US Index Futures are up in premarket Tuesday, with an eye on quarterly results, in addition to expectations of interest rates setting in the world’s largest economy tomorrow.
By 07:16 AM, Dow Jones (DOWI:DJI) futures were up 22 points, or 0.06%. S&P 500 futures were up 0.12%, while Nasdaq-100 futures were up 0.33%. The 10-year Treasury yield is at 3.904%.
Unilever shares rose more than 5% after the company posted a nearly 8% rise in second-quarter sales, beating market expectations. The German Ifo index on the business climate was below consensus, showing pessimism among entrepreneurs. Investors are cautious ahead of the European Central Bank’s decision to potentially raise interest rates by 25 basis points on Thursday, taking them to 4.25%.
On Tuesday’s American economic agenda, investors await the publication of the IMF with the update of the World Economic Outlook at 09:00 am. At 10:00 am, the release of the Fed Richmond industry survey. Later, at 1 pm, the government will hold another Treasury auction, this time for five years. Yesterday, the US Treasury placed US$42 billion in two-year Treasuries auction, with a cut rate of 4.823%. At 4:30 pm, the oil inventories for the week until 07/21 will be released.
In commodities markets, West Texas Intermediate crude for September is up 0.34% to trade at $79.01 a barrel. Brent crude for September is up 0.29% near $82.98 a barrel. Iron ore futures traded in Dalian, China, rose 1.36% to US$119.86 a tonne, after the Asian giant announced that it intends to further stimulate the country’s construction sector.
By Monday’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. Yesterday the PMI’s indices for the Eurozone and the US were released, with virtually all numbers disappointing market projections. This again raised the risk of a global recession. This possibility is reinforced by the forecast that the FOMC will raise the US basic interest rate (the Fed Funds Rate) by 0.25 pp, with chances of an additional adjustment at the September meeting. The Nasdaq 100 index underperformed against the S&P 500 as investors await the numbers from technology companies.
Ahead of Tuesday’s corporate earnings, traders await reports from Verizon (NYSE:VZ), General Motors (NYSE:GM), 3M (NYSE:MMM), General Electric (NYSE:GE), Spotify (NYSE:SPOT), NextEra Energy (NYSE:NEE), Nucor (NYSE:NUE), Raytheon Technologies (NYSE:RTX), ahead of market opening. After the close, the widely anticipated reports are Microsoft (NASDAQ:MSFT), Alphabet (NASDAQ:GOOGL), Visa (NYSE:V), Teladoc (NYSE:TDOC), Snap (NYSE:SNAP), among others.
Wall Street Corporate Highlights for Today
Apple (NASDAQ:AAPL) – More than 1,500 app developers in the UK have filed a £785 million ($1 billion) class action lawsuit against Apple over App Store fees. The 15% to 30% commissions charged by the company have been criticized by developers and antitrust regulators in several countries. The suit alleges that the charges are excessive and abusive due to Apple’s monopoly on app distribution for iPhones and iPads. The company stated that most developers do not pay commissions and that it helps European developers access global markets through the App Store. In other news, Apple plans to produce around 85 million units of the iPhone 15 this year, keeping shipments steady despite the decline in the overall smartphone market.
Meta Platforms (NASDAQ:META) – Meta Platforms Threads has the potential to attract marketing budgets. With rapid growth and 100 million users, Threads is seen as less controversial and more predictable than Elon Musk’s Twitter. Analysts predict high ad spend targets, with Threads potentially generating as much as $8 billion in annual revenue by 2025. Brands are already considering working with the platform when ads become available.
Spotify Technology (NYSE:SPOT) – Spotify has raised prices on its premium plans in several countries, including the US and UK, looking to increase profitability in an uncertain economy. US pricing will see a $1 increase, with the premium single plan now starting at $10.99. The company has taken steps to increase margins, including layoffs and restructuring the podcast unit. Spotify had already indicated that it would increase prices in 2023 and also carried out increases in 46 countries last year.
Adobe (NASDAQ:ADBE) – Adobe’s $20 billion bid for Figma will face EU antitrust investigation after preliminary review by regulators. That underscores the wariness of tech deals where big companies acquire rival startups.
Netflix (NASDAQ:NFLX) – Analysts at Baird showed optimism for Netflix after its recent setback in second-quarter earnings. They upgraded the stock to Outperform and see potential to reach $500, up 17% from Friday’s closing price. The company is entering a period of strength, driven by new initiatives like ad-supported plans and cracking down on password sharing. Despite the rich valuation, analysts believe the underlying momentum and competitive advantages support the investment. Wall Street is divided over the future of Netflix shares, but analysts see room for continued growth.
Walt Disney (NYSE:DIS) – Walt Disney is re-evaluating its year-end movie release schedule and may delay some titles as prominent actors will not be available to promote them. The discussions are at an early stage and could affect films such as “Poor Things”, “Next Goal Wins”, “Wish” and “Magazine Dreams”.
Taiwan Semiconductor Manufacturing (NYSE:TSM) – TSMC is taking routine precautions at its factories in Taiwan due to the approach of Super Typhoon Doksuri. Measures include emergency staff and inspection of drainage systems and watertight gates. In other news, the company plans to invest around $2.87 billion in an advanced packaging facility in northern Taiwan, driven by rising demand for artificial intelligence. CEO CC Wei revealed that advanced packaging capacity will be roughly doubled to meet market needs, especially for AI chips, while the global economy recovers more slowly than expected. TSMC plans to keep its most advanced chip technology in Taiwan even as it expands overseas.
AT&T (NYSE:T) – AT&T investors will be listening to comments from senior management about the company’s financial and legal responsibility for past abandoned lead-lined cables. Stocks are still recovering from a slump to a three-decade low after reports of toxic cables. The governor of New York has ordered an investigation into the associated health risks. Cleanup costs can run into the tens of billions of dollars. Revenue likely increased 1% to $29.94 billion in the second quarter.
Lyft (NASDAQ:LYFT) – Lyft is exploring options for its bicycle and scooter business, considering a sale or strategic partnership to regain market share lost to Uber (NYSE:UBER). The company has received “strong internal interest” and is looking to serve more passengers. Under the leadership of new CEO David Risher, Lyft has been looking to cut costs and reassess its strategy to improve profit margins. In April, it laid off around 1,072 employees and encouraged them to return to the office.
Tesla (NASDAQ:TSLA) – Representatives from Tesla plan to meet India’s Commerce Minister to discuss building a factory to produce a new $24,000 all-electric vehicle. The company seeks to produce low-cost cars for the local and export markets. The discussions represent a change after the hurdles faced last year. Electric vehicles make up less than 2% of total vehicle sales in India, and Tesla is looking to expand its presence in the region by building a car and battery manufacturing base.
Toyota Motor (NYSE:TM) – Toyota’s joint venture in China has laid off about 1,000 dispatch workers in response to pressure from the price war in the auto market. The company has offered compensation to workers hired by labor service companies, citing recent production levels.
Boeing (NYSE:BA) – Boeing executives will face questions about Spirit AeroSystems’ labor settlement and potential production cost increases in the release of Q2 financial results. Problems at Spirit affected Boeing’s aircraft production and deliveries in 2023. The defense unit’s performance will also be evaluated following the delay in launching the Starliner spacecraft in June.
Eni SPA (NYSE:E) – Eni has announced that it will acquire Chevron’s 62% stake in Ganal PSC, its 62% stake in Rapak PSC and its 72% stake in Makassar Straits PSC. The Italian company, which already owns a 20% stake in both Ganal and Rapak, sees this deal as a crucial step in boosting natural gas development in the country. The agreement is subject to standard regulatory review. Financial details of the deal were not disclosed.
Pfizer (NYSE:PFE) – Pfizer reported that more than 30 drugs, including fentanyl and lidocaine, could face supply disruptions after a tornado destroyed a warehouse at its North Carolina plant. The company limited customer purchases and sent a letter informing of possible disruptions. The Rocky Mount plant is one of the largest producers of sterile injectable drugs in the world, with 25% of Pfizer’s sterile injectables in US hospitals being produced there.
Johnson & Johnson (NYSE:JNJ), Kenvue (NYSE:KVUE) – J&J has launched an exchange offer, allowing its shareholders to opt into shares of its consumer health unit, Kenvue. J&J intends to split at least 80.1% of Kenvue’s shares, moving forward with its spin-off plan to focus on medical devices and pharmaceuticals. J&J shareholders can exchange their shares for Kenvue at a 7% discount. The offering follows Kenvue’s debut on the New York Stock Exchange in May, with a market capitalization of approximately $46 billion.
GSK (NYSE:GSK) – A year ago, GSK spun off its consumer healthcare arm, but faces greater challenges. Its shareholders expect significant growth as a pharmaceutical company, but its shares have fallen and the drug pipeline faces uncertainty. Even with good prospects, GSK needs to generate solid sales through its R&D before considering major acquisitions.
Berkshire Hathaway (NYSE:BRK.A) – Warren Buffett’s Berkshire Hathaway is taking advantage of slumping commodity prices to invest more in the oil and gas sector despite environmental concerns. The conglomerate increased stakes in energy companies and invested in a natural gas export terminal. Buffett sees value and growth potential in unique businesses like Occidental’s shale field (NYSE:OXY) and Cove Point LNG terminal. He emphasizes the flexibility and importance of shale in US oil production.
UBS (NYSE:UBS) – On Monday, the US Federal Reserve slapped a $268.5 million fine on UBS Group AG for misconduct by Credit Suisse in its dealings with defunct company Archegos Capital Management. Credit Suisse, acquired by UBS in June, failed to address poor risk management and lost $5.5 billion when Archegos collapsed in 2021. UBS will pay a total of around $387 million in fines, with Swiss and British authorities also taking action against the bank.
Goldman Sachs (NYSE:GS) – Goldman Sachs fell 0.5% to $357.18 in premarket Tuesday after being downgraded to Neutral from Buy by Citi analysts. The target price has been raised to $400 from $370.
Morgan Stanley (NYSE:MS) – Despite being celebrated for his correct predictions last year, Morgan Stanley’s chief US equities strategist Mike Wilson has admitted he was wrong about the market in 2023. He downplayed the strength of the stock rally but remains cautious on corporate earnings.
American Express (NYSE:AXP) – Shares in American Express were downgraded to Underweight from Neutral on Monday by Piper Sandler analyst Kevin Barker due to concerns about the impact of the resumption of student loan payments on the card issuer. He expects a slowdown in spending as young people budget for monthly loan payments.
FedEx (NYSE:FDX) – FedEx pilots rejected tentative contract, prompting the company and the union to reopen negotiations under the supervision of the National Board of Mediation. The deal included salary increases and pensions. FedEx expressed disappointment over the vote, while the company’s stock was unchanged in Tuesday’s premarket.
Yellow (NASDAQ:YELL) – The International Brotherhood of Teamsters called off a strike in Yellow after the company agreed to make payments to the Central States Health Fund. Payments will secure health benefits for union members, preventing an immediate attack on Yellow.
Public Storage (NYSE:PSA) – Public Storage has acquired Simply Self Storage from Blackstone (NYSE:BX) for $2.2 billion to expand market presence. The sale is estimated to generate more than $600 million in profit. The deal will close in the third quarter of 2023.
Walmart (NYSE:WMT) – Walmart stock rose 1.4% in premarket Tuesday after being upgraded to Overweight from Neutral by Piper Sandler with a price target of $210.
Gap (NYSE:GPS) – Gap has announced the appointment of Chris Blakeslee, former president of Alo Yoga, as the new president and CEO of athletics brand Athleta. Investors are hoping his experience will help reverse the decline in sales. Gap is also undergoing a reorganization and cost reduction to address challenges in the apparel market.
Shopify (NYSE:SHOP) – MoffettNathanson analyst Michael Morton has upgraded Shopify’s stock rating to Outperform with a price target of $76, citing the company’s potential to serve large retailers. He believes that Shopify is at the start of a rebound in its enterprise business, especially with the Shopify Plus platform for larger sellers. While the company’s valuation is high, Morton sees promising signs for the company’s future growth. Shopify’s stock is up over 90% this year.
AMC (NYSE:AMC), IMAX (NYSE:IMAX), Cinemark (NYSE:CNK) – AMC shares rose 30%, while IMAX gained 5.9% and Cinemark rose 1.2% on Monday. Theater chains have seen notable gains this year, outperforming even meme stocks. AMC reported strong viewership and audience revenue over the past weekend, boosting confidence in post-pandemic demand. IMAX was also successful with the global release of Oppenheimer and Cinemark highlighted improvements in the performance of previously released films. According to IMDb Charts, Barbie and Oppenheimer , both released on July 21, took in $155 million and $81 million at the weekend box office, respectively.
Earnings
General Electric (NYSE:GE) – Analysts forecast General Electric to post a second-quarter profit of 46 cents a share on sales of $14.8 billion. In the same period of the previous year, GE reported profit of US$ 0.61 per share and income of US$ 17.9 billion. The company’s shares are up 68% this year, benefiting from a recovery in global air travel and improving profitability in its energy division. GE’s results will be released before the stock market opens on Tuesday.
General Motors (NYSE:GM) – General Motors raised its 2023 outlook for the second time this year after second-quarter results beat Wall Street expectations. GM reported earnings per share of $1.91 on revenue of $44.75 billion in the second quarter. The automaker plans to cut $3 billion in spending, including sales, marketing and salaries.
F5 Networks (NASDAQ:FFIV) – Shares in the cloud-based software company rose 9.8% in premarket Tuesday after reporting a surprising performance in its fiscal third quarter. F5 reported adjusted earnings of $3.21 per share and revenue of $703 million. Those numbers beat the expectations of Refinitiv analysts, who were predicting earnings per share of $2.86 and revenue of $699 million.
Cadence Design Systems (NASDAQ:CDNS) – Following the release of second-quarter results, the company’s stock was down 4%, but is flat in premarket Tuesday. Revenue from the products and maintenance category hit $922.8 million, missing analysts’ estimates of $928.8 million, according to StreetAccount. Likewise, services revenue was also below expectations, totaling US$ 53.8 million instead of the US$ 57.9 million forecast by analysts.
Unilever (NYSE:UL) – Shares of Unilever rose 5.2% in premarket Tuesday after beating forecasts for sales growth as it raised prices again to offset higher costs. Underlying sales rose 7.9% in the second quarter, with CEO Hein Schumacher expressing confidence in the company’s fundamentals. The company expects sales growth of over 5% for the full year and faces challenges in maintaining market share. Unilever said the slumping housing market and reduced exports in China had driven consumer sentiment to an all-time low, contrasting with its earlier expectations of a Chinese “consumption boom”. Despite this, underlying sales in China rebounded in the second quarter.
Whirlpool (NYSE:WHR) – Following the mixed earnings announcement, shares in the kitchen and laundry company were down 2% but holding steady in premarket trading on Tuesday. Whirlpool posted adjusted earnings per share of $4.21, beating Refinitiv analysts’ estimates of $3.76 per share. However, revenue was below expectations, with Whirlpool posting $4.79 billion compared to analysts’ projections of $4.82 billion.
Logitech International (NASDAQ:LOGI) – Logitech International beat earnings estimates and raised its outlook despite sales continuing to decline in the fiscal first quarter. Shares are up 6.5% in premarket Tuesday. The company reported adjusted earnings per share of 65 cents, above analysts’ estimates of 46 cents, according to FactSet. Sales of $974 million, down 16% year-over-year, also beat expectations of $916 million.
NXP Semiconductors (NASDAQ:NXPI) – Following the release of the latest quarterly results, shares of the chipmaker are up 1.9% in premarket trading on Tuesday. NXP posted adjusted earnings per share of $3.43 on revenue of $3.3 billion. Analysts had estimated earnings of $3.29 per share on revenue of $3.21 billion, according to Refinitiv. The company issued a third-quarter forecast that also beat analyst estimates.
Domino’s Pizza (NYSE:DPZ) – Domino’s Pizza beat quarterly profit estimates thanks to easing supply chain pressures and lower food costs. However, demand remains pressured by higher menu prices and delivery fees, and US same-store sales were up just 0.1%. Revenue of $1.02 billion was below analysts’ average estimate of $1.07 billion, while earnings of $3.08 per share beat expectations of $3.05, according to Refinitiv data.
Philips (NYSE:PHG) – Philips recorded its fourth consecutive drop in order intake, with an 8% decline in the last quarter. The company warned of global market uncertainty and stock declines. China boosted sales, while Russia declined due to licensing requirements. Philips forecast second-half order increases, updating its full-year targets to comparable “mid-single-digit” sales growth.
Ryanair (NASDAQ:RYAAY) – Ryanair posted quarterly profit beyond pre-pandemic levels but took a cautious stance on travel demand for the rest of the year due to delivery delays from Boeing (NYSE:BA). The company cut its passenger growth forecast, although demand looks robust for the rest of the summer, with fares expected to continue to grow, but at a slower rate. The company is also considering stimulating demand with lower prices this winter, when it will have 25% more seats to fill than in 2019.
Microsoft (NASDAQ:MSFT), Alphabet (NASDAQ:GOOGL) – Reports from Microsoft and Alphabet are set to be released after the close of the stock market on Tuesday. For Microsoft, investors will be watching the prospects for the company’s Azure cloud computing arm and its rapid growth in artificial intelligence. For Alphabet, investors will be monitoring signs of improvement in the advertising market and trends in cloud spending.
Texas Instruments (NASDAQ:TXN) – Texas Instruments will report earnings after market close with tempered expectations. Analysts expect revenue of $4.37 billion and adjusted EPS of $1.76. However, there are concerns about continued weakness in several segments except automotive, with limited signs of recovery in China, the world’s second-largest economy. The company sells basic chips used in several industries, and weak growth in China could affect demand.
3M (NYSE:MMM) – 3M faces environmental and legal challenges, which are likely to impact quarterly results. Earnings per share are forecast to be $1.73, but with charges of more than $10 billion to resolve PFAS issues. Adjusted earnings should be between $12 and $14 per share. Problems in China and a drop in some segments will also affect the company’s fundamentals. 3M faces uncertainty over environmental cleanup responsibilities and defective earplug litigation. 3M shares are down about 22% over the past 12 months, representing a 60% drop from 2018 records.