US Index Futures fell ahead of speeches by Federal Reserve members and the publication of inflation data this week, which could provide hints on the outlook for the economy and monetary policy. The mood is also reinforced by an unexpected drop in imports from China.
By 8:24 AM, Dow Jones futures were down 103 points, or 0.31%. S&P 500 and Nasdaq-100 futures fell 0.34% and 0.49%, respectively.
Investors are following speeches by US central bank officials today, including Fed Governor Philip Jefferson at 8h30 am and New York chairman John Williams at 12h05 pm, ahead of the release of inflation data, the CPI report for April which will be released on Wednesday, followed by the producer price index on Thursday. In April, headline inflation is estimated to have increased by 0.4%, keeping the annual rate at 5%. Core inflation should rise 0.4%, reducing the annual rate from 5.6% to 5.5%. Meanwhile, producer prices are expected to grow by 0.3% per month, possibly lowering annual inflation from 2.7% to 2.5%.
US President Joe Biden is due to meet with congressional leaders this afternoon to discuss raising the country’s $31.4 trillion debt limit or risk a historic default on US debt and other government payments. Earlier, Treasury Secretary Janet Yellen said not to raise the debt ceiling would be an “economic catastrophe” and that regulators are not close to any policy limiting the short selling of shares in regional banks.
Imports from China fell a lower-than-expected 7.9%, raising questions about the strength of the economic recovery in the world’s second-largest economy.
On Monday, the indices had a lukewarm session. The Dow Jones Industrial Average fell 55.69 points, or 0.17%, to 33,618.69 points. The S&P 500 was little changed with a small gain of 0.05% to close at 4,138.12 points. The Nasdaq Composite rose 0.18% to 12,256.92 points. The index of regional banks fell 2.82% on the Nasdaq, undoing part of the strong gains registered on Friday, day of recovery for the sector. At Berkshire’s annual shareholders’ meeting on Saturday, the legendary investor, 92, and his partner Charlie Munger, 99, spoke about succession and the recent banking turmoil in global markets.
On Tuesday’s earnings schedule, traders are digesting reports from Nikola, AMC Networks, Novavax, Under Armour and Coty ahead of the market open. After closing, results are expected from Airbnb, Rivian, Occidental Petroleum, Twilio, Affirm, Upstart, Wynn Resorts, among others.
Wall Street Corporate Highlights for Today
Nintendo (USOTC:NTDOY) – Nintendo expects to sell 15 million units of its Switch console in the current fiscal year, below analysts’ average estimate of 15.7 million units. The downturn of the 2017-released hybrid console is coming more quickly than the company anticipated, and there are no plans for an imminent successor. The company faces increasing competitive pressure from Sony (NYSE:SONY), which plans to sell more than 25 million PlayStation 5 units this year.
Microsoft (NASDAQ:MSFT) – Microsoft’s LinkedIn will close its China jobs app, eliminating about 716 jobs. The company cited intense competition as the reason for phasing out local jobs app InCareer through August, while scaling back functions such as sales and marketing.
Goldman Sachs (NYSE:GS) – Goldman Sachs has agreed to pay $215 million to end a long-running class-action lawsuit that accused the bank of systematically discriminating against women. The agreement includes the hiring of an independent expert to analyze the performance appraisal and promotion processes.
Goldman Sachs (NYSE:GS), Microsoft (NASDAQ:MSFT) – Goldman Sachs, Microsoft, Deloitte and Cboe Global Markets, along with other companies, plan to launch the Canton Network, a blockchain-based system that will connect various institutional applications. Participants say the network offers more privacy and control, with scalable performance suitable for financial institutions. Feature testing will begin in July.
Disney (NYSE:DIS) – On Monday, Disney expanded its federal lawsuit against Florida Governor Ron DeSantis, accusing the Republican leader of doubling down on his “payback campaign” against the company by signing legislation to overturn the Disney development deals in Orlando.
Occidental Petroleum (NYSE:OXY) – Occidental Petroleum has begun to repurchase $10 billion of preferred stock in Berkshire Hathaway Inc (BRK.B). Occidental issued “mandatory redemption notices” of $474 million in preferred stock at a price of 110% of liquidation value plus dividends in March, Berkshire said in its quarterly report.
Boeing (NYSE:BA) – Boeing Co is close to winning a major order from Ryanair Holdings Plc (RYAAY) for around 150 of its largest 737 Max aircraft. The deal, which should be announced later this Tuesday, would be for the 737 Max 10 model, with a possible addition of 50 options, according to Bloomberg.
Qualitas Ltd (ASX:QAL) – Qualitas Ltd. received up to A$1 billion to incrementally invest in Australian commercial real estate through private lending. The company has reached an agreement with an unnamed global investor to receive an initial A$220 million, with an additional A$780 million subject to further approvals.
Baidu (NASDAQ:BIDU) – Baidu is launching its first smartphone to complement its internet services and expand its hardware ecosystem. The Xiaodu unit, similar to Amazon’s Alexa, will introduce the phone next week. The Chinese company has already developed smart speakers and displays for the home, and calls its conversational artificial intelligence system devices DuerOS.
Credit Suisse (NYSE:CS) – UBS Group AG (NYSE:UBS) has tapped Ulrich Koerner, CEO of Credit Suisse Group AG, to lead oversight of the rival bank’s operations. He will be instrumental in integrating Credit Suisse’s operating businesses, according to a statement released on Tuesday.
JPMorgan Chase (NYSE:JPM) – JPMorgan Chase has claimed that former executive Jes Staley repeatedly thwarted its efforts to sever ties with late sex offender Jeffrey Epstein, according to the Financial Times. The claims were made in a lawsuit filed by JPMorgan against Staley in an attempt to hold him accountable for any penalties the company may have to pay if it is found to have facilitated Epstein’s sex trafficking crimes in two other high-profile lawsuits.
Tesla (NASDAQ:TSLA) – CEO Elon Musk has teamed up with Texas Governor Greg Abbott to begin construction on the electric vehicle maker’s new lithium refinery in Corpus Christi, Texas. Tesla plans to invest $375 million to build the Gulf Coast facility, and expects the new factory to produce enough battery lithium to build 1 million electric vehicles by 2025.
Amazon (NASDAQ:AMZN) – Amazon announced that is distributing its original movies and shows to outlets other than Prime Video. Amazon MGM Studios Distribution will develop programming to allow consumers to rent or purchase the content on other services and even on airplanes. It will also license the shows to foreign TV networks.
IBM (NYSE:IBM) – IBM is betting on artificial intelligence. At its annual Think conference, the company announced IBM Watsonx, a new platform that provides tools to build AI models and provide access to pre-trained models to generate computer code, text and more. “AI may not replace managers, but managers who use AI will replace managers who don’t,” said Rob Thomas, chief commercial officer at IBM. At the same time, IBM is partnering with HuggingFace, an artificial intelligence startup and open source platform that reached a $2 billion valuation last year.
Earnings
Lucid (NASDAQ:LCID) – The electric vehicle maker was down more than 8% premarket after the company posted mounting losses in the first quarter, but said it has enough cash to continue operating next year. The company missed revenue expectations, posting $149.4 million against a consensus estimate of $209.9 million from analysts polled by Refinitiv.
Palantir Technologies (NYSE:PLTR) – Software stocks soared more than 18% premarket after Palantir beat analysts’ first-quarter expectations and issued bullish outlooks. Palantir reported 5 cents of adjusted earnings per share on $525 million in revenue, while analysts polled by Refinitiv predicted 4 cents of earnings per share and $506 million in revenue. The company also provided a strong outlook for full-year profitability.
PayPal (NASDAQ:PYPL) – Shares are down about 4.4% premarket. PayPal issued weak expectations for earnings per share for the current quarter, while raising its full-year outlook for the metric. Separately, the digital payments company beat expectations on first-quarter results and revenue, according to Refinitiv.
Skyworks (NASDAQ:SWKS) – Semiconductor stock is down more than 10% in premarket trading. Skyworks said its business fundamentals remained strong in the second quarter despite the challenging backdrop, but steered third-quarter earnings and revenue to come in below Wall Street expectations. The company posted second-quarter earnings of $2.02 a share, excluding items, in line with analyst expectations, according to Refinitiv. Revenue was also in line with the Wall Street forecast.
Saudi Aramco – Saudi state-owned oil giant Aramco on Tuesday reported a 19% drop in its first-quarter earnings, posting a net profit of US$31.9 billion, down from US$39.5 billion a year ago, in amid falling oil prices. The company’s net profit increased 3.75% compared to the fourth quarter.
Novavax (NASDAQ:NVAX) – Novavax rose 3.4% premarket after reporting first-quarter earnings, showing a loss of $293.9 million, or $3.41 per share, after earnings of US$ $203.4 million, or $2.56 per share, in the prior year period. Revenue dropped to $80.9 million from $703.9 million. The FactSet consensus was for a loss of $3.46 and revenue of $87.6 million. The company also announced a restructuring plan that includes a 25% reduction in its global workforce.
3D Systems (NYSE:DDD) – 3D Systems fell 9.8% after posting disappointing first-quarter results. The 3D printer maker reported an adjusted loss of 9 per share and revenue of $121 million. Analysts had forecast a loss per share of 7 cents on revenue of $128 million for Refinitiv. In addition, the company cut 6% of its workforce. It also reaffirmed its full-year revenue guidance, although it raised its full-year adjusted EBITDA forecast.
Under Armor (NYSE:UAA) – The apparel company’s stock was down nearly 5% in premarket trading despite Under Armor’s fiscal fourth quarter results beating earnings expectations, according to Refinitiv. However, the company’s full-year outlook for revenue and earnings per share fell short of expectations. Under Armor projects earnings of between 47 cents a share and 51 cents a share next year, compared with the 61 cents expected by analysts, according to StreetAccount.
Fisker (NYSE:FSR) – Fisker fell 12.5% premarket after first-quarter earnings missed estimates. The auto company posted a larger-than-expected loss of 38 cents a share, while analysts estimated a loss of 30 cents a share, according to Refinitiv.
Trex Company (NYSE:TREX) – Trex Company jumped 4.8% in premarket trade after beating analyst expectations in the first quarter and issuing better-than-expected revenue guidance in the second quarter. The maker of alternative wood decking and railings expects second-quarter revenue of between $310 million and $320 million, while analysts forecast a projection of $309.0 million, according to FactSet.
McKesson (NYSE:MCK) – McKesson rose 4.6% after reporting better-than-expected quarterly results. The company reported adjusted earnings of $7.19 per share, beating only StreetAccount’s forecast of $7.18 per share. The company issued revenue of $68.91 billion, above estimates of $68.08 billion.
Market view
IAG (LSE:IAG) – Analysts are raising their price targets for British Airways parent IAG SA amid a rebound in air travel. Nine analysts raised their expectations for the stock’s performance last month, with the Liberum analyst predicting a 133% rebound over the next year. IAG’s high full-year earnings outlook and falling oil prices are helping the sector recover quickly from the depths of the pandemic crisis.
Western Digital (NASDAQ:WDC) – Western Digital stock rose about 2% in premarket after the company reported a revenue overrun in the last quarter. Investors seemed to ignore the larger-than-expected quarterly loss. Wedbush reiterated its outperform rating Tuesday after the earnings report, with optimism about its upside potential as well as its belief that investors like Elliott and Apollo will eventually drive a strategic outcome for the stock.