Shares traded mixed during Monday’s midday session, opening a week that will focus on inflation, interest rates and the start of second-quarter earnings season.
The S&P 500 (^GSPC) slipped below the zero line, while the Dow Jones Industrial Average (^DJI) rose 0.4%, or more than 130 points. The tech-heavy Nasdaq Composite (^IXIC) fell 0.24%.
Wall Street is looking forward to US consumer and producer inflation reports later this week, which are expected to show price pressures easing. This could prompt the Federal Reserve to ease rate hikes later this year, although a July rate hike is still considered likely after some moderation in the June jobs report.
Meanwhile in China, fresh price data raised the specter of deflation in the world’s second largest economy as Beijing’s stimulus measures appear to be failing.
Moving forward, investors look forward to big name financial results, with Q2 reports from major banks including JPMorgan and Citi scheduled for Friday.
New update
Go over there, Chipotle. Cava is Wall Street’s new favorite restaurant chain
Competition in the fast casual restaurant market is intensifying.
Shares in Mediterranean restaurant chain Cava (CAVA) have risen sharply since the company went public last month, and Wall Street analysts have started covering the stock.
Jefferies, for example, has a buy rating on Cava with a price target of $48.
“We see an attractive future ahead for CAVA to further expand its position as a market leader in the Fast Casual Mediterranean and are targeting a mid-20-30% demographic. EBITDA growth is realistic with plenty of upside potential within LT [Long Term] “The algorithm may evolve over time,” wrote Alexander Slagle, an equity analyst at Jefferies, in a note to clients.
In June, Cava exploded by 99% on the first day of its trading debut. The stock, while fluctuating, was still up 80% as of Friday’s close.
Jefferies analysts see potentially more than 1,000 cava restaurants over the next decade. The blue sky scenario could be close to that of the 7,000 Chipotle units in North America.
Some relief for Carl Icahn
Famed activist investor Carl Icahn is reportedly getting some breathing room from the banks after a short-seller report from Hindenburg sent Icahn Enterprises (IEP) stock plummeting in May.
According to a Wall Street Journal report citing people familiar with the matter, Icahn and the banks reached agreements on Sunday that decoupled his personal loans from the trading price of IEP shares — a big concern of Hindenburg –, increased his collateral and make a plan to pay back the loans in full within three years.
IEP shares rose as much as 15% in morning trade. The stock is down more than 35% this year.
Silicon Valley Bank’s parent company acquires the FDIC
The regulator that bailed out Silicon Valley Bank’s clients after they failed has been sued by the bank’s parent company.
Yahoo Finance’s David Hollerith reports:
SVB Financial Group is suing the Federal Deposit Insurance Corporation to recover $1.9 billion that regulators seized from the lender in March.
SVB Financial Group said in a filing Sunday in US bankruptcy court that the FDIC has not filed a “single” complaint as to why the money should not be returned to the bank’s parent company “despite numerous ways to do so.” By not returning those funds to the bankruptcy estate, the FDIC prevents the bankruptcy estate from being reorganized, the SVB argued.
The FDIC declined to comment on the lawsuit.
In March, the FDIC pledged to cover all uninsured deposits at Silicon Valley Bank, citing an exception for “systemic risk.” It was initially estimated that the bank’s collapse, the third largest in US history, would cost the FDIC’s insurance fund $16 billion.
Stocks rise after China data as Wall Street eyes inflation reports
Stock prices edged higher on Monday as deflationary risks in China prompted concerns about the global economic outlook ahead of key US inflation reports this week.
The S&P 500 (^GSPC) gained 0.14%, while the Dow Jones Industrial Average (^DJI) gained 0.27%. The tech-heavy Nasdaq Composite (^IXIC) was flat at 9:38 am ET.
Stock futures fall in focus due to inflation
The three major US stock indices struggled ahead of Monday’s bell as investors weighed the risk of deflation in China and braced for key US inflation data later in the week.
Futures on the S&P 500 (^GSPC) fell 0.23%, while futures on the Dow Jones Industrial Average (^DJI) were broadly flat. Contracts on the tech-heavy Nasdaq 100 fell 0.39%.
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