S&P 500 Rebounds From Session Lows As Traders Shrug Off Bullard’s Comments

Key Insights

  • Fed’s Bullard said that the Fed might have to raise rates by at least 100 bps to fight inflation. 
  • Stocks opened lower, but traders rushed to increase their positions at cheaper levels. 
  • A move above 3960 will push S&P 500 towards the resistance at 4000.

Tech Stocks Lead The Rebound

S&P 500 rebounds from session lows and is moving closer to the positive territory as traders buy stocks after the pullback. NASDAQ Composite has already pared today’s losses.

Stocks were under strong pressure at the start of today’s session as traders reacted to the hawkish comments of Fed’s Bullard, who said that the Fed might need to raise rates by 100 bps in a dovish scenario. Bullard’s hawkish assumptions would lead to rates above the 7% level.

Not surprisingly, Treasury yields and U.S. dollar moved higher, which was bearish for stocks. The sell-off in commodity markets has put additional pressure on S&P 500.

However, the stock market managed to gain upside momentum despite stronger dollar and higher Treasury yields. Tech stocks led the rebound, driven by Cisco’s strong earnings report. Apple enjoyed strong support and managed to get back to the $151.50 level after testing the 20 EMA at $146.35.

Retailer Bath & Body Works was the strongest performer in the S&P 500 today. The stock gained 25% after the company beat analyst estimates on both earnings and revenue and raised guidance.

Norwegian Cruise Line Holdings declined by 6% after Credit Suisse downgraded the stock from outperform to underperform. According to Credit Suisse, the stock is significantly overvalued compared to its peers Royal Caribbean and Carnival.

From a big picture point of view, the rebound of S&P 500 indicates that the market sentiment remains bullish, and traders are ready to increase their long positions during pullbacks.

Resistance At 3960 In Sight

S&P 500

Currently, S&P 500 is trying to get to the test of the nearest resistance level at 3960. A move above this level will push S&P 500 towards the resistance at 4000. If S&P 500 manages to settle above 4000, it will head towards the 4015 level. A successful test of the resistance at 4015 will open the way to the test of the next resistance at 4040.

On the support side, the nearest support level for S&P 500 is located at 3920. If S&P 500 declines below this level, it will head towards the support at 3885. A move below this level will push S&P 500 towards the 20 EMA at 3865.

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

S&P 500 Retreats Towards 3960 As Traders Focus On Target’s Results

Key Insights

  • Sell-offs in Target and Micron stocks hurt market sentiment today. 
  • Energy stocks moved lower as traders decided to take profits off the table amid a pullback in oil markets. 
  • A successful test of the support at 3960 will push S&P 500 towards the next support level at 3920.

Target And Micron Push The Market Lower

S&P 500 pulled back towards the support at 3960 as traders reacted to the weak report from Target and warning from Micron.

Target missed analyst estimates on earnings and said that it planned to cut up to $3 billion in costs in the next three years.

Micron said that the market outlook for the next year had weakened and adjusted its capex plans accordingly.

Carnival was among the biggest losers in the S&P 500 today after the cruise operator said that it would issue $1 billion of convertible senior notes. At the time of writing, the stock was down by almost 14%. Cruise companies carry significant debt burdens after the pandemic, and their debt levels will likely remain a material problem in the upcoming years.

Energy stocks were under significant pressure today as WTI oil made an attempt to settle below the $85 level. Many stocks in this market segment are trading near yearly highs, so some traders want to take profits off the table.

Tech stocks were hit by Micron’s warning. Micron’s announcement put pressure on shares of other semiconductor stocks, like AMD and NVIDIA.

It should be noted that Treasury yields moved lower today, but this move did not provide any support to the stock market. At this point, it looks that S&P 500 will need additional positive catalysts to settle above the 4000 level.

S&P 500 Tests Support At 3960

S&P 500

S&P 500 has recently made another attempt to settle above the 4000 level but lost momentum and pulled back towards the support level at 3960. If S&P 500 manages to settle below this level, it will gain additional downside momentum and move towards the next support at 3920. A successful test of the support level at 3920 will open the way to the test of the support at 3885.

On the upside, the nearest resistance level for S&P 500 is located at 4000. A move above this level will lead to the test of the next resistance at 4015. In case S&P 500 gets above 4015, it will head towards the resistance level at 4040.

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

S&P 500 (SPY) Gains Ground As Rebound Continues

Key Insights

  • S&P 500 moved higher as traders continued to buy beaten stocks.  
  • The strong report from Netflix provided additional support to S&P 500 in the post-market session. 
  • A move above 3730 will push S&P 500 back towards the recent highs near 3760.

S&P 500 Gained More Than 1% In Broad Rebound

S&P 500 lost momentum after testing the resistance level at 3760 and pulled back towards the 3720 level. However, stocks were still able to record healthy gains for the day.

Industrial Production report, which indicated that Industrial Production increased by 0.4% month-over-month in September, provided material support to stocks. However, it looks that continuation of the technical rebound was the main driver for the stock market today.

Cruise stocks were among the biggest gainers today. Carnival Corporation, Norwegian Cruise Line Holdings, and Royal Caribbean Cruises were up by 7-11% today.

Lockheed Martin gained 8% after beating analyst estimates on earnings and increasing stock buyback. Salesforce was up by more than 4% after Starboard Value acquired a stake in the company.

Interestingly, leading energy stocks like Exxon Mobil and Chevron did not move lower despite the strong sell-off in the oil markets.

From a big picture point of view, the rebound was broad, and all market segments moved higher. Traders continued to hunt for bargains and bought beaten stocks.

In the post-market session, Netflix stock rallied towards $275 after releasing its earnings report. The company reported revenue of $7.48 billion and earnings of $3.19 per share, exceeding analyst expectations on both earnings and revenue. Talking about the fourth-quarter guidance, Netflix noted that strong dollar remained a significant headwind. In the last quarter of this year, Netflix expects to report revenue of $7.8 billion.

United Airlines report beat analyst estimates, pushing the stock towards $40 in the post-market session. The company noted that strong COVID recovery trends would continue to overcome the recessionary pressures. Previously, traders were worried that recession fears may hurt consumer activity, but it looks that demand for air travel remains strong.

S&P 500 Moves Higher After Netflix Beats Expectations

S&P 500

The strong report from Netflix provided support to S&P 500 futures and pushed them above the resistance at 3730. RSI remains in the moderate territory, so S&P 500 has plenty of room to gain additional upside momentum in the upcoming trading sessions.

In case S&P 500 manages to settle above 3730, it will move towards the next resistance, which is located near the recent highs at 3760. A move above this level will open the way to the test of the resistance at the highs of the previous rebound at 3805.

On the support side, a move below 3730 will push S&P 500 towards the support at 3700. In case S&P 500 declines below this level, it will head towards the next support at 3675. A successful test of the support at 3675 will open the way to the test of the support at 3640.

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

S&P 500 (SPY) Stays Close To Yearly Lows

Key Insights

  • S&P 500 failed to settle above the 3600 level and continues to trade near yearly lows.
  • Traders are waiting for the CPI report, which will be released tomorrow. 
  • A move below 3585 will push S&P 500 towards the 3560 level.

Traders Stay Nervous Ahead Of The CPI Report

S&P 500 is swinging between gains and losses as traders remain cautious ahead of the CPI report, which will be released tomorrow.

Today, traders focused on the PPI report, which indicated that Producer Prices increased by 0.4% month-over-month in September. On a year-over-year basis, Producer Prices grew by 8.5%, compared to analyst consensus of 8.4%. The report provided some support to the U.S. dollar, but it is clear that traders are not ready for big moves ahead of the important CPI data.

Cruise stocks gained strong upside momentum today. Norwegian Cruise Line, Carnival Corporation, and Royal Caribbean Cruises are up by 7-8% in today’s trading session. Cruise stocks have been extremely volatile in recent days as traders tried to evaluate the strength of demand in the fourth quarter of this year.

Leading tech stocks show mixed dynamics today. Apple, Microsoft, Alphabet, and Amazon are moving hgiher, while Meta and NVIDIA are under pressure.

From a big picture point of view, stocks received some support near yearly lows but their near-term dynamics will depend on tomorrow’s CPI report. Traders remain worried that aggressive Fed will push the economy into a severe recession, so inflation data will have a huge impact on the market.

S&P 500 Tests Support At 3585

S&P 500

Currently, S&P 500 is trying to settle below the support at 3585. RSI remains in the moderate territory, so there is enough room to gain additional downside momentum in case the right catalysts emerge. If S&P 500 settles below the 3585 level, it will move towards the next support at 3560. A successful test of the support at 3560 will push S&P 500 towards the support level at 3525.

On the upside, S&P 500 needs to stay above the 3585 level to have a chance to gain upside momentum in the near term. The next resistance level is located at 3615. If S&P 500 gets back above this level, it will head towards the next resistance at 3640. A successful test of the 3640 level will open the way to the test of the resistance at 3675.

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

S&P 500 (SPY) Tries To Settle Below 3600

Key Insights

  • Chip stocks are losing ground as traders worry that new export controls will hurt profitability of the leading semiconductor companies. 
  • Casino stocks retreat amid worries about coronavirus-related measures in Macau. 
  • A move below the support at 3585 will push S&P 500 towards the next support level at 3560.

S&P 500 Retreats At The Start Of The Week

S&P 500 remains under strong pressure at the start of the week as traders sell stocks amid recession worries.

The pullback is led by tech stocks. The new export rules aimed at containing China’s access to top technology may lead to significant losses for the companies in this market segment. As a result, stocks like NVIDIA and Intel are testing yearly lows.

Casino stocks like Wynn Resorts and Las Vegas Sands are down by about 10% amid worries about coronavirus-related measures in Macau.

Meanwhile, recession worries continue to put pressure on cruise stocks. Norwegian Cruise Line, Carnival Corporation, and Royal Caribbean Cruises are down by 5-8% in today’s trading.

It should be noted that there is some demand for consumer defensive stocks like Kroger, Kraft Heinz, and Altria.

From a big picture point of view, the sell-off is broad, and the market is moving towards yearly lows. Traders fear that Fed’s aggressive rate hikes will put too much pressure on the economy and cause a severe recession instead of a “soft landing.”

S&P 500 Is Moving Towards Yearly Lows

S&P 500

S&P 500 is currently trying to settle below the 3600 level. In case this attempt is successful, it will head towards the support at 3585. RSI remains in the moderate territory, and there is plenty of room to gain additional downside momentum in case the right catalysts emerge.

If S&P 500 declines below 3585, it will head towards the next support level at 3560. A move below this level will open the way to the test of the support at 3525.

On the upside, the previous support at 3615 will serve as the first resistance level for S&P 500. In case S&P 500 climbs back above this level, it will head towards the resistance at 3640. A successful test of the resistance at 3640 will push S&P 500 towards the resistance level at 3675.

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

S&P 500 (SPY) Rallies As Traders Bet On A Less Hawkish Fed

Key Insights

  • S&P 500 gained strong upside momentum after the release of the weak JOLTs Job Openings report. 
  • Traders bet that the reduction in the number of job openings may force the Fed to take a more cautious approach. 
  • A move above the resistance at 3775 will push S&P 500 towards the next resistance level at 3800.

Stocks Continue To Move Away From Yearly Lows

S&P 500 is up by about 2.5% as traders react to the disappointing JOLTs Job Openings report. The report indicated that job offers declined from 11.17 million in July to 10.05 million in August.

The market’s reaction was euphoric as a weaker job market may lead to a less hawkish Fed. The U.S. dollar declined against a broad basket of currencies, while Treasury yields pulled back.

The rally is broad, and all market segments are gaining ground today. Twitter is one of the biggest gainers in S&P 500 as Elon Musk has reportedly proposed to proceed with his buyout deal.

Cruise line stocks rebound after the recent sell-off. Norwegian Cruise Line, Royal Caribbean Cruises and Carnival Corporation are up by 11-13% in today’s trading session. These stocks have found themselves under strong pressure in recent days amid fears that demand for cruises will be weak in the fourth quarter.

Arline stocks like American Airlines and Delta Air Lines are up by about 8%. The technical rebound amid broad market optimism is the key driver for these moves.

From a big picture point of view, it looks that traders are searching for bargains and are ready to buy beaten stocks. Traders should closely monitor the dynamics of the U.S. dollar, which will indicate whether demand for safe-haven assets is increasing. In case the U.S. dollar begins to rebound after sell-off, stocks may find themselves under pressure.

S&P 500 Tests Resistance At 3775

S&P 500

S&P 500 is currently trying to settle above the resistance at 3775. In case this attempt is successful, S&P 500 will move towards the next resistance level, which is located at the 20 EMA at 3800. A move above the 20 EMA will push S&P 500 towards the resistance at 3830.

On the support side, the nearest significant support level for S&P 500 is located at 3750. If S&P 500 declines below this level, it will move towards the next support at 3725. A successful test of the support at 3725 will push S&P 500 towards the 3700 level.

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

S&P 500 (SPY) Remains Stuck Near The Key 3635 Level

Key Insights

  • S&P 500 continues its attempts to settle below the support at 3635.
  • Nike is down by more than 10% as the company’s report showed that margins declined. 
  • S&P 500 will likely need strong catalysts to get below the support area in the 3600 – 3635 range. 

S&P 500 Is Mostly Flat Ahead Of The Weekend

S&P 500 is currently trying to settle below the key support level at 3635 as traders are not ready to increase risks ahead of the weekend.

Today, the U.S. released the final reading of Michigan Consumer Sentiment report, which indicated that Consumer Sentiment increased from 58.2 in August to 58.6 in September. PCE Price Index increased by 0.3% month-over-month, compared to analyst consensus of 0.1%. These reports have put some pressure on stocks.

Carnival stock is down by more than 20% as the company’s quarterly report missed analyst consensus on both earnings and revenue. Advanced bookings for the fourth quarter were below historical averages, which put significant pressure on the stock. Norwegian Cruise Line and Royal Caribbean have also suffered strong sell-offs.

Nike is down by 12% today as its quarterly report indicated that margins declined. The company noted that it was working hard to get rid of excess inventory, which put pressure on margins.

Today’s trading session is choppy, and several market segments like REITs and basic materials are moving higher. It remains to be seen whether traders are ready for big moves ahead of the weekend.

Support Near 3635 Stays Strong

S&P 500

S&P 500 has already made several attempts to settle below the support level at 3635 in recent trading sessions. RSI is close to the oversold territory, but there is enough room to gain additional downside momentum in case the right catalysts emerge.

Currently, S&P 500 has strong support in the 3600 – 3635 range. To gain strong downside momentum, it will need to settle below 3635 and test the next support at 3600.

Most likely, stocks will need significant catalysts to continue the current trend without a rebound. S&P 500 is down by roughly 25% from yearly highs, so many traders and investors are willing to buy various stocks at a discount.

At the same time, the situation in the economy may get worse in the upcoming months, so S&P 500 has a decent chance to move lower.

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

BoE is in The Game. Will Fed Follow?

The intervention in Britain came after a central bank committee warned of the risks to financial stability from disruption in the government bond market.

What Happened in UK?

The biggest problems stem from a sharp rise in bond yields that has created massive margin calls for big investment firms, including pension funds.

That led to a lot of funds trying to sell bonds in order to raise cash and risked sparking a downward spiral. The Bank of England is now a buyer of bonds at “whatever scale necessary” and is delaying the start of its quantitative tightening (QT) program – aka its plan to unwind its securities holdings.

The lack of liquidity in Britain’s bond markets highlights a similar issue that some fear we could see happening in other parts of the world. This means that central banks might not be able to be as hawkish as some bears have been thinking.

Will Fed Follow BoE?

Keep in mind, in the USA the US Federal Reserve continues to hike rates at a historically fast clip while also working to reduce its balance sheet.

The Fed is now allowing its holdings of Treasury securities to drop by up to -$30 billion per month by letting them mature without replacement, and its mortgage-backed securities (MBS) to drop by up to -$17.5 billion a month.

The program has already dramatically reduced liquidity in US Treasury markets and some worry things could get dangerously volatile as “Quantitative Tightening” (QT) continues to drain money from the system.

Keep in mind, government debt markets across the world are experiencing extreme degrees of volatility right now, meaning bears believe there’s a heightened risk that something could break and possibly spark a wider crisis across global financial markets.

On the flip side, as I mentioned above, bulls believe the risks of extreme volatility and illiquidity in US bond markets could prompt the Fed to pause some of its tightening plans sooner than currently anticipated.

The Fed did reverse course on its asset reductions during its first and only attempt at QT back in 2019.

Several Fed officials have noted that the Fed’s aggressive pace of tightening does pose some risks, including recession, but most right now believe “inflation” is the bigger threat to both economic and market stability.

Data to Watch

Investors get an update on inflation on Friday from the PCE Prices Index. Wall Street expects the year-over-year headline rate to fall again for August but the “core” rate, which strips out food and energy prices, is expected to climb from +4.6% to +4.8%.

Today, the final read of Q3 Gross Domestic Product (GDP) is the data highlight. On the earnings front, Bed Bath & Beyond, CarMax, Carnival, Micron, and Nike results are due today, which we mistakenly had slated for yesterday…sorry for any confusion.

Turning to geopolitical headlines, the US yesterday joined most other governments around the world in condemning Russia’s moves to take over separatist-backed regions of eastern Ukraine after holding what the White House called “illegal and illegitimate” referendums. Officials say the vote was orchestrated by the Kremlin and could represent a major escalation of the war if Russia tries to claim that Ukraine is attacking what is now Russian territory. At least that is the theory.

Ukraine is asking for significantly more military support from the US and other NATO allies and there is talk of more US and EU sanctions against Russia as well.

Who would have ever guessed a year ago we would be sitting here today with the US dollar at twenty year highs, the 30-year mortgage up at 7%, money in a 2-Year Treasury earning +4%, inflation at multi-decade highs, and Russia in a full blown war trying to take over Ukraine.

S&P 500 (SPY) Dives Below 3800 As Powell Wants To Put Pressure On Demand

Key Insights

  • S&P 500 finished the trading session below the 3800 level as Powell said that the Fed would work to moderate demand in order to fight inflation. 
  • The pullback was broad as traders rushed out of riskier assets. 
  • However, some consumer defensive stocks managed to gain ground in today’s trading session. 

The Fed Stays Focused On Inflation

S&P 500 declined by 1.7% in a volatile trading session after the Fed increased the interest rate by 75 bps.

Fed’s message was hawkish. The Fed raised the median federal funds rate projection to 4.6% in 2023. During the press conference, Fed Chair Jerome Powell highlighted the importance of pushing inflation back towards the 2% level.

Interestingly, S&P 500 made an attempt to settle above the 3900 level during Powell’s conference. However, stocks quickly lost momentum, and S&P 500 declined to 3790.

Powell said that higher inflation presented a bigger problem than the slowdown of the economy and potential layoffs. Powell said that the labor market was too tight and needed to be more balanced.

The pullback was broad as Fed’s efforts to cool demand will hurt all industries. Leasure and entertainment stocks were hurt the most. Caesars Entertainment, Las Vegas Sands, Carnival Corporation and Wynn Resorts were among the biggest losers.

Leading tech stocks have also found themselves under material pressure. Apple, Amazon, Tesla, and Meta were down by 2-3% in today’s trading session.

Some consumer defensive stocks, like General Mills, Kellogg, Campbell Soup, and Kraft Heinz enjoyed support today. Traders tried to find safe-haven assets in today’s market and focused on companies that produce basic products. It remains to be seen whether these stocks will continue to move higher in the upcoming trading sessions.

A Move Below 3780 Will Push S&P 500 Towards The Support At 3750

S&P 500

S&P 500 settled below the 3800 level and finished the day near 3790. After the market close, it is trying to settle below the support at 3780.

If this attempt is successful, S&P 500 will head towards the next support level, which is located at 3750. A move below this level will push S&P 500 towards the support at 3725. If S&P 500 gets below 3725, it will head towards the next support at 3700.

On the upside, the previous support at 3800 will serve as the first resistance for S&P 500. If S&P 500 manages to settle back above this level, it will head towards the resistance at 3825. A move above 3825 will push S&P 500 towards the resistance at 3850.

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

Best Travel Stocks To Buy In May

Key Insights

  • Carnival stock has recently moved to yearly lows as rising rates put pressure on the indebted company. 
  • At the same time, Carnival stock declined to attractive valuation levels, which could attract speculative traders.
  • Tripadvisor is also trading near lows, but analyst estimates for the next year have already started to move higher.

S&P 500 has been extremely volatile in recent weeks as traders continued to search for attractive investments amid rising rates and general uncertainty. Travel-related stocks have also experienced significant volatility. Today, we’ll take a look at two stocks that are trading near multi-month lows and whose valuation levels look interesting.

Carnival Corporation

Cruise lines have been severely hit by the coronavirus pandemic. The recent developments in the oil markets have put additional pressure on the industry.

As a result, Carnival stock has been mostly moving lower in recent months. Previously, the market expected that pent-up demand would provide sufficient support for Carnival and other companies in the industry. Pent-up demand is real, but it has failed to serve as a significant positive catalyst for Carnival stock.

It looks that the main problem is the company’s debt, which increased materially during the pandemic. Rising yields have already put pressure on the shares of indebted companies.

At the same time, analysts believe that the company will be able to return to profitability in the next year and expect that Carnival will report earnings of $1.33 per share. Analyst estimates have been moving lower in recent months, but the stock is trading at roughly 10 forward P/E, which looks cheap enough if you believe that demand for the company’s services will be strong in the upcoming years.

Tripadvisor

Tripadvisor is another travel-related stock that has fallen out of market’s favor. Back in March 2021, the stock touched highs near the $65 level but lost momentum and moved towards the $25 level.

The company is expected to report earnings of $0.81 per share in the current year and $1.7 per share in the next year, so the stock is trading at 14 forward P/E, which looks reasonable in the current market environment.

Tripadvisor expects that summer travel demand will be strong, which will boost its business. Interestingly, analyst estimates for the next year have already started to move higher, but analysts remain cautious about the company’s performance in 2022. Nevertheless, the stock looks interesting at current levels.

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

Airline, Cruise Stocks Suffer as Omicron Spike Chokes Holiday Travel

Airline and cruise stocks tumbled on Wednesday after continued flight cancellations and sailing halts due to adverse weather conditions and the ongoing COVID-19 crisis caused by the spread of the Omicron variant.

According to Reuters, flight-tracking website FlightAware.com reported that nearly 800 U.S. airlines cancelled flights Wednesday morning, and 1,120 flights were delayed. On Tuesday, Delta Air Lines and Alaska Air Group cancelled hundreds of flights, while Southwest Airlines cancelled only a few flights. This was caused by adverse weather conditions and an increase in Omicron cases.

“As European nations mull tighter restrictions to contain the spread of the Omicron variant, experts anticipate a similar trend in the U.S. and across the world in the coming months. As investors speculate a slower recovery timeline for the travel industry, the shares of Southwest Airlines have lost a quarter of their value since November,” noted analysts at TREFIS.

“However, the passenger numbers at TSA checkpoints are just 15% below pre-pandemic levels – indicating strong air travel demand despite heightened fears and tougher Covid norms. Notably, Southwest Airlines stock has lost $11 billion in market capitalization since February 2020 despite burning just $1.1 billion of operating cash over the period. Also, the domestic business contributes almost 97% of Southwest’s revenues and is likely to support earnings amid international travel blockades. Considering the negative impact of the Omicron variant for a quarter, Trefis believes that there is a sizable upside in Southwest Airlines stock.”

On Wednesday, Delta Air Lines stock closed 1.21% lower at $39.15, Alaska Air Group ended 1.46% down at $52.13 and Southwest Airlines finished 0.31% lower at $42.16.

In addition to cancelling 170 flights, Alaska Airlines has warned of more cancellations and delays throughout the week, while Delta plans to cancel 250 of 4,133 flights on Tuesday.

Moreover, Cunard, a cruise company owned by Carnival Corp., announced that the Queen Mary 2 would skip a scheduled stop in New York and instead remain in Barbados until Jan. 2. On Wednesday, Carnival Corp closed 0.48% lower at $20.80, Norwegian Cruise Line ended 1.53% down at $21.57 and Royal Caribbean down 0.04% at $78.22.

According to the US Centres for Disease Control and Prevention (CDC) as of Tuesday, 86 ships had been investigated, and three more were being monitored for cases of COVID-19. As a precautionary measure, the company added more crew members but did not elaborate on why more workers were needed.

A temporary ban on cruising may be reintroduced by U.S. health authorities as a result of the spread of the Omicron variant, just months after cruise companies resumed operations.

Check out FX Empire’s earnings calendar

Why Carnival Stock Is Up By 3% Today

Carnival Corporation Misses Analyst Estimates

Shares of Carnival gained upside momentum after the company released its quarterly results. Carnival reported revenue of $1.29 billion and a loss of $2.31 per share, missing analyst estimates on both earnings and revenue.

Interestingly, fears about the spread of Omicron did not put additional pressure on Carnival stock. In fact, news about 48 passengers who tested positive for Omicron on a Royal Caribbean ship were not sufficient enough to push cruise stocks into the negative territory.

Carnival Corp. stated that Omicron has already hurt near-term bookings. However, demand for cruises in late 2022 and 2023 remained healthy: “Cumulative advanced bookings for the second half of 2022 and first half of 2023 are at the higher end of historical ranges and at higher prices, with or without future cruise credits, normalized for bundled packages, as compared to 2019 sailings”.

The company noted that it finished the quarter with $9.4 billion of liquidity, which should provide enough support even if the situation with coronavirus gets worse.

What’s Next For Carnival Stock?

Analysts expect that Carnival will report a loss of $0.16 per share in 2022. Just three months ago, the company was expected to report a profit of $6.13 per share, which means that analyst estimates have been radically cut in recent months.

Not surprisingly, the stock followed analyst estimates and moved from the $31 level at the beginning of June to the $17 level at the start of this month before rebounding towards $19.

The near-term dynamics of the stock will depend on the spread of Omicron, which may deal a significant blow to cruise demand in the near term. While traders look optimistic today and the stock is moving higher despite Omicron fears, Carnival stock will likely find itself under material pressure if the number of daily coronavirus cases keeps moving higher in the upcoming weeks.

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

Carnival Shares Climb Over 4% As Revenue Tops Estimates, Bookings Recovery Helps

Carnival shares rose over 4% on Friday after the world’s largest cruise ship operator reported better than expected revenue in the third quarter and said its cumulative advanced bookings for the second half of 2022 are ahead of pre-COVID-19 pandemic levels.

The firm reported revenue of $636 million, beating the wall street consensus estimates of $535 million.

The Miami, Florida-based company said its booking volumes for all future cruises during the third quarter of 2021 were higher than booking volumes during the first quarter of 2021. The company added that as of August 31, 2021, eight of the company’s nine brands have resumed guest operations as part of its gradual return to service.

Carnival said it ended the third quarter of 2021 with $7.8 billion of liquidity, which the company believes is sufficient to return to full cruise operations. Voyages for the third quarter of 2021 were cash flow positive and the company expects this to continue.

Following this optimism, Carnival shares rose over 4% to $25.72 on Friday.

However, the company reported U.S. GAAP net loss of $2.8 billion and an adjusted net loss of $2.0 billion for the third quarter of 2021.

Analyst Comments

“The company says Q3 occupancy was 54% and built during the month, and revenue per passenger cruise day was above 2019, driven by exceptionally strong onboard and other revenue. For the Carnival brand, revenue per PCD was 20% higher than 2019, despite onboard credits from cancelled cruises, with occupancy of 70%,” noted Jamie Rollo, Equity Analyst at Morgan Stanley.

“The comment on onboard spend is encouraging, and while there is no comment on ticket prices being up, we note that revenue per passenger is unlikely to be comparable to 2019 due to a difference mix of cabins. Q3 voyages were cash flow positive, and it expects this to continue. Despite the positive operating KPIs, the results were well below expectations, suggesting higher restart/lay-up/SG&A costs.”

Carnival Stock Price Forecast

Nine analysts who offered stock ratings for Carnival in the last three months forecast the average price in 12 months of $27.91 with a high forecast of $39.00 and a low forecast of $18.00.

The average price target represents an 8.90% change from the last price of $25.63. From those eight analysts, four rated “Buy”, one rated “Hold” while four rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $18 with a high of $40 under a bull scenario and $5 under the worst-case scenario. The firm gave an “Underweight” rating on the cruise ship operator’s stock.

Several other analysts have also updated their stock outlook. JPMorgan lifted their price objective to $36 from $33 and gave the company a “neutral” rating. Citigroup raised their target price to $34 from $30 and gave the stock a “buy” rating.

Check out FX Empire’s earnings calendar

European Shares Bounce After Worst Session in Two Months; UMG Soars in Debut

The pan-European STOXX 600 was up 0.9% by 07:43 GMT after sinking to a two-month low in the previous session.

Media, mining and energy stocks led early gains, while Germany’s DAX rebounded from its lowest level since late-July.

U.S. stock futures also bounced a day after global markets were roiled by concerns the potential default by Evergrande, the world’s biggest property developer, could hurt China’s real estate sector, banks and the global economy.

Evergrande, struggling for cash, owes $305 billion.

Focus this week is also on policy meetings at a slate of central banks, including the U.S. Federal Reserve, with investors expecting some of them to indicate they were ready to ease their pandemic-era stimulus to combat high inflation.

“Concerns about Evergrande remain but for now there appears to be a wait-and-see approach being adopted,” said Michael Hewson, chief market analyst at CMC Markets UK.

“The bigger question given the risks from events in China is whether the Fed adopts a less hawkish stance tomorrow in order to buy itself some time until the situation becomes clearer.”

Europe’s benchmark STOXX 600 has fallen from record highs in September after seven straight months of gains on fears of persistently high COVID-19 cases and signs of a slowdown in the global economic recovery.

However, helping sentiment on Tuesday, travel-related stocks including British Airways-owner IAG, cruiseliner Carnival Corp and InterContinental Hotels Group jumped between 2% and 5% following the relaxation of U.S. travel curbs.

Britain’s National Express rose 4% after rival Stagecoach Group said it was in talks with National Express about a possible all-share merger.

Stagecoach’s shares jumped 17.3%.

Universal Music Group, the business behind singers such as Lady Gaga, Taylor Swift and The Weeknd, surged 38% in its first day of trading, giving it a market capitalisation of more than 46 billion euros ($54 billion).

Shares of owner Vivendi sank 16.7%.

Sweden’s gardening power tools group Husqvarna tumbled 5.4% after warning it could potentially lose top line sales of up to around 2 billion crowns ($230.7 million) due to a supplier dispute.

All major European bourses were up in morning trading, with the UK’s FTSE 100, Spain’s IBEX and Italy’s FTSE MIB gaining between 0.7% and 0.9%.

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

(Reporting by Sagarika Jaisinghani in Bengaluru; Editing by Arun Koyyur)

Carnival Sees Return to Cruises with 65% Fleet Capacity by End of 2021

The company also said its Carnival Cruise Line brand has plans to bring back its entire fleet into service by the end of 2021, which would take total operating capacity to 75%.

Cruise operators began sailing from U.S. ports in June with mostly vaccinated passengers and crew on limited capacity, but a few on-board infections and rising infections in U.S. states due to the Delta variant of the coronavirus has raised worries that the recovery for the cruise industry could be delayed.

Eight of Carnival’s nine brands have so far announced plans to resume guest operations on 54 ships around the world. The company said more restart announcements are due in the coming weeks.

Carnival’s shares rose about 1% in premarket trade after falling 5.7% Monday on fears of the Delta variant’s rapid spread.

(Reporting by Uday Sampath in Bengaluru; editing by Uttaresh.V)

Cruise Operator Carnival to Sell $500 Million in Shares

Money raised will be used to purchase ordinary shares of Carnival Plc, trading in the United Kingdom, and for general corporate purposes, the company said.

The cruise operator has raised over $2.5 billion by selling its shares over the past year as travel restrictions due to the pandemic brought its business to a standstill.

With cruises ordered to operate with fewer passengers onboard while following strict hygiene and sanitization protocols, Carnival and others are expected to burn more cash to stay in business.

Cruise operators began sailing from U.S. ports last week with mostly vaccinated passengers and crew.

Shares of Carnival and peers Royal Caribbean Group, Norwegian Cruise Holdings Ltd were down about 2% each.

(Reporting by Nivedita Balu in Bengaluru; Editing by Krishna Chandra Eluri)

Carnival Posts $2 Billion in Loss on Prolonged Cruise Suspension

Cruise operators have recorded little to no revenue due to the no-sail order from the U.S. Centers for Disease Control and Prevention, forcing them to tap billions of dollars in debt and even sell a few ships to stay afloat.

Carnival ended the second quarter with $9.3 billion in cash and short-term investments, down from $11.5 billion at the end of the first quarter, as it spent heavily to prepare its ships for voyages.

Net loss was $2.07 billion for the second quarter ended May 31, compared with $4.37 billion a year earlier. Refinitiv data shows Carnival’s loss in the last four quarter was $1.97 billion at the least.

The operator of Princess Cruises also backed its expectations for a third-quarter loss.

(Reporting by Praveen Paramasivam in Bengaluru; Editing by Anil D’Silva)

Why Carnival Stock Moved To Yearly Highs

Carnival Corporation Video 01.06.21.

Carnival Stock Gains Ground As Cruising Continues To Restart

Shares of Carnival Corporation gained upside momentum and moved to yearly highs as investors bet that cruise line operators would enjoy strong demand as coronavirus-related rules get relaxed in the second half of this year.

Yesterday, Carnival’s AIDA Cruises announced that it opened bookings for AIDAcosma over Christmas and New Year’s Eve while AIDAperla’s new Mediterranean voyages in summer 2021 could be booked from May 31.

Meanwhile, Royal Caribbean stated that Silversea Cruises announced new summer voyages in Alaska and Iceland which would begin in July 2021.

The market welcomed the news, and shares of cruise line operators moved higher in today’s trading session.

What’s Next For Carnival Corporation?

Carnival stock is up by 40% this year as traders bet that pent-up demand for cruising would provide strong support to company’s financials in the next few years.

Currently, analysts expect that Carnival would report a loss of $5.29 per share in 2021. The company is projected to return to profitability in 2022 with a profit of $0.24 per share so the stock is trading at about 127 forward P/E which is an ultra-rich valuation.

However, the market is willing to look beyond 2022 and looks ready to focus on longer-term perspectives. At this point, it is ready to ignore the rapid accumulation of debt which was raised to support the company through the acute phase of the coronavirus crisis.

The stock market remains close to all-time high levels while Fed officials managed to calm bond markets and promised to provide sufficient support in the upcoming months.

In this environment, investors and traders are willing to bet on the rebound of the hardest-hit industries, including cruising. This is bullish for Carnival stock, and the company’s shares have decent chances to gain additional upside momentum despite their lofty valuation.

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

Why Shares Of Carnival Corporation Are Up By 5% Today?

Carnival Corporation Video 07.04.21.

Bookings Increase At A Fast Pace

Shares of Carnival gained strong upside momentum after the company released its first-quarter business update. Carnival reported GAAP net loss of $2 billion which is not surprising given the current state of the cruise industry.

However, Carnival noted that cash burn rate in the first quarter of 2021 was better than expected. The company added that booking volumes for all future cruises during the first quarter of 2021 were about 90% higher than booking volumes during the fourth quarter of 2020, which signals that demand for cruises is starting to increase at a fast pace

In fact, cumulative advanced bookings for full year 2022 were ahead of the year 2019, a sign that people are ready to get back to cruising once the situation normalizes.

What’s Next For Carnival Corporation?

The current situation on the coronavirus front remains challenging, but the market sees light at the end of the tunnel. Bookings have started to increase at a healthy pace as customers look ready to get back to their normal lives which include vacations on cruise ships.

Carnival stated that six of the company’s nine brands were expected to resume limited cruise operations by summer. Carnival noted that it expected to capitalize on pent-up demand, and the company’s booking data supports this view.

The market is clearly bullish on Carnival as the stock is up by roughly 40% year-to-date and is currently testing all-time high levels. The strong demand for future cruises may ultimately lead to higher prices for cruises, which will provide additional support to Carnival’s balance sheet.

It should be noted that the stock is trading well below pre-pandemic levels, so the market has just started to price in the turnaround of the company’s business. Analysts expect that the company will get back to profitability in 2022 with a small profit of $0.14 per share, but the market will likely try to look beyond 2022 when evaluating the company’s stock.

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

Carnival Q1 Earnings May Be Disappointing But Shares Rise on Cautious Optimism

Carnival, the world’s largest cruise ship operator, is expected to report a loss for the fourth consecutive time in the fiscal first quarter as the COVID-19 pandemic continues to hurt business operations and global bookings.

But Carnival’s shares, which slumped about 60% in 2020 and rebounded over 30% to $28.60 so far this year, traded 2.31% higher $29.26 in after trading hours on Tuesday.

The Miami, Florida-based company is expected to report a loss of $1.54 per share, worse, compared to a profit of 22 cents per share registered in the same quarter last year. Carnival’s revenue will plunge ​nearly 100% year-on-year to $108 million.

The company did not provide earnings guidance for fiscal 2021 and was unclear as to when its business operations would return to normalcy.

Carnival Stock Price Forecast

Eleven analysts who offered stock ratings for Carnival in the last three months forecast the average price in 12 months of $24.33 with a high forecast of $42.00 and a low forecast of $14.00.

The average price target represents a -14.93% decrease from the last price of $28.60. Of those 11 analysts, four rated “Buy”, three rated “Hold” while four rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $14 with a high of $40 under a bull scenario and $5 under the worst-case scenario. The firm gave an “Underweight” rating on the cruise ship operator’s stock.

“We think the cruise industry will be one of the slowest sub-sectors to recover from COVID-19. Cruising needs not just international travel to return, but ports to reopen, authorities to permit cruising, and the return of customer confidence,” said Jamie Rollo, equity analyst at Morgan Stanley.

“We expect cruising to resume in Q2 2021, and expect FY19 EBITDA to return in FY23 given FY22 will be the first normal year, and pricing will likely come under pressure. FY19 EBITDA implies EPS 60% lower given share issue dilution and higher interest expense. We see debt doubling in FY21 vs FY19 due to operating losses and high capex commitments, and leverage looks high at 5x even in FY23e, so we see risk more equity might need to be raised.”

Several other analysts have also updated their stock outlook. JPMorgan lifted their price objective to $33 from $23 and gave the company a “neutral” rating. Truist raised their price objective to $16 from $14. Citigroup issued a “buy” rating and a $30 price objective on the stock. Credit Suisse Group increased their target price to $18 from $15 and gave the stock a “neutral” rating.

Analyst Comments

“Shares of Carnival have outperformed the industry in the past six months. The company reported fourth-quarter 2020 results, wherein earnings and revenues missed the Zacks Consensus Estimate. Its cruise operations have been halted due to the pandemic. It is also likely to result in delay in ship deliveries. Due to the uncertainty of the crisis, the company is unable to predict the entire fleet’s return to normal operations,” noted analysts at ZACKS Research.

“It anticipates average monthly cash burn in first-quarter fiscal 2021 to be nearly $600 million. The company stated that cumulative advanced bookings for the second half of 2021 are within the historical range. Moreover, bookings for the first half of 2022 are ahead of 2019. Also, it remains optimistic on its innovations featuring PlayOcean and OceanView. Addition of new ship, to its global fleet of Princess Cruises to drive growth.”

Check out FX Empire’s earnings calendar