Stocks moving after the closing bell: Kraft Heinz, Microsoft, Party City, Celsius

Yahoo Finance Live checks out the performance of several trending stocks following Wednesday’s closing bell.

Video Transcript

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DAVID BRIGGS: All right, were just a few minutes away from the closing bell. Let's bring in Yahoo Finance's Jared Blikre to break down the market action. What are you seeing, brother?

JARED BLIKRE: Yeah, we kind of got a new trend this year, where the Dow is now no longer outperforming the NASDAQ. We got the NASDAQ is the outperformer here, though you'll see everything is down. Dow down almost 2%. And let's take a look at what's happening inside the market. This is the sector action for today.

And the mega caps really are the least dirty shirts in the laundry basket. Everything there off more than 1%, XLC, XLY, XLK. But then at the bottom side, XLP, that's staples and utilities, that's bringing in the rear. Also, financials a little bit weak with all the earnings out, PNC weighing on the market, down about, what was it, 5% or so?

But I'm here to talk about chip stocks first. First of all, semiconductors have roared to life this year-- you wouldn't know it from this-- but much-- doing much better than the software sector. These, of course, are very cyclical. And let's take a look at that year-to-date performance here.

You can see Taiwan Semi, ASML each up 20%. Nvidia right there on its heels with 19%. And then contrast the colors, the colors only with what we're seeing in the software space. So just wanted to point that out.

Now I've got to move on to Moderna and the pharmaceutical-- excuse me-- the pharmaceutical space. Let me just pull up what we're seeing today, and Moderna's up 3%. You can see in a sea of red, it is an outperformer today.

And that is because it delivered results for a late-stage trial of RSV. This is a new vaccine which is used to prevent lung disease in the elderly. Now, if the FDA eventually grants approval, it would be the company's second vaccine after its COVID vaccine with which it was first to market.

All right. And also going to take a look at Yeti because this is another stock on my radar today. I was at the IPO a number of years ago down at the New York Stock Exchange, got some nice swag, thank you. And that-- and that stock, well, let's just take a look at the performance here. We can see it's down 7%. Cowen just downgraded the stock to market perform from outperform. And this is because of a slowdown in visitor traffic to its website.

And that's where it sells those colorful coolers and branded drinkware. Now, Cowen is saying that similar web unique visitor traffic over the December month, that was down 3%, but the analyst likes the direct-to-consumer channel which remains a key driver of sales and margin. Cowen has a price target of $47 on the stock. And let's take a look at another heat map as we head into the closing bell, which is right now on Wall Street.

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SEANA SMITH: All right, that marks the end of the trading day, all three of the major averages closing in the red. The Dow off 614 points, right around the lows of the session. Looking at the S&P, off just about 1 and 1/2%. The NASDAQ off just over 1% as well.

Well, taking a look at some of the biggest movers of the day, we first want to take a look at the worst-performing sector and that was consumer staples. Taking a look at that drop, retail sales data coming in for December worse than expected. You're looking at XLP, consumer staples sector off nearly 3% today. Kraft Heinz is a top trending ticker on Yahoo Finance, one of the worst performers in that segment today, finishing off just over 6%.

And, Dave, the theory here is that drop that we're seeing in December sales, what that means for consumer spending going forward. We know so many of these consumer staple names were able to pass along higher costs to the consumer over the course of 2022 when we certainly did see a resilient consumer. So as the recession looms, potentially, the fact that the econ landscape is getting worse, they might not be able to pass along that higher price, and that could mean we could see a bit of a pullback here in some of those names that performed OK in 2022.

DAVID BRIGGS: Yeah, really outperformed just about everything on the market, did Kraft Heinz. And at first glance, I thought this cannot possibly be true. Maybe Kraft Heinz is isolated. Then you go down the list of fellow-- Conagra, Hormel, Campbell's Soup, McDonald's, and Coca-Cola, and General Mills all took a beating today. So clearly, this does emerge as a theme.

But it really makes no sense to me, Seana. I feel like, again, Tom Hanks in "Big," my favorite GIF. I don't get it because even in a recessionary environment, you still got to go to the grocery store. And those companies like Coca-Cola that were able to pass on higher costs throughout '22, I just don't see that dynamic changing.

You're still going to go to McDonald's. You're still going to get your Campbell's Soup, your Mac and Cheese, your ketchup, your Oscar Meyer. All these companies are not things you're going to trade down.

I'm really having a hard time buying this continuing throughout the year as a theme, although we're clearly seeing it today. We did see, by the way, in the Beige Book retailers said they had increased difficulty in passing through costs. So that goes back to your narrative. The only explanation is they're going to have to trim their margins somewhat.

SEANA SMITH: Yeah, exactly. And what that pressure will look like on margins in the coming quarters. And then, of course, given the valuations today, I think that's some of the reason why we're seeing such a big drop in some of those stocks this afternoon.

DAVID BRIGGS: All right. Microsoft shares finishing the day lower after the company announced it would be laying off about 5% of its workforce. And you can see shares down about 2%. Generally speaking, when we have the narrative of trimming headcount and cost cutting, you'll see investors cheer that news, not the case, of course, because this is more of a macro look at what's ahead for big tech.

And it could be a rough at least quarter or two, although Dan Ives, just a short time ago from Wedbush, told us he sees a great environment by year-end for big tech, including most FAANG stocks, the potential for a 10% increase. But in the short term, very difficult environment for companies like Microsoft, and it won't be surprising if we're going to see another round of layoffs. But layoffs really haven't extended beyond big tech. It seems like we're going to be isolated there for the short time.

SEANA SMITH: Yeah, they haven't yet. And to quote Dan Ives, he was saying that some of these tech giants, "they were spending like 1980s rock stars to keep pace with that eye-popping demand," so no surprise here that we are seeing a pullback in some of that spending and the fact that these tech giants have to correct their headcount after going on a massive hiring spree over the last 2 and 1/2 years.

I think the stock reaction, though, was something to note, the fact that the stock was-- still closed the day off just about 1%, but, of course, a move lower, as we did see with the broader market. The question going forward, what these earnings reports are going to look like over the coming weeks. We'll hear from Microsoft next week. Revenue there is expected to be the slowest revenue growth that we have seen in six years. But like you said, many on the Street remain positive on the sector, remain bullish on Microsoft.

Dan Ives has an outperform rating despite the fact that he's saying we're up against a "category five near-term economic storm," a price target of $290, saying that Microsoft is spending in the right space. One of the big bullish points that he made was he likes the move that they had, the partnership that they have with ChatGPT and thinks that that makes a heck of a lot of sense, but we'll see.

DAVID BRIGGS: Really enhances their cloud play. He was very colorful in the jacket and very colorful in the narratives as well today. Just another one of those companies that ramped up hiring way too high during the pandemic, up 22% in one year, and up 75,000 from 2019 levels. Just got a trim back to normal.

SEANA SMITH: All right, let's take a look at Party City because shares halted today after the company filed for chapter 11 bankruptcy prior to the opening bell. But the party, it isn't over just yet hopefully, the specialty retailer planning to keep operating over 800 stores and its online store as part of its turnaround strategy.

Now, this restructuring plan, it calls for bondholders to swap their holdings for equity in the reorganized company, also calls for existing stock to be canceled, no recovery for shareholders. This, of course, has to be approved, but the listed assets, Dave, a billion to $10 billion, and then liabilities in the same range there, a billion to $10 billion, really just speaks to the position that Party City is in today.

DAVID BRIGGS: Yeah, $150 million in financing, and you can't help but wonder if there is a plan. They're going to have to trim some of those stores from 800, maybe cut that in half. There is a massive dent in commercial real estate coming to this country, given if Party City doesn't make it through this and Bed Bath & Beyond as well, you're looking at almost 1,500 massive real estate structures.

But what really hurt them, so many factors, helium shortage, inflation. And I really think that the pop-up nature of the Halloween stores around the country took a dent out of their single biggest opportunity which was Halloween, and they said those numbers were lower, far lower than they expected. Perhaps there is a plan to reemerge.

Want to finish up with Celsius, the energy drink finishing the day down after the drink company lost a battle in court with rapper-- you know him as Flo Rida. A jury awarded Flo Rida $82 million in damages after he alleges Celsius breached an endorsement contract tied to the company's revenue that dated back to 2014. Really confused here why the stock took such a beating, down almost 10%, as you can see.

Clearly $82 million in damages is nowhere near enough to dent a company that currently-- and this might shock you for people that don't follow Celsius-- that is an $8 billion market cap company. They have exploded in the last year, the stock up 120% last year, largely on the heels of $500 million investment from PepsiCo. But Flo Rida got his cash.

SEANA SMITH: Flo Rida did get the pay that he was looking for there. Their revenue growth has been absolutely astounding when you take a look at some of these numbers. The first nine months of 2022, the company said that the revenue growth was up 136% year-over-year.

For fiscal year 2021, that growth looks like 140%. 2019, up 74%. You talk about the massive upswing that we've seen in the stock certainly can be backed up by this revenue growth and got to question whether or not growth like that is going to be sustainable.

DAVID BRIGGS: Sustainable?

SEANA SMITH: Yep. You wouldn't think so.

DAVID BRIGGS: I start most of my days with the Celsius. Man, it's good stuff.