US index futures are down premarket on Friday, continuing to reflect the impacts of US inflation figures, UK activity and uncertainty surrounding global interest rate trends.
By 7:00 AM, Dow Jones Futures (DOWI:DJI) were down 3 points, or 0.01%. S&P 500 futures were down 0.10% and Nasdaq-100 futures were down 0.23%. The 10-year Treasury yield was at 4.096%.
On Friday’s American economic agenda, investors will follow the producer price index at 8:30 am. On a monthly basis, the analysts’ expectation is for an increase of 0.20% in June, while in the annual comparison the indicator should present an increase of 0.70%. At 10 am, the University of Michigan confidence index will be released, which is forecast at 71 in August, down from July, when it reached 71.6. At 1 pm, Baker Hughes will release the number of oil rigs for the week.
In the United Kingdom, the Gross Domestic Product (GDP) grew by 0.2% in the second quarter compared to the previous year, surprising expectations that indicated stability. Industrial production also increased by 1.8% in June, beating the 0.10% forecast. This data could strengthen the prospect that the Bank of England will need to adopt a more rigorous stance to control inflation, which could have a negative impact on markets.
In Asia, on a public holiday in Japan, markets closed lower, reflecting data on controlled inflation in the United States in July. In China, social funding figures reached 528.2 billion yuan in July, nearly half of expectations. In addition, Chinese banks extended 345.9 billion yuan in new loans in July, missing the forecast of 848 billion yuan.
In commodities markets, West Texas Intermediate crude for September was up 0.36% to trade at $83.12 a barrel. Brent crude for October was up 0.42% to close at $86.76 a barrel. Iron ore futures traded in Dalian, China, rose 2.27% to $101.17 a tonne, recovering part of back-to-back declines.
By Thursday’s close, the Dow Jones was up 0.15%. The S&P 500 was broadly flat at 0.03%, while the Nasdaq Composite was up 0.12%. While stocks started the day positive, they closed almost flat. The July inflation index (CPI) was in line with market expectations, registering an increase of 0.2% both in the general index and in the core.
Although the composition of the index did not bring significant surprises, there was an acceleration in the services core, also known as “super-core”. This acceleration, however, does not seem to be sustainable, given that the trend of this component continues to decline.
Overall, the CPI numbers confirm the inflation scenario projected by the Fed, characterized by a gradual deceleration of the cores towards the target. This makes the Fed more likely to stop interest rate hikes, although it continues to emphasize a “high rates longer” policy, indicating that lowering rates may take time. As a result, this data provoked a mixed reaction in the market.
Ahead of Friday’s corporate results, investors are awaiting reports from Air Canada (TSX:AC), AirSculpt (NASDAQ:AIRS), Silver Spike (NASDAQ:SPKBW), ReWalk (NASDAQ:RWLK), among others.
Wall Street Corporate Highlights for Today
Microsoft (NASDAQ:MSFT) – A US cybersecurity advisory panel will review the risks of cloud computing, investigating Microsoft’s role in the breach of government email systems by Chinese hackers. The Cybersecurity Review Board will examine cloud infrastructure and identity management, covering relevant providers. Microsoft faces scrutiny over the hack that enabled spying, prompting calls for action. The House Oversight Committee is also investigating China’s role in the breaches.
Amazon (NASDAQ:AMZN) – Amazon.com is eliminating several of its own clothing brands, reducing its previous range of 30 brands to three. This action is intended to save costs and respond to antitrust concerns. The FTC is investigating Amazon for alleged anti-competitive practices, with a meeting scheduled to avoid prosecution. Amazon denies wrongdoing.
Alphabet (NASDAQ:GOOGL), General Motors (NYSE:GM) – Self-driving car companies have been granted expanded permits to operate in San Francisco despite local concerns. General Motors’ Cruise and Alphabet’s Waymo were authorized to offer paid trips in autonomous vehicles around the city at any time, with unlimited vehicles. GM forecasts $80 billion in annual sales by 2030 from autonomous software. Tesla (NASDAQ:TSLA) and Amazon (NASDAQ:AMZN) are also looking to expand in the sector.
Alphabet (NASDAQ:GOOGL) – Alphabet faces the challenge of directing its growing cash pile. Generating about $29 billion in cash in Q2, the company has about $118 billion in cash and securities. Unlike Apple (NASDAQ:AAPL), Alphabet does not have a clear return on capital strategy. Share buybacks are an option, but strategic investments such as Microsoft (NASDAQ:MSFT) with OpenAI are also considered. The focus on share buybacks aims to avoid the perception of a lack of growth opportunities.
Tesla (NASDAQ:TSLA) – Tesla CEO Elon Musk’s leadership style has raised concerns among investors. Recently, however, Linda Yaccarino, CEO of X (formerly Twitter), stated that she has the autonomy to run Company X, showing that Musk is willing to delegate to strong managers. Although tangentially, that could allay fears and indicate that Musk is more focused on Tesla after having strayed into other endeavors.
Zoom Video Communications (NASDAQ:ZM) – Zoom Video has lifted its policy of not having internal meetings on Wednesdays, citing difficulties in collaboration. CEO Eric Yuan announced the move, also requiring employees within 50 miles of an office to show up twice a week.
Alibaba Group (NYSE:BABA) – Due to global supply constraints, Alibaba Group Holding Ltd. has not been able to fully meet customers’ demand for AI training, as stated by CEO Daniel Zhang. Shortages of critical components such as AI chips are hurting Chinese technology efforts, further hampered by new US rules on investment in AI and quantum computing sectors in China.
KKR & Co (NYSE:KKR) – The Italian government may divest up to 20% of Telecom Italia following preliminary agreement with US fund KKR to acquire NetCo, comprised of TIM’s fixed network and submarine cable. The Italian Treasury will have 20% of the binding offer, with a strategic role, while the Italian fund F2I can raise the combined stake to 30%. TIM seeks to sell to cut debts. KKR has until September to submit a mandatory offer. Vivendi (EU:VIV) is a drag because of its 24% stake. KKR offered around €23 billion on a debt basis.
Moody’s (NYSE:MCO) – Moody’s downgraded Chinese developer Country Garden’s corporate family rating to Caa1 from B1 due to liquidity issues and refinancing risk following bond defaults. The outlook is negative due to uncertainty about the company’s ability to honor its obligations. Moody’s also lowered its contracted sales forecast for 2023, highlighting market concerns about the company’s liquidity and finances, which is facing pressure from China’s volatile real estate sector.
UBS (NYSE:UBS) – UBS will no longer need the Swiss government guarantee, which had been provided to bail out rival Credit Suisse. The Swiss government had guaranteed CHF9 billion to UBS as part of the Credit Suisse bailout. UBS will also not need public liquidity support. The news boosted UBS shares by as much as 5% in premarket trading on Friday.
Goldman Sachs (NYSE:GS) – Goldman Sachs welcomed changes in monetary policy by the Reserve Bank of Kenya, praising exchange rate flexibility and inflation targeting. The bank foresees a strengthening of Kenya’s external balances and foreign reserve, as well as the possibility of attracting foreign investment in local debt. The reforms, including an interest rate corridor, are associated with new Central Bank leadership.
Citigroup (NYSE:C) – Citigroup is lowering its bullish outlook on Egyptian bonds due to concerns over slow progress on the sale of state assets. Bank strategists have reduced their view on Egypt’s debt, citing lack of progress in the privatization plan and heightened idiosyncratic risks. Egypt’s dollar debt has been underperforming in emerging markets. The agreement with the IMF is essential for its economic recovery.
Bank of America (NYSE:BAC) – Recently, investors have been pouring money into money market funds and bonds, pulling money out of the US stock market, according to strategists at Bank of America Corp. In the week to Aug. 9, cash funds received $20.5 billion, while $6.9 billion was withdrawn from bonds. US stocks had their first outflow in three weeks, totaling $1.6 billion.
Grupo Aval (NYSE:AVAL) – Colombia’s Grupo Aval and its banking unit will pay more than $80 million to settle charges of violating US anti-corruption laws. The Corficolombiana unit will face a $40.6 million criminal fine and $40 million in repayment and pretrial interest as part of the resolution of the SEC investigation.
Virgin Galactic (NYSE:SPCE) – Virgin Galactic completed its second commercial space tourism mission, launching the VSS Unity spacecraft from New Mexico with three female guests and a company instructor. Jon Goodwin, a former Olympic kayaker, Keisha Schahaff, an entrepreneur from the Caribbean, and Anastatia Mayers, an 18-year-old student, were taken into space. The altitude reached was 88 km, surpassing the 80 km defined by the USA as the beginning of space. Virgin Galactic plans to fly monthly, after the previous mission was carried out with members of the Italian Air Force and the National Research Council of Italy.
Wisk Aero , Archer Aviation (NYSE:ACHR), Boeing (NYSE:BA) – Archer Aviation has reached an agreement with Boeing and its Wisk unit to resolve disputes and collaborate on autonomous technology. Archer will make Wisk its exclusive provider of autonomous technology for its aircraft. Boeing will invest in Archer to integrate Wisk’s autonomous technology. Archer shares were up 23.2% in premarket trading on Friday.
Lyft (NASDAQ:LYFT) – Lyft plans to run ads on its ridesharing app to boost its revenue. Following the example of its rival Uber (NYSE:UBER), the company partnered with Rokt to sell ads for companies such as Amazon (NASDAQ:AMZN) and Universal Pictures. Drivers will also be able to choose to have a Lyft Media tablet in their car.
Occidental Petroleum (NYSE:OXY) – The US Department of Energy is investing up to $1.2 billion in direct air capture (DAC) technology to reduce global warming. Occidental Petroleum and its subsidiary 1PointFive in Texas are leading one of the projects, aimed at removing up to 30 million metric tons of CO2 per year, while Climeworks and Heirloom manage the Louisiana hub. These pioneering projects will contribute to local jobs and clean energy, with additional funding expected. However, billions of tons of CO2 still need to be removed annually to reach the Paris Agreement targets.
Kroger (NYSE:KR), Albertsons (NYSE:ACI) – The FTC is investigating Kroger’s acquisition deal over Albertsons to determine whether suppliers will be harmed, impacting small supermarket chains. Kroger and the FTC plan divestments to address antitrust concerns. The FTC surveyed experts and industry associations to understand the settlement’s dynamics and potential impacts.
Cano Health (NYSE:CANO) – Shares fell 44.1% in premarket trading due to “substantial doubts” about its one-year operational viability. The company plans to reduce its workforce by 17% and is exploring the possibility of a sale.
DigitalOcean (NYSE:DOCN) – Shares were up 2.2% to hit $35.77 after a rating upgrade from “Underweight” to “Equal Weight” with an increase in price target to $36 from $30. The company recently revised its annual outlook and is correcting accounting errors in past earnings.
Earnings
Alibaba (NYSE:BABA) – Alibaba reported its strongest quarterly revenue growth in nearly two years, focusing on low-cost products to attract consumers amid a difficult economic environment. First-quarter revenue was $32.3 billion, up 14% year-over-year. Net profit grew 51%. The revenue increase comes as the Chinese economy grapples with uncertainty. Alibaba seeks to compete with rivals with low-cost products, planning to invest more in this strategy. The company is also preparing for the departure of CEO Daniel Zhang.
Pagaya Technologies (NASDAQ:PGY) – Shares are up 16.0% premarket after Pagaya reported a second-quarter loss of $31.3 million, adjusted for earnings of $886,000, beating forecasts. Total revenue increased by 7.8%. Pagaya projected adjusted EBITDA of $10 million to $20 million on total revenue of $190 million to $200 million for the third quarter.
Arlo Technologies (NYSE:ARLO) – Arlo Technologies shares fell 2.6% after the maker of security cameras, video doorbells and other home security devices reported a narrower quarterly loss and revenue that, while , exceeded Wall Street expectations. Arlo Technologies reported Q2 EPS of $0.060, $0.02 better than the analyst estimate of $0.040. Revenue for the quarter came in at $115.1 million, versus the consensus estimate of $110.18 million.
IONQ (NYSE:IONQ) – Quantum computing hardware and software company IONQ posted a 5.6% premarket increase after revising its annual booking outlook to a range between $49 million and $56 million . IONQ reported a second-quarter loss per share of $0.22, worse than analysts’ estimate of a loss of $0.13. Revenue for the quarter came in at $5.5 million, versus the consensus estimate of $4.35 million.
Maxeon Solar (NASDAQ:MAXN) – Singapore-based solar technology company Maxeon Solar was down 25.6% in premarket after it revised downwards its full-year outlook due to softened residential demand and forecast challenging market conditions. to persist into the fourth trimester. The new annual forecast is for revenue between $1.25 billion and $1.35 billion, and adjusted earnings before taxes, interest, depreciation and amortization between $80 million and $100 million.
Flowers Foods (NYSE:FLO) – Flowers Foods reported second-quarter adjusted earnings of 33 cents per share, beating analyst forecasts, with revenue up 8.8% to $1.23 billion.
Ralph Lauren (NYSE:RL) – Ralph Lauren CEO Patrice Louvet expressed optimism about the future, despite not raising annual guidance after reporting fiscal first quarter earnings. Revenue of $1.5 billion beat estimates. Louvet highlights the resilience of the brand’s core consumer and notes the shift to a “casual upscale” style, emphasizing the brand’s visibility with celebrities.