US Index Futures were mixed on Wednesday morning as investors awaited the Federal Open Market Committee (FOMC) meeting after the May Consumer Price Index (CPI), released yesterday, helped to consolidate the expectation of the first maintenance of the basic interest rate since March 2022
At around 7:04 AM, Dow Jones (DOWI:DJI) futures were down 36 points, or 0.10%. S&P 500 futures were up 0.18%, while Nasdaq-100 futures were up 0.12%. The 10-year Treasury yield was at 3.821%.
On Wednesday’s schedule of economic indicators, the US Mortgage Market Index (07:00 am), the US producer price index (PPI) (08:30 am), the change in oil inventories EIA (10:30 am) are expected, the US Interest Rate decision (2:00 pm), and the Fed chairman’s press conference (2:30 pm).
This morning, Fed Funds derivatives attribute a probability of 95.3% that the interest rate will remain stable in the range of 5.00% to 5.25%, according to the FedWatch tool, from the Chicago Mercantile Exchange. The expectation of interest rate maintenance comes after speeches by US Central Bank leaders suggesting a pause in the cycle in order to measure the lagged effects of monetary tightening, in addition to the impact of credit contraction on the local economy.
In addition to the decision, the market will be attentive to Powell’s speech in search of signs about the BC’s flight plan. The market still maintains at 60% the chance of a new increase of 0.25 percentage points in interest rates in July, given the caution with the prospective inflation scenario, which remains above the Fed’s target.
Optimism about the potential interruption of the US rate hike cycle supports commodities. Brent crude futures for August was up 1.49% to settle at $75.40 a barrel. Iron ore also recorded a rise and the contract for September rose 1.51%, to 804.5 yuan, per tonne on the Chinese Dalian Exchange, further driven by the expectation that the People’s Bank of China, the BC of the country, is expected to cut its key interest rates tomorrow, following its announcement of cutting short-term rates yesterday.
By Tuesday’s close, the Dow was up 145.79 points, or 0.43%, to close at 34,212.12 points. The S&P 500 rose 0.69% to close at 4,369.01 points, and the Nasdaq Composite gained 0.83% to 13,573.32 points. Stock markets were boosted by the CPI inflation data released yesterday. The number showed a greater-than-expected deceleration, giving virtual certainty that the Fed will “pause” interest rate hikes at today’s meeting. The US consumer inflation index rose 0.1%, lower than expected by the market (0.2%). Even so, the variation in the core was equal to what was expected, with growth of 0.4%. The surprise came mainly from energy items, that is, more cyclical components, which depend more on commodity prices and weather conditions.
Homebuilder Lennar (NYSE:LEN) is scheduled to report quarterly earnings after the stock market close on Wednesday.
Wall Street Corporate Highlights for Today
Amazon (NASDAQ:AMZN) – Amazon Web Services (AWS) has re-established its cloud services after an outage that affected several websites, including those of the New York Metropolitan Transportation Authority and the Boston Globe. The root cause has been identified as an issue with the AWS Lambda subsystem. AWS is considering using AMD’s new artificial intelligence chips but has yet to make a final decision, according to an AWS executive. AWS is evaluating the possibility of using AMD’s MI300 chips. AWS opted to design its own servers rather than adopting Nvidia’s DGX Cloud offering. In other news, Amazon has excluded Temu, its new competitor, from its price search algorithm, claiming that the site does not meet the company’s eligibility standards.
Advanced Micro Devices (NASDAQ:AMD) – AMD announced on Tuesday that its most advanced GPU for artificial intelligence, the MI300X, will ship to select customers later this year. That poses a significant challenge for Nvidia, which currently dominates the AI chip market. AMD CEO Lisa Su highlighted that AI is the company’s biggest long-term growth opportunity. AMD’s new chip offers increased memory capacity and is designed for large language models. The company has also developed its own architecture and software for AI chips.
Nvidia (NASDAQ:NVDA) – Nvidia Corp, after making successful share buybacks last year, has stopped buying. After spending more than $10 billion on buybacks in the last fiscal year, the company has halted purchases as shares soar to exorbitant values boosted by investment in artificial intelligence. While some see this as a sign of overvaluation, others believe Nvidia is keeping more cash available for future investments. The chip giant also became the seventh U.S. company to close on Tuesday with a market value above $1 trillion.
Logitech International (NASDAQ:LOGI) – US-listed shares of Logitech fell 11.36% in premarket trade after the Swiss multinational maker of computer peripherals and software said former chairman and chief executive Bracken Darrell would step down .
Alphabet (NASDAQ:GOOGL) – The European Union has accused Google of violating antitrust rules in the adtech sector and is considering breaking up parts of the company’s business as a solution. The European Commission has preliminarily concluded that Google is dominant in the market for ad servers and programmatic ad buying tools. Google on Wednesday rolled out artificial intelligence features that automate the selection of ad placements. One feature called Demand Gen places ads across multiple products, while another maximizes video views. AI aims to make the work of advertisers easier and allow them to focus on marketing strategy. According to CNBC, Google and OpenAI have opposing views on AI regulation. Google prefers multi-layered approach with industry regulatory agencies, while OpenAI supports a new centralized government agency to oversee and license AI technology. The debate extends to the logistical organization of regulation. In other news, Google employees express concerns about oversight of physical attendance and uncertainty for relocators. Return-to-the-office policies have generated discontent and questions about the transition to hybrid work. Other technology companies also face similar challenges.
Microsoft (NASDAQ:MSFT), Activision Blizzard (NASDAQ:ATVI) – A California federal judge has temporarily blocked Microsoft’s acquisition of Activision Blizzard due to a restraining order sought by the Federal Trade Commission. The ruling keeps the companies separate until the court rules on a more permanent break. US and UK officials have disputed the deal.
Apple (NASDAQ:AAPL) – Apple is on track to become the first company with a $3 trillion valuation, but it faces challenges. Stocks hit an all-time high, boosted by strong iPhone sales and new products. The company needs to overcome obstacles, such as inflation and economic uncertainty, as it seeks to increase its market value with iPhone upgrades and innovative product launches. Some concerns persist, but investors are keeping an eye on Apple as it approaches the $3 trillion milestone.
SAP (NYSE:SAP) – Hasso Plattner, co-founder of SAP, has reached an agreement with an undisclosed bank to sell about 1.46 million shares of the company. He plans to sell between 40% and 60% of the shares by Dec. 13, based on the volume-weighted average price during the selling period.
Accenture (NYSE:ACN) – Accenture announced a three-year, $3 billion investment to strengthen its data and artificial intelligence (AI) practice. The company aims to double the number of employees specializing in advanced technology, reaching 80,000 people working in AI, through hiring, acquisitions and training. The investment aims to help companies from different sectors and follows the trend of companies boosting their offerings with generative AI. Accenture also launched the “AI Navigator for Enterprise” tool to guide companies in the efficient use of technology.
Castellum (USOTC:CTLRF) – Cybersecurity firm Castellum has stepped up its cost-cutting efforts after its stock dropped below $1, leading it to fall outside NYSE American’s listing requirements. The company plans cost cuts worth $8.2 million annually to increase profitability. The CEO expects to recover the value of the shares in the coming months and is looking for investors to become majority shareholders.
Samsung Electronics Co (USOTC:SSNHZ) – Samsung Electronics is offering South Korean employees one Friday off per month to retain talent and meet demands for flexible working. The initiative follows companies such as SK Hynix and Kakao Corp. who adopted similar arrangements. The change reflects the transformation of work culture in South Korea, driven by the pandemic.
Cinverse Corporation (NASDAQ:CNVS) – Shares of Cinverse are down 27.53% premarket due to the announcement of a possible public offering. Stocks are down two-thirds in the last 12 months. The technology and entertainment streaming company plans to offer shares and warrants, but there is no guarantee on the completion, size or terms of the offering. The proceeds obtained would be used for corporate purposes, including content acquisition and development.
RadNet (NASDAQ:RDNT) – RadNet shares took a hit on Wednesday after the diagnostic imaging company priced in an equity offering worth approximately $225 million. The shares fell 9% to $30.00 in premarket trade, despite having risen 87% over the past 12 months. RadNet plans to use the proceeds to repay part of its loans and for general corporate purposes. The offering included an option for underwriters to purchase additional shares.
LVMH (USOTC:LVMUY) – LVMH’s participation in the Olympics will depend on Antoine Arnault, the company’s heir. The negotiations involve promotions for the brands Louis Vuitton and Dior. Sponsorship can cost around 150 million euros and has aroused great interest in France. The aim is to convey LVMH’s role as a purveyor of French crafts and heritage, while avoiding excessive logo displays. Involvement in the Olympics would help differentiate LVMH from its luxury competitors, but it could also bring challenges and controversy.
Starbucks (NASDAQ:SBUX) – Workers United said several Starbucks stores across the US are banning employees from decorating for Pride month. However, Starbucks has stated that it continues to encourage stores to celebrate LGBTQ+ Pride, without any changes to its policies. The conflict comes amid an escalation of attacks on the LGBTQ+ community. Starbucks faces criticism for both its decorations and employee unionization issues. In other news, restaurateur Anton Pinskiy is revealed to have paid around 500 million rubles for Starbucks assets in Russia. Pinskiy and rapper Timati have relaunched the locations under the new Stars Coffee brand, and Pinskiy expects to recoup the investment by the end of the year.
Netflix (NASDAQ:NFLX) – Netflix will open its first pop-up restaurant in Los Angeles, called ‘Netflix Bites’, offering a dining experience with renowned chefs from the platform’s culinary shows. The special tasting menu and custom cocktails will be prepared by the series’ chefs and mixologists. The pop-up will work at the Short Stories Hotel from June 30th onwards.
Disney (NYSE:DIS) – Disney on Tuesday announced changes to its movie release schedule, delaying several productions in the Avatar, Marvel and Star Wars franchises. The reasons behind the changes were not disclosed, but adjustments to schedules are common in the industry. The writers’ strike has also impacted film and series production.
Biogen (NASDAQ:BIIB) – Biogen has renewed its board of directors. Three current board members will not run for re-election, while the company’s former head of corporate strategy Susan Langer has been appointed to the board, Biogen said on Monday.
Eli Lilly (NYSE:LLY) – Eli Lilly CEO David Ricks has expressed concern that the Medicare pricing negotiations could hinder the development of new drugs, especially small molecule drugs. He argues that the changing schedule of negotiations between small and biological drugs will affect investments in the area. Other pharmaceutical companies also have similar criticisms.
Grifols (NASDAQ:GRFS) – Grifols, a Spanish drugmaker, has announced a plan to reduce its stake in Shanghai RAAS, which would yield $1.5 billion. Grifols plans to change the Chinese company’s shareholding structure, retaining a “significant stake”. The sale would help reduce Grifols’ debt and boost its stock.
Illumina (NASDAQ:ILMN) – Republican lawmakers, state attorneys general and advocacy groups have voiced support for Illumina’s acquisition of cancer test developer Grail as the Federal Trade Commission seeks to undo the deal. They argued that the FTC overstepped its authority and preventing the merger would undermine technological advances that benefit health. The deal faced opposition and was blocked by the European Commission last year. Investor Carl Icahn also objected to the deal. Illumina closed the acquisition without approval from antitrust regulators, which drew criticism.
Kura Oncology (NASDAQ:KURA) – Shares fell 8% in premarket after the pharmaceutical company announced a stock offering.
UnitedHealth Group (NYSE:UNH) – Shares fell more than 4% premarket after executives told a Goldman Sachs investor conference on Tuesday that seniors have started to catch up on overdue hip and knee surgeries delayed by the pandemic, which means rising costs for health insurers. Shares of Humana Inc. (NYSE:HUM) were down 4.8% and Cigna Group (NYSE:CI) were down 1.56%.
Shell (NYSE:SHEL) – Shell has announced an increase in dividends and share buybacks, keeping oil production steady through 2030. The company is looking to regain investor confidence following the energy transition. The dividend increase and share buyback program are aimed at improving the performance of Shell shares relative to its peers. Oil production will be kept stable, and the company will look to strengthen its natural gas business. Shell is also committed to reducing net emissions to zero by 2050.
Devon Energy (NYSE:DVN) – Goldman Sachs upgraded Devon to Buy from Neutral, saying it trades at an attractive valuation and looks set to appreciate as its production and capital spending outlook improves.
Toyota (NYSE:TM) – Shares in Toyota surged to a 16-month high after shareholders voted to keep Akio Toyoda as chairman, endorsing the company’s governance and its new electric vehicle strategy. Shareholders rejected proposals for greater disclosure about the company’s climate lobby. Toyota has revealed comprehensive plans for next-generation batteries and range-enhancing technologies. The company aims to sell 1.5 million electric vehicles per year by 2026 and 3.5 million per year by 2030.
General Motors (NYSE:GM) – General Motors has signaled it plans to keep producing profitable combustion trucks and SUVs for another 10 to 12 years, reaping billions of dollars in additional profits before shifting fully to electric vehicles by 2035. news, GM and Samsung SDI (SSDIY) will build an electric vehicle battery cell plant in Indiana with an investment of more than $3 billion. The factory, which should start operations in 2026, will create 1,700 jobs and have an annual production capacity of 30 GWh.
Stellantis (NYSE:STLA) – Stellantis is evaluating Tesla’s charging standard, known as the North American Charging Standard (NACS), following adoption by Ford and General Motors. The company has stated that its goal is to provide the best charging experience for customers through partnerships with charging providers.
Tesla (NASDAQ:TSLA) – Tesla raised the price of the Model Y in the US by just $250 to $47,740, while prices for the other models remained unchanged. This is the third price increase since April, but the Model Y is still 4.5% cheaper than before the reduction in April.
BorgWarner Inc (NYSE:BWA) – The auto parts maker’s board approved the spinoff of fuel services company Phinia Inc., which will trade as a standalone public company in July.
Airbus (USOTC:EADSY) – Airbus has raised its forecast for aircraft deliveries over the next 20 years, while lowering estimates for growth in the global airline fleet. The planemaker forecasts 40,850 deliveries, an increase from its previous forecast. With aging aircraft replacement intensifying, Airbus estimates that 58% of deliveries will be for growing airline fleets. Growth will be mainly driven by Asia, with emphasis on India and China.
Boeing (NYSE:BA) – In May, Boeing delivered 50 jets, 13 fewer than Airbus, but an increase of 43% year-on-year. Boeing 737 MAX deliveries increased to 35 jets, while eight 787 Dreamliners, three 767 Freighters, three 777 Freighters and a modified 737 were also delivered to South Korea. The company recorded 69 orders in May and delivered a total of 206 aircraft in the first five months of the year, trailing Airbus in those numbers.
Delta Air Lines (NYSE:DAL) – Shares in Delta Air Lines are on a record streak since Memorial Day, buoyed by the prospect of a busy summer for air travel. The surge in demand over the Memorial Day holiday and analyst expectations for positive news from the company led to a 19% rise in the stock. While the winning streak must come to an end, there are more positive catalysts on the horizon.
Cathay Pacific Airways (USOTC:CPCAF) – Cathay Pacific Airways is offering junior pilots the opportunity to work as a first officer on the low cost HK Express unit for approximately two years, followed by the possibility of joining Cathay as a first officer. The move is aimed at supporting the growth of HK Express, which is seeking more staff to resume pre-Covid flights. The company did not disclose salary details. The Cathay group expects to return to pre-pandemic passenger capacity levels by the end of 2024, with a target of reaching 70% by the end of this year.
Bunge (NYSE:BG) – Bunge and Viterra are merging to create an agricultural trading giant worth approximately $34 billion, including debt. The deal, which will face regulatory scrutiny, values both companies at about $17 billion each. The merger seeks to compete with major rivals Archer-Daniels-Midland and Cargill.
CGI (NYSE:GIB) – CGI announced on Wednesday that it has been selected by the Finnish Food Authority to continue developing and maintaining its farm subsidy system. The Canadian IT and business consulting firm will provide advanced technologies, including satellite imagery, AI and cloud computing, in a contract worth €10 million ($10.8 million). This will help the regulator to improve the performance of the land parcel identification system and the calculation of national and EU agricultural subsidies.
Tyson Foods (NYSE:TSN) – Tyson Foods has confirmed it will lay off 228 corporate employees in Illinois who refused to relocate to its Arkansas headquarters. The company will eliminate 177 employees in Chicago and 51 in Downers Grove. The decision is part of Tyson Foods’ cost-cutting and consolidation efforts.
Anheuser-Busch InBev (NYSE:BUD) – Modelo Especial has quietly overtaken Bud Light as the top seller in the US following a boycott related to a controversial brand promotion. Bud Light sales were down about 24% and other Anheuser-Busch brands were also affected. Modelo Especial, sold by Constellation Brands (NYSE:STZ), is making up for Bud Light’s decline.
Casino Guichard Perrachon (USOTC:CGUSY) – French entrepreneurs Xavier Niel, Matthieu Pigasse and Moez-Alexandre Zouari have expressed interest in making a bid of up to €1.1 billion for Casino, offering an alternative for the indebted French supermarket group. The proposal comes after the failure of negotiations with the retailer Teract. Casino has confirmed its interest and will study the proposal.
GameStop (NYSE:GME) – Ryan Cohen acquired GameStop stock worth $10 million, showing his support as an activist investor following the recent departure of the CEO. Cohen, who owns about 12% of the company, has pushed for strategic changes, but the transition to e-commerce has been challenging. GameStop faces financial difficulties, with results below expectations and sales declines.
Prosus (USOTC:PROSY) – Tech company Prosus reported a significant drop in profit last year due to losses and lower contributions from Tencent (USOTC:TCEHY), its largest holding company. Prosus expects a 40% to 47% reduction in earnings per share through March 2023, due to the impacts of Covid-19 in China. Despite this, the company recorded stronger earnings in the consolidated business in the second half of the year and a significant improvement in cash flow from operations. Prosus’ stake in Tencent was reduced from 29% to 26% last year. Full results will be released on June 27.
Entain (USOTC:GMVHY) – Entain has announced an agreement to acquire the stakes of sports betting operator STS. The 10% drop sent shares of Entain at the bottom of the London blue-chip index to their lowest level in months, while shares of STS rose significantly in response to the deal.
HSBC (NYSE:HSBC) – HSBC seeks to position itself as a leading global bank for venture capital firms and startups by building a team of technology and healthcare bankers in the US, Hong Kong and Israel. The bank is focused on venture loans to startups in India and Singapore, targeting a slowing market. The hiring of Silicon Valley Bank bankers has sparked a lawsuit from First Citizens BancShares. HSBC claims to be in a comfortable legal position and will defend itself vigorously.
UBS (NYSE:UBS) – UBS plans to absorb most of Credit Suisse’s private bankers in Asia Pacific, expanding its staff to more than 1,200 employees. This strategy is driven by the head of global heritage, Iqbal Khan, who believes in the lucrative potential of the region. While this consolidates UBS’s position in the fast-growing wealth market, significant cutbacks are expected in investment banking. The acquisition derailed Credit Suisse’s plans, but strengthens UBS in Asia.
Bank of America (NYSE:BAC) – Bank of America Corp. returned to the green bond market, ending a seven-month drought. Taking advantage of the European market, the bank sold €1bn ($1.1bn) of five-year bonds to finance renewable energy projects. This was the first ESG issue by major US banks since November. The slowdown in large banks’ ESG bond sales comes amid investor scrutiny and political pressure. Banks may pursue sustainable bond markets denominated in other currencies, due to a more favorable regulatory environment and less mobilization against ESG.
Vodafone (NASDAQ:VOD) – Vodafone PLC and CK Hutchison Group Telecom Holdings have announced an agreement to combine their UK businesses, creating a third operator with scale and increasing competition in the market. Under the deal, Vodafone will have a 51% stake and CK Hutchison will own 49%. The combined company will invest £11 billion over 10 years and deliver fixed wireless access to 82% of households by 2030.