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(C) Reuters.

Investing.com — Here is your Pro Recap of the biggest analyst cuts you may have missed since yesterday: downgrades at Block, Stem, General Mills , FMC, and Agiliti.

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Block slashed at UBS due to dampened growth profit prospects

Block (NYSE:SQ) was downgraded to Neutral from Buy at UBS, which also sharply cut the shares’ price target to $65.00 from $102.00.

The analysts believe Block’s gross profit growth will likely decelerate in the second half of 2023 and throughout next year due to a softening in consumer discretionary spending, a decreased growth rate of Cash App monthly active users, and moderation of Cash App monetization rates.

UBS says that, despite Block consistently improving its profitability and surpassing quarterly adjusted EBITDA expectations, investors are primarily concerned about the company’s gross profit growth potential, commenting:

“This was most evident following the 14% decline in shares after Block exceeded Street adjusted EBITDA by 30% in 2Q/23, while pointing to slowing gross profit growth for 2H/23E. With a lack of catalysts in sight, and re-acceleration of gross profit growth unlikely, we see limited upside potential.”

Shares were trading down in the premarket Wednesday, although recently they were off only marginally at $58.54.

Stem cut at Morgan Stanley

Morgan Stanley downgraded Stem (NYSE:STEM) to Equalweight from Overweight on Wednesday and cut its price target to $8.00 from $12.00.

The analysts said Stem remains their preferred choice in the energy storage sector due to its significant emphasis on high-margin software offerings. However, they expressed concerns about the company’s ability to reach its targets of 65%-85% growth in service and software revenue and achieving an EBITDA-positive target by the second half of the year, based on year-to-date earnings.

General Mills downgraded ahead of Q1 earnings

Exane BNP Paribas downgraded General Mills (NYSE:GIS) to Neutral from Outperform on Tuesday, as reported in real time on InvestingPro.

The company is set to report its Q1/24 earnings on Sept 20. Street estimates stand at $1.09 for EPS and at $4.92 billion for revenues.

FMC stock drops on UBS downgrade

FMC (NYSE:FMC) shares fell more than 4% Tuesday after UBS downgraded the company to Neutral from Buy and cut its price target to $97.00 from $120.00.

“The speed of June quarter volume declines caught FMC, the industry, and ourselves off guard,” UBS said.

UBS noted that volumes dropped 35% year-over-year, a much steeper fall than the mild single-digit decline anticipated just two months prior. UBS also added that discussions with industry participants have indicated that this volume dip is likely a new normal rather than a temporary decline, thereby setting a reduced baseline for future earnings growth.

Agiliti plummets following BofA’s downgrade

Agiliti (NYSE:AGTI) shares plunged more than 11% Tuesday after BofA Securities downgraded the company to Underperform from Neutral and cut its price target to $11.00 from $18.00.

BofA expressed concerns over the company’s limited visibility into short-term organic growth. Agiliti missed the consensus adjusted EBITDA estimate for Q2 and lowered its adjusted EBITDA guidance by 12%, attributing this to reduced usage of peak need rentals and elevated onboarding costs associated with newer contracts.

The analysts mentioned that it’s unclear when utilization will stabilize and when the new contracts will achieve optimal margins. These challenges are expected to continue for at least the next six months and may last even longer, likely causing Agiliti to underperform compared to other companies in the sector.

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(C) Reuters. FILE PHOTO: A man watches stock quotations on an electronic board outside a brokerage, in Tokyo, Japan, March 20, 2023. REUTERS/Androniki Christodoulou/File Photo

By Caroline Valetkevitch

NEW YORK (Reuters) – World stock indexes fell while the benchmark U.S. Treasury yield rose and the U.S. dollar hit its highest in six months on Wednesday after stronger-than-expected U.S. services sector data suggested inflation pressures remain.

Weighing heavily on Wall Street stock indexes, shares of Apple (NASDAQ:AAPL) fell 3.6% after the Wall Street Journal reported, citing people familiar with the matter, that China had banned officials at central government agencies from using iPhones and other foreign-branded devices for work.

The Institute for Supply Management (ISM) said its non-manufacturing PMI rose in August, with new orders firming and businesses paying higher prices for inputs.

Some investors said the data may add to signs that interest rates could remain elevated for longer. The U.S. Federal Reserve is still expected to pause in its rate hikes when it meets later this month.

Also on Wednesday, Fed Bank of Boston President Susan Collins said that while there are signs of progress in cooling inflation, now is a time for the central bank to proceed carefully when it comes to its next monetary policy steps.

The Nasdaq ended more than 1% lower, leading declines on Wall Street. Technology was down the most among major S&P 500 sectors.

The Dow Jones Industrial Average fell 198.78 points, or 0.57%, to 34,443.19, the S&P 500 lost 31.35 points, or 0.70%, to 4,465.48 and the Nasdaq Composite dropped 148.48 points, or 1.06%, to 13,872.47.

The pan-European STOXX 600 index ended down 0.6% and MSCI’s gauge of stocks across the globe also shed 0.6%.

The yield on the benchmark U.S. 10-year Treasury note rose 3 basis points to 4.298%. The yield has risen about 21 basis points over the past three sessions, its biggest three-day gain about a month.

In other data, manufacturing activity in Germany, Britain and the euro zone declined, while their service sectors fell into contraction territory.

Also, the U.S. central bank’s latest “Beige Book” summary of surveys and interviews released on Wednesday showed economic growth was “modest” in recent weeks while job growth was “subdued” and inflation slowed in most parts of the country.

“The two big challenges facing the Fed right now are the risks that inflation could become entrenched and the risks that the consumer could falter when excess savings dry up,” Jeffrey Roach, chief economist at LPL Financial (NASDAQ:LPLA), wrote in a note.

The dollar index rose to a fresh six-month high of 105.03, and was last at 104.85, up 0.1%, with the euro up 0.03% to $1.0723.

Oil prices reversed early declines to end higher, as traders anticipated further draws on U.S. crude oil inventory.

Brent crude futures settled up 56 cents at $90.60 a barrel while U.S. crude futures settled up 85 cents at $87.54.

(C) Reuters

Investing.com — U.S. stocks were falling on Wednesday, extending a slow start to September as investors look forward to the Federal Reserve’s meeting later this month.

At 10:49 ET (14:49 GMT), the Dow Jones Industrial Average was down 170 points or 0.5%, while the S&P 500 was down 0.7% and the NASDAQ Composite was down 0.9%.

The blue-chip Dow Jones Industrial Average closed almost 200 points, or 0.6%, lower on Tuesday, the start of a holiday-shortened week, while the tech-heavy Nasdaq Composite dropped 0.1% and the broad-based S&P 500 fell 0.4%.

Rising oil prices weigh on sentiment

Weighing on global sentiment this week has been a sharp rise in oil prices after major producers Saudi Arabia and Russia unexpectedly extended their voluntary supply cuts to the end of the year.

Although crude has slipped back Wednesday, with the WTI contract down 0.2% at $86.47 a barrel and the Brent contract down 0.4% to $89.64, investors are concerned that the jump in oil prices to their highest level this year with have an impact on inflation and thus how the Federal Reserve will move interest rates going forward.

The Fed is widely seen as holding off on another interest rate increase in September, with Gov. Christopher Waller saying on Tuesday the latest round of economic data was giving the U.S. central bank space to see if it needs to raise interest rates again.

Fed’s Beige Book to illustrate economic backdrop

There is more data due Wednesday, including the Fed’s Beige Book survey of its 12 district banks which will provide investors with an on-the-ground glimpse at economic conditions around the country.

The ISM non-manufacturing purchasing managers’ index was 54.5, versus expectations for 52.5 in August, down from 52.7 in the prior month. This figure serves as a gauge of activity in the services industry, a crucial sector that accounts for over two-thirds of the U.S. economy.

Investors will also get the chance to hear from several Fed speakers during the coming week, with Dallas Fed President Lorie Logan due later Wednesday.

Economic news from Europe and China has been disappointing this week, and that tone continued Wednesday with retail sales in the eurozone falling and German factory orders slumping in July.

Big tech in spotlight after EC ‘gatekeeper’ label

In corporate news, the tech sector will be in focus after the European Commission designated Amazon (NASDAQ:AMZN), Apple (NASDAQ:AAPL), Alphabet (NASDAQ:GOOGL), Meta (NASDAQ:META) and Microsoft (NASDAQ:MSFT), along with China’s ByteDance, as “gatekeepers” under its new Digital Markets Act.

These companies will be required to make their messaging apps interoperate with rivals and let users decide which apps to pre-install on their devices. They will also not be allowed to favor their own services over rivals’ or prevent users from removing pre-installed software or apps.

Elsewhere, GameStop (NYSE:GME), ChargePoint (NYSE:CHPT) and American Eagle Outfitters (NYSE:AEO) are among the companies slated to report earnings after the close.

Manchester United (NYSE:MANU) will also be in focus after the English soccer club’s stock fell 18% on Tuesday, the steepest one-day decline, following a report that its owners, the Glazer family, are going to take the club off the market, having failed to get close to their anticipated asking price.

—Peter Nurse contributed to this report

(C) Reuters

By Yasin Ebrahim

Investing.com — The economy grew modestly in July and August, and inflation slowed driven by slowing price pressures in the goods sector at a time when signs emerge that consumers have turned to borrowing to support spending after exhausting their savings, according to the Federal Reserve’s Beige Book released Wednesday.

Economic activity was modest during July and August, but retail spending, excluding tourism spending, continued to slow, the Fed said in its Beige Book economic report, based on anecdotal information collected by the Fed’s 12 reserve banks through Aug. 28.

“Some Districts highlighted reports suggesting consumers may have exhausted their savings and are relying more on borrowing to support spending,” it added.

The uptick in consumer lending, however, has seen a rise in delinquencies on consumer credit lines, the report showed.

Signs of cracks in the consumer come as most districts reported a slowdown in hiring, according to the report, with labor cost pressures remaining elevated, though are likely to slow in the second half of the year.

“Nearly all Districts indicated businesses renewed their previously unfulfilled expectations that wage growth will slow broadly in the near term,” the report said.

On the inflation front, most Districts reported price growth “slowed overall, decelerating faster in manufacturing and consumer-goods sectors,” the report said.

The report comes just as chorus of Fed speak continues to suggest the central bank will skip a rate hike at its Sept. 20-21 meeting, keeping its benchmark rate in a range of 5.25% to 5.50%.

Recent upbeat economic data puts November hike in focus

“The risk of inflation staying higher for longer must now be weighed against the risk that an overly restrictive stance of monetary policy will lead to a greater slowdown in activity than is needed to restore price stability,” Federal Reserve Bank of Boston President Susan Collins said Wednesday.

But recent economic data showing strong services activity and fresh signs of inflation have put a November hike into focus.

The odds of rate-hike skip in later this month is nearly priced in at 90%, according to Investing.com’s Fed Rate Monitor Tool. But the odds of a November hike jumped to nearly 50% from 38% a day earlier, according to Investing.com’s Fed Rate Monitor Tool.

(C) Reuters.

Investing.com — The Dow closed lower Wednesday as fresh inflation jitters renewed concerns about higher for longer interest rates, while a plunge in Apple (NASDAQ:AAPL) also dented sentiment on stocks.

The Dow Jones Industrial Average fell 0.6%, 197 points, Nasdaq slumped 1.1%, and the S&P 500 fell 0.7%

U.S. services activity surprises to upside stoking renewed inflation and Fed jitters

U.S. services activity rose more than expected in August to 54.5 from 52.7, while the prices paid index component of the survey, a gauge of inflation, increased to 58.9 from 56.8, as strong demand for labor continued to underpin wage growth.

“We still believe that much of the pressure that fuels inflation is rooted in sticky-high unit labor costs in the service sector,” Jefferies said in a note.

Fresh signs of the inflationary pressures, pushed the odds of a November hike to nearly 50% from 38% a day earlier, according to Investing.com’s Fed Rate Monitor Tool.

Apple leads tech selloff as China restricts iPhone use at government agencies

Apple (NASDAQ:AAPL) fell more than 3%, leading the selloff in tech as reports that China, a key market for the company, ordered employees at government agencies not to use foreign devices including Apple’s iPhones.

The move by China — which has been ramping up efforts to curb the dependence on foreign technology amid national security concerns — comes just a week ahead of the arrival of Apple’s new iPhone set to be unveiled on Sept. 12.

Roku climbs on guidance upgrade; Block slumps on UBS downgrade

Roku Inc (NASDAQ:ROKU) upgraded its third-quarter guidance after detailing further cost cutting plans including cutting about 10% of its workforce and consolidating office space. its stock closed up nearly 3%.

The streaming media device company raised its third-quarter revenue guidance by as much as 7% to a range of $835 million to $875 million, from $815 million previously.

Payments company Block Inc (NYSE:SQ) fell nearly 1% after UBS cut its rating on the stock to neutral from buy on concerns about a potential slowdown in margins.

Block gross profit growth will likely take a hit from a weaker consumer backdrop, while a slowdown in Cash App monthly active is expected to pressure monetization rates, 0