Business spending on equipment has also remained resilient despite higher borrowing costs.
Stocks open lower on fears of further Fed tightening
Stocks opened lower after closing higher the past two sessions. Positive reads on the economy raised concerns that the Federal Reserve may have to tighten monetary policy more than expected.
GDP revised upward, labor market remains tight
The final estimate of third-quarter U.S. GDP revealed that gross domestic product increased at a 3.2% annualized rate, above the previous estimate of 2.9%.
Meanwhile, a Labor Department report showed the number of Americans filing for state unemployment benefits increased to 216,000 last week, much below economists’ estimate of 222,000, indicating a still tight labor market.
“Third-quarter GDP estimate has been revised up much more than it was expected and is giving the futures a reason to decline … if the economy is too strong, the Fed may have to raise rates by more than what was expected,” said Robert Pavlik, senior portfolio manager at Dakota Wealth, Conn.
“You combine that with the weekly initial unemployment claims, it just fuels the talk of the Fed having to be more restrictive in their policy.”
Asia, Europe and oil
Overseas, stocks in Asia closed mixed. The European indices were generally lower, though the FTSE was holding a slight gain.
“The index of leading UK shares is not really a proxy for the UK economy with somewhere around 70% of its earnings coming from overseas,” cautioned AJ Bell investment director Russ Mould.
Britain’s economy contracted more than first thought in the third quarter of this year, putting it bottom among the Group of Seven major advanced nations ahead of what is shaping up to be a dismal 2023, data showed on Thursday.
Economic output fell by 0.3% in quarterly terms compared with a previous estimate of -0.2%, the Office for National Statistics said.Oil is higher.
Reuters contributed to this report.
Futures at a glance
U.S. stock futures are in reverse on Thursday after experiencing a small rally the last two trading days.
The Dow Jones Industrial Average futures is off roughly 67 points, or 0.20%, while the S&P and Nasdaq futures are approximately 0.25% and 0.38% higher, respectively.
Over the last five days, the Dow is up around 0.31%, the S&P remains off nearly 0.67% and the tech-heavy Nasdaq is still roughly 1.41% lower.
Pre-market, shares of Nike plummeted around 0.07% beneath the redline after experiencing big gains on Wednesday, while other retail stocks like American Eagle slip approximately 1.67% as Levi Strauss pops roughly 1.57% ahead of the opening bell.
Meanwhile, shares of Meta fell approximately 0.64% pre-market, Apple fell roughly 0.34%, while Microsoft went down around 0.41%.
In commodities, West Texas Intermediate crude futures spiked 1.56% to $79.51 a barrel, as gold popped 0.10% to $1,827.30 an ounce.
Stock futures trade cautiously
U.S. equity futures whipsawed Thursday morning following a rally on Wall Street as investors welcomed a report showing U.S. consumer confidence is holding up.
Oil traded higher on Thursday, rising for a fourth straight day with U.S. crude, heating oil and jet fuel stocks growing tighter.
U.S. West Texas Intermediate (WTI) crude futures traded around $79.00 a barrel.
Brent crude futures traded around $83.00 a barrel.
GDP and jobless claims will headline Thursday’s economic reports.
The yield on the 10-year Treasury, which influences mortgage rates, slipped to 3.63% on Thursday.
In Asia, Tokyo’s Nikkei 225 gained 0.5%, Hong Kong’s Hang Seng jumped 2.7% and China’s Shanghai Composite index fell 0.5%.
Markets got a boost on Wednesday from a report showing U.S. consumer confidence is surprisingly strong, despite inflation squeezing wallets. The Conference Board’s consumer confidence index rose to 108.3 in December from 101.4 in November.
The S&P 500 jumped 1.5% to 3,878.44 while the Dow Jones Industrial Average advanced 1.6% to 33,376.48, helped by a 12.2% surge for Nike after its earnings results trounced analysts’ estimates.
The tech-heavy Nasdaq composite rose 1.5% to 10,709.37.
FTX founder Sam Bankman-Fried lands in New York following extradition from Bahamas
FTX founder Sam Bankman-Fried landed back in the United States Wednesday night following his extradition from the Bahamas, as he faces multiple criminal charges.
The cryptocurrency exchange founder landed in New York shortly after 10 p.m.
He was seen walking away from the tarmac surrounded by law enforcement officials before he was placed into an SUV and rode off in a caravan of vehicles.
Bankman-Fried faces multiple charges from the Southern District of New York and the Securities and Exchange Commission, including conspiracy to commit wire fraud, wire fraud, conspiracy to commit commodities fraud, conspiracy to commit securities fraud, conspiracy to commit money laundering and conspiracy to defraud the Federal Election Commission and commit campaign finance violations.
GDP and jobless claims headline Thursday’s economic reports
The Commerce Department will release its final estimate of 3Q GDP. The Refinitiv forecast is for a seasonally adjusted annual increase of 2.9%, unchanged from the preliminary estimate last month.It follows a contraction of 0.6% in the second quarter.
The Labor Department will release the number of new jobless claims filed last week. Expectations are for a rise of 11,000 to 222,000, after a surprise tumble the prior week to 211,000.
Continuing claims, which track the total number of workers collecting unemployment benefits, are expected to climb to 1.683 million, the highest in 10 months.
The Conference Board will report on the Leading Economic index for November. Watch for a decline of 0.4% from October.
Tesla offers discount on some car models