The three major US stock indexes opened high and consolidated on Monday, with the Dow Jones and S&P 500 continuing to hit new highs. ADM, one of the world's "four major grain merchants," saw its stock price drop by 24.20%. The ADM board of directors announced on the 21st local time that the CFO was immediately forced to take a leave of absence and an external investigation was initiated due to possible accounting issues in the nutrition business.
Dow Jones and Standard&Poor's continue to hit new highs
As of the close on January 22 Eastern Time, the Dow Jones Industrial Average closed up 138.01 points at 38001.81 points, or 0.36%; The Nasdaq rose 49.32 points to 15360.29 points, an increase of 0.32%; The S&P 500 index rose 10.62 points to 4850.43, or 0.22%. After last Friday, the Dow Jones and S&P 500 index hit new historical closing highs. The Dow Jones Industrial Average rose as high as 38109.20 points during the session, while the S&P 500 Index rose as high as 4868.41 points, both hitting new intraday highs.
Large tech stocks in the US have fluctuated, with Apple up 1.2%, Amazon down 0.37%, Netflix up 0.57%, Google down 0.3%, Facebook down 0.44%, and Microsoft down 0.54%. AMD fell 3.47% to $168.18 per share, with the largest intraday drop of nearly 6%. Nvidia rose 0.27% slightly to close at $596.54.
Most US aviation stocks fell, with Boeing down 0.04%, American Airlines down 0.33%, Delta Air Lines down 0.79%, Southwest Airlines up 0.6%, and United Airlines down 0.95%.
Most US bank stocks rose, with JPMorgan Chase down 0.09%, Goldman Sachs up 1.01%, Citigroup up 2.56%, Morgan Stanley up 0.47%, Bank of America up 1.04%, and Wells Fargo up 0.85%.
US energy stocks generally rose, with ExxonMobil down 0.13%, Chevron up 0.19%, ConocoPhillips up 0.18%, Schlumberger up 2.07%, and Western Oil up 0.57%.
Popular Chinese concept stocks generally fell, underperforming the overall market. The Nasdaq Golden Dragon China Index (HXC) fell more than 4% at the beginning of the trading session, but its early decline narrowed to around 3%. It will continue to fall for six consecutive trading days, continuing to break the closing low of over a year. In the early morning trading, the Chinese concept ETF KWEB and CQQQ fell more than 3% and 4% respectively. Three new car manufacturers all fell, with Ideal Automobile falling more than 4%, Xiaopeng Automobile falling more than 3%, and NIO Automobile falling more than 2% in early trading. Among other stocks, Baidu, JD.com, and Tencent saw a drop of over 3% in early trading, Alibaba, Pinduoduo, and Bilibili saw a drop of over 2%, and NetEase saw a drop of nearly 2%.
In terms of news, this week's financial reporting season is gradually reaching its climax. From Tuesday to Friday, several industry leaders will release quarterly reports, including Procter&Gamble and Johnson&Johnson's financial reports before Tuesday's trading, Netflix's financial reports after that day's trading, and AT& T's financial reports before Wednesday's trading; T financial report, Tesla and IBM financial reports after the day's trading, Blackstone financial reports before Thursday's trading, Intel and T-Mobile financial reports after trading, and American Express financial reports before Friday's trading.
According to foreign media reports, Richmond Fed Chairman Barkin stated that a rate cut in March is not impossible. Federal Reserve Governor Waller stated last week that there is no reason to take action or cut interest rates as quickly as in the past. The next two-day monetary policy meeting of the Federal Reserve will begin on January 30th, and the market generally expects to maintain interest rate stability.
Grain trading giant ADM plummets
According to company disclosures, potential issues may arise with accounting practices and procedures related to the company's nutrition business, including certain inter departmental transactions. The reason for the investigation was that the US Securities and Exchange Commission requested companies to voluntarily provide certain documents, and ADM stated that it is cooperating with US securities regulators. Terry Crews, the Chief Director of the ADM Board, stated in a statement that the board attaches great importance to the issues identified. Before the investigation results are available, the board of directors believes that Mr. Luthar should be suspended from work and on vacation. Next, the board of directors will work closely with external consultants to determine the "best path forward".
ADM official website
The company also announced a postponement of the originally scheduled release of the 2023 quarterly and full year financial reports, with further details to be notified. ADM also expects the adjusted earnings per share for the fiscal year 2023 to exceed $6.90, compared to an expectation of $7 given in October last year.
After the news was released, investment banks such as Goldman Sachs, Barclays, and Paya have all downgraded ADM's rating. According to Andrew Strelzik, an analyst at BMO Capital Markets, the latest survey may lead to a decline in profits in the nutrition business, as investors are already concerned about profit risks. As the latest profitability of this business becomes clearer, it is expected that ADM will reassess the strategic focus in the nutrition sector.
Since 2014, ADM has spent billions of dollars expanding its nutrition related business, including investing $3 billion to acquire European natural seasoning manufacturer Wild Flavors. However, due to the weak demand side, the profit growth rate of this business (including plant-based foods) did not meet the company's initial expectations. According to the unanimous expectation of analysts, ADM's nutrition business operating profit will fall by 18% year-on-year in 2023, reaching a new low since 2020.
