Instacart and Arm IPOs Suggest Investors Still Have Appetite for Stocks. What Happens Next.

The timing of the recovery–amid the highest interest rates in 22 years–may seem unusual, particularly given that Arm and Instacart are both tech companies. Perhaps, it’s because the market thinks the Federal Reserve is finally done hiking.

There are a few caveats to consider, however, before proclaiming the IPO market is once again firing on all cylinders. Instacart’s $30 a share pricing values the company at $9.9 billion, much lower than its $39 billion valuation in 2020. Arm’s successful trading debut, jumping 25% on its first day, is also being reassessed. The shares have fallen on days two and three and are not far off where they opened on Thursday.

Nonetheless, demand for Arm shares has been strong and it’s kicked off a stream of new listings. Marketing software company Klaviyo is scheduled to go public Wednesday and also raised its expected price range Monday. German sandal maker Birkenstock filed to list in the U.S. last week, along with another British chip designer, Imagination Technologies.

Arm did the hard work in prising open the IPO window, now other newcomers and the wider market could be set to enjoy the tailwind blowing through it.

—Callum Keown

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UAW Threatens to Strike at More Auto Plants

The United Auto Workers will strike at more plants if
Ford Motor,

General Motors,
and
Stellantis
fail to make “serious progress” toward an agreement by Friday, the union’s leader Shawn Fain warned late Monday. A source familiar with discussions said the UAW is waiting for the companies’ counteroffers.

• UAW met with Stellantis on Monday, after UAW President Shawn Fain rejected Stellantis’ offer of a 21% pay increase on Sunday. Stellantis said Monday’s discussion was “constructive” and focused on reaching an agreement that enables the company to “meet the challenges of electrification.”

• The UAW has sought raises of 40%, cost-of-living increases, job protections, a 32-hour workweek, and benefits for retirees. Fain has pointed to 40% pay raises for auto maker CEOs over the past four years as the reason why workers deserve comparable increases.

• The auto makers have responded to the strikes with temporary layoffs. Ford temporarily laid off about 600 nonstriking workers at its Michigan plant. General Motors said about 2,000 workers at a Kansas assembly plant could be out of work this week, until production resumes.

• Benchmark analyst Michael Ward said the impact of the strikes on the industry has been “minimal thus far,” but noted that parts shortages could close additional plants. He estimated the three current strikes will cost the companies a combined $15 million a day in earnings before interest and taxes.

What’s Next: Auto workers aren’t the only ones on strike. In Hollywood, the Writers Guild of America, on strike since May 2, will resume bargaining on Wednesday with the Alliance of Motion Picture and Television Producers, including
Warner Bros. Discovery,

Netflix,
and
Walt Disney.
“Our focus is getting a fair deal for writers as soon as possible,” WGA said.

—Callum Keown and Janet H. Cho

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Oil Prices Advance and Could Hit $100 a Barrel

Oil prices advanced on Tuesday, extending gains from the past three weeks on signs that supply is getting squeezed while demand holds up.

• Chevron Chief Executive Officer Mike Wirth said Monday that prices will probably reach $100 a barrel in an interview with Bloomberg television.

• Brent Crude is already above $95 a barrel. Prices are the highest in almost a year after Russia and Saudi Arabia said they would extend voluntary output cuts through the fourth quarter.

• A sluggish economic outlook in Europe and China could weigh on oil prices over the next few months, since slower growth means less demand for energy. For now, though, supply worries are overriding those concerns.

What’s Next: The resurgence of oil prices could fan a fresh wave of consumer-price inflation and become a headache for the Federal Reserve. The Fed has aggressively raised interest rates to bring down inflation but is expected to pause at its meeting this week.

—Brian Swint

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Retailers Are Preparing for Holiday Shopping Season

Consumers may still be in pumpkin spice latte mode, but retailers are already looking ahead to the winter holidays, making advance preparations for promotions and staffing for the quarter when they make the majority of their annual sales.

• Macy’s
  is hiring more than 38,000 full- and part-time seasonal workers for its flagship stores, its Bloomingdale’s and Bluemercury stores, and at its distribution centers. That is fewer than the 41,000 workers it planned to recruit last year. Holiday sales overall are seen slowing from last year.

• Retailers are expected to hire the lowest number of seasonal workers this holiday season since 2008, because of rising labor costs and waning consumer confidence, Reuters reported, citing data from Challenger, Gray & Christmas.

• The firm analyzed non-seasonally adjusted data from the Bureau of Labor Statistics to estimate that retailers are expected to add 410,000 jobs this year, Reuters reported. Last year, retailers added 519,400 jobs in the last quarter.

• Amazon.com
  has set another Prime sales event, this one for Oct. 10 and 11. The e-commerce platform is again offering Prime members discounts, this time when they check out with Buy with Prime, which connects shoppers with outside websites.

What’s Next: Instacart, the grocery delivery platform, is expected to make its trading debut today after pricing its initial public offering at $30 a share. It faces increased competition for sales from
Walmart,

Target,
and other stores.

—Janet H. Cho

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Clorox Expects ‘Material Impact’ from Cybersecurity Attack

Clorox,
the cleaning products maker, told investors to expect a “material impact” on current-quarter financial results from a cyberattack that damaged some of its IT infrastructure, which had to be taken offline to contain the problem. That resulted in wide scale operational disruptions and order-processing delays.

• Clorox, which confirmed the attack in mid-August, said Monday that its automated order-processing system has taken time to repair and isn’t fully online. The company expects to start transitioning back to normal operations next week, and will need time to get back to previous levels.

• D.A. Davidson analyst Linda Bolton Wesier said Clorox was undergoing a multiyear drive to upgrade its digital capabilities when the attack happened. Clorox said it was “premature” to determine a longer term impact, given the continuing recovery.

• Meanwhile, cat owners have reported difficulty finding Fresh Step kitty litter on store shelves and online. Clorox confirmed to Barron’s that it is having “availability issues” with Fresh Step after it took certain systems offline after the cybersecurity attack.

• Cybersecurity firm Check Point Software Technologies said 48 ransomware groups attacked more than 2,200 firms in the first half of 2023. Both
  MGM Resorts International
  and
  Caesars Entertainment
  were hit with breaches this month that disrupted operations.

What’s Next: Clorox, whose cleaning wipes and disinfectant sprays were in high demand early in the pandemic, has increased sales by raising prices over the past year as consumers bought fewer products. For the current fiscal year, Clorox expects sales to be flat to up 2%.

—Teresa Rivas and Janet H. Cho

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House GOP Leaders Scramble to Avoid Shutdown

House Republicans are under pressure to pass a stopgap federal funding measure that will prevent a government shutdown after Sept. 30. House Speaker Kevin McCarthy (R., Calif.) told members they should be prepared to remain in D.C. through the weekend as the deadline quickly approaches.

• McCarthy is eyeing Thursday for a House vote on a continuing resolution, a short-term funding measure that would avert a shutdown. A group of GOP lawmakers on Sunday said they had reached an agreement through the end of October that cuts 1% from current spending.

• But McCarthy faces resistance from within the GOP, including about 12 lawmakers who don’t support the continuing resolution. It doesn’t include extra money for Ukraine or disaster relief but does include a border crackdown the Biden administration opposes.

• The bill as proposed also has little chance of passing the Senate, where Democrats hold a thin majority. Sen. Majority Leader Chuck Schumer said it wasn’t a serious proposal, calling it “slapdash” and “reckless.” Treasury Secretary Janet Yellen said Monday she sees no reason for a government shutdown.

• Congress is trying to take up the 12 annual appropriation bills that fund the government. Members of both parties in both chambers have supported a temporary funding measure to give them more time to pass legislation and reach a full-year agreement.

What’s Next: A vote is even trickier for McCarthy because of medical- and family-related absences in the House, the Washington Post reported. He needs 218 Republican votes for the bill to pass, but his four-vote margin could shrink as members undergo medical treatment or have other absences.

—Liz Moyer

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Be sure to join this month’s Barron’s Daily virtual stock exchange challenge and show us your stuff.

Each month, we’ll start a new challenge and invite newsletter readers—you!—to build a portfolio using virtual money and compete against the Barron’s and MarketWatch community.

Everyone will start with the same amount and can trade as often or as little as they choose. We’ll track the leaders and at the end of the challenge the winner whose portfolio has the most value will be announced in The Barron’s Daily newsletter.

Are you ready to compete? Join the challenge and pick your stocks here.

***

—Newsletter edited by Liz Moyer, Brian Swint, Rupert Steiner and Steve Goldstein