US Index Futures are up in premarket trading on Monday, awaiting for economic activity data and the Federal Reserve’s decision this week. European markets also operate higher with investors digesting lower-than-expected results and waiting for the release of interest rates by the European Central Bank (ECB).
By 07:01 AM, Dow Jones futures (DOWI:DJI) were up 30 points, or 0.08%. S&P 500 futures were up 0.14%, while Nasdaq-100 futures were up 0.16%. The 10-year Treasury yield is at 3.802%.
In Europe, investors digest the results of the Purchasing Managers’ Index (PMI) from Germany, the United Kingdom and the euro zone below expectations and with indications of economic retraction in some cases. In the second largest economy in the region, the composite, industrial and services indicators scored readings of 48.3, 38.8 and 52, respectively, below expectations in all three cases.
In the United Kingdom, the composite PMI was 50.7, also below expectations, the same dynamic as the industrial indicator, which was 45; the country’s services PMI stood at 51.5, against a consensus of 53. In the euro zone, in turn, the composite, industrial and services PMIs registered 48.9, 42.7 and 51.1, in that order, while the consensus expected 49.7, 43.5 and 51.5. Readings below 50 indicate a retraction in activity, while marks above this level indicate expansion.
On Thursday, the European Central Bank (ECB) should raise the rate by 25 basis points, according to market expectations, with interest rates remaining at 4.25%. Before the decision, investors should maintain a cautious stance in the trading sessions, while waiting for signs of the end of the cycle of monetary tightening, given the signs of weakening activity and inflation in the region.
On Monday’s American economic agenda, investors will follow the release of the national activity index in June by the Chicago Fed at 8:30 am. Composite US Manufacturing and Services PMIs are out at 09:45 AM. At 1 pm, another auction of two-year Treasuries is scheduled.
In the commodities market, West Texas Intermediate crude for September is up 0.60% at $77.53 a barrel. Brent crude for September is up 0.54% near $81.51 a barrel. Iron ore futures traded in Dalian, China, rose 0.06% to $117.12 a tonne after a week marked by wide swings on weaker Chinese data.
By Friday’s close, the Dow was up 2.51 points or +0.01% to 35,227.69 points. The S&P 500 rose 1.47 points, or 0.03%, to 4,536.34 points. The Nasdaq fell 30.50 points or 0.22% to 14,032.81 points. Friday was an options expiration day, amid a volatile market, with investors seeking to better understand what the Fed’s stance will be at the next FOMC meeting, which will take place this Wednesday. Market projections indicate with virtually certainty that there will be another 0.25 percentage point increase in interest rates. However, there is still a doubt about the communication that the Fed will transmit to the market. Analysts suggest that the interest rate hike will be the last one. Inflation data have supported this scenario, because, despite some items showing persistence, inflation has evolved as expected and even presented some optimistic surprises in recent data.
Ahead of Monday’s corporate earnings, investors are awaiting reports from Domino’s Pizza (NYSE:DPZ), Ryanair (NASDAQ:RYAAY), Applied Digital (NASDAQ:APLD), Philips (NYSE:PHG), Bank of Hawaii (NYSE:BOH), Bank of Marin (NASDAQ:BMRC), Dynex Capital (NYSE:DX), HBT Financial (NASDAQ:HBT), Bank of Hope (NASDAQ:HOPE), ahead of market opening. Post-close, the most highly anticipated reports are Cleveland-Cliffs (NYSE:CLF), NXP Semiconductors (NASDAQ:NXPI), Cadence (NASDAQ:CDNS), Whirlpool (NYSE:WHR) and Logitech (NASDAQ:LOGI).
Wall Street Corporate Highlights for Today
Amazon (NASDAQ:AMZN) – In December 2021, physicians and occupational health experts investigated Amazon’s BF14 care center in Washington after complaints of frequent injuries. Investigators have found risks in several tasks, and the state of Washington is now considering citations against Amazon. In other news, Amazon will require some corporate employees to relocate in order to meet the requirement to work from the office three days a week. The move has heightened tension between the company and the workforce following recent layoffs. The decision on who will be affected and when will be decided at the department level. The measure has been the subject of protests by some employees.
Apple (NASDAQ:AAPL) – Foxconn (USOTC:FXCOF), Apple’s supplier, has invested in semiconductors in order to diversify its business and take advantage of the increased demand for chips due to technologies such as artificial intelligence. However, its foray into this market dominated by established giants has been met with obstacles, highlighting the difficulty for new entrants to compete with experienced companies with complex supply chains. The recent exit from its joint venture with Vedanta (NYSE:VEDL) has shown the barriers to entry in this highly concentrated industry, where experience and large investments are needed to succeed.
Microsoft (NASDAQ:MSFT), Activision Blizzard (NASDAQ:ATVI) – The settlement between Microsoft and Activision Blizzard has returned to the UK antitrust regulator after an appeals court granted a delay. Microsoft argued that the commitments accepted by the European Union after the agreement was blocked changed the situation. The CMA will reopen the case and expects a new interim view in August.
Spotify (NYSE:SPOT) – Spotify plans to increase the price of its ad-free premium monthly plan by $1 in the US. The increase may extend to other markets in the coming months.
Nikola (NASDAQ:NKLA) – A damaged electric truck has caught fire again at Nikola’s headquarters in Phoenix, Arizona. Fortunately, no one was injured, and the company said the fire was brought under control quickly. The company is still investigating what happened, following a similar incident the previous month.
Stellantis (NYSE:STLA) – Stellantis and Samsung SDI (USOTC:SSDIY) plan to open a second joint venture facility in the US to produce electric vehicle batteries, expected to start in 2027, seeking to meet the growing demand for electric vehicles in the US market.
Ford Motor (NYSE:F) – Two US House of Representatives committees are investigating Ford’s partnership with Chinese battery company CATL. Ford invested $3.5 billion to build a battery plant in Michigan with technology from CATL. The committees have concerns about the dependence on China and the possible connection to forced labor practices in Xinjiang. Ford is reviewing the letter and ensuring the agreement complies with US law.
Tesla (NASDAQ:TSLA) – Tesla CEO Elon Musk plans to cut electric car prices again if the economy slows, thanks to the Biden administration’s tax credits. Tesla is the biggest beneficiary of battery production credits, estimated to be worth about $1.8 billion this year, and US government subsidies offset some of the price cut. The company maintained its annual profit forecast. According to Bloomberg, Tesla delivered more electric vehicles in the first half than Volkswagen, BMW, Mercedes-Benz and Porsche combined. Software issues and declining sales in China are contributing to this situation. As Tesla pushes for more volume with price cuts, German automakers are struggling to keep up. On Monday, UBS analysts downgraded their Tesla stock rating to “Neutral” from “Buy”, but raised the price target to $270 from $220.
Harley-Davidson (NYSE:HOG) – Harley-Davidson and Triumph surprised India’s motorcycle industry by unveiling more affordable models in the world’s largest motorcycle market. Manufacturers are producing the bikes locally to compete with the dominant Royal Enfield. The challenge from iconic brands could affect Royal Enfield’s share of the country’s premium 250cc-plus segment, which poses one of the biggest challenges to the company’s monopoly.
Ryanair (NASDAQ:RYAAY) – Ryanair pilots in Belgium called for a new strike on 29 and 30 July due to unsatisfactory wages and working conditions. Negotiations did not take place after the previous strike, which canceled 120 flights in Brussels South Charleroi.
American Airlines (NASDAQ:AAL) – The American Airlines pilots union has indefinitely postponed a vote to ratify an interim contract agreement. The new date has yet to be defined, after the company increases its offer by more than US$ 1 billion.
Chevron (NYSE:CVX) – Chevron has announced sweeping management changes, including the retirement of its Chief Financial Officer Pierre Breber in 2024, replaced by Eimear Bonner, becoming the second woman to hold that position in the company’s more than 140 years. Chief Executive Michael Wirth has agreed to stay beyond the mandatory retirement age to continue his commitments to investors. Chevron also announced that its second-quarter earnings beat Wall Street estimates, hitting a net profit of $6 billion. Chief Executive Michael Wirth indicated the company is open to more acquisitions and increased shareholder distributions.
Vodafone (NASDAQ:VOD) – Vodafone announced accelerated growth in Q1 revenue, driven by strong demand in the UK and improvements in Germany, Italy and Spain. The new chief executive, Margherita Della Valle, is off to a positive start. The company has also named Luka Mucic, former Chief Financial Officer of SAP (SAP, SAPP34), as its new CFO effective September 1st. The company is looking to streamline its operations and face fierce competition in key European markets.
KKR & Co (NYSE:KKR) – KKR & Co announced the acquisition of chemical manufacturer Chase in an all-cash deal valued at approximately $1.3 billion to strengthen its position in the specialty chemicals sector. The deal is expected to close in the fourth quarter of 2023.
Alibaba (NYSE:BABA) – China’s Alibaba Group has decided not to participate in the share buyback of affiliate Ant Group, but will retain its 33% equity stake. The recent fine has raised hopes for a possible turnaround in Ant Group’s plans to list on the stock market.
United Parcel Service (NYSE:UPS) – United Parcel Service will resume labor talks with the Teamsters union on Tuesday to avert a strike that could impact supply chains and the economy. The current contract expires soon, and both parties are looking to resolve outstanding issues.
Goldman Sachs (NYSE:GS) – Goldman Sachs projects that record demand for oil will boost prices in the near term. Brent is forecast to reach $86 a barrel by the end of the year due to significant deficits and declining US rig counts. However, uncertainty about oil demand due to lack of consensus after the G20 meeting could lead to investors demanding premiums to offset the risk. The International Energy Agency has predicted an increase in global oil demand in 2023, especially in India and China.
JPMorgan Chase (NYSE:JPM) – Workers in the financial industry prefer to work for JPMorgan CEO Jamie Dimon, according to a survey. While some blame executives for weak earnings and job cuts, Dimon and Jane Fraser, CEO of Citigroup, are most popular among heads of big US banks. In other news, JPMorgan plans to expand its Chase online bank to Germany and other European Union countries, according to CEO Jamie Dimon. This expansion marks its first foray outside the US, aiming to compete with European rivals in a competitive market. JPMorgan is already one of the largest advisory banks in Germany and is confident of the success of this endeavor. The timeline for the expansion has yet to be decided.
Bain Capital (NYSE:BCSF) – Bain Capital has reached an agreement to acquire 90% of Adani Capital and Adani Housing, buying the Adani family’s private investments in the company. The transaction seeks to strengthen Adani Capital as an independent company to expand its lending. After allegations of improper business practices and a drop in share values, Adani Group shares rallied on Bain’s investment. The transaction is expected to close in the fourth quarter of this year.
CME Group (NASDAQ:CME) – CME Group, the world’s largest derivatives exchange, has eliminated about 100 positions, relocating most of them to new cloud-focused technology roles. The overall number of employees will remain the same as the company prepares to announce its quarterly results.
AMC Entertainment Holdings (NYSE:AMC) – AMC has filed a revised share conversion proposal after a judge blocked the original plan. AMC shares surged 60% in premarket trading on Monday after the proposal was announced. The conversion is aimed at raising capital, but legal concerns could affect the stock’s volatility. The company is seeking to resolve the issue to protect shareholder value and address the uncertainty caused by the writers’ and actors’ strikes.
Becton Dickinson (NYSE:BDX) – Becton Dickinson has received 510(k) approval from the Food and Drug Administration for its updated BD Alaris Infusion System. In addition, Raymond James upgraded the stock’s rating from “Market Perform” to “Outperform”.
KBR Inc (NYSE:KBR) – KBR has secured a $1.9 billion contract with NASA for human spaceflight programs. The five-year contract, with options for extension, includes spaceflight planning, training and execution, and software development.
Earnings
Philips (NYSE:PHG) – Dutch health technology company Philips beat quarterly earnings expectations and raised its full-year targets. The company reported EPA of $0.29 cents per share on revenue of $5 billion. However, he expressed concern about China seeking self-sufficiency in health technologies. Philips faces challenges related to the global recall of respirators.
Ryanair (NASDAQ:RYAAY) – Ryanair struck a cautious tone due to delays in Boeing deliveries and cut its passenger growth forecast. While quarterly profit topped pre-pandemic levels, demand for the rest of the year is uncertain, and the company may have to spur demand with lower winter prices. Ryanair remains optimistic about a modest increase in annual profit and expects more significant guidance in November. Traffic through March 2024 was revised to a 9% growth due to Boeing delivery delays. The company is working with Boeing (BA, BOEI34) and Spirit AeroSystems (SPR) to avoid further delays.
American Express (NYSE:AXP) – Despite record credit card spending in the second quarter, American Express kept its full-year profit forecast unchanged, disappointing investors. While executives are optimistic, analysts point to possible future downturns. The company posted a profit of $2.89 per share, reaffirming its 2023 forecast of $11 to $11.40.
Schlumberger (NYSE:SLB) – SLB indicated a weakening of activity in North American oilfields, despite beating second-quarter profit estimates, driven by a recovery in offshore and international drilling. SLB expects annual revenue growth of more than 15% and adjusted earnings in the mid-20s. Net income excluding items was 72 cents per share. Revenue was $8.1 billion, slightly below estimates.
AutoNation (NYSE:AN) – AutoNation reported better-than-expected second-quarter revenue ($6.89 billion), driven by demand for new vehicles and aftermarket services, although used vehicle sales declined. The company faces pressure from lower demand for used vehicles and falling profit margins amid rising supply. Electric vehicle (EV) sales have been showing growth, but used vehicle inventories have risen, driving down prices. The company’s quarterly net income fell to $272.5 million, or $6.02 per share, compared with $376.3 million, or $6.48 per share, a year earlier.
Unilever (NYSE:UL) – Unilever will report second quarter results on Tuesday. Analysts forecast underlying sales growth of 6.4%, driven by a 7.7% rise in prices, partially offset by an expected 1.2% decline in volumes. Underlying operating profit is forecast at around EUR 4.91 billion for the first half of the year. The full-year outlook includes an underlying sales growth of 6.1% and an underlying operating margin of 16.4%.
Posco Holdings (NYSE:PKX) – Shares in Posco Holdings rose to an almost 16-year high after second-quarter results showed a recovery in earnings and expansion plans in the battery materials business. Retail investors drove the rally, betting on the potential for improved second-half earnings and continued growth in the lithium business. The company aims to increase annual lithium production by 41% by 2030.