Boeing Upgrades Outlook for Jet Demand on Pandemic Recovery Hopes

The world’s largest aerospace company Boeing has upgraded its long-term forecasts for the commercial, defence and space aerospace market, reflecting signs of the industry’s recovery following the impacts of COVID-19.

According to 2021 Boeing Market Outlook (BMO), the aerospace products and services segment will grow to $9 trillion over the next decade. Forecasts have increased from $8.5 trillion a year ago, and from $8.7 trillion in the pre-pandemic forecast for 2019, reflecting the market’s continued recovery.

According to the Commercial Market Outlook (CMO), the company said the global aerospace market is recovering largely. Within the next two years, long-haul travel is expected to return to pre-pandemic levels, followed by domestic demand for air travel and intra-regional travel, which will ease health and travel restrictions.

The Boeing Market Outlook projects global demand for 19,000 commercial airplanes valued at $3.2 trillion over the next decade. During the next 20 years, Boeing projects the demand for more than 43,500 new airplanes worth $7.2 trillion, up about 500 planes over last year’s forecast.

Boeing Stock Price Forecast

Fifteen analysts who offered stock ratings for Boeing in the last three months forecast the average price in 12 months of $275.87 with a high forecast of $307.00 and a low forecast of $224.00.

The average price target represents a 28.62% change from the last price of $214.48. From those 15 analysts, eight rated “Buy”, seven rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $274 with a high of $373 under a bull scenario and $146 under the worst-case scenario. The firm gave an “Overweight” rating on the company’s stock.

Several other analysts have also updated their stock outlook. UBS cut the target price to $290 from $310. Wells Fargo raised the price target to $254 from $244. Bernstein lifted the target price to $252 from $242. Vertical Research upped the target price to $250 from $242.

Analyst Comments

“We expect the market to value the company based on 2025 normalized post-COVID-19 earnings instead of a partial recovery in 2023. Broader COVID-19 vaccine rollout through 2021, eventual easing of international borders, and improved airline booking trends are positive catalysts that could force bears and sideliners to re-evaluate,” noted Kristine Liwag, Equity Analyst at Morgan Stanley.

“Prior headwinds have abated, including: 1) lower production rates are now aligned to weaker demand; 2) implied aircraft cancellations have been recorded in the backlog de-risking the order book; and 3) current liquidity defers a potential equity raise to at least 2022, removing sentiment overhang.”

Check out FX Empire’s earnings calendar

S&P 500 Ends Down, Big Tech lifts Nasdaq to Record

Amgen Inc fell 2.1% and Merck & Co lost 1.6% after Morgan Stanley cut its rating on the stocks to “equal-weight” from “overweight.”

The Nasdaq was supported by Big Tech stocks that have fueled Wall Street’s gains in recent years. Apple rose 1.6% and Netflix added 2.7%, both hitting record highs.

“You could call it a gravitation toward Big Tech. As people feel a bit uncertain about how COVID will play out, you don’t have your reopening worries with those companies,” said Tom Martin, senior portfolio manager at Globalt Investments in Atlanta.

Much of the rest of Wall Street fell. Eight of the eleven sub-indexes traded lower, with economy-sensitive sectors like industrials down 1.8% and utilities dipping 1.4%. The real estate index lost 1.1%.

Tepid August payrolls data on Friday last week raised concerns that the economic recovery was slowing down.

On Tuesday, Morgan Stanley cut its rating on U.S. stocks to underweight, pointing to risks related to economic growth, policy and legislation, and warning it expects the next two months to be “bumpy.”

Accommodative central bank policies and reopening optimism have pushed the S&P 500 and Nasdaq to record highs over the past few weeks, but concerns are growing about rising coronavirus infections due to the Delta variant and its impact on the economic recovery.

Analysts on average expect S&P 500 companies to increase their earnings per share by 30% in the September quarter, following a 96% surge in the second quarter, according to I/B/E/S data from Refinitiv.

Unofficially, the Dow Jones Industrial Average fell 0.76% to end at 35,100 points, while the S&P 500 lost 0.34% to 4,520.03.

The Nasdaq Composite climbed 0.07% to 15,374.33.

The S&P 500 remains up about 20% year to date, and the Nasdaq is up about 19%.

Boeing Co dropped 1.8% after Ireland’s Ryanair said it had ended talks with the planemaker over a purchase of 737 MAX 10 jets worth tens of billions of dollars due to differences over price.

Match Group Inc jumped over 7% after the S&P Dow Jones Indices said on Friday the Tinder parent will join the benchmark index.

Columbia Property Trust Inc surged 15% after Pacific Investment Management Company said it would buy the company for $2.2 billion.

Volume on U.S. exchanges was 9.2 billion shares, compared with the 9.0 billion average for the full session over the last 20 trading days.

Declining issues outnumbered advancing ones on the NYSE by a 2.27-to-1 ratio; on Nasdaq, a 1.65-to-1 ratio favored decliners.

The S&P 500 posted 19 new 52-week highs and 1 new lows; the Nasdaq Composite recorded 120 new highs and 24 new lows.

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Noel Randewich; Additional reporting by Shashank Nayar in Bengaluru; Editing by Anil D’Silva and Arun Koyyur; Editing by Aurora Ellis)

Today’s Market Wrap Up and a Glimpse Into Thursday

Stocks finished the day mixed after the Fed revealed that the economy is on track for employment and inflation. The Dow Jones Industrial Average and S&P 500 were each down fractionally, while the tech-heavy Nasdaq added 100 points to end modestly higher.

As the economy continues on the path to recovery, the Fed tipped its hand, saying it would begin to pull back from its asset purchasing activity. The major indices still remain close to all-time high levels.

One winner in the Dow was Boeing, which surprised Wall Street by swinging to a profit for the first time almost in two years.

Stocks to Watch

The tech earnings parade rolled on, with Facebook taking the spotlight today. Mark Zuckerberg’s company sees 3.51 billion people flock to its platforms,  including Facebook, Instagram, Messenger and Whatsapp, each month, up 12% YoY.

Facebook’s Q2 revenue came in at USD 29.08 billion, continuing a trend that Google, Microsoft and Apple similarly experienced in the quarter. While Facebook’s Q2 results topped Wall Street’s estimates, revenue growth is not expected to be sustained at these levels, the company warned.

PayPal bucked the positive trend in corporate America after its Q2 results disappointed. Worse, the payments company isn’t expecting things to get much better for Q3. Investors punished the stock in extended hours, sending shares lower by about 6%.

Ford shares found a reason to rally thanks to a stronger than expected Q2 in which the company was profitable. The automaker lifted its Q3 forecast on the heels of robust demand for its Ford Bronco SUV.

Shares of cannabis company Tilray climbed more than 25% in the wake of a profitable fiscal Q4. Tilray CEO Irwin Simon sees a world in which marijuana will become legalized at the federal level in the U.S. in the next 18-24 months.

Look Ahead

On Thursday, an advance look at GDP comes out at 8:30 a.m. ET. Wells Fargo economists predict that the economy grew at an annualized pace of 9.1% in the quarter. The economy has come a long way since last year’s pandemic-fueled contraction, which lasted for two months. The economists forecast that consumer spending and business investments were strong in Q2, while supply chain constraints persisted.

Amazon’s earnings come out on Thursday. Bitcoin investors might be listening to the call to hear if the company addresses the recent crypto-related drama.

Why Boeing Stock Is Up By 6% Today?

Boeing Shares Move Higher As Q2 Report Beats Analyst Expectations

Shares of Boeing gained strong upside momentum after the company reported its second-quarter results. Boeing reported revenue of $17 billion and GAAP earnings of $1.00 per share, easily beating analyst estimates on both earnings and revenue. The company’s operating cash flow was -$483 million, which also exceeded analyst expectations.

In its press release, Boeing noted that commercial market environment continued to improve, but the company was closely monitoring COVID-19 case rates.

The company stated that it continued work on the issues with the 737 MAX and 787 programs, which have put some pressure on the stock this year. According to Boeing, the 737 program is producing at a rate of about 16 per month and is expected to reach a production rate of 31 per month in early 2022. The 787 production rate will be temporary lower than five per month and then gradually return to this rate while the company is conducting inspections and rework.

What’s Next For Boeing Stock?

Analysts’ earnings estimates for 2021 have declined in recent months, and analysts expect that Boeing will report a loss of $1.37 per share. However, these estimates will likely be revised after the strong quarterly report.

In 2022, Boeing is expected to report a profit of $5.46 per share, so the stock is trading at 43 forward P/E, which looks rather expensive even in the current market environment.

However, a strong quarterly report shows that Boeing’s business continues to rebound after the blow dealt by the coronavirus pandemic, so traders will stay focused on the company’s future trajectory and will be ready to look beyond 2022.

In this light, Boeing’s rich P/E multiple looks sustainable unless the company encounters additional problems with its airplanes. Earnings estimates for Boeing will likely move higher in the upcoming weeks, which may provide additional support to the company’s shares.

For a look at all of today’s economic events, check out our economic calendar.

Boeing Reports Q1 Profits For The First Time In Two Years

Airplane manufacturer Boeing reported a first-quarter profit for the first time in two years, with the company’s stock price now up by more than 5% today.

Boeing Records Profit In Q1

Plane manufacturer Boeing reported its first-quarter earnings earlier today, and it delivered exceptional results. This is the first time Boeing is recording profits in the first quarter in two years.

The company recorded losses in six consecutive quarters, with the Coronavirus pandemic further affecting its business. Boeing’s revenue went up by 44% to reach $17 billion, after recording $11.8 billion a year earlier. The $17 billion recorded in the first quarter surpassed the analyst estimates of $16.54 billion.

Overall, the adjusted earnings per share were 40 cents compared to a per-share loss of 83 cents. As stated earlier, the revenue was $17 billion vs. $16.54 billion. The increase in Boeing’s revenue came as a result of a surge in deliveries of commercial jetliners. Commercial Airlines are starting to pick up from the pandemic slump, and this has helped Boeing record profits in this quarter.

CEO Dave Calhoun said the company still has a long way before it recovers. However, it is encouraging for Boeing that the commercial market is improving. Boeing had previously revealed that it would slash jobs to about 130,000 employees before the end of the year. However, Calhoun said they would likely retain the current headcount due to the increase in demand.

The revenue in Boeing’s commercial airplane unit surged by roughly 270% from a year earlier. Boeing recorded $6.02 billion in revenue from this sector, but it still reported negative margins of 7.8%.

Boeing’s Shares Rally By Over 5%

The shares of Boeing performed excellently at Wednesday’s pre-market trading session after the company reported its earnings. At the time of this report, BA is trading at $234, up by 5.5% over the past few hours.

BA stock chart. Source: FXEMPIRE

Year-to-date, the company’s stock price has performed well. It began the year trading at $202 per share, and it is now up by over 10%.

Boeing Posts First Profit in Almost Two Years Helped by 737 MAX Deliveries

By Ankit Ajmera and Eric M. Johnson

The 737 MAX is integral to Boeing’s financial recovery, as the U.S. planemaker scrambles to recoup billions of dollars in lost sales from the pandemic, push past the safety scandal caused by two fatal 737 MAX crashes, and deal with structural defects of its bigger, more profitable 787 planes.

Boeing shares were up nearly 6% at $235.18 in early trading following the results, which were also fueled by higher defense and services sales.

Chief Executive Officer David Calhoun said the company now plans to keep staffing levels stable at around 140,000 employees, after previously targeting a reduction to 130,000 by the end of 2021.

“While our commercial market environment is improving, we’re closely monitoring COVID-19 case rates, vaccine distribution and global trade as key indicators for our industry’s stability,” Calhoun said in remarks accompanying results.

While he sounded a note of optimism as U.S. domestic travel returns more quickly than expected, Boeing’s 737 MAX remains grounded in China, where trade tensions between Washington and Beijing have stunted sales, and it faces tougher regulatory scrutiny and weak demand for its delayed 777X mini-jumbo.

Boeing is also working through costly repairs and forensic inspections to fix production-related defects on its 787 program.

It reiterated plans to cut 787 production to an unspecified rate lower than 5 jets per month after finding a new problem, first reported by Reuters, and to deliver fewer than half of the lingering 100 or so 787 Dreamliners in its inventory this year – instead of the “vast majority” it had expected.

Asked whether Boeing has an execution problem on manufacturing given persistent issues on the 787 and other aircraft programs, Calhoun told CNBC: “This is Boeing being tough on Boeing. We started the inspection process, nose to tail.”

Calhoun added that he would start to worry about impacts to production due to a jet order drought from China jet buyers, around the “middle of next year.”

Boeing said it has delivered more than 130 737 MAXs since a safety ban on that jet was lifted in November 2020, and that it was building 16 737 MAX jets per month at its Seattle-area factory. It aims to increase output to 31 per month by early 2022.

“Today could be seen as a tactical victory for Boeing, but the strategic challenges remain,” Vertical Research Partners analyst Rob Stallard said in a client note.

Looking to build momentum, Boeing is preparing to launch its delayed CST-100 Starliner astronaut capsule to the International Space Station on Friday in a crucial do-over test following a near “catastrophic failure” during its 2019 debut.

Calhoun said he is “optimistic, confident” about Friday’s launch after software flaws and NASA reviews sidelined its Starliner for 18 months, and about Boeing’s ability to compete against newer space players such as billionaire entrepreneur Elon Musk’s SpaceX and Jeff Bezos’ Blue Origin.

Boeing’s core operating profit was $755 million in the second quarter, compared with a loss of $3.32 billion a year earlier.

Revenue rose 44% to about $17 billion.

Analysts had on average expected Boeing to report a quarterly loss of $454.8 million on revenue of $16.54 billion, IBES data from Refinitiv showed.

Boeing’s commercial airplanes division, its traditional profit powerhouse, reported a quarterly loss of $472 million, but its defense business earned $958 million and its services division took in $531 million.

(Reporting by Eric M. Johnson in Seattle and Ankit Ajmera in Bengaluru; additional reporting by Tracy Rucinski in Chicago; editing by David Holmes, Jason Neely and Steve Orlofsky)

Boeing Posts First Quarterly Profit Since 2019

Dow component Boeing Co. (BA) is trading at a two-week high in Wednesday’s pre-market after posting the first profit since the third quarter of 2019. The aerospace giant earned $0.40 per-share in Q2 2021, $1.12 higher than estimates, while $44 billion in revenue matched expectations, marking a 44.0% year-over-year increase. The total backlog at the end of the quarter stood at a respectable $363 billion while the company secured new orders for 234 737 airliners and 31 freighter aircraft.

Airline Industry Crosswinds

The 737 MAX is returning to the friendly skies at a rapid pace, with the delivery of more than 130 new aircraft and more than 190 previously grounded aircraft resuming service, translating into nearly 95,000 revenue flights and more than 218,000 flight hours. The company release said little about the potential impact of the Delta variant on the commercial airline industry but that’s likely to be discussed in the 10:30am Eastern conference call.

However, its isn’t all good news for Boeing, with China still withholding certification of the MAX and 787 production delays needed to address FAA mandated inspections and reworking. In addition, business travel is expected to recover at a much slower pace than leisure travel, with the Delta variant forcing many corporations to put off reintegration plans at the same time that international destinations rethink their customs requirements.

Wall Street and Technical Outlook

Wall Street consensus is mixed despite the return of the MAX 737, with an ‘Overweight’ rating based upon 11 ‘Buy’, 2 ‘Overweight’, 11 ‘Hold’, and 2 ‘Sell’ recommendations. Price targets currently range from a low of $200 to a Street-high $314 while the stock is set to open Wednesday’s session more than $40 below the median $272 target. This placement favors share gains in coming weeks, possibly dampened by continued pandemic headwinds.

Boeing posted an all-time high at 446 in 2019, just before the 737 MAX crashed in Ethiopia. The subsequent decline accelerated in the first quarter of 2020, dropping price to a 7-year low in double-digits, ahead of an uptick that ran into a buzzsaw of resistance above 200. Price action since December has tested the 200-day moving average repeatedly while accumulation has dropped to the lowest low since September 2020, when the stock was trading in the 160s. Given uncertain travel conditions, this sideways action could easily persist into 2022.

For a look at all of today’s economic events, check out our economic calendar.

Disclosure: the author held no positions in aforementioned securities at the time of publication. 

Today’s Market Wrap Up and a Glimpse Into Wednesday

A winning streak on Wall Street came to a screeching halt today after all three of the major indices finished in the red. The Dow Jones Industrial Average, S&P 500 and Nasdaq all ended the day lower after Monday’s record session.

The Nasdaq fell more than 1% as tech stocks tumbled. Investors appear to be taking some profits after five days of gains.

Technology leaders reported their earnings after the closing bell, including Google parent Alphabet, Microsoft and Apple. All three companies shined in different areas, while revenues were strong all around.

Durable Goods orders for items such as vehicles and appliances increased last month, the latest data show, in yet another sign that the economic recovery is in full swing. Supply-chain constraints continue to be a problem, however.

The results buoyed General Electric shares, which climbed 1% higher. GE also reported Q2 earnings, and its aviation division is poised to benefit from a rebound in the travel industry.

The FOMC began a two-day meeting today. And while inflation will no doubt be at the center of the discussions, economists are not expecting any surprises. Stock index futures are under pressure, with the Dow Jones, S&P 500 and Nasdaq all moving lower. Dow futures are down nearly 100 points on Tuesday evening.

Stocks to Watch

  • Apple’s earnings were better than expected, while iPhone sales increased 50% vs. year-ago levels to USD 39.6 billion. The stock is down more than 1% in extended-hours trading as investors worry if Apple can keep the good times rolling, especially in light of chip supply issues.
  • Microsoft just flipped green in after-hours trading with the stock up 1%. The company outperformed analyst estimates on the top and bottom lines. Fourth-quarter revenues soared more than 20% to USD 46.2 billion. Microsoft has a market cap of USD 2.15 trillion.
  • Google parent Alphabet far exceeded Wall Street estimates and benefited from robust online advertising sales.

Look Ahead

The earnings parade is far from over, with Facebook, PayPal, McDonald’s and more all on tap for Wednesday. In addition, Dow stock Boeing will unveil its Q2 results before the opening bell. The company is widely expected to report a loss as it continues to grapple with 787 jet airliner setbacks.

Today’s Market Wrap Up and a Glimpse Into Tuesday

Stocks started off the week strong, with all three of the major indices finishing at all-time highs. The gains are an extension of last week’s rally and demonstrate a vote of confidence among investors in corporate America’s earnings results. While the Dow Jones Industrial Average, S&P 500 and Nasdaq were up just fractionally, it was enough to send them all into record territory.

In the cryptocurrency markets, the bitcoin price crossed the USD 40,000 level for the first time in over a month, but the gains slowly faded away. Reports previously suggested that Amazon.com was on the brink of accepting bitcoin payments this year. The e-commerce giant, however, reportedly quashed those rumors despite maintaining that it is looking into crypto.

Stocks to Watch

Tesla’s highly anticipated Q2 earnings are out, and Elon Musk didn’t disappoint. The EV maker surpassed Wall Street estimates on earnings and revenue as Tesla continues to hit on all cylinders. Net income crossed over into the billion-dollar territory, which was a first for the company, while revenue came in at USD 11.9 billion vs. estimates of USD 11.3 billion.

Tesla, which delivered more than 200K vehicles in Q2, said it’s on track to produce its Model Y vehicles in Berlin and Austin, Texas this year. The Cybertruck will also be produced in Austin, Texas “subsequent to Model Y.”

Tesla’s stock is inching higher in extended-hours trading after gaining 2% in the regular session. Tesla also noted it “recorded a bitcoin-related impairment of USD 23 million.” The bitcoin price nosedived 40% in the second quarter of 2021.

F5 Networks is rallying in after-hours trading, with shares up more than 5%. Investors rewarded the technology company for its fiscal Q3 results, which came in better than Wall Street expected.

Cryptocurrency exchange Coinbase saw shares fall close to 2% in extended hours, perhaps in sympathy with bitcoin after the air was let out of the Amazon-fueled rally.

Look Ahead

Major technology companies are queued to report earnings on Tuesday, including Apple, Google parent Alphabet and Microsoft. Snap and Twitter’s quarterly results last week revealed a strong online advertising market that is likely to have benefited Alphabet as well.

On the economic front, Durable Good Orders for the month of June come out at 10 a.m. ET on Tuesday. Wells Fargo economists predict that this indicator increased 2.3% last month fueled in part by orders for Boeing aircraft.

Today’s Market Wrap Up and a Glimpse Into Wednesday

Stocks took a dive today, with all three major indices finishing the session in the red. The Dow Jones Industrial Average shed more than 100 points, weighed down by Boeing, which is experiencing production issues for its 787 Dreamliner yet again.

The S&P 500 and Nasdaq both retreated as well. The selling pressure comes on the heels of two consecutive record sessions for the S&P 500. It was in response to inflation rearing its head once again in the economy as prices for items such as groceries, used vehicles and fuel climbed higher.

Inflation increased in June at a pace that has not been seen in more than a decade. The consumer price index (CPI) rose by 5.4% last month year-over-year, the biggest jump that the inflation gauge has experienced since about the time of the housing crisis. Economists were expecting a gain more along the lines of 5%.

Stocks to Watch

Norwegian Cruise Line Holdings flipped green in extended-hours trading after losing ground in the regular session. The company filed a lawsuit against Florida’s surgeon general in an attempt to reverse a ban on companies that stops them from checking the vaccination status of customers. Without knowing whether or not passengers have been inoculated, the cruise line would have no choice but to cancel trips.

Rising inflation spooked investors, who chose to focus on rising prices rather than corporate America’s latest earnings round. JPMorgan and Goldman Sachs shares both fell despite reporting earnings that surpassed Wall Streets estimates.

Meanwhile, investors rewarded PepsiCo for beating consensus estimates in Q2, sending the stock more than 2% higher on the day. PepsiCo’s strong results were a signal that the economy is once again open for business.

Telecom play Nokia skyrocketed nearly 10% today and the rally is continuing in after-hours trading as well. The company plans to upwardly revise its outlook amid robust demand coupled with its ability to keep a lid on costs.

China’s ride-hailing company, DiDi Global, took back some ground after a disastrous IPO. After soaring 11% in the regular session, shares gave back some of those gains and tumbled 2.5% in after-hours trading.

Meme stocks succumbed to the selling pressure, with movie chain AMC Entertainment and Virgin Galactic each spiraling by more than 7% on the day.

Look Ahead

The second-quarter earnings parade will continue on Wednesday, with financial stocks, including Bank of America, PNC Financial and BlackRock, in the pipeline.

The next piece of economic data comes out on Friday when Retail Sales for June will be revealed. In May, this index fell by 1.3%. Wells Fargo predicts retail sales, excluding autos, inched higher by 0.5% in June.

S&P 500 and Nasdaq End Down After Hitting Record Highs

The S&P 500 and Nasdaq reached fresh record highs but quickly fell into negative territory after an auction of 30-year Treasuries showed less demand than some investors expected and pushed yields higher.

Data indicated U.S. consumer prices rose by the most in 13 years last month, while so-called core consumer prices surged 4.5% year over year, the largest rise since November 1991.

Economists viewed the price surge, driven by travel-rated services and used automobiles, as mostly temporary, aligning with Federal Reserve Chair Jerome Powell’s long-standing views.

“Any time you get an uptick in interest rates the stock market is going to get nervous, especially on a day like today,” said Joe Saluzzi, co-manager of trading at Themis Trading in Chatham, New Jersey.

The S&P 500 growth index dipped 0.05%, while the value index fell 0.70%.

“With growth outperforming value, the takeaway is clearly that inflation from a market perspective is not a real threat in the long term,” said Keith Buchanan, a portfolio manager at GLOBALT Investments in Atlanta, Georgia.

Ten of the 11 major S&P 500 sector indexes ended lower, with real estate, consumer discretionary and financials each down more than 1%.

JPMorgan Chase & Co stock fell 1.5% after the company reported blockbuster quarterly profit growth but warned that the sunny outlook would not make for blockbuster revenues in the short term due to low interest rates.

Goldman Sachs Group Inc dipped 1.2% after its quarterly earnings exceeded forecasts.

Citigroup, Wells Fargo & Co and Bank of America were due to report their quarterly results early on Wednesday.

PepsiCo Inc gained 2.3% after raising its full-year earnings forecast, betting on accelerating demand as COVID-19 restrictions continue to ease.

June-quarter earnings per share for S&P 500 companies are expected to rise 66%, according to Refinitiv data, with investors questioning how long Wall Street’s rally would last after a 16% rise in the benchmark index so far this year.

All eyes now turn to Fed Chair Jerome Powell’s congressional testimony on Wednesday and Thursday for his comments about rising price pressures and monetary support going forward.

The Dow Jones Industrial Average fell 0.31% to end at 34,888.79 points, while the S&P 500 lost 0.35% to 4,369.21.

The Nasdaq Composite dropped 0.38% to 14,677.65.

Conagra Brands Inc dropped 5.4% after the packaged foods company warned that higher raw material and ingredient costs would take a bigger bite out of its profit this year than previously estimated.

Boeing Co fell 4.2% after the Federal Aviation Administration said late on Monday some undelivered 787 Dreamliners have a new manufacturing quality issue.

Declining issues outnumbered advancing ones on the NYSE by a 2.85-to-1 ratio; on Nasdaq, a 3.06-to-1 ratio favored decliners.

The S&P 500 posted 39 new 52-week highs and no new lows; the Nasdaq Composite recorded 61 new highs and 73 new lows.

Volume on U.S. exchanges was 9.5 billion shares, compared with the 10.5 billion average for the full session over the last 20 trading days.

For a look at all of today’s economic events, check out our economic calendar.

(Additional reporting by Devik Jain and Shreyashi Sanyal in Bengaluru; Editing by Cynthia Osterman)

Why Boeing Stock Is Down By 3% Today

Boeing Stock Falls As Company Cuts Guidance For 787s Deliveries

Shares of Boeing found themselves under pressure after FAA stated that new problems were found near the nose of certain 787 planes that were produced but not delivered.

Boeing stated that “the company has identified additional rework that will be required on undelivered 787s”. As a result, the 787 production rate will decrease and the company expects to deliver fewer than half of the 787s that are currently in inventory.

In the second quarter, Boeing’s major program deliveries totaled 79 in the Commercial Airplanes segment and 43 in the Defense, Space & Security segment. The company has also received 219 gross orders in June, which indicated that demand for Boeing’s products remained very strong.

What’s Next For Boeing Stock?

Analysts expect that Boeing will report a loss of $1.37 per share in 2021, but the company is expected to return to profitability in 2022 with earnings of $5.46 per share.

Analyst esimtates for 2022 earnings have been moving higher in recent weeks. However, higher earnings estimates failed to provide support to the stock as investors focused on Boeing’s problems.

The stock is trading at 42 forward P/E which is high for Boeing but investors are ready to look beyond 2022 as the industry continues to recover despite persistent problems with coronavirus in the world.

I’d note that recent safety concerns, highlighted by FAA, have clearly hurt market sentiment towards Boeing stock. S&P 500 is at all time high levels while shares of Boeing have pulled back by almost 20% from highs that were reached back in March.

The near-term trend for the stock is bearish, and it looks that Boeing will need to come up with additional upside catalysts to reverse this trend. While Boeing’s recent success in booking new business will provide support to its financials in the future, the company needs to fix the existing problems for its stock to have a chance to develop significant upside momentum.

For a look at all of today’s economic events, check out our economic calendar.

Today’s Market Wrap Up and a Glimpse Into Thursday

Another day, another new all-time high for the S&P 500. The broader market index just set its fifth-straight record after finishing the day fractionally higher to just under 4,300. The Nasdaq failed to keep up and ended the day slightly lower, while the Dow Jones Industrial Average tacked on 210 points, with Boeing, Goldman Sachs and Walmart leading the gains.

Now that the month of June is in the rear-view mirror, it’s clear investors have managed to push stocks to impressive gains despite signs of inflation and lofty valuations. The S&P 500 and Dow are up roughly 14% and close to 13%, respectively, year-to-date.

The economy is humming along, with consumers exhibiting signs of resilience. For the back half of the year, however, investors will be weighing whether the economy can stand on its own two feet without the help of a dovish Fed. This will begin with Friday’s all-important employment report.

Stocks on the Move

When you hear that an electric vehicle stock is rallying, you would not be alone to guess Tesla. Today, however, that title went to NIO, a Shanghai-based EV maker. The stock gained nearly 6% on the day amid optimistic investors ahead of the company’s Q2 results coupled with China’s recovering economy. Wall Street analysts are also reportedly turning more bullish on the stock.

Sticking with the auto stock theme, shares of Ford fell 1% today. The company revealed it would suspend operations at some of its North American facilities due to a shortage of chips. The shutdown will cost the automaker upwards of USD 2 billion and slash its production significantly in the interim.

China’s ride-share company Didi made its debut on the U.S. stock market today. The ADR shares came out of the gate strong, rallying by a double-digit percentage, but the enthusiasm didn’t last. Didi finished the day with a gain of 1%.

Look Ahead

The ISM Manufacturing index for June comes out after surpassing estimates and climbing to 61.2 in May. Wells Fargo predicts the reading will stay “elevated” for June amid a strong orders pipeline.

On the earnings front, retailer Walgreens and spice maker McCormick are on deck. McCormick has benefited from rising demand as consumers spent more time cooking during the shift to staying at home during the health crisis.

United Airlines Could Post Weak Returns into 2022

United Airlines Holdings Inc. (UAL) has gone on a buying binge, procuring 270 new Boeing Co. (BA) and Airbus SE (EADSY) aircraft in the largest single order in airline history and the biggest by one carrier in the last ten years. In addition, CEO Scott Kirby just told CNBC the carrier will purchase one new aircraft every three days until 2023. Both transactions reflect growing optimism that airline travel is rapidly returning to pre-pandemic levels.

Business Travel Still Lagging

U.S. airline travel is booming in the summer of 2021 thanks to vaccinations but many foreign nations are still restricting access, weighing on quarterly revenues. In addition, the vast majority of current travelers are headed into vacations rather than business meetings, which are still being conducted through Zoom and other virtual meeting places. It’s wise to assume at this point that corporations have noticed they can significantly cut expenses using this digital channel.

Kirby expressed cautious optimism but admitted it will take 18 months for Asia to recover due to ongoing restrictions and Delta variant hotspots. He noted that business travel remains down 60% compared to 2019 but points out it stood above 90% just “weeks ago”. Chief Commercial Officer Andrew Nocella expressed similar optimism before his boss’s comments, insisting that “What you’re seeing in the marketplace is that as people travel more for leisure, the resistance to traveling for business is rolling back quickly.”

Wall Street and Technical Outlook

Wall Street consensus remains cautious despite the travel surge, with an ‘Overweight’ rating based upon 8 ‘Buy’, 2 ‘Overweight’, 9 ‘Hold’, 1 ‘Underweight’, and 2 ‘Sell’ recommendations. Price targets currently range from a low of $43 to a Street-high $78 while the stock barely budged after the news and is set to open Tuesday’s session about $13 below the median $65 target. This placement reveals continued skepticism about United’s long-term outlook.

United posted an all-time high at 97.85 in December 2018 and dropped into a narrow sideways pattern that broke to the downside in February 2020, dropping to an 8-year low. The subsequent uptick eased into a rising channel, stalling at the 50% selloff retracement and 50-week moving average in March 2021. The stock has been drifting sideways since that time, not reacting to the travel uptick. This apathy could persist, yielding weak returns into the first quarter of 2022.

For a look at all of today’s economic events, check out our economic calendar.

Disclosure: the author held no positions in aforementioned securities at the time of publication. 

Today’s Market Wrap Up and a Glimpse Into Tuesday

Stocks came out of the gate strong, with the S&P 500 and Nasdaq both setting new record highs, buoyed by Facebook. The social media giant gained more than 4% on the day and is up in extended hours thanks to a court ruling that went Mark Zuckerberg’s way in an antitrust case filed by the FTC.

Today marked the third consecutive all-time high for the S&P 500.  The Dow Jones Industrial Average didn’t join the party and closed the day slightly in the red. Dow member Boeing pressured the index due to a regulatory setback for its 777X aircraft.

Outside of the stock market, cryptocurrencies were in focus after ARK Invest filed with the U.S. SEC for a bitcoin ETF. The bitcoin price has been leading the markets higher all day even before the ETF development. Cathie Wood, who is at the helm of ARK Invest, is also a Tesla bull.

Stocks to Watch

The top three most actively traded companies today were meme stocks.

  • Context Logic topped the list. The stock, which trades under the symbol WISH, gained 2.5% on the day with 175 million shares changing hands vs. the average volume of 46 million.
  • Virgin Galactic, which was last week’s winner, gave back some ground today, falling nearly 2% after its value ballooned by nearly 40% on Friday. The company received regulatory approval for commercial flights to space.
  • AMC Entertainment tacked on 7.5% after enjoying its best weekend for ticket sales since before the pandemic as moviegoers returned to the theaters.

Financials in Focus

  • Morgan Stanley is up 3.4% in after-hours trading after revealing that it would increase its quarterly dividend twofold to USD 0.70 per share as soon as Q3, pending board approval. The investment bank is going for it and also announced a USD 12 billion share buyback program on the heels of the recent stress test.
  • JPMorgan lifted its dividend to USD 1 per share, an 11% increase in the payout.
  • Bank of America is increasing its distribution by 17% to USD 0.21 per share.
  • Goldman Sachs announced a 60% increase to its quarterly dividend to USD 2 per share, up from USD 1.25.

Look Ahead

The markets are also bracing for June’s employment report, which is expected on Friday. In the interim, Richmond Fed President Thomas Barkin will be making comments on Tuesday. The earnings calendar is light.

Why Boeing Stock Is Under Pressure Today

FAA Reportedly Tells Boeing That 777X Would Not Be Certified Until 2023

Shares of Boeing found themselves under pressure after FAA reportedly stated that the company’s 777X jet would not be certified until 2023.

Previously, problems with software in two Boeing 737 MAX planes have led to crashes, so the market is sensitive to any news about issues with Boeing aircraft.

The 777X program has already suffered delays due to the pandemic, and it remains to be seen whether the market will pay significant attention to FAA letter to Boeing as dealing with various issues is a natural part of any certification process.

What’s Next For Boeing Stock?

Boeing stock is up by about 13% year-to-date as investors continue to bet on the recovery of the airline industry. In addition, Boeing gets revenue from its defense and services segments, which brings more stability to the company’s financial performance despite the current challenges in the commercial airplanes segment.

Analysts expect that Boeing will report a loss of $1.51 per share in 2021. In 2022, the company is projected to report a profit of $5.37 per share so the stock is trading at roughly 45 forward P/E.

Analyst estimates have slightly improved in recent weeks, but the company’s valuation looks rather high even for the current market environment, although it is clear that the market is ready to look beyond 2022.

It should be noted that high valuation levels make the stock more sensitive to any negative news, so it’s not surprising to see that Boeing stock is down by about 3% after the release of reports about 777X certification.

However, it remains to be seen whether Boeing shares will be able to gain any downside momentum as the stock market remains bullish and investors look ready to buy big cap stocks at high levels.

For a look at all of today’s economic events, check out our economic calendar.

United Airlines Closes in On $30 Billion Post-Pandemic Jet Order

By Tim Hepher, Tracy Rucinski and Eric M. Johnson

The order could include up to 200 Boeing 737 MAX and some 70 Airbus A321neo which competes with the top end of the MAX family for single-aisle trips needing most range.

Such a deal would notionally be worth $33 billion at the most recently published list prices, but analysts say airlines typically pay less than half price for deals of this size.

None of the parties commented ahead of an announcement expected at a United investor event on Tuesday. Negotiations are complex and numbers of units can shift, the sources cautioned.

The deal would be the industry’s biggest since the coronavirus pandemic pummelled air traffic and airline balance sheets, eclipsing recent orders for more than 100 MAX from Southwest Airlines.[

It would accelerate a recovery for the MAX which has been logging orders to rebuild momentum damaged by a safety crisis even before COVID-19. A 2019 draft order for 200 MAX from British Airways owner IAG was never finalised.

However, it would not resolve a strategic stalemate which has seen Airbus dominate the busy market for larger single-aisle jets while Boeing relies heavily on demand for its core MAX 8.

A split order would highlight widespread concerns that the MAX “can’t solve the whole problem”, one industry source said. Airlines also have to consider availability when buying.

Such an announcement “could mean only two versus three cheers for Boeing” since the A321neo remains “Boeing’s nemesis at the top end of the narrowbody market with a dominant market share,” Vertical Research Partners analyst Rob Stallard wrote.

United is considered one of the industry’s most influential buyers, whose whopping purchases can set the tone for decades.

A shock Airbus win there in 1992 led to the launch of the most-sold generation of Boeing 737, the 737NG. Boeing hit back with a major win for its successor, the 737 MAX, in 2012.

Reuters reported this month that the MAX portion of the latest order could involve as many as 200 aircraft.

The deal would come days after the first flight of the 737 MAX 10, the largest member of the MAX family of which United has 100 on order.

The MAX 10 was launched in 2017 to strengthen the top end of the portfolio following disappointing sales of the MAX 9, but Boeing continues to lag Airbus in the key long-range niche.

Boeing is now studying a new model to replace the out-of-production 757, which overlaps with the A321neo and MAX 10, but is not expected to decide before 2023 as it ponders how to produce the pair of jets as cheaply as possible.

(Reporting by Tim Hepher, Tracy Rucinski, Eric M. Johnson; Editing by Kirsten Donovan)

Exclusive – U.S. Opens $500 Million Fund for Relatives of Boeing 737 MAX Victims

By David Shepardson

The fund is part of a settlement with the Justice Department. Boeing Co in January agreed to pay $500 million to compensate the heirs, relatives and beneficiaries of the passengers who died in Lion Air Flight 610 and Ethiopian Airlines Flight 302 in 2018 and 2019.

Each eligible family will receive nearly $1.45 million and money will be paid on a rolling basis as claim forms are submitted and completed, said administrators Ken Feinberg and Camille Biros in a joint statement. Families have until October 15 to complete claim forms.

The Justice Department and Boeing did not immediately comment.

The fund is part of a $2.5 billion Justice Department settlement reached in January with Boeing after prosecutors charged the company with fraud over the certification of the 737 MAX following a Lion Air crash on Oct. 29, 2019 and an Ethiopian Airlines disaster on March 10, 2019.

The settlement allowed Boeing to avoid criminal prosecution but did not impact civil litigation by victims’ relatives that continues.

In July 2019, Boeing named Feinberg and Biros to oversee the distribution of a separate $50 million to the families of those killed in the crashes and the new fund’s distribution follows a similar formula.

While Boeing has mostly settled Lion Air lawsuits, it still face numerous lawsuits in Chicago federal court by families of the Ethiopian crash asking why the MAX continued flying after the first disaster.

The DOJ settlement includes a fine of $243.6 million and compensation to airlines of $1.77 billion over fraud conspiracy charges related to the plane’s flawed design.

The Justice Department said in January, “Boeing’s employees chose the path of profit over candor by concealing material information from the FAA concerning the operation of its 737 Max airplane and engaging in an effort to cover up their deception.”

Some lawmakers say the government did not go far enough, while Boeing says it has taken numerous steps to overhaul its safety culture.

Congress ordered a major overhaul of how the FAA certifies new airplanes in December and directed an independent review of Boeing’s safety culture.

(Reporting by David ShepardsonEditing by Chizu Nomiyama and Nick Zieminski)

United Airlines in Talks to Buy at Least 100 Boeing 737 Max Jets – Bloomberg News

The carrier is looking to upgrade its fleet and study several new, fuel-efficient models at a time when the likes of Boeing and Airbus SE are hungry for deals while demand for leisure travel has been surging in the United States, the report said https://bloom.bg/3izdUZQ, citing people familiar with the discussions.

Boeing‘s portion of the order could include 150 Max, Bloomberg News added.

“We do not currently have a deal in place with Boeing or Airbus to purchase new aircraft and do not comment on speculative aircraft orders,” United spokesperson Luke Punzenberger said.

In March, the airline had ordered 25 new Boeing 737 MAX aircraft, as it prepares to replace aging jets and meet post-pandemic demand growth.

Bookings for U.S. airlines are expected to rebound this year on the back of speedy COVID-19 vaccination programs and easing restrictions after the pandemic caused one of the industry’s worst downturns in 2020.

Boeing said the company does not comment on customer discussions.

The planemaker has been offering some customers steep discounts, reduced upfront payments and other inducements that may not be available once global air traffic returns to more normal levels, the report said.

Reuters last month reported that Boeing had drawn up preliminary plans for a fresh sprint in 737 MAX output to as many as 42 jets a month in fall 2022.

(Reporting by Radhika Anilkumar and Kanishka Singh in Bengaluru; Editing by Sherry Jacob-Phillips)

Spirit AeroSystems Seek Relief From Lenders, Stock Plunges Over 13%

Shares of Spirit AeroSystems Holdings Inc, the world’s largest first-tier aerostructures manufacturer, plunged over 13% overnight after it announced that it is seeking concessions from lenders on repayment timelines and financial covenants as they worry about a sharp erosion in earnings after Boeing directed to cut production amid coronavirus pandemic.

The coronavirus related travel restrictions and grounding of passenger jets have led to a collapse in air travel demand.

Boeing Company, an American multinational corporation that designs, manufactures, and sells airplanes, rotorcraft, rockets, satellites, telecommunications equipment, and missiles worldwide, said that it has asked its biggest part supplier to substantially lower 737 Max production this year. However, Spirit cautioned that it may have an adverse impact on the financial condition of the company.

The company which manufactures several key pieces of Boeing, including the fuselage of the 737, portions of the 787 fuselage, and the cockpit section of the fuselage of nearly all of its airliners, said that it anticipates to hand over only around 70 shipsets, down from over 120 planned previously.

“Given the substantial production plan reduction, Spirit could breach the financial covenants under its credit agreement in the fourth quarter of 2020 without an amendment or waiver,” the company said in the SEC filing.

The COVID-19 pandemic along with the B737 MAX grounding presents significant challenges to Spirit’s liquidity. The COVID-19 pandemic presents the potential for impairment charges and increased bad debt expense provisions, which could negatively impact the company’s results, the company added.

“Our business depends, in large part, on sales of components for a single aircraft program, the B737 MAX. Further suspensions or reductions in our production rates for the B737 MAX as well as our other programs, as a result of the COVID-19 pandemic, may have a material adverse impact on our business, financial condition, results of operations, and cash flows.”

Spirit AeroSystems outlook

On Tuesday, Spirit AeroSystems shares closed 13.34% down at $23.58. Ten analysts forecast the average price in 12 months at $24.00 with a high of $40.00 and a low of $14.00. The average price target represents a 1.78% increase from the last price of $23.58, according to Tipranks.

However, it is good to buy at the current level for the short-term as 50-day Moving Average and 20-50-day MACD Oscillator signals a buying opportunity. On June 11, Jefferies raised the target price to $30 from $21. However, UBS cuts price target to $19 from $21, Suntrust Robinson cuts to $14 from $16 and Cowen and Company cut to $21 from $25 in May.