Ignore these five things in the market at your own risk...
1. -- Stocks Rise Following Trump's Iran Deal Withdrawal
U.S. stock futures were gaining Wednesday, May 9, as markets digested President Donald Trump's decision to withdraw from the Iran nuclear deal.
Contracts tied to the Dow Jones Industrial Average undefined rallied 0.49%, or about 120 points, while those linked to the broader S&P 500 undefined rose 0.44% and Nasdaq Composite undefined futures climbed 0.36%.
President Trump announced Tuesday afternoon plans to pull out of the Obama-era deal, which had established an international agreement that lifted U.S., U.N. and European Union sanctions against Iran in return for the country accepting limits on its nuclear program. Trump had previously called the Iran deal the "worst deal ever."
With the U.S. expected to renew economic sanctions on Iran, oil exports out of the top-producing country could take a hit, leading to a shift in supply that could in turn boost prices. The last time Iran was subject to international sanctions, between 2010 and 2016, the OPEC member's oil exports fell from 2.2 million barrels to 1.1 million barrels, according to Credit Suisse.
Oil stocks have caught an early bid Wednesday following the news, reports TheStreet's Martin Baccardax.
Following Trump's official decision, gas prices may move higher by as much as 25 cents per gallon, Patrick DeHaan, a senior petroleum analyst at GasBuddy, a firm that monitors gasoline pricing, told TheStreet's Anders Keitz via email.
West Texas Intermediate crude oil for June delivery rallied 2.82% to $71.01 per barrel on Wednesday morning, hitting its highest price since 2014. Brent crude, the global benchmark, jumped 3.06% to $77.14 in early trading. The Energy Select Sector SPDR ETF (XLE) - Get Free Report gained 1.44% in premarket trading after closing higher Tuesday.
"We saw this coming, but it could still add a significant dose of uncertainty to an already indecisive market. Now that Trump walked away from the deal, it's hard to tell what a path forward might look like - and a plan won't be known for some time. Not exactly the clear picture investors like to see," said Mike Loewengart, E*TRADE's Vice President of Investment Strategy to TheStreet.
"For investors, the lesson of today is what it has been all year: It's best to get comfortable, because volatility is here to stay," said Loewengart.
- If you'd like to receive the free "5 Things You Must Know" newsletter, please register here.
2. -- Disney Beats on Top and Bottom Line
Disney reported $1.84 in adjusted earnings per share for the fiscal second quarter, ended March 31, on $14.55 billion in revenue. Revenue rose 9% year over year, while earnings increased 23%. The results also topped the consensus analyst estimate of $1.70 in EPS on $14.11 billion in revenue, according to FactSet.
Disney stock dipped premarket, down about 1% ahead of the opening bell. Shares are lower 7.2% over the last year.
Strong quarterly performance was driven in large part by 21% growth in Disney's studio entertainment segment and 13% growth in its parks and resorts segment. Media networks business grew 3% and consumer products and interactive media grew 2% on the top line, but each slid 6% and 4%, respectively, in operating income.
"It's hard to come up with enough superlatives" for the studio business," Disney chairman and CEO Bob Iger said on an earnings call after the market close Tuesday. He referred to both "Black Panther," which made a "very loud statement about risk-taking and the value of inclusion," and "Avengers: Infinity War," which opened after the close of the quarter but had the largest domestic opening in history.
Iger did not directly mention Disney's $66 billion bid for Twenty-First Century Fox's film and television studios, international satellite TV operations and other assets, but he did say that the pending acquisition of Fox content would be beneficial to Disney's platform growth should a deal come to fruition.
Disney declined TheStreet's interview request for Iger.
3. -- Facebook's Biggest Executive Change-up Ever
Facebook, which is a holding in Jim Cramer's Action Alerts PLUS portfolio, is appointing new leaders for WhatsApp, Messenger and its core social app; establishing leadership to take on blockchain technology; and giving some longstanding executives new responsibilities, according to multiple media reports citing internal memos at the company.
Facebook leadership said the changes were aimed at improving executive communication and bettering privacy protection for users. The changes come on the heels of recent backlash against the company following the Cambridge Analytica data licensing scandal that brought Facebook CEO Mark Zuckerberg to Capitol Hill for intense testimony in front of U.S. lawmakers.
- Facebook's Big Executive Shakeup Comes at a Very Interesting Time
Facebook will put longtime executive Chris Cox at the helm of a family of apps including Facebook, Instagram, WhatsApp and Messenger, reportedly in a bid to better integrate Facebook's big-time acquisitions with its core platform.
The company is now set to split up its product and engineering divisions into three main segments. Facebook will also build a blockchain technology-focused team led by David Marcus, the Facebook exec who previously ran Messenger.
4. -- AT&T Confirms It Paid Trump Lawyer Cohen
The admission came after a lawyer for porn star Stormy Daniels, who has said she and the President had an affair before she was offered $130,000 in hush money from Cohen, alleged that AT&T, drug giant Novartis AG (NVS) - Get Free Report and Russian oligarchs made payments to Cohen's shell company.
The lawyer, Michael Avenatti, alleged AT&T made four separate payments of $50,000 each to Cohen's company, called Essential Consultants, in late-2017 and early-2018.
In a prepared statement to CNBC, AT&T said Cohen's company "was one of several firms we engaged in early 2017 to provide insights into understanding the new administration. They did no legal or lobbying work for us, and the contract ended in December 2017."
Avenatti said in a report to Cohen's firm that Novartis also made four separate payments to Essential Consultants around the same time, totaling about $400,000. "Following these payments, reports surfaced that Mr. Trump took a dinner with the incoming CEO of Novartis before Mr. Trump's speech at the World Economic Forum in Davos, Switzerland in late January 2018," Avenatti's report said.
Novartis said, "any agreements with Essential Consultants were entered before our current CEO taking office in February of this year and have expired."
5. -- Sears Holds Annual Meeting Amid Sustained Woes
Sears Holding Corp. (SHLD) will hold its annual meeting on Wednesday, May 9, as analysts and investors continue to question the future of the ailing chain.
"Despite constant speculation about its demise, Sears is the great survivor," GlobalData Retail manager partner Neil Saunders told TheStreet. "Sears has bought itself time by monetizing assets and receiving loans from its CEO [Eddie Lampert]. Those two dynamics can't continue indefinitely."
Saunders added that asset sales are especially troubling because while they provide liquidity to cover trading losses, they also weaken the balance sheet at a time when Sears has a heavy debt load. Sears has needed some $2 billion in liquidity for the last six years just to keep operating, according to Fitch Ratings.
Sears' stock has struggled of late. Shares have handed over more than 75% of their value in the last year, down 16% in the last month alone.
At Wednesday's annual meeting, shareholders will be asked to approve the election of six directors, including Sears chairman and CEO Lampert, and greenlight their compensation packages. Lampert earns a token annual salary of $1 annually, but is paid in stock, which last year was worth $4.3 million. His stock "payment" totaled $1.14 billion for the three years between 2015 and 2017, according to a Securities and Exchange Commission filing.