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Nasdaq ends session down 1%

The Nasdaq closed about 1% lower on Wednesday, pushing its losing streak to three days. The S&P 500 shed about 0.25%, while the Dow closed up about 80 points.

— Jesse Pound

Utility stocks outperform

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Utilities stocks were rising on Wednesday.

Albemarle shares slide after Bank of America downgrade

Bank of America downgraded Albemarle shares to underperform as it lowers its lithium price forecast.

Analyst Matthew DeYoe wrote in a Wednesday note that the downgrade reflects “softer chemical markets and a reversal in spodumene price through the company’s JV structure. The latter we think could be a >$800mn headwind to EBITDA, and we believe is underappreciated by investors. This could ultimately drag further on 2025 results, more than offsetting volume growth tailwinds.”

He added that “given contract price lags, the implications of current market declines may not resonate until 2H23, but we have growing confidence that negative earnings revisions are forthcoming.”

The firm lowered its price target to $195 per share, implying 7.4% downside to Tuesday’s close price. Albemarle shares were already down to $195.15, or 6.9%, on Wednesday afternoon.

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Albemarle stock

Higher deposit rates to attract savers’ dollars could hit banks’ profitability, Goldman says

Banks are raising the rates they pay customers on their deposits, and that could pressure the institutions’ profitability, according to a new paper from Joseph Briggs, economist at Goldman Sachs.

The Federal Reserve’s rate-hiking campaign has lifted yields on U.S. Treasurys. At the same time, banks have lifted rates on certificates of deposit in a bid to compete against T-bills. Rates on savings accounts are lagging, tracking at 0.2% — but they are likely to rise from here, Goldman found.

Banks are grappling with two key factors that will spur them to raise the rates they pay on deposits, according to Goldman: First, the rapid pace of interest rate hikes has resulted in an array of competing products for savers, including CDs and money market funds. That means banks will feel the pressure to hike deposit rates. Second, it’s also much easier for investors to move their funds via mobile banking to a competing institution with higher-yielding offerings.

However, higher deposit rates could come back to bite the banks that offer them, according to Goldman. That’s because those higher rates eat the margin between interest expenses and interest income.

“This, in turn, could weigh on lending and growth, as declines in profitability may temper banks’ forward-looking expectations and raise concerns around balance sheet sustainability, prompting banks to tighten lending standards and instead shore up capital,” Briggs wrote.

Darla Mercado

Chip stocks fall as recession fears mount

Western Alliance trims losses after deposit update

Shares of Western Alliance trimmed their losses significantly in afternoon trading after the regional bank released a new update on its deposits.

Western Alliance said its total deposits shrank by $6 billion in the first quarter but had started to recover at the end of March. The bank said it has added an additional $1.2 billion of deposits in April.

Shares of Western Alliance were down about 10.5%. The stock had fallen nearly 20% earlier in the session after the bank had revealed that its percentage of insured deposits had risen sharply during the first quarter but did not provide dollar amounts for the new level of total deposits.

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Western Alliance trimmed its losses in afternoon trading.

Investors have gotten too greedy, Citi says

Citi said that its volatility risk premia model has moved from fear and into greed territory, suggesting investors may want to take profits on equity longs.

“VRP, which is the difference between implied and realized volatility, has historically been more useful in timing short-term dips than have either jumps in VIX or large price declines,” Citi said. “Since March 14th when we initiated our ‘buy-the-dip’ call, S&P has appreciated around 5%. Oversold conditions no longer persist, given the current VRP levels have fallen back below zero.”

— Fred Imbert, Michael Bloom

One of the most volatile and controversial earnings seasons begins next week

Bank earnings are set to kick off next week and many believes it will be one of the most volatile and controversial reporting seasons in a while.

“Sentiment is extremely cautious around the banks for obvious reasons,” Adam Crisafulli, founder of Vital Knowledge, said in a note. “Investors anticipate steep cuts to industry EPS forecasts with income statements coming under assault from all sides.”

investors will get the first formal look at the fallout from the banking crisis. JPMorgan, Wells Fargo and Citigroup are slated to report numbers Friday April 14 before the bell. PNC Financial also reports that day.

— Yun Li

Citi’s credit card data shows spending down 1% in March vs the prior year

Are consumers running out of steam? Citi said its credit card data showed spending rose 3% in the first quarter of the year. That was flat with the fourth quarter of 2022, but it’s worth noting that spending grew weaker as each month passed by.

January kicked off the year with a 7% year-over-year gain, it said. However, monthly spending fell 1% in March versus the prior year. Analyst Arren Cyganovich said its the first monthly year-over-year decline since February 2021. Shoppers rang up roughly as many purchases as they did a year ago, but the amount of each ticket is declining, he said.

—Christina Cheddar Berk

Market is starting to crack, Wolfe Research says

The S&P 500 got off to a strong start for 2023, but the move higher is now starting to develop some cracks, Wolfe Research technical strategist Rob Ginsberg wrote late Tuesday.

“It is prudent to harvest gains from the better-than-expected start to the year,” he wrote. “Yes, the S&P is now overbought at a lower-high, but it is the persistent weakness in small caps, banks and now industrials that is really starting to gnaw at us,” he added.

The S&P 500 slipped 0.5% on Wednesday, but it’s still up more than 6%.

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Crack starting to emerge in stock market?

— Fred Imbert, Michael Bloom

Wolfe Research expecting ‘lackluster’ earnings

Despite the larger-than-average downward revisions coming into earnings season, Wolfe Research is still expecting S&P 500 companies to, at best, put up a very modest beat in their first-quarter reports. The season kicks off next week.

“Recent earnings season trends are consistent with an economy that is significantly slowing and likely entering a recession this year,” analyst Chris Senyek wrote in a note Wednesday.

The firm continues to forecast S&P operating earnings per share of $190 for 2023 estimates and $210 for 2024 estimates. That is about 15% below the bottom-up consensus for both years, Senyek said.

— Michelle Fox

Raymond James upgrades Clean Energy Fuels stock

Raymond James says there’s a “textbook buy-on-the-dip opportunity” for shares of Clean Energy Fuels — but it could be a volatile ride for investors. 

The firm upgraded Clean Energy to outperform from market perform. It set a price target of $6 per share, which implies 42.8% upside from Wednesday’s close price.  

Analyst Pavel Molchanov thinks the renewable energy company could see gains as natural gas fuels, including those derived from biogas, play a role in the decarbonization of fleets. 

Shares of Clean Energy were up 1.7% Wednesday morning.

CNBC Pro subscribers can read more about his upgrade here.

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CLNE in 2023

Raymond James says UnitedHealth Group shares could rally more than 25%

UnitedHealth shares are well-positioned to have a strong 2023, according to Raymond James. 

Analyst John Ransom upgraded shares of UnitedHealth to strong buy from outperform. He also raised his price target to $630 from $615, which implies 27.7% upside from Tuesday’s close price. 

The analyst said he is more constructive on the Dow Jones Industrial Average component after its year-to-date underperformance. UnitedHealth shares are down 7% in 2023, lagging the S&P 500′s 6.8% advance. “In short, we believe the ‘set-up’ has improved markedly with the valuation reset amid the improving regulatory backdrop.”

CNBC Pro subscribers can read more about his upgrade here.

— Hakyung Kim

Walmart leans into automation as it looks to grow profits faster than sales

Walmart shares are up about 1% as the retail giant meets with investors and details how it expects to make its target of 4% sales growth over the next three to five years.

Part of the focus is on automation, which it expects will help it be more nimble in meeting shifting consumer demand. Walmart expects two-thirds of its stores will use some form of automation by the end of fiscal 2026.

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Walmart shares have gained about 5% since the year began.

While the company reiterated its forecast for the fiscal first quarter and full year, it is talking about changes it’s making to become more profitable over time.

“Our five-year plan calls for us to grow profitability faster than sales,” said CEO Doug McMillon. “We know where our price gaps need to be, and we’ll manage them as we grow profit faster than sales through productivity and business mix.”

—Christina Cheddar Berk

Western Alliance shares tumble as bank says percent of insured deposits rose

Shares of Western Alliance shed about 15% after the bank said insured deposits rose to 68% of total deposits by the end of March.

The bank failed to provide additional details on its deposit balance, but said it has enough liquidity to cover the remaining uninsured deposits.

As of Dec. 31, Western Alliance’s total deposits hit $53.6 billion, with uninsured deposits equating to $29.5 billion. Uninsured deposits accounted for more than half of total deposits at the end of the fourth quarter.

Investors in recent weeks have kept close watch on these metrics after the collapse of Silicon Valley Bank triggered some deposit flight to larger banking behemoths.

Western Alliance shares have cratered roughly 52% since the start of the year.

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Western Alliance shares move on deposit update

WWE, McDonald’s among stocks notching 52-week highs

Six stocks in the S&P 500 hit highs in Wednesday’s session not seen in at least a year:

Citizens Financial Group, meanwhile, reached a low last seen in November 2020. Outside of the S&P 500, other financial stocks Pinnacle Financial Partners and Webster Financial also hit respective lows not reached since November 2020.

But not all financials were struggling. First Citizens BancShares, which is also not in the S&P 500, traded at all-time highs back to its reorganization in 1986.

World Wrestling Entertainment was also among the non-S&P 500 stocks notching new highs, with WWE trading at levels not seen since April 2019. The move upward came as investors continued buying in following news of its merger with the UFC.

— Alex Harring, Chris Hayes

Services index slides on drops in orders, imports and prices

The U.S. services sector slipped closer to contraction in March due to sharp declines in new orders, exports and prices.

The ISM Services index declined to 51.2%, representing the level of businesses reporting expansion. A reading below 50% represents contraction, a level that index last saw in December. Economists had been looking for 53.8%, according to Dow Jones. February’s reading was 55.1%.

New export orders plunged 18 percentage points to 43.7, new orders tumbled 10.4 points to 52.2 and imports fell 9 points to 43.6. The prices sub-index showed inflation cooling some, as it dropped 6.1 percentage points to 59.5.

The ISM Manufacturing index is well in contraction level, with a reading Tuesday of 46.3% for March.

—Jeff Cox

Key levels to watch on the S&P 500, according to Fairlead’s Stockton

The S&P 500 is up 6% for the year, but technical indicators show no signs that the market is out of the woods yet, according to Katie Stockton.

The chart analyst and founder of Fairlead Strategies said the broad market index could fall about 15%. The key level she’s watching to the downside is 3,505, while she sees resistance at 4,155. The S&P 500 ended the Tuesday trading session at 4,100.6.

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The S&P 500 in 2023

“The latest relief rally has been associated with improved market breadth, but that improvement is now such that these oscillating measures of market breadth or participation are somewhat overbought, so that creates yet another proving ground for the market,” Stockton told CNBC’s “Squawk Box” Wednesday.

— Tanaya Macheel

Health care stocks boost Dow

The Dow is outperforming on Wednesday, powered by a 3% gain for Johnson & Johnson.

The health care stocks in general were a boon for the Dow. Other notable movers in the 30-stock average include a 1.4% gain for Merck, 2% for Amgen and 1.3% for UnitedHealth.

— Jesse Pound

S&P 500 opens slightly lower

The S&P 500 was marginally lower on Wednesday at the start of trading, falling about 0.2%.

The Dow was flat, while the Nasdaq Composite dipped about 0.4%.

— Jesse Pound

U.S. trade deficit rises, pointing to weaker Q1 growth

The U.S. trade deficit rose more than expected in February as exports posted a sharp decline, the Commerce Department reported Wednesday.

The trade imbalance increased to $70.5 billion for the month, up $1.9 billion from January and more than the Dow Jones estimate.

Exports fell to $251.2 billion, a 2.7% decline, as industrial supplies, autos, consumer goods and capital goods all decreased. Imports fell by $5 billion.

As exports add to GDP and imports subtract, the numbers suggest economic growth could be weaker than expected in the first quarter. The Atlanta Federal Reserve’s GDPNow tracker is pointing to a gain of just 1.7% for the period, down from 3.5% less than two weeks ago.

—Jeff Cox

Why falling yields may be a bad sign for stocks

The solid start to the year for equities has coincided with a retreat for bond yields, but investors may be taking the wrong cues from the fixed income market, according to Lisa Shalett, CIO at Morgan Stanley Wealth Management.

“The fact that equity markets have shrugged off the genesis of the turnaround in rates expectations strikes us as shortsighted and a remnant of the reflexive investment narrative of the past 15 years, when the level of rates was the only thing that mattered,” Shalett said in a note to clients.

“The current situation, however, is different: The change in the cost of capital has not resulted from proactive central bank policy grounded in victories over inflation and a successful soft landing. Rather, the shift has come in response to regional banking stress,” Shalett added.

— Jesse Pound

Palantir shares jump on expanded partnership with Microsoft

Shares of Palantir gained nearly 6% before the bell after the software company announced that its broadening its strategic cloud partnership with Microsoft to include the public sector.

As part of the expansion, Palantir’s federal cloud service also gained authorization to support key workloads at the U.S. Department of Defense.

Microsoft shares last traded flat.

— Samantha Subin

Yields dip after ADP report misses expectations

Treasury yields gave up their gains and turned red for the day after a weak labor market reading from the ADP private payrolls report.

The 2-year Treasury yield fell 8 basis points to 3.751%. The 10-year yield fell more than 3 basis points to about 3.3%.

Yields move opposite of price.

— Jesse Pound

Hiring slumps in March as financial activities sector sees big decline

Private company hiring fell sharply in March and was well below expectations, according to a report from payroll processing firm ADP.

Payrolls rose by just 145,000 for the month, down from 261,000 in February and below the Dow Jones estimate for 210,000.

Losses in financial activities, profession and business services and manufacturing pushed the total lower. Leisure and hospitality, trade, transportation and utilities and construction led hiring.

The numbers come ahead of Friday’s nonfarm payrolls report, which is expected to show a gain of 238,000.

—Jeff Cox

Fed will be forced to cut rates later this year, Sri-Kumar says

Strategist Komal Sri-Kumar told CNBC on Wednesday that he is skeptical the Federal Reserve will be able to continue hiking rates and then maintain those high levels after the two regional bank failures last month.

“We have already had one credit event in the form of the banking crisis. In the next three to four months I think we’ll have another credit event coming from somewhere, and I think the Fed is going to buckle and is going to start cutting rates before the end of the year,” Sri-Kumar said.

Sri-Kumar’s comments come after Cleveland Fed President Loretta Mester said on Tuesday night that the central bank’s rate target will need to exceed 5%.

— Jesse Pound

FedEx announces reorganization, dividend hike

Shipping company FedEx announced a corporate reorganization and a dividend hike on Wednesday ahead of an investor event later this morning.

The company announced it will raise its dividend by 10%, consolidate its different business divisions and change its executive compensation packages.

Shares of FedEx rose more than 2% in premarket trading.

— Jesse Pound

‘Hard landing’ theme is unsettling investors, Vital Knowledge says

Adam Crisafulli of Vital Knowledge said that “markets remain a bit unsettled as the “recession/hard landing” theme seeps further into the narrative … while monetary headlines were hawkish.”

The major averages closed lower Tuesday after the release of disappointing job openings data. For the S&P 500 and Dow, it was their first losing session in five.

“We think what happened in the US on Tues was more a function of the SPX simply digesting its recent rally and people are way too quick to embrace the “hard landing” scenario (the JOLTs report on Tues was nothing but encouraging as it suggests labor markets are finally at an inflection point with trends coming off the boil),” Crisafulli said.

— Fred Imbert, Michael Bloom

UBS double upgrades First Citizens BancShares

Analyst Brody Preston double upgraded shares to buy from sell. Preston also raised his price target to $1,206 from $538, implying 26.1% upside from Tuesday’s close.

“We view the balance sheet as more well positioned to handle a recession going forward given the low loss nature of the SIVB loan portfolio, which should result in a higher quality earnings stream,” Preston wrote in a Wednesday note. 

CNBC Pro subscribers can read more here.

— Hakyung Kim

UBS holds first shareholder meeting since Credit Suisse takeover

UBS held its first shareholder meeting since taking over Credit Suisse, with UBS Chairman Colm Kelleher referring to March 19 — the date of the emergency rescue of the rival bank — as a “historic day and a day we hoped would never come.”

However, he said the merger also presents “huge opportunities ahead for the combined bank and the Swiss financial sector as a whole.”

— Elliot Smith

European markets slightly lower as investor uncertainty resurfaces

European markets were slightly lower Wednesday morning as investor uncertainty lingers over the economic outlook.

The pan-European Stoxx 600 was down 0.2% in early trade, with sectors spread across positive and negative territory. Utilities led gains with a 1.3% uptick, while construction and material stocks dropped 1.8%.

— Hannah Ward-Glenton

Fed’s Mester says rate target will need to exceed 5%

Federal Reserve Bank of Cleveland President Loretta Mester said in a speech in New York that the central bank will need to raise rates further to tame inflation.

“Precisely how much higher the federal funds rate will need to go from here and for how long policy will need to remain restrictive will depend on how much inflation and inflation expectations are moving down,” said Mester, adding that it will “depend on how much demand is slowing, supply challenges are being resolved, and price pressures are easing.”

The central bank in its March meeting raised the benchmark interest rate by 25 basis points, raising the federal funds rate to a target range between 4.75%-5%.

Mester is not a voting member on the Federal Reserve’s 2023 committee but an alternate member.

“In my modal projection, to put inflation on a sustained downward trajectory to 2 percent and to keep inflation expectations anchored, monetary policy moves somewhat further into restrictive territory this year, with the fed funds rate moving above 5 percent and the real fed funds rate staying in positive territory for some time,” she said.

Her comments came despite job openings tumbling below 10 million in February for the first time in nearly two years, a sign the Fed’s effort to slow the labor market may be having some impact.

– Jihye Lee

New Zealand says rate hikes needed as inflation “too high and persistent”

New Zealand’s central bank said its latest rate hike decision was supported by the fact that inflation is still “too high and persistent.”

In its statement, the bank’s monetary policy committee added that the employment in New Zealand is also “beyond its maximum sustainable level,” emphasizing its aim to bring inflation down to its target of 1-3%.

New Zealand’s consumer price index in its final quarter of 2022 was 7.2%, hovering around historic highs seen in October.

— Lim Hui Jie

New Zealand delivers surprise rate hike of 50 basis points to 5.25%

New Zealand’s central bank has raised rates by 50 basis points, bringing the benchmark interest rate to 5.25% and higher than economists’ expectations of a 25 basis points hike.

The latest move brings the interest rate to the highest level since October 2008.

This follows the previous hike of 50 basis points, which saw the interest rate move from 4.25% to 4.75% in February.

The New Zealand dollar strengthened 0.59% to trade at 0.6351 against the U.S. dollar.

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Japan’s services sector expands in March, sees second-sharpest rise in business activity

Japan’s services sector continued to expand in March, according to a private survey from the au Jibun Bank.

The country’s services purchasing managers index rose to 55, up from 54 in February and marking the seventh straight month of expansion.

The sector expanded the most since 2013 and marked the second-strongest in the history of the survey.

The economy also saw a rise in new business volumes during the month, marking the steepest rate since February 2019.

Japan’s “rates of expansion in business activity, new business and export orders all accelerated on the month to reach among the highest in their respective series histories,” the release said, while noting that input inflation eased to a 12-month low.

Firms were also “increasingly optimistic” about the outlook for activity over the coming year, amid hopes for stable market conditions, au Jibun bank added.

— Lim Hui Jie

CNBC Pro: Netflix vs Disney: Analysts names their favorite — and give one nearly 30% upside

Netflix and Disney are two of the biggest players in the streaming space, but one stock is a clear favorite among analysts.

Pro subscribers can read more here.

— Zavier Ong

C3.ai shares close lower by 26% on Tuesday

C3.ai shares closed down by 26.34% on Tuesday after short seller Kerrisdale Capital alleged “serious accounting and disclosure issues” in a letter sent to the enterprise artificial intelligence software firm’s auditor Deloitte & Touche.

Kerrisdale Capital’s chief investment officer Sahm Adrangi said C3.ai’s valuation profit is “ridiculously overvalued,” during a Tuesday appearance on CNBC’s “Closing Bell: Overtime.”

A C3.ai spokesperson responded to the letter in a statement to CNBC, saying “The Kerrisdale Letter appears to be a highly creative and transparent attempt by a self-acclaimed short seller to short the stock, publish an inflammatory letter to move the stock price downward, then cover the short and pocket the profits.”

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C3.ai shares 1-day

The latest ADP private payrolls report is set to release Wednesday before the open

On Wednesday, traders are expecting the latest ADP private payrolls report before the bell. Economists polled by Dow Jones are expecting a rise of 210,000 jobs in March, down from an increase of 242,000 in the previous month.

— Sarah Min

Johnson & Johnson shares rise after hours

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Johnson & Johnson shares 1-day

— Annika Kim Constantino, Sarah Min

Stock futures open higher

U.S. stock futures rise slightly on Tuesday night after the major averages slid during the regular session.

Dow Jones Industrial Average futures rose by 47 points, or 0.14%. S&P 500 and Nasdaq 100 futures climbed 0.11% and 0.07%, respectively.

— Sarah Min