US index futures are trading higher in Wednesday’s pre-market, reflecting a perceived easing of concerns about interest rates following comments from Federal Reserve members the previous day, as well as substantial stimulus measures announced by China. Investors are keeping an eye on the release of the Federal Open Market Committee minutes and developments in the Israel conflict.
At 06:50 AM, Dow Jones (DOWI:DJI) futures rose 73 points or 0.22%. S&P 500 futures gained 0.23%, and Nasdaq-100 futures climbed 0.32%. The yield on 10-year Treasury bonds was at 4.558%.
In the commodities market, November West Texas Intermediate crude oil fell 0.35% to $85.67 per barrel. Brent crude oil for December dropped 0.26% to near $87.42 per barrel. Iron ore with 62% concentration traded on the Dalian Exchange rose 1.04% to $113.29 per ton.
On Wednesday’s economic agenda, investors are awaiting the weekly mortgage rate at 7:00 AM, while the September Producer Price Index (PPI) is scheduled for release at 8:30 AM, with an expected monthly increase of 0.30%. Like in previous days, speeches by Fed members are planned. At 10:15 AM, Fed Governor Christopher Waller will speak, and Raphael Bostic, President of the Atlanta Fed, will address at 12:15 PM. At 1:00 PM, another U.S. Treasury auction is scheduled. Yesterday, the government placed $46 billion in the three-year Treasury auction at a stop-out yield of 4.740%.
At 2:00 PM, the minutes of the latest Federal Open Market Committee (FOMC) meeting from September, in which the central bank kept the interest rate in the range of 5.25% to 5.50%, will be released. Despite the pause in the monetary tightening cycle, the Fed’s decision significantly impacted the markets due to its tougher stance on inflation. Finally, at 4:00 PM, the American Petroleum Institute (API) will release the weekly crude oil inventory report.
In Asia, markets closed higher, driven by news that the Chinese government is considering issuing at least $137 billion in additional sovereign debt to fund infrastructure projects as part of its efforts to achieve 5% growth this year. Evergrande, which had been a major source of uncertainty for investors, saw a strong afternoon surge in Hong Kong, closing the session with a gain of more than 22%. Other real estate companies also recorded significant gains on the day.
Although the conflict between the Hamas terrorist group and Israel has not had a significant impact on the markets, investors continue to monitor it closely. Some analysts suggest that markets may be underestimating the risks of this conflict, as geopolitical escalation could have significant effects on the commodities market, particularly oil. This has led Brent crude oil prices to fluctuate in recent days due to concerns about the global oil supply imbalance.
In the European market, which started the day on a positive note, the highlight is the final reading of inflation in Germany, which rose by 0.3% in September, exceeding consensus expectations of a similar magnitude increase. These data indicate the resilience of the largest economy in Europe, suggesting that restrictive measures are having an effect, with inflation remaining in line with projections for the second consecutive month.
At Tuesday’s close, the Dow Jones closed up 134.65 points or 0.40% at 33,739.30 points. The S&P 500 rose 22.58 points or 0.52% to 4,358.24, and the Nasdaq Composite advanced 78.60 points or 0.58% to 13,562.84. As Federal Reserve officials hinted at the possibility of halting interest rate hikes, markets reacted positively, with stocks rising and Treasury yields falling. Shares of US-listed Chinese companies also posted gains following news about a possible economic stimulus in China. Treasury yields fell more than 10 basis points during the session, reflecting a greater than 60% probability that the Fed will not make further rate hikes in December. Dollar continued to weaken. At the same time, geopolitical concerns persisted due to the conflict between Israel and Hamas, which affected natural gas prices in Europe due to suspicions of sabotage in the Baltic Sea pipelines.
Ahead of Wednesday’s corporate earnings, investors will be watching the report from Richardson Electronics (NASDAQ:RELL).
Wall Street Corporate Highlights for Today
Alphabet (NASDAQ:GOOGL) – Sundar Pichai, CEO of Google, expressed concerns in 2007 about the Google-Apple agreement, stating that it was bad in terms of optics as it did not allow choosing a search engine in the Safari browser. This came to light during the Department of Justice’s antitrust lawsuit against Google. The emails reveal worries about Google paying Apple (NASDAQ:AAPL) to be the default search option, raising questions about competition. In other news, Google and its subsidiary Discord maintained an exclusive forum to discuss the AI-based chatbot, Bard, for months. Google employees debate the tool’s effectiveness and question whether the massive investment in development is worth it. Despite ongoing improvements, Bard faces criticism for generating inaccurate information and potentially hazardous advice. Concerns have also arisen about the working conditions of service providers training Bard. For now, Google continues to enhance its chatbot as it seeks to maintain its leadership in the search market.
AMD (NASDAQ:AMD) – AMD announced plans to acquire artificial intelligence startup, Nod.ai, as part of its strategy to strengthen its software capabilities. AMD seeks to compete with Nvidia (NASDAQ:NVDA) by investing in essential software for its AI chips. The company aims to create a unified collection of software for its various chips, including the integration of technology from Nod.ai, which makes it easier to deploy AI models tailored to its chips. Financial details of the acquisition were not disclosed, and AMD continues to expand its team of engineers in its AI group. This is the second recent acquisition by AMD, which maintains its focus on strengthening its portfolio.
Adobe (NASDAQ:ADBE) – Adobe has launched new imaging technology, including the “Generative Match” feature, to compete with companies like Midjourney and Stable Diffusion. This allows users to create images from text and upload multiple images as a base. Adobe emphasized the legal protection of generated images and revealed that its customers have already created three billion images. Additionally, it introduced tools for vector graphics and templates for brochures. Prices will remain unchanged following previous increases in September.
HP Inc. (NYSE:HPQ) – HP Inc. forecast fiscal 2024 earnings in line with estimates, increasing its annual dividend by 5% to $1.10 per share due to stabilizing demand for PCs. Future Ready plan aims to strengthen the core business, expand services and improve structural costs.
Micron Technology (NASDAQ:MU), Intel (NASDAQ:INTC) – Samsung Electronics (USOTC:SSNLF) reported a quarterly drop in profits, but less sharp than in previous quarters, possibly signaling a positive outlook for North American companies like Micron Technology and Intel. Samsung’s recovery, particularly in chip production, could benefit Micron, while Intel expects a broader recovery in demand for chips in PCs and smartphones. Samsung’s results suggest a possible stabilization in the consumer electronics market, boosting investor confidence.
Cisco Systems (NASDAQ:CSCO) – Cisco Systems has named former PayPal (NASDAQ:PYPL) CEO Dan Schulman to its board of directors. Schulman is also a member of other boards, including PayPal, Verizon Communications (NYSE:VZ) and Cleveland Clinic. Additionally, Michele Burns, Rod McGeary and Lisa Su, CEO of Advanced Micro Devices (NASDAQ:AMD), announced that they will not seek re-election at Cisco’s 2023 annual meeting.
MGM Resorts (NYSE:MGM) – MGM Resorts International CEO Bill Hornbuckle chose not to give in to the ransom demand of hackers who broke into the company’s casino network. The attack had been underway for several days before MGM received the ransom note. The company was able to rebuild its systems and saw no need to respond to the hackers.
Vodafone Group (NASDAQ:VOD) – The UK Competition and Markets Authority is asking for market feedback on the potential merger between the UK units of Vodafone and CK Hutchison Holdings (TG:A2R88B). The assessment seeks to determine the impact on competition and investment incentives on the quality of mobile networks in the country. The proposed merger to acquire Three UK faces regulatory scrutiny given the recent strict stance of antitrust authorities in the UK. The government is also examining security implications, as the agreement may involve sensitive technologies.
Walt Disney (NYSE:DIS), Blackstone (NYSE:BX) – Private equity firm Blackstone has discussed with Walt Disney about acquiring a stake in its Indian entertainment division. Disney is seeking partnerships or asset sales in a competitive Indian market, including digital and TV businesses. Candle Media, backed by Blackstone and founded by former Disney executives, led the talks. Other negotiations include talks with Indian billionaires Gautam Adani and Kalanithi Maran.
Amazon (NASDAQ:AMZN), Walmart (NYSE:WMT), Target (NYSE:TGT) – Amazon, Walmart, Target and other major US retailers began discount sales in October in anticipation of Black Friday, one of the biggest shopping days. Total sales between November and January are expected to grow 3.5% to 4.6%, reaching up to $1.56 trillion, according to Deloitte. Retailers are adopting flash sales strategies and exclusive offers to build momentum similar to the “doorbuster deals” of years past. Inflation worries shoppers, leading them to look for discounts and coupons. Some wait for Black Friday and Cyber Monday to buy expensive electronics.
Walmart (NYSE:WMT) – Walmart plans to expand its online primary care benefits in 28 U.S. states by partnering with virtual health services provider Included Health. Employees will have access to virtual care options, including digestive health and physical therapy, starting next year.
Groupon (NASDAQ:GRPN) – Groupon shares took a big hit on Tuesday after selling a portion of its stake in SumUp at a much lower-than-expected price. The transaction involved 9.4% of its stake in SumUp, valuing the company at $4.1 billion, well below the $8.5 billion announced in June 2022. This reduced the value of Groupon’s stake to $94 million of dollars, a significant drop. SumUp said small transactions between existing shareholders often do not reflect the true value of the company and highlighted its long-term prospects. Groupon shares are down -2.7% in premarket trading.
Walgreens Boots Alliance (NASDAQ:WBA) – Walgreens Boots Alliance has named Tim Wentworth as its new CEO following the departure of Rosalind Brewer. Wentworth, former CEO of Cigna (NYSE:CI), will also join the Board of Directors.
Silk Road Medical (NASDAQ:SILK) – Silk Road Medical faced a 36.5% drop in Wednesday’s pre-market trading due to its annual revenue estimate of between $170 million and $174 million, lower than the previous outlook of US$ 180 million to US$ 184 million and analysts’ expectations, which predicted around US$ 182 million.
Fresenius Medical Care (NYSE:FMS) – The early shutdown of Novo Nordisk‘s (NYSE:NVO) clinical trial of semaglutide, a promising drug against kidney failure, caused an 18.3% drop in Fresenius Medical Care shares. On the other hand, Novo Nordisk shares rose 2.7% after the news. Novo Nordisk’s GLP-1 drug, Ozempic, is a specific treatment for patients with type 2 diabetes. Analysts indicated that the early cessation of the clinical trial suggests possible negative impacts on the chronic kidney disease patient population, an area where GLP-1 drugs -1 may have an effect.
Birkenstock – German premium footwear maker Birkenstock has set its US IPO at $46 per share, raising $1.48 billion. Valued at US$9.3 billion after the offering, it became the fourth company to go public in recent months. The shares will debut under the ticker “BIRK” on the NYSE.
Tesla (NASDAQ:TSLA) – Tesla has rejected allegations of health and safety issues at its Berlin gigafactory, emphasizing its commitment to protecting workers. The company said it has provided training and safety equipment and that the factory undergoes regular checks by local authorities.
Xpeng (NYSE:XPEV) – Chinese electric vehicle maker Xpeng has suspended its vice president Li Feng due to a corruption investigation. The incident affected a limited area and did not impact the company’s business or production. Xpeng has strengthened supply chain management and investigated some of its employees.
Polestar Automotive (NASDAQ:PSNY) – Swedish electric vehicle maker Polestar Automotive is looking to raise $1 billion through various forms, including share sales, reflecting the challenges faced by EV startups. Its shares fell 6.9% in premarket trading Wednesday, highlighting the pressure on companies selling electric vehicles with tight profit margins.
Thor Industries (NYSE:THO) – Thor Industries announced a 7% dividend increase, reaching 48 cents per share. Payment will be made on November 10th to shareholders registered by November 1st.
General Motors (NYSE:GM) – General Motors and Canadian union Unifor have reached a tentative agreement following a 12-hour strike that threatened production of large trucks. The agreement follows the Ford (NYSE:F) standard and includes salary increases of up to 25%. Workers still need to vote to approve the agreement. The strike occurred after GM refused to match Ford’s contract, and Unifor used the “standards negotiation” approach.
Chevron (NYSE:CVX) – Chevron and unions have advanced negotiations over wages and conditions at LNG facilities in Australia. After the threat of strikes, negotiations are mediated by the Fair Work Commission. This is the second round in weeks. Chevron seeks agreement on issues such as travel and meal reimbursement. The threat of a strike affected European gas prices.
Exxon Mobil (NYSE:XOM), Pioneer Natural Resources (NYSE:PXD) – Exxon Mobil plans to buy Pioneer Natural Resources for about $58 billion, solidifying its position in the largest U.S. oil field. Exxon will make a stock offering valued at more than $250 per Pioneer share, marking the biggest acquisition of the year and Exxon’s largest since 1998. Exxon’s planned acquisition dwarfs Shell’s purchase of BG Group in 2016 and strengthens its presence in the global liquefied natural gas market.
Boeing (NYSE:BA) – Boeing 737 MAX deliveries have fallen to their lowest level since August 2021 due to manufacturing issues. Boeing booked orders in September for 224 planes and reported 10 cancellations, but deliveries have slowed to 15 737 MAX, 10 787 and two 777 planes. Boeing is still awaiting certification of the 737 MAX 7. Additionally, Boeing opened a technology and engineering in Brazil, seeking to expand its global presence and collaborate in the production of sustainable aviation fuel (SAF). Brazil is considered a leader in SAF production, and Boeing sees opportunities to develop the aerospace ecosystem in the country.
Albemarle Corp (NYSE:ALB) – Australian billionaire Gina Rinehart has acquired a 19.9% stake in lithium miner Liontown Resources (USOTC:LINRF), possibly hampering Albemarle’s takeover bid. Hancock Prospecting, Rinehart’s company, seeks to influence Liontown’s future as the largest shareholder. Albemarle offered A$3 per share for Liontown, valuing it at US$4.3 billion.
Honeywell (NASDAQ:HON) – Honeywell announced a restructuring focused on three business megatrends: automation, future of aviation and energy transition. The new structure will include four business lines: Aerospace Technologies, Industrial Automation, Building Automation and Energy and Sustainability Solutions. The company expects third-quarter profit to be at or above its previous estimate of $2.15 to $2.25 per share, driven by demand and U.S. labor shortages. The reorganization will take effect in the first quarter of 2024.
LPL Financial (NASDAQ:LPLA) – LPL Financial hired a team from RBC Wealth Management that oversaw $900 million in client assets in York, Pennsylvania. The team led by Brock R. Hively, Josh P. Smeltzer, Aaron N. Gingrich and Emily C. Sides joined LPL’s Strategic Wealth Services channel on October 3. The team, called Sides Wealth Advisory Group, chose independence to build their own practice and take advantage of LPL’s support services. LPL hired a father-son duo from Morgan Stanley (NYSE:MS) to its SWS unit in September.
Deutsche Bank (NYSE:DB) – Strategists at Deutsche Bank have recommended an overweight rating on stocks in 2024, arguing that risks are adequately reflected in the market and are poised to become opportunities. They predicted weaker growth and disappointing central bank communications in the third quarter, but say those risks are already priced in.
Goldman Sachs (NYSE:GS) – Goldman Sachs warned that the 19% rally in Italian stocks this year leaves them vulnerable to sovereign debt risks as bond yields rise. Strategists led by Sharon Bell predict that the spread between Italian 10-year bond yields and German ones will gradually widen, putting pressure on Italian banking stocks, Milan’s FTSE MIB index and European stocks generally. Italy is the world’s second-largest sovereign issuer in terms of its public debt and faces concerns about its credit rating. Bell suggests the UK’s FTSE 100 as a safer alternative.
Block (NYSE:SQ) – Despite the big drop in Block shares since July, BofA Global Research analyst Jason Kupferberg sees a buying opportunity due to the payments technology company’s earnings potential, highlighting cost savings and growth in gross profit. He maintains a Buy rating with a $71 price target.