Month: February 2024

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© Reuters. FILE PHOTO: U.S. President Joe Biden meets with autoworkers after the United Auto Workers (UAW) union recently endorsed his reelection bid, at the UAW Region 1 George Merrelli Technical Training Center in Warren, in the Detroit metro area, Michigan, U.S.,
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By Nandita Bose and Tim Reid

DEARBORN, Michigan (Reuters) -U.S. President Joe Biden easily won the Democratic presidential primary in Michigan on Tuesday, but a protest vote by Democrats angry over his support for Israel’s war against Hamas in Gaza exceeded organizers’ expectations.

Donald Trump won the state’s Republican presidential primary by a large margin, strengthening his grip on the party’s White House nomination as Nikki Haley, his last remaining rival, came in a distant second.

Although Biden and Republican former President Trump had been expected to easily win their separate party primaries, the vote count for both was being closely watched for signs of wavering support.

In Michigan, home to a large Arab American constituency, Democratic voters had been urged to mark their primary ballots as “uncommitted” on Tuesday in protest at Biden’s Gaza policy.

With almost half of Democratic votes counted, the number of “uncommitted” voters was more than 58,000, according to Edison Research, far exceeding the target of 10,000 that protest organizers had hoped for.

Many in Michigan’s Arab American community who backed Biden in 2020 are angry, as are some progressive Democrats, over Biden’s support for Israel’s offensive in Hamas-ruled Gaza where tens of thousands of Palestinians have been killed.

“Our movement emerged victorious tonight and massively surpassed our expectations. Tens of thousands of Michigan Democrats, many of whom who voted for Biden in 2020, are uncommitted to his re-election due to the war in Gaza,” the Listen to Michigan campaign, which urged people to vote uncommitted, said in a statement.

Campaign organizers vowed to take what they called their antiwar agenda to the Democratic National Convention in Chicago in August.

Michigan pollster Bernie Porn said it remained to be seen how big of an issue the Middle East would be for Biden in November when the situation could look different.

In a statement late on Tuesday, Biden said, “I want to thank every Michigander who made their voice heard today. Exercising the right to vote and participating in our democracy is what makes America great,” he said.

The statement made no mention of Gaza or the “uncommitted” vote.

“Donald Trump is threatening to drag us even further into the past as he pursues revenge and retribution,” Biden said.

Partial returns showed Biden and Trump with solid overall leads. With nearly half the estimated Democratic vote counted, Biden had 80% support, with “uncommitted” getting 13%. With 58% of the estimated Republican vote counted, Trump had 67% support to Haley’s 27%, Edison Research said.

Michigan routinely offers an “uncommitted” option as a way of questioning whether a named candidate has the support of the party’s base. It could not be determined how many of those votes were protesting Biden’s Gaza policy.

When former Democratic President Barack Obama ran for re-election in 2012, he faced about 21,000 “uncommitted” voters in Michigan’s primary that year. Biden faced substantially more.

Michigan is expected to play a decisive role in the head-to-head Nov. 5 U.S. presidential election, a likely rematch between Biden and Trump.

It is a battleground state that could swing toward either party. Biden beat Trump in Michigan by just 2.8 percentage points in the 2020 election.

“We have to win on Nov. 5, and we’re going to win big, and it’s going to be like nothing that anybody has ever seen. It’s going to be fantastic. We win Michigan, we win the whole thing,” Trump told supporters in Michigan by phone.

NIKKI HALEY TO CARRY ON

Michigan turnout for former U.N. Ambassador Haley, who won nearly 40% of Republican votes in her home state of South Carolina on Saturday, was also being scrutinized for signs of vulnerability for Trump among moderates, whose support he would need in a general election.

Despite having lost to Trump in every primary race, Haley has performed well with moderate voters, although she has no clear path to the nomination.

On Tuesday, shortly before Trump was projected the winner in Michigan, Haley vowed to carry on.

“We’ve only seen a handful of states vote,” Haley told CNN. “We’re taking this one state one day at a time.”

Late on Monday, Biden said Israel had agreed to halt military activities in Gaza for the Muslim holy month of Ramadan expected to begin on the evening of March 10, as Hamas studied a draft for a truce that includes a prisoner-hostage exchange.

It should have happened sooner, said Michael Bristol, 21, a student at Wayne State University who said he cast an uncommitted vote.

Engage Action and Listen to Michigan said before the vote they were aiming for 10% of Michigan’s Democratic primary voters to mark their ballots uncommitted, a symbolically significant 10,000 votes – about equal to Democrat Hillary Clinton’s loss in Michigan to Trump in the 2016 presidential election.

Democrats, overall, support Biden’s handling of the Israel-Hamas conflict by 61%, February polling by Harvard-Harris shows.

Michigan Governor Gretchen Whitmer and other Democrats have warned that if Democratic voters abandon Biden, they could hand the swing state and the country back to Trump in November. Biden defeated Trump in the 2020 election.

On Feb. 1, Biden won a strong pledge of support from union autoworkers, a Michigan voting bloc no less crucial to his reelection bid. The state is home to nearly 20% of all U.S. auto production, more than any state in the country.

Michigan’s Republican Party, beset by internal turmoil, will allocate some delegates to the party’s July convention based on Tuesday’s primary results.

Rival factions are holding dueling party meetings on Saturday that will award the bulk of the delegates. It was unclear, however, which results will be official, although Trump was expected to handily win both sets of Saturday’s votes.

© Reuters. Citi says S&P 500 not in a bubble, tells investors to ‘buy pullbacks’

The latest market upswing, sparked by Nvidia’s (NVDA) strong earnings beat and guidance, has brought S&P 500 valuations to the forefront, making them a primary concern among investors as the index reached new all-time highs.

Weighing in on this matter, Citi strategists said they maintain a basic view that valuations hold significance primarily when considered alongside expectations for underlying growth, and on their own, are less indicative of future performance than is widely believed.

Overall, the year-to-date surge of nearly 7% in the S&P 500 increases the necessity for fundamental growth factors to materialize and sustain the market’s movement, Citi added. Essentially, investors are advancing funds based on anticipated future earnings growth.

“We remain confident in this, but need to recognize that much has quickly been priced in. While the index may overshoot our year-end 5100 target in the short term, it seems premature to increase the probability of our 5700 bull case scenario,” the strategists said.

“That scenario reflects a goldilocks macro and 22x a $260 index earnings projection (vs our base case $245 estimate). For now, we remain constructive on SP 500 fundamentals, but prefer to buy pullbacks,” they added.

Citi also responded to recent parallels drawn between the current bull market and the tech bubble, pointing out that today’s valuation multiples are significantly lower than those seen in 1999-2000.

From their perspective, the strategists think that the underlying fundamentals of the market have markedly changed, distinguishing the current situation from that of the late ’90s.

“That said, the current spending ramp on gen AI infrastructure and product will need to translate to incremental revenue and growth drivers. But it is premature to judge that,” the strategists commented.

Moreover, Citi previously said that market broadening is crucial for reaching new index peaks. While it’s true that a handful of mega-cap companies have significantly propelled the S&P 500 to new highs, contributing to about half of the index’s gains, there’s also been a significant rise in the number of stocks reaching 52-week highs, Citi highlighted.

“PEG ratios support a broadening thesis. However, we’re still left with a valuation near the high end of longer-term averages. So, we expect a tougher path to index upside from here, but with an ongoing stock selection/dispersion focus,” it wrote.

Finally, the strategists stated the S&P 500 has entered a new bull market as many U.S. corporations have come out of the pandemic with a sharpened focus on their businesses, robust cash flow, and a commitment to enhancing productivity.

On top of all that, the tech sector is experiencing a transformative wave, thanks to the burgeoning revolution led by generative AI.

Investing.com– The S&P 500 closed higher Tuesday, as dip buyers helped tech cut some losses and better-than-expected quarterly results from Macy’s and Lowe’s pushed retail stocks higher ahead of a key inflation report later this week . 

By 16:00 ET (21:00 GMT), The S&P 500 gained 0.2%, the NASDAQ Composite rose 0.4%, and the Dow Jones Industrial Average fell 96 points, or 0.3%.

Macy’s, Lowe’s lead retailers higher after earnings beat

Lowe’s (NYSE:LOW) started the ball rolling earlier Tuesday, reported fourth-quarter net sales that topped Wall Street estimates despite an ongoing slowdown in spending on home improvement projects. Its stock rose nearly 2%.

Macy’s (NYSE:M) stock rose 4% after the Bloomingdale’s owner unveiled strategy overhaul aimed at creating a “more modern” business, as it has been struggling with weak demand as shoppers, squeezed by high inflation and elevated interest rates, pull back spending on discretionary items.

The duo of reports come amid a busy week for quarterly earnings from retailers including TJX Companies (NYSE:TJX) and Best Buy (NYSE:BBY) set to release quarterly earnings this week.

Consumer showing signs of trouble; Fed speakers continue to urge caution on rate cuts

Consumer confidence unexpectedly fell to 106.7 in February from 110.9 the prior month, marking a three-month low, as the impact of inflation continue to weigh on consumers. 

“Similar to businesses curtailing investment amid a still positive but uncertain outlook for the economy as well as monetary and fiscal policy, consumers are growing less confident, Stifel said in a note. 

Durable goods orders, meanwhile, fell more than expected in January amid a sharp drop in bookings for commercial aircraft, falling 6.1% last month.

The duo of reports come a Fed officials continue to urge caution on cutting rates too soon. 

“With inflation running above target, labor markets tight and demand showing considerable momentum, my own view is that there is no need to preemptively adjust the stance of policy,” Kansas City Federal Reserve Bank President Jeffrey Schmid said in his first extensive public remarks on Monday since he began the job last August. 

Zoom a bright spot in tech; Unity Software, Workday guidance fall short

Zoom (NASDAQ:ZM) rose 8% after reporting stronger-than-expected earnings, while also announcing a $1.5 billion share buyback The video conferencing firm’s “guidance for an acceleration in 2H [second half of the year] as well as a new $1.5 billion buyback to offset dilution and that might lower the risk of large-scale M&A,” UBS said in a note. 

Unity Software (NYSE:U) fell 6% after the videogame software maker reported weaker-than-expected guidance amid turnaround plan that includes exiting some businesses.

Workday (NASDAQ:WDAY) fell 4% after keeping its subscription sales guidance unchanged despite the top line beat as “operating margin expansion is expected to slow in FY25 owing to significantly higher net new Opex to support durable growth,” Oppenheimer said in a note.

Energy stocks slip despite oil gains amid fresh hopes for extended OPEC+ cuts 

Energy stock slipped, weighed down by weakness in Hess Corporation (NYSE:HES), Chevron Corp (NYSE:CVX), and Phillips 66 (NYSE:PSX) even as oil prices climbed following a Reuters report that the OPEC and its allies, or OPEC+, are considering extending voluntary oil output cuts into Q2.

In November last year, OPEC+ agreed to voluntary cuts totalling about 2.2 million barrels per day for the first quarter this year, though dealmaking between members was fraught with disagreement over output limits.  

Bitcoin continues rise after briefly topping $57K

Bitcoin continued to rise, briefly jumping above $57,000 as crypto demand continues to accelerate following the approval of bitcoin-spot exchange-traded funds in the United States last month. In a further sign of growing demand, MicroStrategy said it had purchased about 3,000 bitcoins, taking its BTC holding to 193,000.

(Peter Nurse Ambar Warrick contributed to this article.)