Main subjects of the day
US index futures rose on Wednesday morning, recovering from the eve’s losses, with investors bracing for the Fed’s decision on interest rates.
By 8:21 AM, Dow Jones futures were up 60 points, or 0.18%. S&P 500 and Nasdaq-100 futures were up 0.29% each.
At 8:28 am, the 10-year Treasury bond yield was trading at 3.413%. The 2-Year Treasury traded at 3.949%.
After yesterday’s market close, Ford beat analysts’ expectations in its latest quarter, as did Starbucks. However, both stocks are falling premarket. Advanced Micro Devices Inc also fell after issuing a warm outlook. The earnings season continues, with the disclosure of figures for CVS Health, Yum Brands, Philips 66, Estée Lauder and Spirit AeroSystems, before the opening of the market. After the closing, numbers are expected from Qualcomm, Albemarle, SolarEdge, Mercado Libre, SunRun, Fastly, Marathon Oil, Etsy, among others.
On Tuesday, the Dow fell 367.17 points, or 1.08%, to close at 33,684.53 points. The S&P 500 fell 1.16% to close at 4,119.58 points. The Nasdaq Composite fell 1.08% to close at 12,080.51 points. The segment of regional banks listed on the NYSE retreated to the lowest level since the end of 2020, after the bankruptcy of the FRC raised questions, among operators, about the business model of these institutions. Yesterday, shares in PacWest Bancorp and Western Alliance Bancorp led the way, on investor fears about those banks’ business operations, asset-liability mismatch and uninsured deposits.
On Wednesday’s economic agenda, the anticipation of the FOMC’s decision is taken with great caution. If the turbulence seen in the banking system in recent months confirms the end of the cycle of high interest rates, it is not expected that the speech of the decision or Powell in his speech make that clear. Most economists polled by Reuters expect the Fed to hike rates by 25 basis points, with the rest predicting a break. Attention also turns to indications of the Federal Reserve’s next steps. With inflation still very high in the cores and a heated job market, the Fed should seek to leave greater degrees of freedom for its next decisions, not anticipating its next move.
Hiring at private companies unexpectedly increased in April, defying expectations of a cooling labor market ahead, ADP reported. Private payrolls rose by 296,000 for the month, up from a downwardly revised 142,000 a month earlier and well above the Dow Jones estimate of 133,000. The gain was the biggest monthly increase since July 2022. According to ADP, the fastest job growth in April was in leisure and hospitality, with a gain of 154,000, followed by education and health services (69,000) and construction (53,000). Other sectors that posted solid gains included natural resources and mining, with 52,000, and commerce, transport and utilities, which added 32,000.
Other important economic data for today, in addition to the Fed Interest Rate decision, are Services PMI (10:00 am) and Oil and Gasoline Inventory Change (10:30 am). The Services PMI is expected to show a reading of 53.7 last month, which is in line with the previous month. April ISM Non-Manufacturing PMI data is forecast to show 51.8, according to Dow Jones consensus estimates. That’s higher than the previous month’s reading of 51.2.
Wall Street Corporate Highlights for Today
PacWest (NASDAQ:PACW), Western Alliance (NYSE:WAL) – Regional bank stocks were poised to extend their losses for the week on Wednesday morning. PacWest shares were down 4.6% in premarket trade after falling nearly 28% on Tuesday. Western Alliance fell more than 3% after losing 15% on Tuesday. Stocks are under pressure amid renewed concerns about the sector’s health.
Airbus (USOTC:EADSY) – Airbus SE delivered around 55 planes in April, according to a person familiar with the matter, as the world’s biggest plane maker continues to struggle with supply shortages that have slowed production. The April number represents a drop of about 10% from the 61 deliveries in March, undermining CEO Guillaume Faury in his target to increase deliveries to 720 jets this year.
Eli Lilly (NYSE:LLY) – Shares in Eli Lilly rose more than 6% in premarket trade after the company’s Alzheimer’s treatment donanemab significantly slowed the progression of the mental illness, according to data of clinical trials released on Wednesday by the company.
Biogen (NASDAQ:BIIB) – The biotech company was down about 4% on Wednesday after Eli Lilly released its Alzheimer’s drug trial data. Biogen reported earnings last week, hitting a $3.40 per share, while analysts polled by StreetAccount had forecast $3.28. The company recently received authorization from the Food and Drug Administration for an ALS treatment drug.
CVS Health (NYSE:CVS) – CVS Health announced the completion of its $10.6 billion acquisition of primary care company Oak Street Health on Tuesday following a last-minute deal to raise $5.0 billion to finance the transaction.
Icahn Enterprises (NASDAQ:IEP) – According to the brief report released on Tuesday, Hindenburg has taken a short position on Icahn Enterprises units and claims that IEP units are “inflated”. Icahn responded to the report in a statement, saying, “We believe the short seller report published by Hindenburg Research was solely intended to generate profits on the short Hindenburg position at the expense of long-term IEP unit holders.”
Alphabet (NASDAQ:GOOGL) – Leading Google technology executives from Alphabet, Microsoft (NASDAQ:MSFT), OpenAI and Anthropic will meet with Vice President Kamala Harris and other senior Biden administration officials on Thursday to discuss pressing issues related to artificial intelligence. The invitation noted President Biden’s expectation that companies “must ensure their products are safe before making them available to the public.”
Revlon (USOTC:REVRQ) – Revlon, Inc has announced that it is exiting bankruptcy protection following a successful restructuring and will be renamed Revlon Group Holdings LLC. According to the new private entity, it reports about $236 million in liquidity and has eliminated more than $2.7 billion of debt from its balance sheet.
Chegg (NYSE:CHGG) – Shares of the online book rental rallied 6.2% on Wednesday, after falling as much as 48% a day earlier. The company noted concern about the rise of artificial intelligence as a threat to the core business in its earnings conference call. CEO Dan Rosensweig also said the panic that sent stocks tumbling was “extraordinarily exaggerated”.
IBM (NYSE:IBM) – International Business Machines Corp CEO Arvind Krishna said the company expects to stop hiring for jobs it believes could be replaced by artificial intelligence in the coming years. Hiring in administrative roles – such as human resources – will be suspended or delayed, and that would mean around 7,800 jobs lost.
Earnings
Ford Motor (NYSE:F) – Ford was down about -0.42% premarket after beating analysts’ expectations on first-quarter results. However, the company reiterated its previous full-year outlook for adjusted earnings of between $9 billion and $11 billion, as well as about $6 billion in adjusted free cash flow.
Starbucks (NASDAQ:SBUX) – Starbucks shares were down nearly 5% in premarket trading. The coffee chain beat analysts’ expectations on both revenue and results, reporting adjusted earnings of 74 cents a share, above the estimate of 65 cents a share, according to Refinitiv. Revenue was $8.72 billion, beating the forecast of $8.4 billion.
Clorox (NYSE:CLX) – Clorox was flat in premarket trading after beating analyst expectations on third-quarter results. The consumer products company reported fiscal third-quarter adjusted earnings of $1.51 per share on revenue of $1.91 billion. Analysts polled by Refinitiv had expected earnings of $1.22 per share and revenue of $1.82 billion.
Match Group (NASDAQ:MTCH) – Match Group shares were flat premarket after reporting first-quarter earnings that exceeded expectations, according to consensus estimates from Refinitiv. However, the online dating company missed analysts’ revenue estimates.
Advanced Micro Devices (NASDAQ:AMD) – Shares fell more than 7% premarket after Advanced Micro Devices issued a weaker-than-expected second-quarter revenue outlook. Otherwise, the company beat analysts’ expectations in its first-quarter results, according to Refinitiv.
Yum China (NYSE:YUMC) – Yum China rose 2.4% premarket after the China-based fast-food company beat analysts’ first-quarter earnings and revenue expectations. Yum China reported adjusted earnings of 69 cents per share on revenue of $2.92 billion. Analysts polled by Refinitiv had expected earnings per share of 46 cents and revenue of $2.77 billion.
Caesars Entertainment (NASDAQ:CZR) – Caesars Entertainment was flat in premarket after missing analysts’ first-quarter earnings expectations. The casino giant posted a loss of 63 cents a share, far more than analysts’ forecast of a loss of 1 cent a share, according to Refinitiv. Other than that, it reported revenue of $2.83 billion, beating the forecast of $2.76 billion.
CVS Health (NYSE:CVS) – CVS shares fell more than 1% premarket after it reported first-quarter results that beat earnings and revenue expectations, but the company lowered its full-year profit forecast due to costs related to recent acquisitions. CVS lowered its 2023 adjusted earnings outlook to a range of $8.50 to $8.70, 20 cents lower than its previous forecast of $8.70 to $8.90.
Yum Brands (NYSE:YUM) – Shares in Yum Brands fell more than 2% in premarket trade after reporting quarterly earnings that fell short of analyst expectations despite a rebound in China sales for KFC and Pizza hut. The company said its earnings per share declined 7 cents per share due to reductions in the value of unidentified investments and was hit by 8 cents per share because of foreign currency.
Generac (NYSE:GNRC) – The energy technology company gained 6.5% after quarterly earnings beat analyst expectations. Generac reported an adjustment of 63 cents per share versus an expected 48 cents, according to StreetAccount.
Market vision
Cogent (NASDAQ:CCOI) – Shares in the communications and internet company rose 2.8% after a Bank of America lift. Cogent said on Tuesday it had closed a plan to acquire Sprint’s wireless network from T-Mobile.
Pearson (NYSE:PSO) — Pearson stock soared more than 8%. The stock was double-uplifted to buy from underperform by Bank of America, which said Tuesday’s share sale, which followed a sharp decline in Chegg amid AI concerns, was “excessively harsh”.