Hot Stocks: FDX soars; Chinese EV stocks rise; cruise stocks hit 52-week lows; CLR takeover bid; OM falls

Uncertainty ahead of the Federal Reserve’s next interest rate announcement led to a choppy session on Tuesday. Following two days of massive declines, the major U.S. equity indices ended the day mixed, as investors waited to see what the central bank would do.

While the overall market showed a lack of direction, Chinese EV stocks rallied. Nio (NIO), Li Auto (LI) and XPeng (XPEV) climbed on hopes that easing COVID restrictions would allow production to get back to normal.

FedEx (NYSE:FDX) represented another standout winner on the session. A raised dividend and a deal with an activist investor prompted a double-digit percentage advance in the package delivery giant.

Meanwhile, a takeover deal spurred buying in Continental Resources (CLR), which jumped to a new 52-week high.

Turning to some of the day’s standout decliners, Outset Medical (OM) lost more than a third of its value after halting shipments of a key product. At the same time, concerns about a potential recession sparked selling in travel stocks, with cruise companies Carnival (CCL), Norwegian Cruise Line Holdings (NCLH) and Royal Caribbean (RCL) reaching new 52-week lows.

Sector In Focus

Hope for a COVID recovery in China sparked a rebound in Chinese electric vehicle stocks, allowing the sector to recover some of the losses it has posted in recent days.

The rally came as Chinese authorities signaled increasing auto production in Shanghai, as the city saw more than 96% of industrial businesses back in operation.

Nio (NIO) led the group higher, jumping by 16%. This reversed a large chunk of the losses posted over the previous few days. The stock had dropped nearly 22% over a three-day slide headed into Tuesday’s trading.

Li Auto (LI) and XPeng (XPEV) also showed notable gains. The stocks climbed 11% and 8%, respectively.

Standout Gainer

FedEx (FDX) attracted significant buying interest after hiking its dividend and reaching an agreement with activist investor D.E. Shaw. The news sent the stock higher by more than 14%.

FDX revealed that it has raised its dividend by 53%. At the same time, the shipping giant announced two additions to its board of directors, part of its deal with Shaw.

Bolstered by the news, FDX climbed $28.91 to close at $229.95. With the advance, the stock jumped above a recent trading range to record its highest finish since late March.

Standout Loser

Shares of Outset Medical (OM) fell off a cliff on news that it has halted shipments of its Tablo product as it waits for regulatory action. The stock dropped 34% on the news.

The medical device maker paused shipments of its Tablo Hemodialysis System for home use, as it waits for the U.S. Food and Drug Administration to review and clear a 510(k) that the firm has submitted. The filing covers changes made since the product’s original clearance.

OM finished the session at $13.46, a decline of $6.95 on the day. Shares also touched an intraday 52-week low of $13.25. Looking longer-term, the stock has dropped 70% in the past six months.

Notable New High

A takeover offer sparked a rally in Continental Resources (CLR). Shares jumped 15% to reach a 52-week high.

Billionaire Harold Hamm proposed to purchase all shares of the shale driller that he and his family did not already own. The bid was valued at $70 per share, or a total of $4.3B. Hamm and his family currently own 83% of the company’s outstanding stock.

The bid represents a 9% premium over Monday’s closing price. However, shares surged by $9.72 to end at $74.22 — finishing well above the contemplated takeover amount. Meanwhile, Truist analyst Neil Dingmann said the company could be worth $95 a share.

Monday’s rally, which took the stock to an intraday 52-week high of $75.49, added to a longer-term advance. Shares have more than doubled over the past 12 months.

Notable New Low

Travel and leisure stocks fell on concerns that a flagging economy could lead to a renewed downturn in travel demand. As part of this, cruise operators Carnival (CCL), Norwegian Cruise Line Holdings (NCLH) and Royal Caribbean (RCL) all set new 52-week lows.

With experts predicting that the Fed will accelerate its rate-hiking campaign, recent polls show that 70% of people expect a recession next year. This tanking sentiment has raised worries about travel spending.

CCL dropped 4% to reach an intraday 52-week low of $9.41, before closing at $9.52. The stock has lost about two-thirds of its value over the past 12 months.

RCL and NCLH followed a similar pattern. They both dropped about 4% on the session to set new 52-week lows.

For more of the day’s best- and worst-performing stocks, click over to Seeking Alpha’s On The Move section.

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