15 minutes ago
Berkshire Hathaway buys more Occidental Petroleum
A regulatory filing revealed Tuesday night that Warren Buffett’s Berkshire Hathaway added to its already gigantic stake in Occidental Petroleum.
Berkshire bought nearly 5.8 million shares of the oil company in separate deals on Friday, Monday and Tuesday. The company paid in a range of $59.80 per share to $61.90 per share.
This is also the first time since September that Berkshire has added to its Occidental stake, bringing it to more than $12 billion, based on Tuesday’s close.
—Fred Imbert, Yun Li
29 minutes ago
Berenberg downgrades Tesla
Berenberg analyst Adrian Yanoshik said investors should hold off on buying more Tesla shares for now, downgrading the stock to hold.
“Tactical pricing changes reflect cost leadership strategy: Tesla’s new factories offer several years of capital and labor efficiency opportunities,” Yanoshik wrote to clients on Tuesday. “However, we are downgrading our rating to Hold now that our Buy thesis – based on misplaced fears of a price war – appears to have been accepted by the market.”
Tesla shares fell slightly in the premarket.
11 hours ago
There is still a way to a soft landing, says Morgan Stanley’s global chief economist
There’s still a path to a soft landing despite Federal Reserve Chairman Jerome Powell’s comments suggesting interest rates could stay higher for longer, according to Morgan Stanley’s global chief economist Seth Carpenter.
Of course, there needs to be a cooling in the labor market for the Fed to meet its own inflation projections, he said in a Tuesday appearance on CNBC’s “Closing Bell: Overtime.”
Carpenter expects nonfarm payrolls to fall below $100,000 a month to reach that goal. Investors await the February jobs report this week to see if the economy continues to heat up or if January’s blockbuster report was an aberration.
“If we stay at 500,000 non-farm payrolls a month, it clearly doesn’t. We have to see it slowly, get down to, say, below 100,000 a month,” Carpenter said. “But if it stays positive, then I think that kind of trajectory, that’s the path to a soft landing. We still think it’s possible.”
11 hours ago
Gundlach says the Fed is ‘very likely’ to raise interest rates by half a point this month
DoubleLine Capital CEO Jeffrey Gundlach said it is “very likely” the Federal Reserve will raise interest rates by half a percentage point at its next policy meeting.
“We’ve had a very large increase in short interest rates and a further inversion of the yield curve,” Gundlach said Tuesday during a DoubleLine investor webcast. “We don’t need the Fed. All we need is the 2-year Treasury.”
The yield on the 2-year U.S. Treasury note jumped more than 12 basis points to top 5% on Tuesday, hitting its highest level since 2007. The sharp increase followed Fed Chairman Jerome Powell saying that interest rates are “likely to be higher” than previously forecast .
The so-called bond king said the Fed funds rate has almost perfectly mirrored the 2-year Treasury yield over the years.
“It now confirms the idea that the Fed is likely to take the fed funds rate up to 5% at the upcoming meeting,” Gundlach said.
– Yun Li
11 hours ago
Small- and mid-cap stocks outperformed Tuesday’s decline
In investing, sometimes you have to be content to suffer less than the rest.
The Dow Jones Industrial Average fell 1.72% on Tuesday, giving back all of the remaining gain it had scored in 2023, and the S&P 500 fell 1.53%, both after Fed Chairman Powell told Congress that benchmark interest rates may must move higher than tanks to successfully control inflation.
Using these declines as a benchmark, which parts of the stock market outperformed the largest stocks relatively?
Well, the Nasdaq Composite, which after all contains more than 2,500 stocks, fell less than 1.25% on Tuesday. The S&P Midcap 400 Index fell 1.18%, while the S&P Smallcap 600 Index lost just 1.0%. The Russell 2000, another barometer for small caps, fell 1.25%.
Aided by stronger airlines, the 20-share Dow Transports rose 1.25%. The NYSE Consumer Staples Index weakened 0.99% and the NYSE Tech/Media/Telecom Index retreated 1.07%.
Bad, but not quite that bad.
12 hours ago
Short-term government yields pop, with interest rates above 5%
Bond yields rose on Tuesday, with a number of short-term government bonds seeing their yields exceed 5%.
Yields on 3-month, 6-month, 1-year and 2-year Treasuries jumped above 5% on Tuesday. At their highs, yields on the 3-month Treasury bill and the 2-year Treasury rose to levels last seen in 2007, while yields on the 1-year note hit their highest level since 2006.
Furthermore, the spread in yields between the 2-year and 10-year government bonds hit a fresh low of -105.3, the lowest level since 1981.
Speaking before the Senate Banking, Housing and Urban Affairs Committee earlier in the day, Federal Reserve Jerome Powell said interest rates “will likely be higher” than the central bank had expected. The comments raised fears that policymakers could raise interest rates by half a point at their next meeting later this month. Bond yields rose and stocks sold on the news.
–Darla Mercado, Gina Francolla
12 hours ago
US stock futures open flat on Tuesday
US stock futures were flat on Tuesday night.
Dow Jones Industrial Average futures ticked up 17 points, or 0.05%. S&P 500 and Nasdaq 100 futures rose 0.03% and 0.07%, respectively.