US Index Futures extend a three-day streak of declines after a rally in technology stocks, which had been supporting the market, ran out of steam.
By 7:24 AM, Dow Jones futures (DOWI:DJI) was down 113 points, or 0.33%. S&P 500 futures were down 0.32%, while Nasdaq-100 futures were down 0.41%. The 10-year Treasury yield was at 3.746%.
Today, Powell will again participate in a hearing in the US Congress. He will speak in the Senate from 10:00 AM. Other Fed officials will also participate in public events.
Elsewhere, the interest rate was raised by 0.50 percentage points in Norway to 3.75%, a rise above the expected 0.25pp. The BC of Switzerland, on the other hand, raised the rate by 0.25pp, to 1.75%, confirming expectations, but indicated more increases to ensure price stability in the medium term. The Bank of England surprised markets with a 50 basis point hike in interest rates, facing persistent inflation. The decision defied market expectations, which had expected an increase of 25 basis points. In Asia, the Hong Kong and Shanghai stock exchanges were closed. The Nikkei, of the Tokyo Stock Exchange, closed with a variation of -0.92% and the Kospi, of the Seoul Stock Exchange, rose 0.43%.
In the commodities market, concerns about the effect of interest rates on demand weigh on oil, with Brent for August down 2.09% at $75.50 a barrel. West Texas Intermediate crude for August fell -2.16% to settle at $70.97 a barrel. Due to a public holiday in China, the iron ore futures contract was not quoted on the Dalian Chinese Exchange. In Singapore, ore advanced 0.50% after higher-than-expected steel production data in China.
Thursday’s US economic agenda:
- Current account balance (8:30 am)
- Unemployment insurance claims (8:30 am)
- Chicago Fed National Activity Index (08:30)
- Index of Leading Indicators (10:00 am)
- US Home Sales (10:00 am)
- Change in oil inventories EIA (11h00)
After a more forceful speech by Federal Reserve Chairman Jerome Powell to the US Congress, US stock markets fell yesterday. The Dow fell 102.35 points, or -0.30%, to 33,951.52 points. The S&P 500 fell 23.02 points or -0.52% to 4,365.69 points. The Nasdaq Composite dropped 165.10 points or -1.21% to 13,502.20 points. According to Powell, there is consensus among members of the US Open Market Committee that interest rates should be raised. Specifically, there are indications of a consensus regarding a further hike in the Federal Funds interest rate at the July meeting. However, some members more inclined to a dovish stance, such as Raphael Bostic, from Fed Atlanta, raised the possibility of keeping the rate at the current level until the end of the year.
Ahead of Thursday’s quarterly results, traders are watching reports from Accenture (NYSE:ACN), Darden Restaurants (NYSE:DRI), FactSet (NYSE:FDS), Method Electronics (NYSE:MEI) and GMS (NYSE:GMS).
Wall Street Corporate Highlights for Today
Alphabet (NASDAQ:GOOGL) – Technology trade groups including Google have filed complaints with the US Federal Trade Commission (FTC) alleging unfair business practices in the cloud services market, with a focus on Microsoft (MSFT, MSFT34). Concerns include security issues, competition, and licensing restrictions that discourage the use of competing providers.
Amazon (NASDAQ:AMZN) – Amazon is facing Federal Trade Commission (FTC) allegations of using manipulative tactics to trick and trap customers in the Amazon Prime program. The company allegedly made it difficult to unsubscribe and used misleading pop-ups during the purchase process. Amazon denies the allegations, saying the sign-up and unsubscribe process is clear and simple. In other events, Amazon announced that this year’s Prime Day event will run from July 11-12, with an increased focus on small business products.
Meta Platforms (NASDAQ:META) – Meta Platforms will revert to being considered a full-growth stock following the annual rebuild of the FTSE Russell stock index. Reconstitution generates portfolio adjustments and a significant increase in trading volume. Meta, along with other companies, will see a higher weighting as growth stocks. In other news, Elon Musk and Mark Zuckerberg’s social media posts are fueling speculation about a potential Las Vegas cage fight. Musk proposed the challenge in response to Meta Platforms’ plans to launch a competing service. While it’s uncertain whether the fight will actually take place, the exchange of commentary between the billionaires is drawing attention. Both Musk and Zuckerberg shared details of their physical abilities recently, adding more curiosity about who would win. The companies involved preferred not to comment on the matter.
Nvidia (NASDAQ:NVDA) – Nvidia stock was down 0.7% to close at $427.37 on Wednesday. Lynx analyst KC Rajkumar expressed that investor expectations of NVDA have reached exaggerated levels. He set a price target of $360 for the stock. In turn, the average of the FactSet estimates indicates that Wall Street analysts predict the stock will rise to $445.38. A former Nvidia board member, Mark Stevens, sold some of his shares in the company, pocketing more than $51 million. Despite this, he remains a major shareholder in the chip company, with more than 1 million shares.
Netflix (NASDAQ:NFLX) – Netflix Co-CEO Ted Sarandos has assured that the company’s $2.5 billion investment in South Korean content will not foreclose on local talent. He mentioned that one in five Netflix titles between 2022 and 2025 will be from first-time writers or directors. The company also plans to expand its investment in films and non-fiction in South Korea. While Netflix is praised for supporting creators, there are concerns about its market dominance.
Intel (NASDAQ:INTC) – Intel Corp has announced that its manufacturing business will operate as a separate unit, but has not given a clear timeline for its growth. Intel also did not reveal a new external customer for the foundry business, part of its turnaround strategy. Chief Financial Officer David Zinsner said Intel’s in-house units will have a customer-supplier relationship with the manufacturing business, and the company expects to become the second-largest foundry next year with revenues of more than $20 billion. However, that prediction is trumped by TSMC, whose sales are expected to reach nearly $85 billion in 2024, according to analyst Kinngai Chan.
Logitech International (NASDAQ:LOGI) – Logitech International has received company board approval of a new share repurchase program worth up to $1 billion. On Wednesday, shares of Logitech suffered a 2.7% drop due to reports that one of its gamepads was allegedly used to control the submersible involved in the disappearance of the Titanic. LOGI recorded a cumulative decline of around 18% for the month.
Oracle (NYSE:ORCL) – Oracle, at a valuation of more than $330 billion, is being compared to “mini Microsoft” by Bernstein analyst Mark Moerdler. It highlights similarities in the transition to the cloud and high operating margins. While there are differences, Moerdler believes Oracle has the potential for sustained stock appreciation.
Alaska Airlines (NYSE:ALK) – Alaska Airlines is looking forward to taking delivery of the Boeing 737 MAX 10 as it will allow it to carry more passengers once the plane is certified, according to CEO Ben Minicucci. The airline has 48 orders for the MAX 10 and is confident that approval will be granted, provided it is secure and properly certified. Minicucci highlighted the good relationship with Boeing and the company’s transparency regarding production problems.
Spirit AeroSystems (NYSE:SPR) – Spirit AeroSystems will suspend production at its Wichita, Kansas, plant after workers rejected a deal and announced a strike beginning June 24. The company is a major supplier to Boeing (BA) and Airbus, and a prolonged shutdown could affect plane production. Spirit will continue to pay employees during the production suspension and hopes to resume negotiations with the union. Boeing is monitoring the situation and Airbus conducts regular assessments with suppliers to mitigate risks.
Boeing (NYSE:BA) – After the 2023 Paris Air Show, two issues are looming for Boeing. The supply chain continues to experience bottlenecks and shortages, according to an analyst at BofA Securities. The other concern is that market share is tilting in favor of Airbus. However, shares of Boeing were down 0.1% on Wednesday, while the S&P 500 and Dow Jones were down 0.5% and 0.3% respectively.
Embraer (NYSE:ERJ) – Aircraft manufacturer Embraer is returning to China through an agreement with a local partner in Lanzhou to convert passenger jets into cargo aircraft. Demand for freighters in the Chinese market is on the rise due to the growth of e-commerce. Embraer forecasts a demand for 240 aircraft in China over the next 20 years.
Lockheed Martin (NYSE:LMT) – Lockheed Martin said Wednesday that it is committed to working with the United States government to upgrade the capabilities and performance of the F-35 jets. The company plans to upgrade the engine to offer more power and better cooling capacity.
NRG Energy (NYSE:NRG) – According to the Wall Street Journal, sources familiar with the matter have revealed that activist investor Elliott Investment Management is seeking the ouster of the CEO of NRG Energy. Elliott is in negotiations with possible candidates to replace Mauricio Gutierrez, as well as other top executives. Last month, the activist investor disclosed his acquisition of an approximately $1 billion stake in NRG Energy.
Tesla (NASDAQ:TSLA) – Tesla has been reinstated in the S&P 500 ESG Index after adding environmental disclosures, despite past controversies. While symbolic, reinstatement builds confidence in the company’s ESG posture. Tesla has joined other companies in the annual index rebalancing. Additionally, Texas will require EV charging companies to include Tesla’s standard and CCS if they want to participate in a statewide program. The decision could spur the adoption of Tesla’s standard in other states. Tesla shares fell more than 5% on Wednesday after a downgrade from Barclays. Analyst Dan Levy considered the recent rise in Tesla shares too sharp and downgraded its rating to “Hold”. Tesla shares have more than doubled this year.
General Motors (NYSE:GM) – General Motors has announced that the Camaro will be discontinued after 2024 due to tighter regulations and declining sales. GM hasn’t revealed its future plans for the car, but has said it’s not the end of the Camaro story.
Rivian (NASDAQ:RIVN) – Rivian has acquired Swedish maker of route planning apps for electric vehicles, Iternio, with a view to integrating its technology into its electric pickup trucks and expanding its charging network. Rivian’s CEO, RJ Scaringe, said the deal was closed in the first quarter, but the value was not disclosed. In addition, Rivian plans to invest in the continued development of Iternio’s A Better Routeplanner (ABRP) application and utilize the data to improve its charging infrastructure. This partnership also includes agreements with Tesla to adopt its charging standard.
Uber (NYSE:UBER) – Uber will cut 200 jobs in its recruiting division as part of efforts to keep headcount steady and reduce costs. The cuts represent 35% of the recruiting team and affect less than 1% of Uber’s global workforce of 32,700 employees. The company reduced its staff by 17% at the start of the pandemic, while its rival Lyft (NASDAQ:LYFT) laid off about 26% of its workforce.
AutoNation (NYSE:AN), Advanced Auto Parts (NYSE:AAP), AutoZone (NYSE:AZO) – Executives and directors at auto retailers are buying stock in their companies. AutoNation CEO Michael Manley purchased $1 million worth of stock. Insider purchases were also seen for Advance Auto Parts and AutoZone. While AutoNation’s shares have been rising, the other two companies have struggled. Insiders are confident in the potential of companies and believe that the current share price does not reflect its true value.
Aegon (NYSE:AEG) – Aegon, owner of Transamerica, forecasts an increase in free cash flow and dividends in 2025, boosting its investment strategy in higher yielding assets in the US. The company sees untapped potential in the US insurance market and plans to strengthen its Transamerica subsidiary.
Novo Nordisk (NYSE:NVO) – Novo Nordisk said the European regulator had issued a thyroid cancer-related safety flag for some of its medicines, including semaglutide in its diabetes and obesity drugs. The company is aware of the signal and will provide a full assessment of the data. Other competing companies are also being investigated. Analysts say it’s too early to worry, but it’s important to investigate the matter.
Eli Lilly (NYSE:LLY) – At the American Diabetes Association’s scientific conference beginning Friday, Eli Lilly and Novo Nordisk will showcase their weight-loss medications, seeking to outperform existing products. Demand for these drugs has surged, boosting the companies’ stocks. In addition, there will be important results on diabetes and meetings with medical device companies.
Mastercard (NYSE:MA) – Mastercard has launched a global credit and debit card recycling project in partnership with HSBC (NYSE:HSBC). The goal is to avoid disposal in landfills and build economies of scale. The plan includes shredders and plastic recycling facilities.
JPMorgan Chase (NYSE:JPM) – JPMorgan is expanding its global presence by entering Singapore and Israel this year, aiming to quadruple the number of commercial clients. The banking institution seeks to become the leading global banking partner for foreign companies, in addition to serving US companies operating abroad. Meanwhile, it was reported on Wednesday that the bank has cut around 20 jobs in its investment banking business in Asia in a new round of staff cuts as trading slows in the region. This is the bank’s second round of layoffs this year. In other news, JPMorgan has named Teresa Heitsenrether as Director of Data and Analytics, leading the adoption of artificial intelligence. Tim Fitzgerald will be the new global head of securities services.
Citibank (NYSE:C) – The central bank of Singapore has imposed fines totaling $2.83 million on Citibank, DBS, OCBC and Swiss Life for violations of anti-money laundering and terrorist financing requirements related to the case Wirecard. While the violations are serious, no intentional misconduct was found, and institutions took immediate corrective action. OCBC and Citibank are strengthening their compliance processes, while DBS has acknowledged lapses in its response to the case. Swiss Life terminated the customer relationship and implemented additional measures to more effectively detect misconduct.
Goldman Sachs (NYSE:GS) – Former Goldman Sachs banker Brijesh Goel was found guilty of providing inside information to friend Akshay Niranjan, a former Barclays trader. Niranjan made illegal profits of US$280,000, but he denounced Goel and cooperated with investigators. The verdict resulted in charges of conspiracy, fraud and obstruction of justice.
Deutsche Bank AG (NYSE:DB) – Christian Sewing, CEO of Deutsche Bank AG, has expressed openness to more business following the surprise acquisition of corporate broker Numis Corp. He stated that organic growth is the main path, but he will not rule out opportunities like this. The acquisition marks a strategic shift for the bank as it seeks to expand its presence in the UK. Sewing reiterated his commitment to returning cash to shareholders and said the deal would not compromise that promise.
UBS (NYSE:UBS) – UBS will begin cutting investment banking jobs in Asia from Credit Suisse next month as part of the process of integrating operations. The reduction will mainly affect investment bankers in Australia and China, as well as industrial and retail group hedging teams. UBS plans to retain the majority of investment bankers specializing in technology, media and telecoms, while assessing portfolios and client profiles is a priority. Former Credit Suisse bankers are operating independently for now.
Steelcase (NYSE:SCS) – Steelcase reported adjusted earnings and sales results for the fiscal first quarter that beat Wall Street expectations. However, the company also released a sales forecast for the second quarter that was below expectations.
KB Home (NYSE:KBH) – Shares of construction company KB Home were down -0.3% in premarket trading after releasing earnings and prospects that beat Wall Street’s expectations. The company reported net income of $164.4 million for the fiscal second quarter on revenue of $1.77 billion. KB Home also projected annual revenue higher than analyst estimates.
Overstock.com (NASDAQ:OSTK) – Overstock.com won an auction for the intellectual property and digital assets of bankrupt Bed Bath & Beyond. The purchase includes the brand, business data and digital assets for $21.5 million. Bed Bath stores will not be kept open. The sale still needs to be approved at a hearing.
Molson Coors (NYSE:TAP) – Despite the culture wars surrounding beer, people continue to drink but are more selective with brands. This has benefited Molson Coors Beverage, with increased sales. Analysts at Citigroup raised the company’s stock price target due to the backlash against Anheuser-Busch InBev (BUD, ABUD34). The expectation is that the controversy extends throughout the summer, boosting Molson’s sales and profitability. Other analysts are also bullish on the company.
Beyond Meat (NASDAQ:BYND) – The alternative protein industry is facing a crisis as companies like Unreal Food, Remastered Foods and The Meatless Farm cease operations. Investors cut back on funding due to higher interest rates and inflated production costs. Furthermore, consumers are becoming more choosy about the foods they choose. This turmoil will result in market consolidation, with fewer competitors and more control by survivors. Despite this, some investors remain optimistic about the growth potential of the alternative protein sector, driven by consumer demand and environmental concerns.