US Index Futures operate in decline this Wednesday, as well as European markets, reverberating results of large corporations and caution before the decision of monetary policy in the United States.
By 6:52 AM, Dow Jones futures (DOWI:DJI) were down 73 points, or 0.21%. S&P 500 futures were down 0.17%, while Nasdaq-100 futures were down 0.30%. The 10-year Treasury yield is at 3.893%.
In Europe, the focus is on financial reports from LVMH (EU:MC), which registered a slowdown in sales in the United States during the second quarter, and from Deutsche Bank (NYSE:DB), which exceeded expectations for the period, despite a 27% reduction in profit compared to to the previous year.
However, investors are on hold due to the possibility of rising interest rates in the region. Market consensus suggests the European Central Bank (ECB) is likely to raise the bloc’s key interest rate by 25 basis points on Thursday, taking it to 4.25%. Until that happens, investors are cautious.
On Wednesday’s American economic agenda, the Federal Reserve (Fed) will announce the American interest rate at 2 pm. Then at 2:30 pm, Fed Chairman Jerome Powell will comment on the decision and provide more clues about the future.
Currently, interest rates in the United States are between 5% and 5.25%. Markets have already priced in a 25 basis point rise, taking rates into the range of 5.25% to 5.75%, the highest level since January 2001. Investors will also be watching for signals about future monetary policy during the Fed’s statement and press conference.
Additionally, investors will follow the July Home Mortgage Index, which will be released at 7:00 am. At 10:30 am, the weekly change in oil inventories will be released, with an expectation of a drop of 1.97 million barrels.
In commodities markets, West Texas Intermediate crude for September is down 0.95% at $78.87 a barrel. Brent crude for September is down 0.94% near $82.85 a barrel. Iron ore futures traded in Dalian, China, rose 1.76% to US$121.06 per ton, continuing the movement seen yesterday, in view of the expectation of the Asian giant to announce even more measures to encourage the construction sector of the country.
At Tuesday’s close, the stock market rose amid anticipation of Microsoft (NASDAQ:MSFT) and Alphabet (NASDAQ:GOOGL) results and anticipation of the Fed’s decision. The Dow closed up 26.83 points or 0.08% to 35,438.07 points. The S&P 500 rose 12.82 points, or 0.28%, to 4,567.46 points, hitting its best closing level in more than a year. The Nasdaq rose 85.69 points, or 0.61%, to 14,144.56 points. The Conference Board’s consumer confidence indices in the US came in higher than expected, easing fears of a possible recession in the country. Meanwhile, the earnings season has been very positive in the US, which is helping the market rise.
Ahead of Tuesday’s corporate results, traders await reports from AT&T (NYSE:T), Boeing (NYSE:BA), Coca-Cola (NYSE:KO), Tilray (NASDAQ:TLRY), Thermo Fisher (NYSE:TMO), Hilton (NYSE:HLT), Union Pacific (NYSE:UNP), prior to market opening. After the close, widely anticipated reports are Meta Platforms (NASDAQ:META), Lam Research (NASDAQ:LRCX), eBay (NASDAQ:EBAY), Mattel (NASDAQ:MAT), ServiceNow (NYSE:NOW), Chipotle Mexican Grill (NYSE:CMG), among others.
Wall Street Corporate Highlights for Today
Amazon (NASDAQ:AMZN), iRobot (NASDAQ:IRBT) – Amazon.com reduced the purchase price of iRobot by about 15% to about $1.42 billion after iRobot took on new debt. The modified agreement calls for $51.75 per iRobot share. iRobot justified the price change due to new debt and is working with regulators on reviewing the merger, which faces antitrust scrutiny in Europe. The deal has already been cleared by the UK antitrust regulator. In other news, Amazon has offered to change its UK marketplace rules to address concerns raised by the Competition and Markets Authority (CMA). If accepted, the changes will ensure equality for third-party sellers regarding the display of products in the ‘Buy Box’.
Apple (NASDAQ:AAPL) – France’s antitrust body has issued a statement of objection against Apple, alleging that the US company may have violated regulations related to the use of iPhone user data for advertising purposes. Apple has denied the allegation, saying its mechanism gives users more control over data tracking.
Microsoft (NASDAQ:MSFT) – Microsoft unveiled a spending plan to meet demand for artificial intelligence services, driven by investments in OpenAI. The company intends to integrate AI into its products, such as the “Copilot” assistant for Microsoft 365, but heavy spending ahead of commensurate revenue growth has worried investors. The company expects to be aggressive in meeting demand and sees Azure as an important part of its business.
Meta Platforms (NASDAQ:META) – The Federal Court of Australia has ordered Meta to pay A$20 million for collecting user data through the Onavo app, without disclosing its actions. The company is also facing other civil lawsuits related to the handling of user information. Meta acknowledged the fine but said it worked to give people more transparency and control over their data. In other news, Meta has offered restrictions on the use of data from competitors to Facebook Marketplace, but EU regulators have rejected the offer to end the antitrust investigation. The company could face fines of up to 10% of global turnover for antitrust violations. Last December, the EU accused Meta of abusing its market power by linking Facebook Marketplace with the Facebook social network and imposing unfair trading conditions on rival classified ad services.
Alibaba (NYSE:BABA) – Alibaba Cloud became the first Chinese company to support the Llama da Meta (NASDAQ:META) artificial intelligence model. This will allow Chinese business users to develop programs using the Llama2 model recently launched by Meta. The partnership could strengthen Alibaba Cloud in the Chinese market and help Meta strengthen ties with China. The move could also boost Alibaba’s AI ambitions amid US restrictions on Chinese companies in the tech sector.
Intel (NASDAQ:INTC), Ericsson (NASDAQ:ERIC) – Intel and Ericsson will work together to create a custom chip for Ericsson’s 5G networking equipment, utilizing Intel’s most advanced manufacturing technology known as “18A” . The chip will be one of the first to use this technology, expected to be ready in 2025.
Datadog (NASDAQ:DDOG) – Datadog received a ratings update Tuesday from Wolfe Research analyst Alex Zukin, who upgraded the stock’s rating to “Outperform.” Zukin set a price target of $140, citing a more optimistic view of fundamentals and growing demand for Datadog’s observability software. He sees the company as the potential growth leader in the software industry.
Walt Disney (NYSE:DIS) – Bryan Cranston, the Emmy-winning actor of “Breaking Bad,” led a rally of Hollywood actors in New York, criticizing Disney Chief Executive Bob Iger. Actors are concerned about artificial intelligence being used to replace their jobs and are demanding higher pay and protections. The SAG-AFTRA union went on strike in support of these demands. AMPTP, which negotiates on behalf of Disney and other companies, has offered pay and benefits increases, but the dispute continues.
Dish Network (NASDAQ:DISH) – Shares in Dish Network rose 12.1% in premarket Wednesday after Bloomberg reports that the company will begin selling its premium wireless service on Amazon.com’s website still this week.
United Parcel Service (NYSE:UPS) – UPS and the Teamsters union signed an interim contract for about 340,000 workers, averting a strike that could have cost the economy billions and disrupted a quarter of US shipments. The agreement guarantees historic wage increases and improvements in benefits for workers. Member voting to ratify the pact begins in August.
Intuitive Machines (NASDAQ:LUNR) – The space exploration company was selected to be part of an award given by NASA, aiming to assist in the development of technology for nocturnal lunar exploration.
Morgan Stanley (NYSE:MS) – Morgan Stanley has downgraded Israel’s sovereign credit due to the passage of laws that limit the power of the Supreme Court. Analysts predict economic uncertainty in the coming months, with rising borrowing costs and a weakening shekel currency. Mass protests compounded the crisis, with growth projected at 1.6% in 2024.
LPL Financial (NASDAQ:LPLA) – LPL Financial is acquiring Crown Capital Securities, expanding its expansion efforts. Crown Capital Securities which has 260 advisors overseeing approximately $6.5 billion in advisory and brokerage assets. The acquisition will allow LPL to increase its resources and technology for Crown Capital advisors, while the company will retain its brand and structure. Consolidation continues in the independent brokerage industry. The acquisition is expected to close in early 2024.
Wells Fargo (NYSE:WFC) – Wells Fargo has announced the authorization of a new share repurchase program of up to $30 billion. The bank’s shares rose 2.8% in premarket trading on Wednesday, boosted by a 57% jump in second-quarter profit due to interest payments from customers. The lender and other major US banks raised their dividends in the third quarter after passing the Federal Reserve’s health check, showing strength in the face of a possible economic downturn.
PacWest Bancorp (NASDAQ:PACW), Banc of California (NYSE:BANC) – Following the $1.1 billion buyout deal by Banc of California, PacWest stock was up 35.4% in premarket trading on Wednesday. PacWest was hurt by the collapse of regional creditors, but the sale was seen as profitable by analysts. Shares in Banc of California also rose 14.4%.
Deutsche Bank (NYSE:DB) – Deutsche Bank announced a $497 million share repurchase this year, signaling a more positive outlook and reflecting the improvement in its financial condition. The buyback will begin in August ahead of quarterly results on Wednesday.
NatWest (NYSE:NWG) – Alison Rose, CEO of NatWest, has faced several crises throughout her career, including the Covid-19 pandemic and the aftermath of Brexit. However, it was the decision to close the accounts of former Brexit Party leader Nigel Farage that cost her her job. Widely praised for her work, her resignation raised questions about the future of the institution.
Biogen (NASDAQ:BIIB) – Biogen has announced a cut of about 1,000 jobs (11% of the workforce) to reduce costs and boost the launch of the new Alzheimer’s drug, Leqembi. The company faces challenges with competition and declining sales of other treatments.
Delta Air lines (NYSE:DAL) – Delta Airlines opened its second lounge at John F. Kennedy Airport in New York City to meet high demand and alleviate overcrowding. SkyClub T4-A offers features suitable for business or short-haul leisure travelers, including private cabins for Zoom meetings and a glass-enclosed deck with panoramic views. The airline has adjusted its policies to accommodate increased air traffic, restricting lounge access to customers departing within three hours. The lounge also features a menu of Jewish staples prepared by chef Elyssa Heller.
Raytheon Technologies (NYSE:RTX) – Pratt & Whitney faced issues with an engine model, leading to a 10% drop in parent company RTX shares. More than 1,000 engines have to be removed from Airbus planes to check for microscopic cracks. These setbacks could affect aircraft production capacity during the summer travel season.
Tesla (NASDAQ:TSLA) – Tesla vehicles have been banned from certain areas of the city of Chengdu, China, in preparation for President Xi Jinping’s visit for the World University Games. Authorities blocked Teslas in areas related to the event and Xi’s visit, citing concerns about data collected by the vehicles’ cameras. Chengdu also imposed broader traffic restrictions during the games, which run until August 8. China is a key market for Tesla, with a factory in Shanghai accounting for most of its global production.
Earnings
Rio Tinto (NYSE:RIO) – In the first half, Rio Tinto’s underlying earnings fell to a three-year low due to falling iron ore prices despite rising shipments. The company cut dividends. Even so, he believes in a recovery of demand for iron ore in China. Rio Tinto is considering extracting critical minerals such as gallium and germanium through its mining process. The mining company faces a shortage of skilled workers and supply chain issues. Rio reported underlying earnings of $5.7 billion for the six months ended June 30, down from $8.63 billion a year ago and a consensus of $5.85 billion, according to Visible Alpha.
Stellantis (NYSE:STLA) – Stellantis reported growth in revenue and operating profit in the first half, beating estimates. CEO Carlos Tavares said the automaker will need to accelerate cost cuts to maintain profitability in a challenging pricing environment. Adjusted EBIT margin fell to 14.4%, but the company confirmed its full-year double-digit margin target.
Deutsche Bank (NYSE:DB) – Deutsche Bank reported net income of $842 million for the second quarter of 2023, beating expectations but down 27% from a year earlier. The bank plans to cut costs, increase investments in technology and save 2 billion to 2.5 billion euros. After a successful restructuring, Deutsche Bank posted its 12th consecutive quarterly profit. The company also announced share buyback plans and expects to return more than €1 billion to shareholders in 2023.
Hilton Worldwide (NYSE:HLT) – Hilton Worldwide reported second-quarter earnings and revenue that beat expectations, driven by increases in occupancy and average room nights. Net income increased to $411 million, or $1.55 per share, from $368 million, or $1.32 per share, in the prior-year period. Total revenue grew by 18.8%. The company also expects an above-expected adjusted EPS for 2023.
Microsoft (NASDAQ:MSFT) – Shares of Microsoft were down 4.1% in premarket Wednesday after reporting slower revenue growth at its cloud business in the fourth fiscal quarter. Despite that, the company posted earnings of $2.69 per share, beating analysts’ forecasts of $2.55 per share, according to Refinitiv. Additionally, Microsoft reported revenue of $56.19 billion, beating estimates of $55.47 billion.
Alphabet (NASDAQ:GOOGL) – Shares in Google’s parent company were up 6.9% in premarket Wednesday on the back of surprising second-quarter results, as investors celebrated strong growth in cloud sales. The company posted earnings of $1.44 per share and revenue of $74.6 billion, beating expectations. Analysts were forecasting adjusted earnings of $1.34 per share and revenue of $72.82 billion, according to Refinitiv. Solid growth in cloud sales was the main driver of these impressive results. Additionally, Alphabet announced that its CFO, Ruth Porat, would assume the role of president and chief investment officer.
Snap Inc (NYSE:SNAP) – Snap was down 19.2% in premarket trading on Wednesday after issuing a lower-than-expected outlook for the current quarter. However, the company delivered better-than-expected results, with an adjusted loss of 2 cents per share, compared to the consensus estimate of a loss of 4 cents per share, according to Refinitiv. Additionally, revenue hit $1.07 billion, beating analyst expectations of $1.05 billion.
Texas Instruments (NASDAQ:TXN) – Texas Instruments shares were down 3.5% premarket. The company announced an earnings per share projection for the current quarter, ranging between $1.68 and $1.92, with most of that range falling below the consensus estimate of $1.91, as pointed out by analysts consulted by FactSet. As for revenue, Texas Instruments estimated it to be between $4.36 billion and $4.74 billion for the quarter, encompassing the analyst consensus estimate of $4.59 billion, as reported by FactSet.
Teladoc (NYSE:TDOC) – Shares of the virtual healthcare company rose 6.7% in premarket Wednesday after the release of a better-than-expected earnings report. Teladoc said it posted a loss of 40 cents a share for the second quarter, beating analysts’ estimates of a loss of 41 cents a share, according to Refinitiv. In addition, the company also beat revenue expectations, reaching $652 million compared to the consensus estimate of $649 million.
Visa (NYSE:V) – Visa reported second-quarter earnings and revenue that beat Wall Street estimates, driven by a recovery in international travel and spending. Net income increased 7%, and adjusted earnings per share increased 9% year-over-year. However, the growth in the volume of payments has slowed down compared to the last few quarters. Visa generated $5.5 billion in free cash flow and repurchased $3 billion in stock. The company expects an above-expected adjusted EPS for 2023.
Robert Half (NYSE:RHI) – The employment agency did not meet earnings expectations. Management explained that the company was impacted by its clients’ lengthy hiring cycles. Financial results showed earnings per share of $1 on revenue of $1.64 billion, while analysts polled by Refinitiv had expected earnings per share of $1.14 and revenue of $1.69 billion.
General Electric (NYSE:GE) – GE raised its earnings outlook for the year after quarterly earnings beat expectations due to high demand for jet engine replacement parts and airline services amid increased air travel. GE’s adjusted earnings for the June quarter came in at 68 cents a share, compared with a profit of 46 cents a share estimated by analysts in a Refinitiv survey. CEO Larry Culp said demand remains strong with no signs of slowing down despite rising interest rates. The company now expects adjusted earnings per share of $2.10 to $2.30 for 2023.
GE HealthCare Technologies (NASDAQ:GEHC) – GE HealthCare anticipates that the commercial launch of Alzheimer’s treatment and related tests will increase demand for its imaging equipment in hospitals and medical centers in the coming year. The US Center for Medicare and Medicaid Services (CMS) has proposed broader coverage for brain scans used to identify the key protein of Alzheimer’s disease. The company raised its full-year profit forecast after beating quarterly profit estimates as electronic component availability improved. GE HealthCare’s total quarterly sales were $4.8 billion, and the company now expects earnings of $3.70 to $3.85 per share in 2023.
General Motors (NYSE:GM) – General Motors faces challenges with electric vehicle manufacturing and costs, resulting in declining profit and margins in the North American market. GM plans to invest less in new products and cut operating costs, but maintains ambitious EV production and revenue targets. On a year-over-year basis, GM said second-quarter net income increased nearly 52% to $2.6 billion, with revenue up 25% from the same period in 2022.
Verizon (NYSE:VZ) – Verizon beat quarterly earnings expectations due to lower costs and a surprising increase in wireless subscribers, driven by efforts to expand its enterprise customer base and 5G network. Adjusted earnings were $1.21 per share, above expectations of $1.16. Total revenue fell 3.5% to $32.6 billion, below analysts’ estimates of $33.24 billion, according to Refinitiv data.