The S&P 500 notched its second-straight weekly loss as inflation concerns remain front and center ahead of the Federal Reserve’s policy meeting next week.
The S&P 500 shed 0.13% this week. The 30-stock Dow inched lower by 0.02% on the week, and the Nasdaq slipped 0.7%.
Investors remain hyper-vigilant after a slew of data from earlier in the week. February’s producer price index, a gauge of wholesaler inflation, advanced more than economists anticipated. The data has helped push the benchmark 10-year Treasury higher by about 22 basis points this week, as investors wondered if the recent economic data was too strong for the Federal Reserve to loosen monetary policy. The Fed will begin its two-day policy meeting on March 19.
Apple to pay $490 million for misleading investors about iPhone sales
Apple (APPL:NASDAQ) has agreed to pay $490 million to settle a class-action lawsuit alleging CEO Tim Cook misled investors about a steep downturn in iPhone’s sales in China.
The preliminary settlement stems from a shareholder lawsuit focused on the way Apple relayed information about how iPhone models released in September 2018 were performing in China.
On Jan. 2, 2019, Cook issued a warning that Apple’s revenue for the just-completed quarter would fall $9 billion below management’s forecast for the period. This was after Cook had given a positive forecast about China sales in September 2018.
It marked the first time Apple had cut its revenue guidance since the iPhone’s release in 2007 and triggered its stock price to plunge 10% in the next day of frenetic trading, wiping out more than $70 billion in shareholder wealth.
Apple vehemently denied Cook deceived investors about the iPhone’s sales in China but said it decided to make the payment to avoid an “overly burdensome, expensive, and distracting” hassle.
Apple shares ended the week 0.17% lower.
Semiconductors post worst week since January.
Semiconductors notched their worst week since January as Marvell (MRVL:NASDAQ), AMD (AMD:NASDAQ) and Taiwan Semiconductor (TSMC:NASDAQ) each tumbled more than 6% during the week.
The VanEck Semiconductor ETF (SMH:NASDAQ) dropped nearly 3% this week, before paring some losses to finish the week 1.6% lower. Every member of the ETF which tracks semiconductors except for Nvidia (NVDA:NASDAQ) ended the week with a loss.
This marks the biggest loss since early January when the fund dropped 5% in a week. It would also be the fund’s first negative week for the ETF in four.
Customer penny-pinching is hitting Dollar Tree’s bottom line
Dollar Tree announced it would close about 1,000 of its Family Dollar stores over the next few years after reporting a quarterly loss.
The discount retailer has been hit hard by store theft and low-income consumers who are spending less due to persistent inflation.
Compared with Dollar Tree stores, Family Dollar locations are more concentrated in urban areas and sell groceries, cleaning products and other items at various price points.
McDonald’s (MCD:NYSE) also stated that lower-income consumers are pulling back in 2024, turning to grocery stores instead of restaurants.
Dollar Tree shares slid 13% this week.
Biden isn’t on board with U.S. Steel takeover
President Joe Biden has opposed Nippon Steel’s attempt to buy U.S. Steel (X:NYSE), prompting concerns that the U.S. government could block the takeover. Biden didn’t explicitly say he would block the deal.
In December, the American steelmaker agreed to be acquired by Japan’s Nippon Steel in a $14.1 billion deal. The United Steelworkers union criticized the takeover, and Republican and Democratic lawmakers have called for the Biden administration to use national-security powers to block the deal.
U.S. Steel shares gained 1.5% Friday but extended its losses after ending the week 18% lower.
Adobe shares tumble on soft sales forecast
Adobe shares tumbled as much as 11% in extended trading Thursday after the design software maker issued strong fiscal first-quarter results but came up slightly short on quarterly revenue guidance.
Adobe’s revenue grew 11% year over year in the quarter, which ended March 1, according to a statement. Net income decreased to $620 million, or $1.36 per share, from $1.25 billion, or $2.71 per share, in the same quarter a year ago.
During the quarter, Adobe abandoned its $20 billion acquisition of design software startup Figma after U.K. regulators found competitive concerns. The company paid Figma a $1 billion termination fee.
Adobe shares ended the week 10.8% lower