US Index Futures were mixed with investors saying the Federal Reserve is likely to halt interest rate hikes due to inflation data cooling, as investors look further into economic data, the Producer Price Index and Initial jobless claims.
By 8:40 AM, Dow Jones futures were down 110 points, or 0.33%. S&P 500 futures were down 0.05%, while Nasdaq-100 futures were up 0.21%.
In April, the producer price index, which is the Federal Reserve’s preferred inflation gauge and measures wholesale prices, showed an increase of just 0.2%, resulting in a year-over-year increase of 2.3%. Economists polled by Dow Jones had predicted that PPI would have advanced 0.3% last month. In the week ended May 6, initial claims for unemployment benefits rose by 22,000 to 264,000, according to the Labor Department. That was the highest reading on unemployment since October 30, 2021.
Elsewhere, the pound eased its losses slightly after the Bank of England raised its interest rate to its highest level since 2008 and indicated further increases may be needed if inflation remains high. In addition, the BOE released the biggest update of UK growth forecasts since independence in 1997.
In China, overnight data showed that consumer prices rose at the slowest pace in more than two years in April. The consumer price index rose 0.1% year-on-year, after rising 0.7% in March, and was below the consensus 0.4%. Deflation at factory gates deepened, down 3.6%, compared to a 2.5% drop in the previous month. The indicator was also below consensus.
Assimilating the data that suggest skepticism with the demand perspective, the iron ore futures contract yielded 3.5%, to 698.50 yuan, the equivalent of US$101.05 a ton. In Singapore, the contract returned to a level below US$100, ending with a drop of 3.7%, at US$99.50.
At Wednesday’s close, the Dow fell 0.09%, or 30.48 points, to close at 33,531.33 points. The S&P 500 added only 0.45% to close at 4,137.64 points. The Nasdaq Composite rose 1.04% to close at 12,306.44 points. Names like Amazon, Apple and Microsoft boosted the Nasdaq. Other stocks that stood out were Airbnb, which fell after more cautious guidance for second-quarter sales. US consumer prices rose 0.4% in April, with CPI up 4.9% year-on-year. At the same time, the core index also rose by 0.4%. Thus, the numbers came in line with market expectations. On the negative side, the US debt talks and the possible consequences of a default heighten investor caution.
On the earnings front, Walt Disney Co slipped premarket after predicting a bigger loss for its streaming service this quarter while Robinhood Markets Inc surged after better-than-expected results from the trading platform. Other quarterly results are being released ahead of Thursday’s market open, with JD.com, Fiverr, Krispy Kreme, Yeti, Tapestry to name a few. After the closing, the results of Petrobras, Direct Digital, SoundHound, Cemtrex, among others, are awaited.
Wall Street Corporate Highlights for Today
PacWest (NASDAQ:PACW) – PacWest stock was down 20% in premarket trading after the regional bank said its deposits were down 9.5% during the week to May 5, citing that most of those outflows came after media reports that the bank was exploring strategic options. PacWest shares are already down 40% this month and more than 70% for the year.
Wendy’s (NASDAQ:WEN) – The CEO of Wendy’s announced the fast-food chain’s partnership with Google, saying artificial intelligence is the “first step” towards more technological change in restaurants. The chain will test an AI chatbot for drive-thru orders at select locations in Columbus starting in June, with the goal of eliminating speakerphone slowdowns and improving the customer experience. Yesterday Wendy’s reported total revenue of $528.8 million, up 8.2% year-over-year, better than the consensus estimate of $522 million. The company’s earnings per share of 21 cents was 1 cent higher than expected.
Alphabet (NASDAQ:GOOGL) – Google on Wednesday unveiled its latest lineup of hardware products, including its first foldable phone and a new tablet, as well as plans to roll out new AI capabilities to its search engine and search tools productivity.
Intel (NASDAQ:INTC) – Intel Corp and Boston Consulting Group have partnered to sell generative artificial intelligence tools to large enterprises. Generative AI technology is responsible for chatbots like OpenAI’s ChatGPT. The partnership aims to help BCG employees use its half-century-old archives more efficiently, enabling AI to answer questions or summarize entire documents.
Taiwan Semiconductor Manufacturing (NYSE:TSM) – Taiwanese chipmaker TSMC said the war in Ukraine had impacted its costs, but customers need not worry about price increases. The company expects global chip growth excluding memory to fall into the mid-single-digit percentage range, according to Reuters. The automaker is focusing on advanced chips for customers like Apple and sees growth opportunities in the electrification and automation of the auto industry, as well as AI and 5G.
Microsoft (NASDAQ:MSFT) – Microsoft entered into an agreement with nuclear fusion company Helion Energy to receive electricity within about five years, making it the first commercial agreement of its kind. Nuclear fusion has the potential to provide energy without producing long-lasting radioactive waste, and several companies are investing billions of dollars in pursuit of net energy gains. The Helion plant is expected to be operational by 2028, with the capacity to generate 50 megawatts of energy or more.
Microsoft (NASDAQ:MSFT) – Microsoft will delay pay increases for its full-time employees, according to an email from CEO Satya Nadella. The decision aims to reduce costs amid the slowdown in revenue growth. In January, the company announced the elimination of about 10,000 jobs.
Shell (NYSE:SHEL) – Shell may announce a 38% increase in its quarterly dividend, from US$ 0.29 to US$ 0.40 per share, during a capital market presentation in June, according to RBC. The increase could be effective in the fourth quarter and follows Shell’s record profits in 2022. CEO will present strategy on capital markets day.
Eli Lilly (NYSE:LLY) – Eli Lilly CEO Dave Ricks vowed not to raise prices on the company’s insulin products again at a Senate Health Committee hearing. Senator Bernie Sanders asked the CEOs of the three companies that control more than 90% of the global insulin market to pledge never to raise the price of the drug again. Ricks was the only one to accept the demand, while the CEO of Novo Nordisk (NYSE:NVO) pledged to limit price increases to single digits, and the CEO of Sanofi (NASDAQ:SNY) stated that the company has a policy of responsible pricing and that the net prices of their insulin products are falling.
Merck (NYSE:MRK) – Merck has warned that its adjusted operating profits could decline as much as 10% this year due to the poor outlook for its specialty chemicals business. The company expects an EBITDA of between 6.1 and 6.7 billion euros in 2023, down from 6.8 billion last year. Demand for semiconductor materials is also expected to recover later and from a lower base than previously anticipated.
UBS Group AG (NYSE:UBS) – UBS appraisers reviewing the businesses of Credit Suisse Group AG have expressed concerns about some loan portfolios in high-growth Asian countries as the company decides which assets to liquidate. Concerns were raised that lending relationships in traditionally risky markets, including Vietnam, India, Malaysia and Indonesia, could result in asset sales. UBS is weighing options, including selling parts of its Asia credit portfolio to private debt companies or releasing the loans, according to Bloomberg.
Blackstone (NYSE:BX) – Blackstone Inc. is in talks with regional banks with assets of between $100 billion and $250 billion to form partnerships that would funnel loans to the company’s insurance clients, according to the Financial Times. Blackstone chairman Jon Gray has proposed that insurers pay the company a fee to direct assets to them and hold debt to maturity. The proposal expands on comments made by Gray in April, which highlighted the opportunity to partner with regional banks on a large scale. Blackstone is interested in products such as auto finance, home improvement loans and equipment finance.
Palantir (NYSE:PLTR) – In 2021, Palantir purchased over $50 million in 100-ounce gold bars, but now the company has sold all of its gold bars for a total proceeds of $51.1 million. At the time of the investment, Palantir chose a more conservative path by parking some of its extra cash in gold while other tech companies invested in bitcoin. The company did not explain the reason for the sale.
Apple (NASDAQ:AAPL) – Italian antitrust agency AGCM opened an investigation into Apple on Thursday for abusing its dominant position in the apps market. The company is accused of imposing a more restrictive privacy policy on third-party developers and offering them lower-quality data.
Foxconn (USOTC:FXCOF) – Foxconn, an Apple supplier, reported a 56% drop in its first-quarter net income to T$12.8 billion ($417.17 million). The world’s biggest electronics maker blamed a T$17.3 billion writedown on its 34% stake in Japanese electronics maker Sharp Corp. The company also said full-year visibility is “limited” due to global economic uncertainty.
Saudi Aramco – Saudi Aramco has postponed its planned initial public offering for the energy trading business in Riyadh, which could have been one of the world’s biggest equity sales this year (valued at over $30 billion). The company has not set a new timeline for the listing and it could be delayed until next year unless the market improves. Aramco wants more time to complete the integration of its main business unit with Motiva Enterprises before proceeding with the IPO.
Syneos (NASDAQ:SYNH) – An investment consortium led by Elliott Investment Management has agreed to take Syneos Health private for $4.46 billion. The acquisition, which includes debt, values Syneos at $7.1 billion. The company faces challenges in winning new business due to reduced customer spending amid the post-COVID crisis. Goldman Sachs, UBS Investment Bank and RBC Capital Markets are among some of the US banks that have agreed to finance the deal, which is expected to close in the second half of 2023.
Honda (NYSE:HMC) – Honda sees 19.1% rise in operating profit this year to ¥1.0 trillion ($7.4bn), driven by higher sales and stronger supply chain after failing analyst estimates in the last quarter.
General Motors (NYSE:GM) – GM will unify commercial vehicle sales, parts and telematics services operations under the GM Envolve brand. The reorganization aims to facilitate the negotiation of electric vehicles and combustion and registration in after-sales services.
Rivian (NASDAQ:RIVN) – Electric vehicle startup Rivian is betting it can keep prices high for its entry-level electric trucks and SUVs even as competition increases. The company is focusing on launching higher-priced, feature-packed models for its R1S SUVs and R1T pickup trucks to meet customer demand in the near term, increasing the average selling price (ASP), even as it offers a few variants. with lower prices, according to Reuters.
Livent (NYSE:LTHM) – Allkem Ltd (USOTC:OROCF) and Livent Corp announced on Wednesday that they will merge in a $10.6 billion share deal to create the world’s third-largest producer of lithium, a metal used to make electric vehicle batteries. Under the deal, which is expected to close by the end of 2023, Allkem shareholders will receive one share of the combined entity for each of their shares, and the company will have a 56% stake in the new company. The as-yet-unnamed new company will be listed on the NYSE and headquartered in the US, with CEO Jon Graves and Chairman Peter Coleman leading the way. Martin Perez de Solay of Allkem will become a consultant for the new company.
Earnings
Disney (NYSE:DIS) – Shares fell 5.7% premarket after the company posted mixed results for the second quarter of 2023. Profit was in line with estimates, while revenue slightly beat analyst estimates, according to data from Refinitiv. While the company said its losses on its streaming segment have eased, it has lost 4 million Disney+ subscribers.
Beyond Meat (NASDAQ:BYND) – Shares in the alternative meat maker fell -2.88% premarket after Beyond Meat posted better-than-expected first-quarter results. Beyond Meat posted a loss of 92 cents per share and $92.2 million in revenue. Analysts had forecast a loss of $1.01 per share on revenue of $90.8 million, according to Refinitiv.
Robinhood (NASDAQ:HOOD) – Shares in Robinhood rose 5.3% in premarket trade after it reported $441 million in first-quarter revenue, above the $425 million forecast by analysts, according to Refinitiv. Stock and options trading revenues increased from the fourth quarter, and monthly active users increased slightly to 11.8 million.
Unity Software (NYSE:U) – Shares of Unity Software soared 9.7% premarket after the company beat revenue estimates for the latest quarter, according to Refinitiv. Unity also shared stronger-than-expected guidance for the current quarter, saying it expects revenue to range between $510 million and $520 million.
Groupon (NASDAQ:GRPN) – Shares fell 4% after the coupon company posted lower-than-expected first-quarter revenue, according to Refinitiv. Groupon reported revenue of $121.6 million, while Wall Street forecast $134.9 million.
Sonos (NASDAQ:SONO) – Home stereo shares fell 23.4% premarket. Sonos posted a loss of 24 cents a share, while analysts polled by Refinitiv had forecast a loss of 18 cents a share. Sonos CEO Patrick Spence announced that the company is lowering its outlook for the second half of fiscal 2023 amid “softening consumer demand and tightness in channel partner inventory.”
Softbank (USOTC:SFTBY) – SoftBank posted a net loss of 970.14 billion yen for the fiscal year, lower than the 1.7 trillion yen loss in the same period a year earlier. The Japanese giant’s Vision Fund segment posted a loss of JPY 4.3 trillion ($32 billion) in its fiscal year ended March 31, versus a loss of JPY 2.55 trillion in the same period a year earlier.
Emirates Group – Emirates reported annual profit of US$3 billion, on revenue of US$32.6 billion and a 123% increase in passenger numbers to 43.6 million.
Applovin (NASDAQ:APP) – Applovin said it expects second-quarter revenue of $710 million to $730 million, above analyst forecasts of $695.7 million. The stock jumped more than 17% in premarket trading.
Tapestry (NYSE:TPR) – Tapestry rose nearly 10% premarket after parent company Coach and Kate Spade reported better-than-expected fiscal third-quarter earnings and raised the outlook.
The Trade Desk (NASDAQ:TTD) – Trade Desk stock rose 3.7% premarket after the advertising technology company reported adjusted earnings of 23 cents per share for the first quarter, beating estimates of 13 cents.
JD.com (NASDAQ:JD) – US-listed shares of JD.com rose 3.5% in premarket trade after the Chinese e-commerce giant’s first-quarter earnings beat analyst estimates and the company named a new chief executive.
Telefonica (NYSE:TEF) – Shares of Telefonica fell 4.5% premarket after the company posted a 58% drop in Q1 net profit from a year earlier due to an inability to raise prices with costs. However, overall revenue increased by 6.7% to €10.05 billion. The company expects low single-digit revenue growth in 2023.
Market view
Norfolk Southern (NYSE:NSC) – Norfolk Southern shares gained 1.9% premarket after the rail company was upgraded from neutral to overweight by JP Morgan.
Albemarle (NYSE:ALB) – Albemarle gained 2.0% premarket after shares in the lithium miner were lifted to overweight sector weight with a $270 price target by KeyBanc.
Alcoa (NYSE:AA) – Shares in Alcoa were up 1.4% premarket as Credit Suisse upgraded the aluminum producer to outperform, citing a recovery in aluminum prices and a move beyond Alcoa’s operational issues.