US Index Futures rose in premarket trading on Friday after the US Senate passed a bill raising the debt ceiling, eliminating the risk of a debt default. The market is now shifting its focus to the Payroll report, which is important for calibrating expectations about the trajectory of US interest rates.
By 6:55 AM, Dow Jones (DOWI:DJI) futures were up 179 points, or 0.54%. S&P 500 futures were up 0.50%, while Nasdaq-100 futures were up 0.43%. The 10-year Treasury yield was at 3.612%. West Texas Intermediate crude was up 1.48% to settle at $71.17 a barrel.
The bill raising the US debt ceiling passed with bipartisan support late last night. There were 63 votes in favor and only 36 against. The text now goes to US President Joe Biden’s sanction.
The market is waiting for the Payroll, which comes out at 8:30 am, and should show the creation of 190,000 jobs in May, with a slight rise in the unemployment rate from 3.4% to 3.5%. The consensus represents a slowdown compared to the 253,000 jobs created in April. The forecast for average hourly earnings is up 0.3% month-on-month, after rising 0.5% in the previous survey.
After recent speeches by Fed officials, the market consolidated the idea that the Fed could pause its tightening cycle. This morning, the majority expectation prevails that the American interest rate will remain stuck in the range between 5% and 5.25% at the meeting of the American Central Bank on June 14th. The probability of maintenance was 72.7%, against 79.6% yesterday, according to the Fed Watch tool, of the Chicago Mercantile Exchange.
In commodities, the approval of the US debt agreement boosts oil prices, with the Brent contract for July up 1.24%, at US$75.21 a barrel. Attention is also focused on the meeting of the Organization of Petroleum Exporting Countries and allies, OPEC+, this weekend. The expectation is that the bloc will avoid new production cuts to support prices, even after a recent warning by a Saudi minister in the opposite direction.
Iron ore jumped 2.90%, and rose to a six-week high on the Chinese Dalian Stock Exchange at 745.5 yuan, extending gains after better-than-expected growth shown by the Caixin/S&P Global Purchasing Managers’ Index, released yesterday.
By Thursday’s close, the Dow was up 153.3 points, or 0.47%, to close at 33,061.57 points, despite a 4.7% drop in Salesforce. The S&P 500 gained 0.99% to close at 4,221.02 points, while the Nasdaq Composite advanced. 1.28% closing at 13,100.98 points. Both the S&P 500 and Nasdaq closed at their highest levels since August 2022. Yesterday, despite the ADP job creation report showing a stronger than expected number (278K vs. 170K), other data showed more favorable numbers. Among them, labor productivity fell less than expected (-2.1% vs. exp: -2.4%), labor cost rose less (4.2% vs. exp: 6.0% ) and the manufacturing ISM was practically in line with expectations in the main index, but showed a strong retreat in the price index and new orders. Philadelphia Federal Reserve Chairman Patrick Harker said yesterday that he believes the central bank is close to a level at which it can keep interest rates unchanged and let monetary policy do its job of bringing inflation back to the pursued target of 2.0%. Harker, who is a voting member of the Federal Open Market Committee (FOMC) this year, also said that disinflation is taking place at a “disappointingly slow” pace in the US.
Wall Street Corporate Highlights for Today
JPMorgan Chase (NYSE:JPM) – JPMorgan Chase Chief Executive Jamie Dimon is visiting Taiwan following his trip to China on Friday, where he will meet with employees and customers. Dimon also plans to visit South Korea as part of his Asia tour. He advocates real engagement between the US and China.
First Republic Bank (NYSE:FRC) – JPMorgan Chase & Co will close 21 First Republic Bank branches by the end of the year as part of the failed creditor integration. Affected employees will receive transitional assignments and may apply for other roles at JPMorgan.
Goldman Sachs (NYSE:GS) – Goldman Sachs plans further job cuts due to a challenging economic environment, with commercial revenue expected to decline 25% this quarter. The company has already laid off about 3,200 employees this year and expects to reduce payroll expenses by $600 million. Equity market results are slower and trading activities in equities and fixed income are at lower levels. Goldman Sachs is also considering the sale of fintech business GreenSky and may reduce the premium paid for the business. Goldman Sachs shares closed down 2.3% on Thursday, in contrast to the S&P 500, which rose 1.1% for the day.
Bank of America (NYSE:BAC) – Bank of America CEO Brian Moynihan said he expects investment banking fees and trading income to remain broadly flat this quarter. Lending growth should also remain stable, according to Moynihan. The second-largest US bank reported investment banking fees of $1.1 billion in the second quarter of last year.
Citigroup Inc (NYSE:C) – Citigroup has hired Dan Ford, a former banker at UBS Group AG (NYSE:UBS), as vice president of the investment bank’s natural resources and clean energy transition group. Ford has served as a senior outside consultant for Citi for the past year. During his 25-year career, he has specialized in the energy and utilities sector. Citigroup has recently advised on major energy deals, such as Vistra Corp’s acquisition of Energy Harbor and Chesapeake Energy Corp’s divestiture of oil and gas production assets in South Texas.
Credit Suisse (NYSE:CS) – Credit Suisse used Swiss government-backed liquidity to weather its financial difficulties, according to the Swiss finance minister. Although the bank did not disclose the exact amount borrowed, it is estimated to have been CHF70 billion. Funds have now been fully refunded.
Exxon Mobil (NYSE:XOM) – Exxon Mobil has reached a deal to capture carbon from a steel plant owned by Nucor Corp. (NYSE:NUE), seeking to decarbonize heavy industry. The carbon capture technology will be used to collect and store up to 800,000 metric tons of carbon per year, increasing Exxon’s total pipeline of projects to more than 5 million tons per year. The company is working to obtain carbon storage permits and hopes that regulatory oversight will be transferred to state authorities, speeding approval. Exxon has not disclosed specific financial targets for the project, but analysts see potential to boost the company’s long-term returns. The company is directing around 10% of its capital budget to low-carbon projects.
Southwest Airlines (NYSE:LUV) – Southwest Airlines said it maintains its forecast for a strong full-year adjusted profit driven by increased leisure travel and ticket sales. The company also reiterated its second-quarter profit forecast, with bookings boosted by the Memorial Day holiday. Southwest has not made significant revisions to its fleet or capacity plans for 2023 and expects to take delivery of approximately 70 Boeing 737-8 aircraft.
Lufthansa (USOTC:DLAKY) – Lufthansa’s acquisition of ITA Airways drives consolidation in Europe’s aviation market, paving the way for more medium-sized domestic airlines. Lufthansa, along with other major airlines, is looking to acquire smaller carriers to compete with low-cost carriers. However, they face the challenge of facing competition from these low-cost airlines, which are expanding rapidly. Consolidation in the sector is considered necessary for the survival of medium-sized carriers.
British Airways (LSE:IAG) – The US Department of Transportation is fining British Airways $1.1 million for failing to provide timely refunds during the pandemic. The company has denied the allegations, but the USDOT says the fine will serve as a deterrent to similar practices in the future.
Aercap Holdings (NYSE:AER) – According to the CEO of AerCap, airlines could face shortages of planes, engines and parts for several years due to the strong recovery in demand for travel. The supply constraint will last for many years, affecting not only production lines but also repair facilities. Global demand will remain strong, and tightening supply could lessen the impact of a potential slowdown in demand.
Boeing (NYSE:BA) – Boeing CEO Dave Calhoun has played down speculation about China’s C919 jet threatening the duopoly of Boeing and Airbus. Calhoun said that COMAC will take a long time to meet demand from Chinese airlines. He stressed the importance of focusing on existing competition and the technology race. Calhoun also ruled out the possibility of Boeing reacquiring Spirit AeroSystems to solve supply chain problems. In other news, Boeing has again postponed the first manned launch of the Starliner spacecraft due to parachute and safety issues. The company accumulated losses of $833 million during more than two years in the program. The commitment to complete the project continues.
Toyota (NYSE:TM) – Two of the nation’s leading public pension funds voted against the re-election of Akio Toyoda, chairman of Toyota Motor Corp. In addition, they asked the company to improve disclosure of its climate change lobby. Pressure on the automaker mounts ahead of its annual meeting, with criticism of governance and the lack of electric vehicles. Toyota responded by saying its board meets governance standards and defending its approach to vehicle alternatives.
Stellantis (NYSE:STLA) – Stellantis will invest €160 million at its Rennes plant to launch an all-electric compact SUV in 2025. The vehicle will form part of the STLA Medium platform and the automaker plans to sell only electric cars in Europe by 2030. In other news, Stellantis chairman John Elkann said the automaker does not need the Italian state as a shareholder, as it is in good shape. He explained that the French shareholding is due to PSA’s past difficulties. The company is headquartered in the Netherlands.
Volkswagen (USOTC:VWAGY) – Volkswagen has announced that it will launch electric versions of its iconic VW bus in North America starting in 2024. The model, called the ID Buzz, will be available in an extra-long version with seating for seven passengers and a larger battery to increase the range. The vehicles will be made in Germany and can be quickly charged at charging stations.
Nikola Corp (NASDAQ:NKLA) – Nikola, the maker of electric trucks, is considering a reverse stock split if the share price does not meet Nasdaq minimum requirements. The company faces mounting losses and sluggish demand. Cash burn in the first quarter was $240 million.
Autoliv (NYSE:ALV) – Autoliv has announced that it will produce a new motorcycle airbag from the first quarter of 2025. The Swedish vehicle safety company has developed solutions to reduce the risk of injury in frontal collisions, with the first product to be launched being a bicycle airbag.
Tesla (NASDAQ:TSLA) – Tesla CEO Elon Musk had a meeting with Chinese Vice Premier Ding Xuexiang in Beijing. Details about the discussions were not released. The meeting took place after meetings with Chinese ministers and marks the importance of the relationship between China and Tesla, which considers the country its second largest market. Musk ended his visit to China on Thursday.
Netflix (NASDAQ:NFLX) – Netflix shareholders voted against proposed compensation packages for key executives, including co-CEOs Ted Sarandos and Greg Peters. However, the vote is advisory and non-binding, and Netflix’s board can ignore the result. The Writers Guild of America asked investors to reject the compensation plans, arguing that the company could direct resources to improve conditions for writers. The final vote count has yet to be released.
Meta Platforms (NASDAQ:META) – Meta has announced that it will conduct tests on Facebook and Instagram to limit access and sharing of news content in Canada. This measure is a response to the country’s proposed legislation that seeks to regulate the payment of news editors. California lawmakers introduced a bill requiring Big Tech platforms to pay news publishers. Meta threatened to remove the news from Facebook and Instagram if the project was approved. The law still needs to pass the state Senate. At the same time, CEO Mark Zuckerberg unveiled the Quest 3 mixed reality headset, which will be 40% thinner and feature augmented and virtual reality capabilities. The company will also reduce prices on the existing Quest 2 and promised more details at the AR/VR conference in September. Meta seeks to maintain its leadership in view of the potential launch of Apple in the market. In other news, Meta announced on Thursday that employees will need to work from company offices three days a week starting in September. The new policy will not affect existing employees who already primarily work remotely.
Amazon (NASDAQ:AMZN) – European Union (EU) antitrust regulators will decide by July 6 whether to approve the $1.7 billion acquisition of vacuum cleaner maker iRobot Corp by Amazon.com Inc. The European Commission can cancel the deal or launch a four-month investigation if it has serious concerns. Regulators in the US and UK are also reviewing the deal. Critics have raised concerns about privacy due to Amazon’s expansion of personal household information.
Apple Inc (NASDAQ:AAPL) – Apple has refuted Russia’s Federal Security Service (FSB) allegations that it collaborated with US spies to spy on Russian iPhone users. In a statement, the company denied any such cooperation with governments and said it has never, and never will, backdoor its products. In other news, Apple is working on a plan to expand and revitalize its retail stores, with a focus on Asia, China, Europe and North America. The company plans to open 53 new stores, relocate or renovate existing locations over the next four years. The emphasis is on building the Apple brand in growth markets, improving the customer experience and addressing recent challenges.
Microsoft (NASDAQ:MSFT) – According to CNBC, Microsoft plans to invest billions of dollars over several years in the computing infrastructure of startup CoreWeave. The partnership aims to provide adequate computing power for OpenAI and its ChatGPT chatbot. CoreWeave has raised more than $400 million in the past two months and counts Nvidia among its investors.
GAP Inc (NYSE:GPS) – Outdoor apparel retailer Patagonia Inc has reached a settlement in its lawsuit against Gap for allegedly illegally copying its “iconic” flap pocket. The judge dismissed the case after both companies disclosed the settlement and agreed to withdraw their claims. The details of the agreement were not disclosed. Patagonia accused Gap of selling fleece jackets that mimicked its flap pocket without permission, while Gap denied the allegations and questioned the legal protection of Patagonia’s design. The pocket in question has been a feature of Patagonia’s Snap-T jackets for over 30 years.
Macy’s Inc (NYSE:M) – Macy’s has lowered its annual sales and profit forecasts due to a slowdown in demand caused by inflation, which has hampered the department store chain’s efforts to reduce discounts that affect profit margins. The company will need to offer further discounts in the second quarter to clear excess inventory. Other clothing retailers such as Nordstrom and Kohl’s have maintained their annual forecasts, but Macy’s has taken a more conservative approach to this economic backdrop. Macy’s now expects 2023 sales to be between $22.8 billion and $23.2 billion, compared with its previous forecast of $23.7 billion to $24.2 billion. She sees adjusted annual earnings per share between $2.70 and $3.20, compared with the $3.67 to $4.11 per share she had previously forecast.
Dollar General (NYSE:DG) – Dollar General Corp lowered its full-year sales and profit forecasts due to rising prices, prompting consumers to buy more essentials and reduce purchases of household items and clothing. Its shares fell on Thursday due to this challenging trend and competition from larger retailers. The company expects a 1% to 2% increase in same-store sales in fiscal 2023 and a reduction in earnings per share to range from flat to an 8% decline. The outlook reflects the challenging retail and consumer environment.
Getty Images Holdings (NYSE:GETY) – Getty Images has asked the High Court of London for an injunction to prevent Stability AI from selling its AI-based imaging system in the UK. Getty accuses Stability AI of violating its copyright by using its images to train its system. The case is ongoing and Getty is seeking unspecified damages and destruction of versions of the system that may infringe its intellectual property rights.
C3.AI Inc (NYSE:AI) – Shares in C3.ai Inc fell 13% on Thursday after forecast annual revenue of $307.50 million missed analysts’ expectations of $317.1 million, lowering the enthusiasm around actions related to artificial intelligence. Other small-cap stocks in the sector also fell. Despite this, C3.ai continues to attract investors and has seen strong retail influx. Of the 12 brokerages tracking the stock, at least six raised their price targets for C3.AI, taking Wall Street’s average target to $27, more than doubling since March 1. The average rating was Hold.
CrowdStrike (NASDAQ:CRWD) – CrowdStrike CEO George Kurtz said the company is prepared to take on adversaries who use artificial intelligence to hack systems for nefarious purposes. He highlighted the importance of AI and better data collection to combat these threats. CrowdStrike has received high-level security clearance and claims its technology is more effective than legacy Microsoft-based products.
Navient (NASDAQ:NAVI) – Shares in Navient and other student loan companies rose Thursday after the Senate blocked Biden’s loan forgiveness plan. The symbolic measure, which will likely be vetoed by the president, also affects SoFi Technologies (NASDAQ:SOFI). The resumption of federal student loan payments could also affect Target (NYSE:TGT) stock.
Earnings
Dell Technologies (NYSE:DELL) – Dell Technologies beat first-quarter profit estimates due to better cost controls, in contrast to its rivals HP Inc and Lenovo Group. However, full recovery is still some way off, with the company predicting revenue below Wall Street targets for the current quarter due to cautious IT spending. The company’s revenue fell 20% to $20.92 billion, but was above analysts’ expectations of $20.27 billion, according to Refinitiv data. Dell earned $1.31 a share, versus an estimate of $0.86. Estimated second-quarter revenue is between $20.2 billion and $21.2 billion, below midpoint expectations of $21.2 billion.
Broadcom Inc (NASDAQ:AVGO) – Broadcom forecast third-quarter revenue above market estimates, driven by corporate investment in AI-related technologies. The company is benefiting from rising orders for chips to support the technology in data centers, and Broadcom CEO Hock Tan predicts that generative AI will account for more than 25% of the company’s semiconductor revenue by 2024. Broadcom forecast revenue for the current quarter of around $8.85 billion, while analysts polled by Refinitiv expect revenue of $8.72 billion. Second-quarter revenue increased 8% to $8.73 billion, compared with estimates of $8.71 billion. On an adjusted basis, the company earned $10.32 per share, compared with estimates of $10.08 per share.
Lululemon (NASDAQ:LULU) – Lululemon reported better-than-expected fiscal first-quarter earnings and raised its full-year outlook. The company also recorded a sales growth of 24% compared to the same period of the previous year. EPS of $2.28 was higher than $1.98 expected on revenue of $2 billion versus $1.93 billion expected. Lululemon expects second-quarter sales to be in the range of $2.14 billion to $2.17 billion, representing growth of about 15%.
MongoDB (NASDAQ:MDB) – Data developer platform MongoDB has posted bullish outlook. MongoDB forecasts second-quarter revenue to be between $388 million and $392 million, compared to analyst forecasts of $362 million, according to Refinitiv. MongoDB beat estimates in its latest quarterly report. The company reported EPS of 56 cents per share, adjusted, versus 19 cents per share as expected by analysts, according to Refinitiv. Revenue of $368 million was higher than the $347 million expected by analysts.
Five Below (NASDAQ:FIVE) – Five Below reported earnings of 67 cents a share, while analysts polled by Refinitiv estimated earnings of 63 cents a share. However, Five Below reported revenue of $726 million, compared to Wall Street’s forecast of $728 million. The outlook for the second quarter was also below analyst expectations.
PagerDuty (NYSE:PD) – PagerDuty reported adjusted earnings per share that beat Wall Street estimates, but issued a weaker-than-expected earnings outlook.
Asana (NYSE:ASAN) – Asana reported lower-than-expected revenue and losses, beating analyst expectations in the first quarter, according to FactSet.
Samsara (NYSE:IOT) – Samsara reported a lower-than-expected loss in the first quarter, according to FactSet. Revenue also beat Wall Street estimates, while the full-year sales forecast expanded.
ChargePoint (NYSE:CHPT) – ChargePoint beat Wall Street earnings expectations but shared a light outlook for the current quarter that was below consensus estimates.
SentinelOne (NYSE:S) – Shares in SentinelOne fell as much as 37% in premarket trading on Friday as the cybersecurity firm cut its revenue outlook and missed Wall Street’s revenue expectations for the most recent period.
Tilly’s Inc (NYSE:TLYS) – Tilly’s, the West Coast-themed clothing and accessories retailer, forecast a sharper second-quarter loss than expected, saying rising prices continued “to have a negative impact on our high-end demographic” preteen, teen, and young adult clients.
Guidewire Software Inc (NYSE:GWRE) – Insurance software company Guidewire Software missed revenue estimates and offered a weak outlook. Guidewire estimates revenue of $255 million to $265 million for the fourth quarter and $890 million to $900 million for the full year. Analysts polled by FactSet expect revenue of $258.6 million for the fourth quarter and $900.7 million for the full year. The company reported a fiscal third-quarter loss of $45.6 million, or $0.56 per share, compared with $57.4 million, or $0.69 per share, in the prior-year period.
Zscaler Inc (NASDAQ:ZS) – Shares of Zscaler Inc were down -0.44% in premarket trading on Friday, even as earnings and forecasts beat Wall Street’s expectations. The cybersecurity company reported adjusted earnings of 48 cents per share on revenue of $418.8 million in the fiscal third quarter. For the fourth quarter, it predicts adjusted earnings of 49 cents per share and revenue between $429 million and $431 million.
Market vision
SoftBank Group (USOTC:SFTBY) – The Japanese conglomerate, which is gearing up for the initial public offering of chipmaker Arm, saw its shares rise 17% for the week, posting its biggest weekly gain since March 2020. However, its performance on the accumulated for the year lags behind other companies in the sector, such as Nvidia. SoftBank CEO Masayoshi Son is excited about the potential of artificial intelligence. Jefferies became at least the third finance company to lift SoftBank to Buy in the past three weeks, following Morningstar and HSBC. The stock now has 18 Buy ratings to five Hold ratings and no Sell ratings.