A survey of North American equities heading in both directions
On the rise
Shares of Dollarama (DOL-T) were higher after it beat second-quarter profit estimates on Wednesday, helped by lower costs and stable demand for low-priced essentials like groceries.
Consumers grappling with rising living costs have relentlessly bargain-hunted and traded down to cheaper alternatives.
In addition, lower costs of inbound shipping and logistics helped the dollar-store company counter lingering challenges related to shrink, in which inventory is either lost, stolen or damaged.
The Montreal, Quebec-based company’s gross margin rose to 45.2 per cent in the quarter ended July 28 from 43.9 per cent, a year ago.
The company also reiterated its fiscal 2025 comparable sales forecast of a rise in the 3.5-4.5-per-cent range.
U.S. dollar stores like Dollar General (DG-N) and Dollar Tree (DLTR-Q) have been trying to lift demand as larger rivals such as Target (TGT-N), Walmart (WMT-N) and PDD Holding’s e-commerce platform Temu competed for customer dollar.
This also meant off-price retailers such as TJX (TJX-N) and Ross Stores (ROST-Q) reported a sequential rise in customer traffic at the cost of higher-end department store operators like Macy’s (M-N).
Dollarama’s net sales rose 7.4 per cent to $1.56-billion compared to a year ago. Analysts estimated net sales of $1.57-billion, according to LSEG data.
The company posted net earnings per share of $1.02 compared with 86 cents a year ago. Analysts, on average, expected a profit of 97 cents.
North American lithium companies, including Lithium Americas Corp. (LAC-T), jumped after Chinese battery giant CATL plans to adjust its lithium production in the southern province of Jiangxi.
A slump of prices of the metal used mainly for electric vehicle and solar batteries has forced many global lithium producers to scale back production and cut jobs.
The huge CATL-owned lithium mine in the Yichun city in Jiangxi province is a major reason for the rapidly growing supplies in China.
However, the cost of producing the battery material from lepidolite, a hard type of lithium ore, is too high analysts said.
“Based on recent lithium carbonate market conditions, the company plans to make adjustments on lithium carbonate production in Yichun,” CATL told Reuters on Wednesday after Asia trading.
That was in response to Reuters’ questions seeking comment after an analyst report that said CATL had suspended its huge lepidolite mine which boosted lithium futures prices and some global companies’ shares.
Toronto-Dominion Bank (TD-T) rose despite being ordered by a U.S. regulator on Wednesday to pay nearly US$28-million for repeatedly sharing inaccurate, negative information about its customers with credit reporting agencies, potentially tarnishing customers’ credit scores.
The Consumer Financial Protection Bureau said that since 2015, TD provided wrong information about personal bankruptcies, credit card delinquencies, accounts that had been closed, and accounts that it knew or suspected had been fraudulently opened.
It also said TD also took “far too long,” sometimes more than one year, to correct mistakes, and ignored some disputes because it diverted resources elsewhere and was distracted by its failed attempt to buy Tennessee bank First Horizon.
The CFPB said this “abusive” conduct took unreasonable advantage of customers’ inability to monitor how the Cherry Hill, New Jersey-based lender, one of the 10 largest U.S. commercial banks, reported their credit information.
“TD Bank illegally threatened the consumer reports of its customers with fraudulent information and then barely lifted a finger to fix it,” CFPB Director Rohit Chopra said in a statement.
The payout includes a US$20-million civil fine, plus US$7.76-million of restitution to tens of thousands of customers.
TD did not admit or deny wrongdoing.
In a statement, TD said it cooperated in resolving the matter, and has “voluntarily and proactively implemented enhancements to our furnishing and dispute handling practices.”
Canadian National Railway (CNR-T) ended higher after it revised its full-year financial outlook and saidd its operations have completely recovered following several months of labor disputes and a total shutdown of its Canadian network.
The railroad has said the work stoppages, as well as the wildfires in Alberta, led to a quarter-to-date impact of about 20 cents per share to its earnings.
Reaction from the Street: Wednesday's analyst upgrades and downgrades
Both CN and Canadian Pacific Kansas City (CP-T) previously faced a threat of work stoppages by the Teamsters Canada Rail Conference Union, until the Canadian government intervened and called for binding arbitration to reach an agreement over a new contract.
“CN now expects to deliver adjusted diluted EPS growth in the low single-digit range, compared to its July 23, 2024, expectation of mid to high single-digit growth,” the railroad said.
The company now expects its adjusted return on invested capital to be in the range of 13 per cent to 15 per cent, down from its previous expectation of about 15 per cent.
On the decline
Cryptocurrency shares, including Bitfarms Ltd. (BITF-T), Hut 8 Corp. (HUT-T) and Hive Digital Technologies Ltd. (HIVE-X), fell on Wednesday after Democratic candidate Kamala Harris put her Republican rival and crypto supporter Donald Trump on the defensive in a combative presidential debate.
The former president had positioned himself as a pro-bitcoin candidate whose return could mark a win for the industry that has accused the current administration of regulatory overreach.
Bets on a win for Harris improved to 56 per cent from 53 per cent before the debate, while Trump’s chances slipped to 48 per cent from 52 per cent, according to online betting site PredictIt.
“Following the performance of Harris in the debate and perhaps Taylor Swift’s endorsement, there is a slightly lower chance of a crypto-supporting Trump in the White House,” said Susannah Streeter, head of money and markets at Hargreaves Lansdown.
Bitcoin, the world’s largest cryptocurrency, pared losses and was last down 1.4 per cent, while ether fell 2.1 per cent.
Trump had in July courted the crypto industry in a conference in search of donations and votes with a promise of friendlier regulation.
“Never sell your bitcoin,” Mr. Trump said at the time, adding that if elected the U.S. government will hold bitcoin as a store of value.
Meanwhile, Ms. Harris has yet to detail a policy position on crypto.
In the run-up to the debate, many market participants and analysts viewed bitcoin as the asset to watch for clues on which candidate was gaining an upper hand.
“The U.S. presidential debate did not address crypto directly. However, market sentiment is shifting in favor of Kamala Harris,” Valentin Fournier, analyst at research firm BRN.
“This creates a somewhat less optimistic outlook for bitcoin compared to the more enthusiastic projections made by Trump at the Bitcoin 2024 Conference.”
The crypto market is often seen as a risky fringe business with high volatility and has been accused by the U.S. Securities and Exchange Commission of flouting securities laws.
U.S. bank stocks struggled for direction on Wednesday, as volatility continued sparked by warnings of a slower-than-anticipated recovery in investment banking and an expected hit to interest income from looming rate cuts.
Bank executives this week softened investor hopes ahead of a widely expected interest rate cut by the Federal Reserve, as well as persistent worries over the economy.
“Investors are trying to reconcile a few moving parts that are both bullish and bearish,” said David Wagner, portfolio manager and equity analyst at Aptus Capital Advisors.
“Rate cuts are expected to compress NII much like JPM’s commentary…but lower rates are also supposed to help boost spending. Thus, a tug of war has begun to see if growth can insulate the NII compression.”
JPMorgan (JPM-N) led the declines on Tuesday with a 5.2-per-cent fall after Chief Operating Officer Daniel Pinto said forecasts for 2025 net interest income (NII), or the difference between what the bank earns on loans and pays out on deposits, were overly optimistic.
Higher rates had boosted banks’ loan income, but easing monetary policy would lead to smaller-than-expected increases.
Morgan Stanley (MS-N) has also forecast modestly lower interest income in the third quarter, with President Dan Simkowitz noting that mergers, acquisitions and initial public offering activities will remain below trends for the rest of the year.
Mr. Pinto expects trading revenue to be flat or rise 2 per cent in the quarter, while Goldman Sachs (GS-N) CEO David Solomon anticipates a probable 10% dip due to sluggish conditions in August.
Citigroup’s (C-N) CFO Mark Mason told investors at a conference in New York on Monday that markets revenue is likely to drop 4 per cent.
Bank of America (BAC-N) slid in response to Warren Buffett’s Berkshire Hathaway (BRK.B-N, BRK.A-N) selling shares worth US$228.7-million, as the conglomerate continues to trim its stake in the second-largest U.S. lender.
Berkshire, late on Tuesday, disclosed it has sold about 5.8 million BofA shares between Sept. 6 and Sept. 10.
That takes the total sale of shares to about 174.7 million since mid-July, raking in US$7.19-billion, according to LSEG data.
Berkshire, still BofA’s largest shareholder, has to keep reporting sales regularly until its holding falls below 10 per cent. It is currently at 11.1 per cent.
The 94-year-old billionaire, one of the world’s most revered investors, started investing in BofA in 2011 when Berkshire bought US$5-billion of preferred stock.
The stake sales come more than a year after Mr. Buffett praised BofA and CEO Brian Moynihan.
Mr. Moynihan said on Tuesday Mr. Buffett has been a “great” investor for the bank, but he did not ask the legendary investor about the recent stake sales.
“I don’t know what exactly he is doing because frankly we can’t ask,” Moynihan told investors at a financial conference in New York.
A Deutsche Bank analyst had said last week Berkshire could be aiming to get just below the 10 per cent reporting threshold to avoid regulatory scrutiny.
Shares of Trump Media & Technology Group Corp. (DJT-Q) dropped as investors priced in greater odds of Democrat Kamala Harris winning the U.S. presidency following the first presidential debate.
Shifting election bets boost solar stocks, weigh on crypto after fiery debate
Ms. Harris put her Republican rival Donald Trump on the defensive in a combative presidential debate on Tuesday.
“An extension of the presidential debate fallout in markets will get mixed up with the impact of the August inflation report today ... this is the last big data release before the Sept. 18 FOMC announcement,” ING analysts said.
After the debate, pricing for a Trump victory slipped by 6 cents to 47 cents on online betting site PredictIt, while climbing to 57 cents from 53 cents for a Harris win.
With Trump Media stock cratering, Donald Trump has a decision to make
While the debate offered Wall Street little clarity on key policy issues, some market watchers see Ms. Harris’s proposals to raise the corporate tax rate as likely to hit company profits, while Mr. Trump’s tougher stance on tariffs could stoke inflation.
Manchester United’s (MANU-N) new chief said on Wednesday the club was working towards improving performance on and off the pitch after a fifth consecutive year of net losses following a poor 2023-24 season and heavy investments in the new squad.
The English Premier League soccer club’s shares slipped as net losses widened to more than 113 million pounds (US$147-million) in the year to June, making it only the second time since its New York listing in 2012 that losses topped 100 million pounds.
United have embarked on a slew of changes since British billionaire Jim Ratcliffe bought a 25-per-cent stake in the club and under his stewardship had a busy summer in the transfer market, securing several promising young players.
“We are working towards greater financial sustainability and making changes to our operations to make them more efficient, to ensure we are directing our resources to enhancing on-pitch performance,” newly appointed CEO Omar Berrada said.
“Our clear objective is to return the club to the top of European football.”
The Premier League has clamped down on big spending by clubs with its Profitability and Sustainability Rules (PSR) to try to level the playing field and prevent rich owners from spending vast sums on players.
To comply with PSR, clubs must rack up no more than 105 million pounds of losses over a three-year period, although investments in infrastructure, academies, charity foundation and women’s soccer can be deducted.
United have recorded losses of more than 257 million pounds in the past three years, and more than 370 million pounds over five years. The club said it was committed to and compliant with the PSR, as well as European governing body UEFA’s Financial Fair Play Regulations.
United finished eighth in the Premier League last season, their lowest position since the league’s inception in 1992. This season has not started any better, with two losses from the first three games.
For fiscal 2025, the club expects an adjusted core profit of 145-160 million pounds and revenues of 650-670 million pounds. It reported adjusted core profit of 147.7 million pounds on record revenues of 661.8 million pounds in fiscal 2024.
The forecast reflects the impact of recent restructuring that included 250 job cuts.
GameStop (GME-N), a widely watched meme stock, tumbled on Wednesday after the video game retailer reported a bigger drop in quarterly revenue, questioning its ability to revitalize its business.
The company, which is feverishly tracked by retail investors following a meme stock frenzy in early 2021 that sent its shares to dizzying levels, has been trying to restructure itself by operating a smaller network of stores and focusing on selling more value-added items to boost sales and profitability.
The 31-per-cent slide in GameStop’s revenue in the most recent quarter overshadowed a swing to net profit. It also announced a plan to sell up to 20 million shares to fund acquisitions.
GameStop has raised a little over US$3-billion through share sales in May and June, taking advantage of wild swings in its stock following bullish bets by Keith Gill, also known as “Roaring Kitty,” who has been a key figure in the so-called “Reddit rally.”
The stock more than doubled over a few days in May after Mr. Gill returned from a three-year hiatus and then crashed 40 per cent in June after Mr. Gill’s livestream failed to drum up investor interest.
Still, the stock is up about 34 per cent this year through Tuesday.
GameStop’s stock reached an intra-day peak of nearly US$121 in January 2021 from about US$10 a few days earlier, in a roller-coaster ride for investors before crashing nearly 90 per cent in the following month.
With files from staff and wires