US index futures are lower in premarket trading on Friday reflecting a heightened risk aversion scenario.
By 6:50 AM, Dow Jones futures (DOWI:DJI) were down 45 points, or 0.13%. S&P 500 futures were down 0.14% and Nasdaq-100 futures were down 0.16%. The 10-year Treasury yield was at 4.246%.
In the economic agenda for Friday, investors await, at 10:00 am, the wholesale stock in July, which has a consensus of a drop of 0.10% in the monthly comparison. At 1:00 pm, Baker Hughes releases last week’s stock of rigs, while at 3:00 pm it will be the turn of consumer credit, which has a projection of US$16 billion in July.
In Germany, consumer prices rose 0.30% in August on a monthly basis and accumulated an increase of 6.10% annually, in line with expectations. This data draws attention to the European Central Bank’s (ECB) next decision on monetary policy, especially when contrasted with the 5.3% inflation in the euro zone in August, highlighting economic challenges in the region.
Asian markets ended lower. Japanese GDP grew by 1.2% in the second quarter, below the initial estimate of 1.5%. Additionally, concerns about the Chinese economy influenced markets, following the announcement that both exports and imports declined in August, with drops of 8.8% and 7.3% respectively, indicating challenges in global demand.
In the commodities market, West Texas Intermediate crude oil for October rose 0.48% to $87.29 per barrel. Brent oil for November rose 0.58% at US$90.44 per barrel. Iron ore with a concentration of 62% fell 2.07% to US$112.66.
By Thursday’s close, Nasdaq was down 123.64 points or 0.89% to 13,748.83 points and S&P 500 was down 14.34 points or 0.32% to 4,451.14 points. Meanwhile, Dow rose into positive territory and ended the day up 57.54 points or 0.17% at 34,500.73. Worries about interest rates weighed on Wall Street after reports indicated accelerated growth in the services sector and a reduction in US jobless claims. While the Fed may keep rates steady, the probability of a November hike is 43.4%. Apple’s fall, after Chinese restrictions, also affected the market.
Ahead of Friday’s corporate results, traders are watching reports from Kroger (NYSE:KR) and Rent The Runway (NASDAQ:RENT).
Wall Street Corporate Highlights for Today
Apple (NASDAQ:AAPL) – Beijing’s restrictions on the use of iPhones by government employees have worried U.S. lawmakers, stoking fears for U.S. tech companies in China. Apple closed down 2.9% on Thursday. Sino-US tensions intensify, with Beijing seeking technological independence and Washington imposing sanctions on Huawei. In other news, the Citizen Lab group has identified spyware from Israeli company NSO exploiting a flaw in Apple devices. The flaw, which affected iOS 16.6, allowed infections without victim interaction. Apple released corrective updates.
Microsoft (NASDAQ:MSFT) – Microsoft will indemnify customers who are sued for copyright infringements generated by its AI products, as long as they use company protections and filters. This measure comes with rising concerns about generative AI playing content without attribution.
Alphabet (NASDAQ:GOOGL) – Eric Schmidt, former CEO of Google, is heavily invested in artificial intelligence and has significant influence in Washington. He advocates for the US to prioritize AI investments to compete with China. His network of connections spans think tanks, philanthropic initiatives and startups, raising questions about conflicts of interest and their growing influence on US AI policy. In addition, Schmidt is also shaping policy in biotechnology, reflecting his diverse interests and investments.
SAP (NYSE:SAP) – SAP purchased software company LeanIX to power its business transformation. Completion is expected in the fourth quarter, and financial details were not disclosed.
Allegro Microsystems (NASDAQ:ALGM) – One Equity Partners, the main investor in Allegro Microsystems, sold five million shares, reducing its stake from 9.2% to 6.6%. Questions have been raised about Allegro’s profit margins and its dealings with related parties such as SanKen, which owns 51% of the company. Allegro defended its accounting in a Barron column.
IBM (NYSE:IBM), Palantir (NYSE:PLTR), Adobe (NASDAQ:ADBE), Salesforce (NYSE:CRM) – These companies will join President Biden’s AI commitments, seeking to prioritize trust and security. The announcement expands on a previous agreement with Microsoft and Google. The initiative aims to set global standards as the US Congress deliberates on regulations.
Uber Technologies (NYSE:UBER) – Uber, after reporting an operating profit and increased cash flow, is considering buybacks and shareholder dividends, as stated by CEO Dara Khosrowshahi at a recent event.
Chevron (NYSE:CVX) – Workers at Chevron’s LNG projects in Australia have gone on strike after stalled negotiations, affecting more than 5% of global supply. The shutdown could intensify competition from other sources, raising European gas prices by 12%. Discussions between Chevron and unions have stalled, with both sides at odds over pay and job security. Disruptions could affect deliveries, particularly to China and Japan, the main buyers of Australian LNG.
Stellantis (NYSE:STLA) – Stellantis believes that combustion engine vehicles will circulate by 2050. Tests in partnership with Aramco confirmed the compatibility of 24 engines with advanced e-fuels. The automaker intends that all new cars in Europe will be electric by 2030, but defends the development of e-fuels due to the longevity of the vehicles. They expect greater availability and reduced costs of e-fuels in the future.
Ford Motor (NYSE:F) – Ford announced that 8,000 unionized workers will receive an average raise of $4.33 per hour under the 2019 contract. Negotiations with the UAW are ongoing, with Ford submitting detailed salary proposals.
General Motors (NYSE:GM) – GM offered a 10% pay raise and additional bonuses in an attempt to avoid a strike. Shawn Fain, president of the UAW, rejected the proposal, calling it “insulting”. Negotiations remain tense, and a strike could raise vehicle prices and affect inflation.
Rivian (NASDAQ:RIVN) – Rivian expects to benefit from reduced battery material prices through 2024, as indicated by CFO Claire McDonough. Falling battery prices, coupled with increased domestic production, could boost Rivian’s profitability.
Fisker (NYSE:FSR) – Startup Fisker plans to increase production of the Ocean SUV from 180 to 300 units daily in Q4. In partnership with Magna International, deliveries in North America are expected to increase in September.
VinFast (NASDAQ:VFS) – Shares of VinFast are up 2.7% in premarket trading on Friday. Despite a significant increase following its Nasdaq debut in August, the shares’ momentum has waned, and they are on course to close out the week down nearly 40%.
Spirit AeroSystems (NYSE:SPR) – Spirit AeroSystems has asked Boeing (NYSE:BA) and Airbus (USOTC:EADSY) to share the financial burden caused by inflation, making the contracts “unsustainable”, according to CEO Tom Gentile. In the first half, Spirit faced $215 million in extra costs due to challenges such as wage inflation and parts shortages.
Boeing (NYSE:BA) – Boeing aims to deliver 400 737s this year, despite delays due to production failures on the 737 MAX. Brian West, Boeing’s CFO, cited negative margins and high costs in the third quarter. Production issues with the supplier affected 75% of the stock.
Walmart (NYSE:WMT) – Walmart is unifying the starting salary structure for several positions in its stores, aiming to reduce costs in a slow job market. The change maintains higher salaries for specialized roles. The company emphasizes that the $14/hour minimum wage will not change and that there will be no cuts for current employees.
Morgan Stanley (NYSE:MS) – Morgan Stanley, after testing with 1,000 advisors, will implement an artificial intelligence bot, developed in partnership with OpenAI, to help financial advisors quickly access information. The bot is expected to summarize conversations and administrative tasks, reinforcing that the human role will remain central. The initiative aligns with the bank’s focus on expanding its wealth division through technology.
Goldman Sachs (NYSE:GS) – Goldman Sachs plans to cut jobs of underperforming employees in October, according to the Financial Times. This annual reduction, aiming to cut between 1% and 5% of employees, resumed after a pandemic pause. In 2022, they laid off 500 employees. David Solomon, CEO of Goldman Sachs, defended himself from recent criticisms in an interview with CNBC, stating he doesn’t recognize the negative image portrayed in the media. Additionally, the Moscow Arbitration Court denied Goldman Sachs’ request to dismiss a $6.3 million lawsuit filed by Otkritie, owned by the state bank VTB. Goldman argued lack of jurisdiction. The case, tied to a derivatives deal, will be heard on October 5th.
JPMorgan Chase (NYSE:JPM) – JPMorgan warned that a possible UAW union strike would affect new car production and raise used vehicle prices, negatively impacting the auto insurance industry. UAW is in talks with Detroit automakers. A strike could cost more than $5 billion. In other news, JPMorgan explores creating a blockchain-based deposit token for fast cross-border payments. Awaiting regulatory approval, the infrastructure has already been developed. Unlike JPM Coin, it would allow transfers between banks and possibly multiple currencies.
HSBC (NYSE:HSBC) – Goldman Sachs (NYSE:GS) and Morgan Stanley (NYSE:MS) forecast stronger results in 2024 due to intensified trading on Wall Street and momentum in asset management, as reported by HSBC. Saul Martinez, principal analyst, highlights a fork in the banking market.
Citigroup (NYSE:C) – Citigroup lowered its 2023 euro growth forecast to 0.4%, anticipating economic contraction in the coming quarters. Growth of 0.8% was forecast, but a 0.1% retraction is now expected in 2024 due to economic challenges.
First Citizens Bank (NASDAQ:FCNCA) – First Citizens Bank restructured the leadership of its equity division, with Michael Wilson at the helm, incorporating responsibilities from the recently acquired SVB Private. The new team unites talents from both entities, aiming to improve financial solutions for clients. Wilson, overseeing $50 billion in assets, highlights the combined strength of the two institutions to deliver superior financial services.
BlackRock (NYSE:BLK) – BlackRock, major shareholder in Glencore (LSE:GLEN), has rejected the miner’s climate report for inconsistencies. Though it owns more than 6% of Glencore’s shares, BlackRock has helped push votes against the company’s plan beyond 30%.
Telefonica (NYSE:TEF) – The CEO of Telefónica, José Maria Alvarez-Pallete, surprisingly learned of the intention of Grupo STC, the main Saudi telecommunications operator, to acquire 9.9% of the Spanish company. The move is seen as a vote of confidence in debt-ridden Telefonica as STC seeks to modernize its infrastructure. However, it raises concerns in Spain about Saudi influence. STC, linked to Saudi Arabia’s Vision 2030 plan, aims to import technological know-how, while Telefonica sees the investment as relief. The transaction also coincides with the “Davos in the Desert” conference.
American Tower Corp (NYSE:AMT) – MTN Group will transfer its tower operations in Nigeria to American Tower in 2025 following the expiration of contracts with IHS. The relationship between MTN and IHS deteriorated after disputes over governance.
Philips (NYSE:PHG) – Philips has reached a $479 million settlement to settle U.S. lawsuits related to the 2021 recall of breathing devices, which posed potential cancer risks. The company has provisioned US$615.48 million to cover the estimated costs.
Walgreens (NASDAQ:WBA) – Following the announcement of Rosalind Brewer’s departure as CEO of Walgreens Boots Alliance, its stock dropped significantly, continuing a five-year decline. With ongoing challenges and competition, the appointment of a new experienced leader in healthcare can provide a short-term boost to stocks.
Kenvue (NYSE:KVUE) – Shares of Kenvue fell 6% on Thursday, below its IPO price, on concerns over litigation involving Tylenol. Although Kenvue claims acetaminophen is safe, lawsuits allege neurological risks when taken during pregnancy.
GameStop (NYSE:GME), AMC (NYSE:AMC) – Despite the push from social media, GameStop and AMC are facing financial challenges. AMC has seen its shares drop 98% since June 2021 and is looking for ways to raise capital. GameStop, after high in 2021, faces transitions in the gaming industry. Both raised funds by selling shares, but their sustainability is questionable. Analysts predict continued challenges, while GameStop also sees executive turnover and unsuccessful forays into cryptocurrencies.
Charter Communications (NASDAQ:CHTR), Disney (NYSE:DIS) – Charter Communications, the second-largest cable company in the US, confronts Disney in a dispute over transmission costs. In a context of declining cable TV, with 25 million cancellations in the last five years, Charter defends thinner and more flexible packages, while Disney seeks to maintain its profitability until its streaming services strengthen.
Earnings
DocuSign (NASDAQ:DOCU) – Shares in electronic signature company DocuSign gained 2.8% in premarket trading on Friday after beating second-quarter forecasts. The company posted 72 cents per share and $688 million in revenue, beating Refinitiv’s expectations of 66 cents and $678 million.
Planet Labs (NYSE:PL) – Shares in Planet Labs, the satellite imagery company, fell 2.6% in premarket trading on Friday after reporting quarterly losses of 14 cents a share and $53.8 million in revenue, not meeting Refinitiv’s expectations. Annual projections also disappoint.
RH (NYSE:RH) – The luxury furniture company’s shares are flat premarket even after delivering a dismal forecast. The third-quarter operating margin forecast was 8% to 10%, below the 16.1% expected by Wall Street, according to Street Account. Projected revenue is between $740 million and $760 million, lower than the $773 million estimated by analysts.
Guidewire Software (NYSE:GWRE) – Insurance software company Guidewire forecast revenue of between $197 million and $202 million for the fiscal first quarter, down from the $212.5 million expected by analysts at FactSet.
Smartsheet (NYSE:SMAR) – The company beat analysts’ estimates for second-quarter earnings. The work management software company reported adjusted earnings of 16 cents per share and $235.6 million in revenue, while FactSet’s expectation was 7 cents per share and $229.6 million in revenue.