US stock futures show timid signs of recovery after Chinese Premier Li Qiang’s speech at the World Economic Forum, announcing the country’s intention to implement new, “more effective” measures to boost domestic demand. The sectors with the best pre-market performances are telephony, technology and energy.
By 07:02 AM, Dow Jones (DOWI:DJI) futures were up 3 points, or 0.01%. S&P 500 futures were up 0.22%, while Nasdaq-100 futures were up 0.48%. The 10-year Treasury yield was at 3.731%.
Stocks in Asia surged, with Hong Kong posting its first rise in six days. Stock markets in Europe operate without a clear direction, counterbalancing Asian optimism with harsh statements by the president of the European Central Bank, Christine Lagarde, that interest rate increases “will not stop anytime soon”.
In commodities markets, West Texas Intermediate crude for August fell -1.24% at $68.51 a barrel. Brent crude fell 1.21% to $73.29, reflecting markets’ uncertainty over recession risks and the relatively quick resolution of the Wagner mercenary group’s uprising in Russia over the weekend. Iron ore surged 4.11% in Dalian.
Tuesday’s US economic agenda:
- US Durable Goods Orders (8:30 am)
- Case-Shiller Home Price Index (9:00 am)
- Fed Richmond Industrial Survey (10:00 am)
- Consumer Confidence Index (10:00 am)
- New property sales (10:00 am)
- Change in API oil inventories (4:30 pm)
At Monday’s close, the Dow Jones Industrial Average dropped 12.72 points or 0.04% to 33,714.71 points. The S&P 500 fell 19.51 points or 0.45% to 4,328.82 points, while the Nasdaq closed down 156.74 points or 1.16% at 13,335.78 points. Investors were concerned about the prospect of high interest rates for a long time in major economies, which affected economic growth projections. Lowering US rate cut expectations in 2023 and geopolitical uncertainty in Russia also contributed to the slump in markets, especially in the technology sector. However, the lack of concrete information about the situation in Russia limited the impact on equity markets. The movement was also evidenced by the American curve, which registered a flattening movement in the day (shorter rates opened and longer ones closed).
Ahead of Tuesday’s quarterly results, traders will be watching the report from Walgreens Boots Alliance (WBA), Korn Ferry (NYSE:KFY), Schnitzer Steel (NASDAQ:SCHL), AeroVironment (NASDAQ:AVAV) and Jefferies Financial (NYSE:JEF).
Wall Street Corporate Highlights for Today
Lordstown Motors (NASDAQ:RIDE) – Electric truck maker Lordstown Motors has filed for bankruptcy and is up for sale following a dispute with Foxconn over an investment. The company accused Foxconn of fraudulent conduct and breach of promises. The situation creates an international trade conflict and could affect Foxconn’s partnerships with other electric vehicle makers. Lordstown is looking for a buyer and is struggling to produce its Endurance trucks.
Tesla (NASDAQ:TSLA) – Following a downgrade by Goldman Sachs that sent Tesla shares into a decline on Monday, Tesla shares were reiterated as a Top Pick in 2023 by Baird on Tuesday. In other news, a Tesla vehicle running on Autopilot software collided with a parked truck in Pennsylvania on Friday, according to police. The incident has raised awareness about Tesla’s driver assistance system. Police blamed the accident on the 18-year-old driver, accusing him of careless driving. US authorities are investigating other crashes involving Tesla vehicles on Autopilot. Tesla emphasizes that Autopilot requires active driver supervision and does not make the vehicle autonomous.
Ford Motor (NYSE:F) – Ford has confirmed it will be rolling out layoffs across the US and Canada, primarily affecting engineering jobs, as part of its cost-cutting and restructuring measures. The cuts are expected to affect all three of Ford’s business units. The company did not reveal the exact number of employees affected.
AutoZone (NYSE:AZO) – Bill Rhodes, CEO and chairman of AutoZone, will step down in January 2024 and take over as chief executive of the board. Philip Daniele, with 29 years of experience at the company, will succeed Rhodes as CEO, taking his seat on the board.
Nvidia (NASDAQ:NVDA), Snowflake (NYSE:SNOW) – Snowflake and Nvidia have teamed up to enable customers to build AI models using their own data. The partnership aims to incorporate Nvidia’s NeMo platform into the Snowflake Data Cloud, allowing it to train and run generative AI models. The initiative seeks to harness the power of data to drive innovation and business growth. Financial details were not disclosed.
Advanced Micro Devices (NASDAQ:AMD) – Cathie Wood’s ARK Investment acquired 18,583 shares of Advanced Micro Devices Inc on Monday, worth about $2 million. The shares were added to ARK’s Autonomous Technology & Robotics ETF, along with 18,106 shares of Taiwan Semiconductor Manufacturing (NYSE:TSM). At the same time, ARK has continued to offload Tesla stock, selling over 500,000 shares so far in June. AMD shares hit their lowest since 2022 on Monday in their seventh consecutive losing session, the longest losing streak since September 2021.
Amazon (NASDAQ:AMZN) – Amazon Web Services, Amazon’s cloud computing division, announced a $7.8 billion investment in Ohio through 2030 to expand its data centers. The goal is to meet the growing demand for cloud services from companies and governments, creating jobs and supporting the local economy. In addition, Amazon plans to invest billions in Virginia and India in the coming years.
Baidu (NASDAQ:BIDU) – The ChatGPT style chat service from Baidu Inc. outperformed OpenAI’s GPT-3.5 on multiple metrics, according to China’s search leader. Baidu’s Ernie 3.5 outperformed OpenAI’s chatbot in general skills and GPT-4 in Chinese language capabilities. Baidu expects Ernie Bot to become an indispensable application on the Chinese Internet and is integrating it into various areas of business. The company has also set aside an investment fund for startups similar to OpenAI.
Apple (NASDAQ:AAPL) – Apple plans to release updated versions of its existing products, including the iPhone 15, new iMacs, iPad Pro, iPad Air and MacBook Pro, according to a Bloomberg report. In addition, the company is working on the launch of the Vision Pro headset and has already begun developing two distinct product lines for the future. Apple is also expanding access to Vision Pro for select developers, looking to enhance the VisionOS ecosystem.
Microsoft (NASDAQ:MSFT) – Microsoft CEO Satya Nadella revealed in a public memo that the company is aiming to reach $500 billion in revenue by 2030, more than doubling its current size. Nadella highlighted the company’s growth strategy and enduring mission. He mentioned Microsoft Cloud as the main driver of growth, aiming to outpace the competition and close the gap with AWS.
Meta Platforms (NASDAQ:META) – Meta Platforms has launched Meta Quest+, a subscription service for its virtual reality headsets. CEO Mark Zuckerberg announced that it will be available for $7.99 per month or $59.99 annually. Apple also entered the market, but its headset costs three times as much as Meta’s.
Illumina (NASDAQ:ILMN) – Illumina Inc has initiated job cuts as part of a plan to mitigate the impact of pent-up inflation and a strong dollar. The company is also looking to further reduce its California workforce and real estate footprint, seeking to save more than $100 million in annual expenses through 2023. While it has not confirmed the exact number of layoffs, reports indicate that 10% of the research and development has been affected. The reduction will result in charges of approximately $25 to $35 million.
UnitedHealth Group (NYSE:UNH), Amedisys (NASDAQ:AMED) – Amedisys accepted an enhanced cash offer of $3.3 billion from UnitedHealth Group and canceled the agreement with Option Care Health (NASDAQ:OPCH). UnitedHealth will buy the company for $101 per share, expanding its presence in home healthcare. Option Care expressed disappointment but will continue to explore strategic deals.
Walgreens Boots Alliance (NASDAQ:WBA) – Walgreens lowered its full-year earnings outlook due to underperforming in the fiscal third quarter. The drop in consumer spending and demand for Covid vaccines and tests were the main factors. The CEO announced cost-cutting measures and stated that the recovery strategy will drive the company’s sustainable growth. Despite this, revenue exceeded expectations and sales grew.
Eli Lilly (NYSE:LLY) – Eli Lilly announced that the company’s investigational drug retatrutide, in an interim trial, helped patients with obesity lose up to 24.2% of their body weight in 48 weeks. The study results were published in the New England Journal of Medicine on Monday.
Johnson & Johnson (NYSE:JNJ) – J&J is facing a crucial test of its plan to use the US bankruptcy system to settle more than 60,000 talc-based talc and cancer claims. A victims’ group is asking a federal judge in New Jersey to dismiss the bankruptcy case of LTL Management, a unit created by J&J. The trial began on Tuesday and will decide whether J&J is misusing bankruptcy laws to force a deal. Opinions differ among lawyers, with some supporting the settlement and others seeking to take their claims to grand juries across the country. The outcome of the case will have significant implications for J&J and the cancer victims involved.
HSBC (NYSE:HSBC) – HSBC plans to abandon its Canary Wharf tower and move staff to a smaller development in central London. The global downsizing trend is shaking real estate markets, driven by remote work and the pursuit of sustainability. The HSBC move is an example of this transformation, challenging traditional business models and reshaping cities. The reduction in office space also affects real estate and companies’ environmental goals.
UBS (NYSE:UBS) – UBS will reveal additional management changes to integrate Credit Suisse following the recent acquisition. CEO Sergio Ermotti announced that the first lines of responsibility have been established and that the third level of responsibilities will be announced shortly. He hopes to provide more details on the integration later in the summer. UBS’s second quarter results have been postponed to August.
Goldman Sachs (NYSE:GS) – Goldman Sachs plans to add Tom Montag, a former Bank of America (NYSE:BAC) executive, to its board as it faces challenges in its strategy. Montag, current CEO of Rubicon Carbon, is an ally of CEO David Solomon. The board meeting comes amid cost-cutting and a challenging outlook for the bank.
Mizuho Financial Group (NYSE:MFG) – Mizuho is providing access to Microsoft Corp’s Azure OpenAI service to all of its 45,000 employees in Japan. The bank is encouraging employees to explore the potential of generative artificial intelligence to drive innovation and is implementing guidelines to address the risks associated with the technology. Mizuho sees generative AI as a necessity in order not to be left behind.
Robinhood (NASDAQ:HOOD) – Trading platform Robinhood Markets has announced full-time job cuts to offset costs amid slowing demand. Teams may experience changes based on volume and workload. The company seeks new revenue after struggling with a reduced customer base.
PacWest (NASDAQ:PACW) – PacWest Bancorp on Monday announced an agreement to sell a financial loan portfolio worth $3.54 billion to Ares Management as part of its efforts to strengthen its balance sheet in the wake of the regional banking crisis. The transaction will improve PacWest’s liquidity and capital in line with its strategy to focus on a relationship-based community bank. The sale of assets will contribute to increasing the company’s capital levels.
Blackrock (NYSE:BLK) – Larry Fink, CEO of BlackRock, stopped using the term ESG due to its politicization, but stated that the company has not changed its position on environmental, social and governance issues. BlackRock will continue to address these issues with the companies it invests in, including decarbonization and corporate governance. Fink emphasized that ESG discussions should not be politicized.
General Dynamics (NYSE:GD) – The US Army selected General Dynamics and Rheinmetall to compete in the Bradley Fighting Vehicle replacement. The deal, estimated to be worth more than $45 billion to the winner, involves the development of detailed digital designs and prototypes for testing. The Army will decide the number of vehicles to be acquired by 2027.
Spirit Aerosystems (NYSE:SPR) – Spirit Aerosystems said it had constructive meetings with the US train drivers’ union, indicating progress in negotiations for a new contract. The company expects to resume operations in Wichita after reaching an agreement with the International Association of Machinists and Aerospace Workers. CEO Tom Gentile highlighted the good progress made.
Thomson Reuters (NYSE:TRI) – Thomson Reuters has agreed to acquire legal startup Casetext for $650 million in cash. Casetext has developed CoCounsel, an artificial intelligence legal assistant powered by GPT-4 that offers document review, legal research and contract analysis. The deal is subject to regulatory approvals and is expected to close in the second half of 2023.
Starbucks (NASDAQ:SBUX) – Starbucks plans to issue clearer guidelines for visual displays in its stores following allegations of a ban on Pride-themed decor. The coffee chain seeks to represent inclusivity and its brand, while contesting accusations made by the union. Other brands also faced similar controversies.
Prologis (NYSE:PLD), Blackstone (NYSE:BX) – Prologis has agreed to acquire 14 million square feet of Blackstone-affiliated industrial properties for $3.1 billion in cash. The deal expands Prologis’ presence in multiple regions and increases its customer base. Closing is scheduled for the end of the second quarter.
SL Green Realty Corp (NYSE:SLG) – Shares in SL Green Realty Corp closed up more than 20% on Monday after the real estate fund sold a stake in a New York office building for $2 billion . The deal brings hope to the city’s commercial real estate market, which has faced challenges recently. The transaction suggests a possible turning point for real estate in New York.
American Equity Life (NYSE:AEL) – Brookfield, a Canadian private equity firm, is close to acquiring insurance company American Equity Life Holding. The offering, comprised of cash and stock, is being recommended by the board of American Equity.
Carnival (NYSE:CCL) – In Monday’s earnings release, Carnival forecast third-quarter profit below estimates due to rising marketing and labor costs. The midpoint of the company’s third-quarter adjusted earnings per share forecast of 70 cents to 77 cents was below analysts’ average estimate of 76 cents, according to IBES data from Refinitiv. Despite this, the company lowered its annual loss forecast and expects strong demand to continue. The shares closed down 7.6% on Monday.
Masimo Corp (NASDAQ:MASI)– Shareholders of Masimo Corp have elected two candidates proposed by Politan Capital Management to the board of directors, in a defiant vote for the company. Politan expressed concerns about capital allocation and oversaw the purchase of Sound United. The investment firm considered the election a clear indication that significant changes are needed. Masimo will release preliminary results shortly.
Biogen (NASDAQ:BIIB) – Biogen shareholders have elected Susan Langer, a former company executive, as a director following the departure of Alex Denner. Langer held positions at the biotechnology company between 2013 and 2019. Denner left Biogen to seek a seat on Alkermes’ board. Shareholders also re-elected the company’s nominees for seven other directors.
Bed Bath & Beyond (NASDAQ:BBBY) – Shares in Bed Bath & Beyond rose 39.1% on Monday after news that the retailer reduced its debt from $5.2 billion to $1.7 billion. The company filed for bankruptcy in April. Overstock.com (OSTK) has successfully bid for the assets of Bed Bath & Beyond. The company faced troubled years, with strategic mistakes and challenges caused by the Covid-19 pandemic.
Market view
Alphabet (NASDAQ:GOOGL) – Alphabet has been downgraded from “Outperform” to “Market Perform” by Bernstein. The share price was unchanged at $125. UBS also downgraded the stock on Monday from “Buy” to “Neutral” but raised its price target from $123 to $132.
3M (NYSE:MMM) – Moody’s downgraded 3M’s senior unsecured debt rating on Monday from A1 to A2. The new A2 rating is in the middle of Moody’s investment grade scale. The outlook for 3M’s debt is negative.