Tesla comes under federal scrutiny … again, a judge temporarily halts the JEDI project that was awarded to Microsoft over Amazon and more in today’s Closing Bell on Money and Markets.
The Top Story
The U.S. Securities and Exchange Commission has opened an investigation into Tesla’s financing and accounting practices.
The news comes at the same time Tesla Inc. (Nasdaq: TSLA) announced it wants to raise more than $2 billion from selling common stock.
According to The Wall Street Journal, the SEC issued subpoenas to the electric car maker in December looking for information regarding some financial data and contracts on the company’s regular financing arrangements.
A previous investigation into projections and public statements about the Model 3 production has since been closed.
Last year, Tesla had a $2.7 billion stock and bond sale, but that came as the car maker was experiencing a sharp share price decline.
Shares of Tesla started the day down but moved up nearly 6% in afternoon trading over its Wednesday closing price.
In other business news, a judge has temporarily blocked a defense department contract initially awarded to Microsoft Corp. (Nasdaq: MSFT) that was then contested by rival Amazon.com Inc. (Nasdaq: AMZN).
Amazon has contested the controversial JEDI cloud contract awarded to Microsoft, claiming President Donald Trump exercised “unmistakable bias” in awarding the $10 billion contract to Microsoft.
The injunction was not made public Thursday and there was no clear reason why the documents were sealed.
Shares of both Amazon and Microsoft were down slightly Thursday afternoon at 3:30 p.m. EST.
Money and Markets: Closing Bell*
S&P 500: 3,379 (-5 points, -0.2%)
DOW: 29,512 (-128 points, -0.4%)
NASDAQ: 9,723 (-13 points, -0.1%)
GOLD: $1,575.80 (+$10, +0.6%)
BITCOIN: $10,184.17 (-243.00, -2.3%)
U.S. 10-YEAR YIELD: 1.61%
*- as of 4:20 p.m.
A Big Win
In this morning’s Wall Street Wake-Up, we reported that Cisco Systems Inc. (Nasdaq: CSCO) had a drop in premarket trading. That was due to a revenue forecast dip of 3.4%. Despite higher earnings and revenue for the quarter, shares of Cisco Systems were down 5.2% in afternoon trading.
M&A News
Alphabet Inc. (Nasdaq: GOOG) subsidiary Google has finalized a $2.6 billion acquisition of business intelligence analytics software developer Looker Data Sciences. The U.K. Competition and Markets Authority group approved the deal Thursday.
Golden Nuggets
Gold prices moved higher Thursday as precious metals were helped by an escalation in the coronavirus outbreak in China.
Analysts with Standard Charter said the safe haven’s price floor has yet to be tested as physical demand will be key.
“If the virus is brought under control, gold prices are likely to test the physical floor,” analyst Suki Cooper wrote Thursday.
The physical demand for gold remains weak in 2020, especially in India and China.
The price of gold jumped 0.6% to $1.575.80 an ounce while silver climbed 0.9% to $17.65 an ounce. Platinum moved 0.7% higher to $973.00 an ounce and palladium was up to $2,318 an ounce.
Cannabis Corner
Cannabis giant Aurora Cannabis Inc. (NYSE: ACB) reported weak Q2 sales and increased losses as the cannabis market continues to face headwinds.
The lower sales come a week after CEO Terry Booth surprisingly retired and the company said it was undergoing a “massive restructuring.” Aurora Cannabis also said it was shedding jobs as a way to trim expenses.
Despite the bad news, shares of Aurora Cannabis were up 2% in Thursday afternoon trading.
In its earnings report, Aurora Cannabis said its net sales were down 26% from the previous quarter. It also predicted net sales below analysts’ estimates.
Production for the company also fell 26% due to a shift to high-value, high-potency strains that have less yield.
Canopy Growth Corp. (NYSE: CGC) fell 0.7% by day’s end while Cronos Group Inc. (Nasdaq: CRON) rose 2.0%.
Stock Market Update
U.S. consumer prices moved up slightly in January, as did the number of Americans filing for unemployment benefits.
The U.S. Bureau of Labor Statistics reported a 0.1% increase for all items in January — a 2.5% increase over January 2019. Taking out food and energy prices, the CPI went up 0.2% during the month.
Americans spent more on clothes, recreation and airline tickets during the month while prices for used cars and trucks, prescription drugs and household furnishings declined.
In a separate report, the Labor Department said the economy created 225,000 new jobs in January, but the unemployment rate rose to 3.6%. State unemployment claims went up 2,000 to 205,000 for the week ending Feb. 8. The overall number of claims is less than the 210,000 forecast.
In U.S. market news, equities were mainly flat.
As of 3:15 p.m. Eastern time, the Dow Jones Industrial Average was down 0.1%. The S&P 500 and Nasdaq Composite moved up and down slightly.
Today’s Big Winners:
(as of 3:15 p.m. EST)
Equifax Inc. (NYSE: EFX) +5.7%
Tesla Inc. (Nasdaq: TSLA) +5.7%
Fidelity National Information Services Inc. (NYSE: FIS) +5.5%
Applied Materials Inc. (Nasdaq: AMAT) +3.3%
Walmart Inc. (NYSE: WMT) +1.3%
Today’s Big Losers:
(as of 3:15 p.m. EST)
NetApp Inc. (Nasdaq: NTAP) -9.6%
Centurylink Inc. (NYSE: CTL) -9.3%
Kraft Heinz Co. (Nasdaq: KHC) -7.6%
Cisco Systems Inc. (Nasdaq: CSCO) -4.8%
Walgreens Boots Alliance Inc. (Nasdaq: WBA) -1.8%
Check back for the most important news and numbers each day after the Closing Bell, only on Money and Markets.
Don’t forget about “Marijuana Markets: a POTcast,” featuring the biggest cannabis news and investment notes from Banyan Hill’s Anthony Planas, here on Money and Markets each Saturday morning.