U.S. stocks retreated on Friday, concluding what has been a tough week for the market.
Ford ended the day up 1.9% after a source told CNBC that the auto giant was making progress in negotiations with the striking United Auto Workers union. Stellantis also traded slightly higher, while General Motors finished lower.
Friday's slide marked the fourth straight day of losses for the three major indexes. The losing streak came as investors reacted to a signal from the Federal Reserve that it intended to keep interest rates higher for longer.
The S&P 500 and the technology-heavy Nasdaq Composite have dropped 2.9% and 3.6% this week, respectively. That marked the third straight negative week and worst weekly performance since March for each. The blue-chip Dow slid 1.9% on the week.
Bond yields surged after the central bank forecasted one more rate hike for 2023. The benchmark 10-year Treasury yield popped to its highest level since 2007 this week. Meanwhile, the 2-year rate touched its highest level since 2006.
"That's starting to raise some eyebrows for investors," said Charlie Ripley, senior investment strategist at Allianz Investment Management. "Investors are getting used to these higher rate levels and what that means for risk assets going forward."
Concern also grew around a government shutdown, which could dent consumer confidence and slow down the economy further. House Republican leaders sent the chamber into recess on Thursday.
"Investors are staring at the ground right now worried about a shutdown," said Jamie Cox, managing partner at Harris Financial. "Markets are just sort of waiting around to see when it happens, and then trying to discount the duration of it."
Citi cuts estimates for Schwab, sticks with buy rating
Citi analyst Christopher Allen said in a note to clients that he is sticking with his buy rating on Charles Schwab even if a rebound for the company appears to be getting pushed further into the future.
"While the near-term remains choppy, we continue to like the longer-term story here given solid underlying organic [net new asset] trends, SCHW's scale/positioning, expense leverage with ~$1B coming out of the run-rate in 2H23-2024," the note said.
Allen cut his earnings estimates for Schwab for 2024 and 2025. Allen did slightly adjust the third-quarter 2023 earnings estimate up to 75 cents per share from 74 cents.
— Jesse Pound
Lidar stock has upside potential of over 40%, Bank of America says
Following a massive selloff earlier this year, this lidar stock leader could see upside potential of over 40%, according to Bank of America.
The firm initiated coverage of the stock with a buy rating and a price target of $14.80, corresponding to a potential upside of 45% from the stock's Thursday close.
Since the stock's debut in February, shares have fallen over 46%. But analyst Jessie Lo still believes the company "deserves a valuation premium against peers, given its leading position in market share, shipment, order gain, margin, breakeven timeline, and balance sheet/cash flow management."
CNBC Pro subscribers can read the full story here.
— Lisa Kailai Han
U.S., Eurozone central banks near the end in rate hike paths, says Citi
The U.S. and Eurozone central banks are very close to being done with their hiking cycles, according to Citi, amid a stronger-than-expected U.S. economy and a weaker European economy. The bank has lowered its GDP outlook for the Eurozone accordingly.
"From a central bank cycle point of view, duration is attractive as rate hiking cycles are coming to a quick end. Valuation is also interesting, especially in the US," analyst Dirk Willer said in a Thursday note.
"However, central banks have not been given the all clear yet, as either growth is still surprisingly strong (the US), or inflation surprisingly stubborn (EU, UK). And quickly rising oil prices are typically a strong headwind for duration," he added.
The analyst remains long on the "cheap cyclical" Latin American market, while shorting the defensive U.K. market, which he believes should benefit from a weaker Pound.
— Hakyung Kim
Goldman says to fade Friday's move higher
Friday's move higher brings some relief to a market that has struggled mightily this week. However, Goldman Sachs's Scott Rubner thinks traders should stay away from it.
"It is not the time to buy this cover bid rally. For today, a short squeeze is probable into a long weekend for many," Rubner wrote.
"We are in the middle of the worst seasonal equity period of the year right now for the market to close out Q3. Since 1928, the median SPX return for the last 10 out of 11 days in September is negative. In addition, Monday is holiday and potential long weekend (lower volumes). This dynamic improves as we move in October, see NDX for example," Rubner added.
— Fred Imbert, Michael Bloom
Growth could be 'more of a grind' for Instacart, BTIG says
BTIG analyst Jake Fuller initiated coverage of Instacart with a neutral rating, saying in a note to clients that the company's valuation already looks fair.
"There are positives here with a strong market position, low category penetration, ancillary opportunities and healthy margins, but modest growth, ramping competition and valuation lead us to a Neutral rating," the note said.
"Online penetration is low in grocery, but we expect post-pandemic adoption to be more of a grind than we are seeing in the restaurant category," the note said.
— Jesse Pound
HSBC initiates Mondelez and Procter & Gamble with buy ratings
HSBC initiated coverage of Mondelez and Procter & Gamble with buy ratings, naming the former its top pick in packaged food and the latter as its preferred name in household and personal care companies.
Mondelez has reached an inflection point where it has demonstrated its market leadership and shown strong initiative in identifying new brand opportunities, analyst Alejandro Zamacona wrote in a recent note.
Meanwhile, Procter & Gamble has successfully defended its market-share leadership across several categories through innovation, he said.
"We believe it has delivered impressive results with decent pricing power, a focus on profitability, strong FCF conversion, and the strongest balance sheet of the household companies under our coverage," Zamacona added.
His $84 price target on Mondelez implies nearly 19% upside, while his $179 price target on Procter & Gamble suggests almost 18% upside.
— Michelle Fox
CNBC Pro: Stock market weakness could continue in week ahead
Headwinds are piling up for the market heading into the final week of the month, as September lives up to its reputation as a horrible month for Wall Street.
All three major averages are headed for losses this month, with the tech-heavy Nasdaq Composite sliding by more than 5% — though the index does remain 26% higher this year. The S&P 500 and Dow Jones Industrial Average are also down 3.9% and 2%, respectively.
However, market participants worry that stocks have further to fall. Wolfe Research's Rob Ginsberg pointed out in a note this week that the CBOE Volatility Index (VIX) doesn't suggest much fear in markets.
CNBC Pro subscribers can read the full story here.
— Sarah Min
Traders head into final hour of session, week
The market kicked off its final hour of both the trading session and week.
All three were on pace for weekly losses. The S&P 500 and Nasdaq Composite lost 2.8% and 3.5%, respectively. If that performance holds, it would mark the third straight losing week and worst weekly performance since March for both.
Meanwhile, the Dow was set to lose 1.8% on the week. That would mark its first week since July.
— Alex Harring
First Solar could rally, according to Morgan Stanley
Shares of First Solar are poised for a potential windfall ahead, according to Morgan Stanley.
Following the release of the solar panel maker's updated guidance targets, the investment bank lifted its price target to $226 per share from $206. That implies an upside of nearly 36% from First Solar's Thursday close of $166.24.
"First Solar is adding to its existing manufacturing footprint to reach ~14 GW of domestic U.S.- based capacity over the next few years, providing meaningful near-term benefits to margin and cash flow," analyst Andrew Percoco wrote.
He added that he also increased First Solar's 2025 revenue estimate by $153 million, or 3%, and 2026 revenue estimate by $328 million, or 5%, based on the company's updated production targets.
— Lisa Kailai Han, Michael Bloom
Bitcoin heads for a three-week win streak
Bitcoin is on pace for its first three-week win streak since March, while ether is on pace for back-to-back weekly losses and its fifth weekly loss in six weeks. Both crypto assets were flat on Friday afternoon. Bitcoin was last trading at $26,559.43, while ether traded at $1,591.20.
The Federal Reserve's hold on the bitcoin price may be back in play following the central bank's latest policy update. Last year's crypto winter was unlike others before it in that the central bank and its inflation fighting rate hiking campaign had perhaps the biggest influence over bitcoin's price action.
For more read our full story here.
— Tanaya Macheel, Nick Wells
JPMorgan says oil can hit as high as $150 a barrel
The latest surge in oil prices may have a lot further to run, according to JPMorgan.
Analyst Christyan Malek upgraded the entire global energy sector to an overweight rating in a research note on Friday, saying that an energy "supercycle" could eventually drive up Brent crude prices as high as $150 a barrel.
Read more on JPMorgan's outlook for the oil industry here.
— Samantha Subin
Intel leads Dow lower in losing week
The chip stock has struggled this week amid as investors weighed management commentary around gross margins. American Express and Dow, Inc., were also among the biggest laggards, with both down more than 6%.
Just five of the 30 stocks in the blue-chip index were on pace to finish the week higher. Notably, UnitedHealth was poised for a gain of around 4%, while Travelers and Amgen both added more than 2% on the week.
— Alex Harring
Raymond James says to buy Ralph Lauren
Shares of Ralph Lauren are trading below fair value against the backdrop of a strong growth outlook, according to Raymond James.
The firm initiated coverage of Ralph Lauren with an outperform rating accompanied by a price target of $135.
"Over the past few years through COVID, RL has worked