US Index Futures rose on Thursday, with shares of microchip makers higher in premarket. Other markets operated without direction this morning, Asian stocks closed generally in the red and European stocks registered slight gains, driven by shares of the public utilities, technology and banking sectors.
By 07:01 AM, Dow Jones (DOWI:DJI) futures are up 101 points, or 0.30%. S&P 500 futures are up 0.30%, while Nasdaq-100 futures are up 0.37%. Yields on 10-year Treasuries are up to 3.749%.
Early this morning, US central bank President Jerome Powell said that the US economy faces challenges with tightening credit conditions, but that “the process of bringing inflation to the 2.0% target has a long way to go.” He estimates that May core inflation, to be released on Friday, will hold steady from June on a 12-month comparison at 4.7%.
In addition, all 23 US banks have passed the Federal Reserve’s annual stress test, weathering a severe recession and continuing to provide credit. While maintaining minimum capital levels, tighter regulations are expected for regional banks, especially after recent bankruptcies. Losses on loans, mainly credit cards, were highlighted. Banks will disclose buyback and dividend plans, likely taking a conservative approach given future uncertainties.
In commodities markets, West Texas Intermediate crude for August was up 0.33% to trade at $69.79 a barrel. Brent crude for August was up 0.36% at $74.30 a barrel. Iron ore jumped 0.9% to $114.71, the highest level in 15 weeks, after analysts signaled that Chinese steel exports could be the highest since 2016. There are also expectations of more economic stimulus announcements in the country.
The American economic agenda for Thursday, US Quarterly GDP Change, Jobless Claims, and PCE Prices will be released at 8:30 am. At 10:00 AM, the US Pending Home Sales report will be released.
In the evening, China’s Purchasing Managers’ Indices (PMIs) will be released, which may guide investor sentiment regarding the economic recovery of the Asian powerhouse.
At the close of Wednesday, American stock exchanges operated without a well-defined trend, partly reacting to a movement of achievement in the semiconductor sector in view of the possibility of the imposition of new restrictions on the export of chips in the USA. The proximity of the end of the quarter also seems to be contributing to greater volatility. Nasdaq Composite closed up 36.08 points or 0.27% at 13,591.75 points. The S&P 500 was down 0.04% to 4,376.86 points and the Dow Jones was down 74.08 points, or 0.22%, to 33,852.66.
Ahead of Thursday’s quarterly results, traders will be watching reports from Paychex, Rite Aid, McComick, Acuity Brands, Simply Good, and others, ahead of the market open. Nike will release the quarterly report after the close.
Wall Street Corporate Highlights for Today
Apple (NASDAQ:AAPL) – Shares in Apple reached an all-time high at the close of Wednesday, approaching a market capitalization of $3 trillion. Buoyed by the expectation of the end of the cycle of rising interest rates and the potential of artificial intelligence, Apple shares rose 0.6%, reaching a market value of US$ 2.98 trillion. Strong financial results and the launch of the augmented reality headset contributed to this milestone. In other news, Apple is challenging the EU, saying it doesn’t need to make any more changes to the App Store after accusations of unfair treatment of competitors like Spotify (NYSE:SPOT). The company claims it has addressed competition concerns over the past two years and that the allegations are unfounded.
Microsoft (NASDAQ:MSFT) – Leaders from Microsoft and Activision Blizzard sought to allay antitrust concerns over the proposed $69 billion merger. Microsoft CEO Satya Nadella stated that it would not make strategic sense to make Activision games exclusive. Microsoft has agreed to license the “Call of Duty” game to rivals to address FTC concerns. Both companies face regulatory challenges in the US and UK. In other news, Sega rules out being acquired by Microsoft or other buyers, saying it intends to remain part of a larger Japanese entertainment conglomerate. The company said it maintains a close relationship with Microsoft but is not open to acquisition talks at this time.
Activision Blizzard (NASDAQ:ATVI) – Activision Blizzard has announced that its “Call of Duty” studio will be based in Barcelona as part of its investment plans in Europe. Activision also plans to expand its investments and workforce in the European Union. The company recognizes Europe’s key role in game development and intends to expand its presence on the continent.
Oracle (NYSE:ORCL) – Oracle is investing billions of dollars in Nvidia chips as it expands its cloud computing service to power artificial intelligence. The company is acquiring GPUs from Nvidia, CPUs from Ampere Computing and AMD. These investments are aimed at strengthening Oracle’s presence in the AI space. In addition, Oracle modified its database software to run on chips from Ampere Computing, which use a technology architecture from Arm Ltd. The company believes this change is the future, as Ampere’s chips are more energy efficient.
Nvidia (NASDAQ:NVDA) – Nvidia’s chief financial officer has expressed concerns that restrictions on exports of artificial intelligence chips to China would result in permanent lost opportunities for the US industry. US authorities are considering tightening export control rules, which could affect chip sales to China. Nvidia said it does not expect immediate impacts, but recognizes the potential longer-term impact.
Micron Technology (NASDAQ:MU) – Micron Technology beat third-quarter expectations, driven by demand for artificial intelligence memory chips and oversupply in PCs and smartphones. The company is bullish on the adoption of generative AI and believes the memory inventory fix has passed. Revenue for the quarter was $3.75 billion, while the forecast for the next quarter is in line with expectations. The company faces challenges in China due to regulatory restrictions.
Amazon (NASDAQ:AMZN) – The FTC led by Lina Khan will file a sweeping antitrust lawsuit against Amazon, alleging that the company rewards and punishes merchants based on the use of its logistics services. Khan seeks to restructure the company, which Amazon is sure to challenge. The investigation has been ongoing since 2019 and is based on allegations similar to a congressional report and a European antitrust case. Amazon faces criticism and pressure as Khan takes a rigorous approach.
Alphabet (NASDAQ:GOOGL), Salesforce (NYSE:CRM) – AI startup Typeface raised $100 million in a funding round led by Salesforce and Google, valuing the company at $1 billion. Typeface offers generative content creation tools that allow companies to produce marketing materials more efficiently. The startup also has strategic partnerships with Google and Salesforce to offer customized solutions to customers.
BlackBerry (NYSE:BB) – BlackBerry posted surprising Q1 earnings, boosted by its cybersecurity and enterprise software business. The company’s shares are up 16% in premarket trading on Thursday. Total revenue of $373 million beat analysts’ expectations. Cybersecurity unit revenue increased 5.5% to $93 million. BlackBerry sold mobile-related patents for up to $900 million to Malikie Innovation Limited. The company is reviewing its strategic alternatives, including the separation of its core businesses.
Nike (NYSE:NKE) – Analysts are concerned about the impact of slowing sales in North America on Nike’s results. Expectations over the company’s earnings report led to reductions in target price estimates. Despite having exceeded expectations in recent quarters, concerns persist. Investors are more attentive to projections for the next fiscal year and the recovery in China. Wholesale partnerships and sales in China can influence investor sentiment. Results will be released after the close on Thursday.
Virgin Galactic (NYSE:SPCE) – Virgin Galactic joins Blue Origin and SpaceX in the space tourism race on Thursday. A twin-body jet is ready to carry a crew of three Italians on a Virgin Galactic rocket plane for the first commercial flight of paying customers into space. The scientific flight would collect biometric data and study the behavior of liquids and solids in microgravity.
Honeywell (NASDAQ:HON) – Honeywell has agreed to acquire Saab’s heads-up display (HUD) assets to strengthen its avionics unit. The HUDs will be integrated into aircraft cockpit systems, offering features such as a wide field of view and high image resolution. This will increase pilots’ situational awareness and improve safety.
Joby Aviation (NYSE:JOBY) – Joby Aviation has received approval from the US Federal Aviation Administration to test its electric air taxi, moving closer to authorization for commercial operations. Toyota North America will also join Joby’s board. The company’s shares are up 15.3% in premarket Thursday after bouncing on Wednesday. Joby plans to start operations in 2025, adopting a business model similar to a ride-sharing app. Competition in the eVTOL aircraft market is fierce, with certification deadlines being adjusted.
Boeing (NYSE:BA) – According to Boeing, approximately 90% of the China 737 MAX jets have already resumed commercial operations by the end of June. Some of these planes were assigned to regional international routes. However, Boeing has yet to resume deliveries to China due to geopolitical tensions between the countries.
Delta Air Lines (NYSE:DAL) – Delta raised its forecasts and supported 2024 targets on its investor day, highlighting “tailwinds for demand.” Analysts praised the updates, predicting a promising third quarter. While delays due to storms impact airports, US airlines are optimistic for the summer and second half of the year. Business travel can offset a possible slowdown in leisure travel.
Stellantis (NYSE:STLA) – Automaker Stellantis plans to impose mandatory overtime on unionized workers at its Warren Truck and Jefferson North, Michigan, plants in order to increase production of Jeep SUVs ahead of a potential strike deadline in September. The move is seen as an attempt to build up inventories and pressure the United Auto Workers (UAW) union to accept a new contract.
Tesla (NASDAQ:TSLA) – ARK Investment, managed by Cathie Wood, sold more Tesla shares in two of its exchange-traded funds. In total, more than 500,000 Tesla shares were sold this month. On the other hand, ARK funds added shares of Advanced Micro Devices (NASDAQ:AMD) and Taiwan Semiconductor Manufacturing (NYSE:TSM).
Toyota (NYSE:TM) – Toyota posted a 10% increase in global sales in May, driven by a recovery in parts supply and growth at home and in other key markets. The company sold 838,478 vehicles in total, including the Lexus brand. Sales in Japan were up 35.1%, while global hybrid sales were up 25.8%. The automaker has also sold 9,923 battery electric vehicles worldwide. Sales in China were flat compared to April.
Lucid (NASDAQ:LCID) – Lucid is seeking more deals to sell its luxury electric vehicle technology as it expands its supply business. Its CEO has stated that the recent deal with Aston Martin is just the beginning. The company will provide Aston with technology, including powertrains and battery modules. Lucid plans to provide high-performance technology initially and move into the mass market later. Lucid and Aston share a shareholder, but the CEO has stated that the investor did not play a role in the deal.
Exxon Mobil (NYSE:XOM) – Exxon Mobil has agreed to develop 6,100 lithium-rich acres in Arkansas with Tetra Technologies. This is Exxon’s second move this year to secure the assets needed to produce lithium for electric vehicles. The partnership allows both companies to increase their presence in the lithium supply chain.
Occidental Petroleum (NYSE:OXY) – Berkshire Hathaway (NYSE:BRK.B) has increased its stake in Occidental Petroleum, acquiring 2.1 million shares in recent days. It now owns more than 25% of the energy company, with a stake valued at around $12.9 billion. Occidental redeemed Berkshire preferred stock, paying a 10% premium. Berkshire also has warrants to buy more of Occidental’s common stock.
BlackRock (NYSE:BLK) – According to the BlackRock Investment Institute, companies focused on artificial intelligence (AI) will drive returns in developed markets, even in a challenging economic environment. The high concentration of earnings in the tech sector, similar to the tech boom of the 2000s, highlights the potential of AI as a force generating returns. The institute recommends a granular allocation and envisions a “new regime” of economic volatility and high interest rates. Factors such as labor shortages, energy transition and geopolitical instability are expected to continue to cause inflationary pressures.
Morgan Stanley (NYSE:MS) – Federal prosecutors are investigating whether a Spartan Capital Securities broker illegally obtained confidential information about planned Morgan Stanley mergers and acquisitions. The broker’s communications with former employees are being scrutinized, including access to email accounts. Morgan Stanley has not been accused of wrongdoing.
Thomson Reuters (NYSE:TRI) – Thomson Reuters will acquire Imagen, a digital content asset management company, to expand its agency business. Imagen, owner of the Screenocean platform, offers digital content library services to sports, media and business companies. The acquisition will enable customers to add media asset management services to its offering. Thomson Reuters also recently agreed to buy Casetext, an AI company.
Bed Bath & Beyond (NASDAQ:BBBY) – Bed Bath & Beyond has decided to split the Buy Buy Baby bankruptcy auction into two phases, according to CNBC. The first phase will accept bids only for the chain’s intellectual property, while the second phase will allow bids to keep Buy Buy Baby and its stores in business as usual.
Overstock.com (NASDAQ:OSTK) – Overstock.com jumped 8.5% in premarket Thursday after completing the acquisition of the Bed Bath & Beyond brand and certain of the retailer’s intellectual property assets for $21.5 million. Overstock.com will change its name to Bed Bath & Beyond. The company plans to relaunch the site in Canada and expand in the US, but will not acquire any Bed Bath & Beyond brick-and-mortar stores.
McCormick (NYSE:MKC) – Brendan Foley has been promoted to CEO of McCormick, effective September 1. He was also elected to the company’s board. Lawrence E. Kurzius will continue as chairman of the executive board.
DoorDash (NYSE:DASH) – A DoorDash courier received a $10,000 gift from the company, which was a huge help in a difficult time for her and her husband. DoorDash selected Peggie as one of its “Most Loyal Dashers” and made the donation in celebration of the company’s 10th anniversary. The company has gifted couriers who joined the platform in the early years and completed more than 10,000 deliveries.
Airbnb (NASDAQ:ABNB) – Recent data indicates a drop in revenue from short-term rentals in major US cities, raising concerns about consumer spending power. Airbnb disputes the numbers, saying more guests are traveling on the platform than ever before. Meanwhile, US home prices continue to rise due to tight supply.
AMC Entertainment (NYSE:AMC) – AMC rose 7.6% on Wednesday ahead of a crucial hearing on converting preferred equity units to common stock. This was the biggest single-day percentage rise since April. The company seeks to eliminate its debt through this conversion. An agreement to resolve a legal dispute was reached, pending court approval. AMC shares are up 8.4% this year.
Market view
Micron Technology (NASDAQ:MU) – Piper Sandler raised Micron stock to “Neutral” from “Underweight” and raised its price target to $70 from $45.