Nasdaq sheds 1% on Monday as investors dump tech names to start final week of June: Live updates

Health care stocks took a hit earlier this month after UnitedHealth warned of higher-than-expected utilization of care from customers. UBS analyst Andrew Mok said in a note to clients that the rise of pickleball may at least partly to blame.

“We estimate $250-500 mn of medical costs directly attributable to pickleball and see potential for greater medical costs indirectly linked to pickleball,” the note said.

Read more about the theory on CNBC Pro.

— Jesse Pound

Walmart’s membership service hit a new high, according to estimates from a Morgan Stanley consumer survey.

The latest AlphaWise survey estimated Walmart+, a service that includes free delivery and shipping, has about 21.4 million members. That equates to about 17% of U.S. household penetration.

It marks a nearly 3-million subscriber increase from May and is more than 1 million higher than the previous record.

“The positive inflection continues the broader trend of membership growth despite some brief blips,” analyst Simeon Gutman said in a note to clients Sunday.

The “TAM,” which gauges the number of actual members as well as respondents who reported being very likely to join, also rose but was still off previous highs.

— Alex Harring

Bitcoin is coming off one of its strongest weeks of the year after it climbed 17% thanks to enthusiasm around financial institutions giving crypto their stamp of approval. ETF applications from WisdomTree, Invesco and others got the most attention but Wall Street is also optimistic about opportunities for custody, wealth management and tokenization using blockchains.

“Crypto is far from dead,” Bernstein analyst Gautam Chhugani said in a note Monday. “Institutional interest has remained alive through the crypto winter and we are seeing some early news flow with the current announcements. We will continue to see continued institutional participation in new crypto products and offerings, including institutions building tokenized products on public blockchains.”

Despite the crypto industry’s anarchist roots, much of the industry has been waiting and hoping to see institutions join the crypto market in a meaningful way that would bring about greater legitimacy of the asset class and more ways for more people to gain access to crypto. While the biggest institutions have done research and testing of blockchain-based products for years, most have been cautious to declare it as a priority for their businesses.

“Strong crypto-native survivors from this cycle, willing to play the long regulatory game as clarity evolves, are well placed,” Chhugani added. “The institutions are not just here for ‘regulatory capture’ but they see the commercial impact – both revenue and costs.”

— Tanaya Macheel

JPMorgan boosted its price target on shares of Las Vegas Sands on Monday ahead of second-quarter earnings out next month from the casino operator.

“We like the entry point for LVS, with its shares flattish since it reported its 1Q23 earnings in mid-April,” wrote analyst Joseph Greff, as he upped his price target to $72 from $71 a share. The increase implies 26% upside from Friday’s close.

“The lack of positive share price momentum quarter-to-date is, unsurprisingly, related to mixed China non-Macau related macroeconomic signals, and provides a buying opportunity for investors willing to ignore the noise and focus on the [gross gaming revenue] recovery and what we think will be a positive estimate revision story,” he said.

— Samantha Subin

While the crisis between Russian President Vladimir Putin’s Ministry of Defense and the the private mercenary Wagner Group “appears over as soon as it began, there will be questions and suppositions about what all of this means for days and weeks to come,” UBS analysts led by Roger Read wrote Sunday.

“Given that Russia is a major oil producer and exporter, we expect this uncertainty to be supportive of oil prices in the near term,” although the price effect will be seen in “the form of a risk-premium for future barrels as there are no indications of disruptions to production or exports at this time,” he said.

UBS and other Wall Street investment banks also considered the idea that internal dissent in Russia over the conduct of the war in Ukraine might conceivably lead to either an end to the conflict or, at least, a ceasefire — either of which might eventually lead to an easing of Western sanctions and lower oil prices.

But immediately, “this weekend’s events are not a cause to relieve sanctions, particularly with energy prices significantly lower” year over year, wrote Wolfe Research’s Sam Margolin on Saturday.

Goldman Sachs analysts agreed that the likely immediate effect of the Wagner Group mutiny will be on future crude oil pricing, not spot prices. “Markets may price a moderately higher probability that domestic volatility in Russia leads to supply disruptions or has a sizable negative impact on oil supply at some point in the future, analysts led by Daan Struyven wrote Sunday.

One consideration noted by Goldman: the Wagner Group has provided protection for the Libyan National Army faction in eastern Libya since 2019, “entrenched in and around oil facilities,” with the ability “to disrupt oil production, although the incentives to do so seem unclear should revenue depend on these flows.” Libya produces about 1.1 million barrels of crude per day. Russia pumps about 11 million barrels.

— Scott Schnipper, with reporting by CNBC’s Michael Bloom

Banking conditions are deteriorating in Texas, with loan demand and volume falling while nonperforming loans are on the rise, according to a survey the Federal Reserve in Dallas released Monday.

“Loan demand declined for the seventh period in a row, and most bankers expect a further deterioration over the next six months. Overall loan volumes continued to fall, with particular weakness seen in consumer lending,” the Banking Conditions Survey stated.

The one bright spot was residential real estate, which was stable, though commercial and industrial loan volumes declines.

“Bankers’ outlooks remained pessimistic, with contacts expecting a further contraction in business activity and an increase in nonperforming loans over the next six months,” the survey said.

— Jeff Cox

Lululemon could double its store revenue in China as the country recovers from stringent Covid-19 lockdowns, according to Piper Sandler.

Analyst Abbie Zcejnieks wrote in a Monday note that because roughly 80% of Lululemon stores in the region were opened since the start of the pandemic, the company could be poised to benefit from a strong rebound in foot traffic.

“We think store productivity has been significantly impacted by store closures and lower traffic due to lock downs, and we estimate that store productivity could improve by ~35% in FY23,” Zcejnieks said. The firm reiterated an overweight rating on Lululemon stock.

— Brian Evans

Frank Cappelleri of Cappthesis pointed to three key technical changes that are helping the market this year:

1. Bullish chart patterns are working, while bearish ones aren’t
2. Big market moves are happening less often than last year
3. “The number of big GAINS noticeably outnumber the number of big DECLINES.”

Despite last week’s decline, the S&P 500 is still up 13% for the year and more than 20% above its October low.

“Can the market keep up this pace? That’s been the question since a few days after the October’22 lows.” Cappelleri wrote in a note Monday. “While it would be ‘easy’ to pound one’s chest and declare it’s either a bull market or the mother of all bear market rallies, that wouldn’t help.”

“The key is understanding the vital changes that have taken place to get us here and what needs to happen to keep it going,” he added. “The bottom line is that these three points simply were not present in 2022, and the market floundered.”

Don’t be surprised if markets “largely ignore” the events occurring over the weekend in Russia, according to Barclays.

“While the short-lived Russian insurrection dominated weekend headlines, we think the market impact is limited, and macro factors are likely to remain the main drivers of risk assets,” wrote Ajay Rajadhyaksha in a Monday note.

Although the events may signal that Russia appears more unstable than anticipated, Rajadhyaksha said that markets seem more focused on implications for the war in Ukraine.

— Samantha Subin

The tech rally is ‘running out of steam’ as challenges start to build, according to Berenberg.

“We highlight how US tech has outperformed US equities ytd without any support from falling bond yields – either there is a new and independent tech cycle (eg AI domination) or the break in this macro relationship needs to repair somewhat given tech’s role as a long-duration sector,” Jonathan Stubbs wrote Friday.

“In theory, tech would benefit from a significant fall in US bond yields; however, that likely would need a sharp economic slowdown, which could also drive risk-off sentiment across equities and be to tech’s disadvantage.”

— Sarah Min

Despite the tepid market action, some stocks are hovering near fresh highs during Monday’s session.

Homebuilding stocks are also seeing another day of gains, with D.R. Horton, NVR and PulteGroup last trading near multi-decade highs dating back to their IPOs.

These stocks also hit new highs:

• Take-Two Interactive trading levels not seen since April 2022
• Eaton Corp trading at all-time high levels back to its IPO in July 1923
• WW Grainger trading at all-time high levels back to when it began trading in 1967
• Parker-Hannifin trading at all-time high levels back to its IPO in 1964
• Snap-On trading at all-time high levels back through our history to 1972
• Palo Alto Networks trading at all-time highs back to its IPO in July 2012
• Martin Marietta trading at levels not seen since January 2022
• Vulcan Materials trading at all-time high levels back through our history to 1972

Elsewhere, Campbell Soup Company traded at lows not seen since June 2022, while Pfizer traded at lows not seen since April 2021.

— Chris Hayes, Samantha Subin

Morgan Stanley’s latest Consumer Pulse Survey showed an uptick in economic confidence but concerns about the resumption of student loan payments among loan holders. Those payments are expected to resume in October, after a Covid-induced pause.

“The majority across all income groups said they couldn’t afford this, or would have to adjust spending in other areas to afford the restart, a potential headwind for consumer discretionary categories,” analyst Brian Harbour wrote in a note Monday.

Some 78% of those who made under $50,000 said they wouldn’t be able to pay their monthly student loan bills or would have to cut back spending in other areas to make the payments. Meanwhile, 70% of those who made between $50,000 and $99,999 said the same, while 57% of those making over $100,00 and above agreed.

The survey polled 2,000 US consumers between June 16-19.

— Michelle Fox

Barclays strategist Venu Krishna said in a note to clients on Monday that the narrowness of this year’s market rally is a symptom of how Wall Street sees the winners of artificial intelligence.

“Markets appear largely in agreement that widening AI adoption is likely to concentrate power into the hands of a few key Tech companies. Tech valuations have taken off, and AI-exposed stocks have captured nearly all equity gains YTD,” the note said.

However, the boom for those tech stocks doesn’t mean that the stocks are necessarily overpriced, Krishna said.

“Multiples remain far from the extremes that were seen during the dotcom bubble, and have yet to even return to the heights that were seen during the 2020 equity market rebound. Partly, this is because AI is already showing up at the bottom line,” the note said.

— Jesse Pound

Check out the companies making headlines in midday trading.

• Lucid Group — Lucid shares jumped 6% after the electric vehicle maker said it will provide powertrain and battery systems to British luxury automaker Aston Martin.
• WSFS Financial — The regional bank added 4.5% after D.A. Davidson upgraded the stock to buy from neutral, noting WSFS could benefit from a higher-for-longer interest rate environment. The gain helped the SPDR S&P Regional Banking ETF (KRE), which traded about 2% higher.
• Pfizer — Pfizer slid 3.8% after it said it would end development of its experimental obesity and diabetes drug, lotiglipron, because of elevated liver enzymes that could indicate liver damage. Pfizer said no participants reported any symptoms or side effects.

Check out the full list here.

— Sarah Min

Energy and real estate stocks gained on Monday, lifting the S&P 500 sectors by 1.5% and about 1.3%, respectively, shortly before 12 p.m. ET.

The energy sector got a boost from a jump in oil prices and gains totaling nearly 3% from EQT Corp and Halliburton. Baker Hughes, Targa Resources, EOG Resources and Hess added about 2% each.

Boston Properties and Alexandria Real Estate Equities were the biggest gainers in the real estate sector, jumping 7.2% and 3.3%, respectively. Ventas, Digital Realty Trust and Kimco Realty each rose about 2%.

Communications services suffered the most extreme losses. The sector fell 1%, dragged down by losses from from Meta Platforms and Alphabet, declining by about 2% each. Netflix and Warner Bros. Discovery contributed to the declines, dipping 1%.

— Samantha Subin

IBM shares rose nearly 1% on Monday after announcing plans to buy IT software management company Apptio for $4.6 billion from Vista Equity Partners.

IBM called the acquisition an extension of its investment in artificial intelligence and IT automation that will enable the Dow holding to build on its application management offerings.

The acquisition of Apptio, a vendor to more than 1,500 clients including technology giants Microsoft and Google, is expected to close in the second half of 2023.

— Ashley Capoot, Samantha Subin

Pfizer shares dropped 5% after the pharmaceutical giant said Monday it would halt development of its experimental obesity and diabetes pill, called lotiglipron. The firm cited elevated liver enzymes, which could point to liver damage, in clinical patients who took the drug once a day.

The decision comes amid growing interest in a new class of drugs targeting weight loss. However, there remain questions on how long patients will need to take the drugs to keep the weight off.

— Sarah Min, Annika Kim Constantino

The SPDR S&P Regional Banking ETF (KRE) rose 2% in Monday’s session, putting the fund on pace for its best day in more than two weeks.

If the performance holds, it would end the ETF’s five session losing streak. It would also mark the best performance since June 7, when the fund finished 3.3% higher.

Monday’s rally has been helped in part by PacWest, WSFS Financial and Western Alliance, which have all gained more than 4%.

That advance also helps as the ETF looks to finish a winning month. The fund is up 4.4% since June began, which would be its first positive and best month since January, when it ended 5.8% higher. Investors have closely watched the KRE since the onset of the banking crisis in March, which prompted fears about the health of regional banks.

— Alex Harring, Gina Francolla

Carnival shares sank nearly 9% even after the cruise line reported a smaller-than-expected loss for the recent quarter.

The company also shared an upbeat outlook, including strong occupancy expectations as cruising demand accelerates. Despite rising demand, management said costs continue to rise.

Shares of Royal Caribbean and Norwegian Cruise Line lost more than 1% and 4%, respectively, in sympathy.

— Samantha Subin

The potential of generative artificial intelligence is giving UBS reason to get more bullish on shares of Meta Platforms.

Analyst Lloyd Walmsley lifted his price target on the social media stock to $335 from $300 a share, saying that tailwinds from AI have not been fully price in to shares.

“We expect Meta to integrate generative AI (GenAI) broadly into its apps and increasingly be viewed as an AI winner, providing another leg to the bull case,” he wrote. “There has been chatter of Meta AI tools, but investor conversations have focused narrowly on the ad tech angle, less around consumer applications that could drive new engagement and ad units.”

The target adjustment reflect 16% upside for shares from Friday’s close. The stock’s gained nearly 140% this year as investors move back into popular technology names.

— Samantha Subin

BMO Capital Markets thinks a slightly better-than-expected housing market will help lift Sherwin-Williams.

The firm upgraded Sherwin-Williams stock on Monday, and forecasted more than 11% upside.

“With growing conviction in our above consensus estimates and a belief that there may be upside to our estimates given numerous tailwinds (raws in the near-term housing in the longer term) that could drive solid momentum in earnings and the stock, we feel the risk/reward was compelling relative to other names in the chemical space (where numbers may be coming down),” BMO analyst John McNulty said.

CNBC Pro subscribers can read the full story here.

— Brian Evans

These are some of the stocks making the biggest moves before the bell.

Tesla — Shares dropped 1.9% after Goldman Sachs became the latest Wall Street bank to downgrade the electric vehicle maker to neutral from buy. Goldman cited the difficult pricing environment for electric vehicles, as well as the stock’s recent run up, for the call.

Moderna — The drugmaker gained 2.5% following an upgrade by UBS to buy from neutral. The bank said the stock’s current valuation isn’t pricing in potential upside from other vaccines. UBS cut is price target to $191 from $221, which still implies 61% upside from Friday’s close.

Lucid — The EV maker popped 12% after it announced a partnership with Aston Martin to supply powertrain and battery systems to the British luxury carmaker. Aston Martin will give Lucid a 3.7% stake in the company and cash payments totaling $232 million.

Read the full list of stocks moving premarket here.

— Michelle Fox

Oil prices steadied Monday, paring some early gains, as investors watched to see if there’ll be further fallout from an attempted insurrection in Russia that could disrupt energy supplies from one of the world’s largest oil producer nations.

West Texas Intermediate futures were last up about 0.61% at $69.58, after initially rising as much as 1.3% to just below $70 a barrel earlier Monday, followed by last week’s almost 4% decline. Brent crude were trading about 0.66% higher at $74.35.

— Clement Tan, Sarah Min

UBS thinks Moderna stock can benefit from vaccines beyond the scope of Covid-19.

The firm upgraded Moderna stock on Monday, although with a lower price target. UBS analyst Eliana Merle pointed toward vaccines for respiratory syncytial virus (RSV), the flu and cytomegalovirus (CMV) as promising upside drivers for the company.

“We think MRNA’s CMV vaccine could be a major potential upside driver over the next 1-2 years, with limited priced in (leading cause of birth defects, no approved vaccines),” Merle said.

Shares rose 2.5% before the bell.

CNBC Pro subscribers can read the full story here.

— Brian Evans

UBS downgraded Alphabet shares on Monday over stiffer competition from other large artificial intelligence players.

“We do not see Bing or ChatGPT as major threats given a superior product at Google. We see some tail risk that Meta’s AI chat could gain traction given the scale of users across its apps but we view this as more speculative,” UBS analyst Lloyd Walmsley said.

The stock fell 1.4% before the bell.

CNBC Pro subscribers can read the full story here.

— Brian Evans

Goldman Sachs downgraded Tesla stock on Monday, citing a more challenging pricing environment for its electric vehicles.

“While the primary reason for the change in our view is that we think the market is now giving the stock more credit for its longer-term opportunities, we are also cognizant of the difficult pricing environment for new vehicles that we think will continue to weigh on Tesla’s automotive non-GAAP gross margin this year,” Goldman analyst Mark Delaney said.

The firm now joins a chorus of other Wall Street firms including Morgan Stanley and Barclays in downgrading Tesla stock in the past week.

CNBC Pro subscribers can read the full story here.

— Brian Evans

JPMorgan strategist Mislav Matejka noted Monday that the market rally broadening seen in recent week will not last long.

“We believe that the broadening in market leadership that was seen at some points this month is unlikely to have legs, as we don’t expect bond yields to move higher, especially not for the right reasons,” Mislav wrote. “Cracks in the labour market are emerging, manufacturing PMIs are not converging with services, as consensus was expecting; in fact the opposite appears to be happening, and any China stimulus might end up underwhelming – sell the news.”

— Fred Imbert, Michael Bloom

U.S. Treasury yields declined on Monday as investors looked ahead to a week of fresh economic data that could provide insights into the state of the U.S. economy.

Investors are also looking to comments from Fed speakers, including Chairman Jerome Powell, for fresh details about further rate hikes which policymakers have indicated will likely be needed to lower inflation.

At 04:10 AM ET, the yield on the 10-year Treasury was down by close to five basis points to 3.6902%. The 2-year Treasury was trading more than four basis points lower at 4.7052%.

Yields and prices have an inverted relationship and one basis point equals 0.01%.

— Sophie Kiderlin

European markets opened marginally higher Monday in a potential bounce back following a downbeat week.

The pan-European Stoxx 600 index was up 0.1% at market open, with most sectors trading in tentatively positive territory. Oil and gas stocks led marginal gains with a 0.8% uptick, followed by travel and leisure and mining stocks, which each gained 0.4%. Banking stocks dropped 0.5%.

— Hannah Ward-Glenton

Mainland Chinese markets were the biggest losers in Asia on Monday, with the Shenzhen Component down 1.78% and the Shanghai Composite lower by 1.35%.

The Shenzhen index was dragged by technology and consumer non-cyclical stocks, while losses on the Shanghai index were mainly due to declines in academic and educational stocks.

The broader CSI 300 index was down 1.56%.

— Lim Hui Jie

Japan’s producer prices index for its services sector rose 1.6% on a year-on-year basis in May, unchanged from April’s growth rate of 1.6%.

This puts the index at 108.5, a 0.1% month-on-month drop compared with April’s 108.6.

The PPI measures the average movements of prices received by domestic producers their services sold.

— Lim Hui Jie

Here’s where the three major U.S. market averages stand with one week left in June.

The Dow:

• Up 2.49% for the month
• Up 1.75% for the year

The S&P 500:

• Up 4.03% for the month
• Up 13.25% for the year

The Nasdaq Composite:

• Up 4.31% for the month
• Up 28.91% for the year

— Jesse Pound

Stock futures were flat in initial trading on Sunday evening. Dow futures shuffled between gains and losses of less than 0.1% in either direction.

— Jesse Pound

Last week ended a winning streak for all three major averages.

• The Dow fell 1.67%, breaking a three-week winning streak.
• The S&P 500 fell 1.01%, ending a five-week winning streak.
• The Nasdaq Composite fell 1.44%, snapping an eight-week winning streak.
• It was the worst week for all three indexes since March.
• All three indexes still closed above their 200-day and 50-day moving averages.

— Jesse Pound