In Thursday’s pre-market, United States index futures show mixed behavior, influenced by positive economic data that suggest a possible end to the monetary tightening cycle by the Federal Reserve. Investors are also analyzing recent corporate earnings and the implications of the meeting between Joe Biden and Xi Jinping for the markets.
At 6:28 am, Dow Jones futures (DOWI:DJI) rose 3 points, or 0.01%. S&P 500 futures were down 0.02% and Nasdaq-100 futures were down 0.15%. The yield on 10-year Treasury bonds stood at 4.496%.
In the commodities market, West Texas Intermediate crude oil for December fell 0.07% to $76.61 per barrel. Brent crude for January fell 0.05% to close to US$81.14 per barrel. Iron ore with a concentration of 62%, traded on the Dalian exchange, fell 1.53%, quoted at US$ 133.07 per ton.
On this Thursday’s economic agenda, investors await, at 08:30 am, the release of unemployment insurance claims for the week, which has a forecast of 220,000 new claims, in addition to import and export prices and the Philadelphia Fed’s manufacturing index. Industrial production, which will be released at 09:15 am, is projected to fall by 0.30% in October. At 10 am, it will be the turn of the NAHB real estate index, while at 11 am the Kansas Fed manufacturing index will be released.
Throughout the day, many Fed members speak. At 6 am, Fed Governor Lisa Cook speaks; at 7:10 am it will be the turn of Michael Barr, vice president of supervision at the Fed; at 08:30 am, the president of the Cleveland Fed, Loretta Mester, speaks; at 09:25 am, John Williams, president of the New York Fed, speaks; and at 10:30 am, Fed member Christopher Waller.
During the bilateral meeting between the US and China, Biden and Xi highlighted the differences between their countries, but recognized interdependence in areas such as exports, climate change, trade, and agriculture. At the same time, the approval of an aid package by the American Legislature, avoiding a government shutdown, was positively received.
In Asian markets, there was a drop in response to the meeting between the two largest economies. China, facing a sharp decline in new housing prices in its major cities in October, announced plans to inject $137 billion into the property market.
In Europe, with a light economic agenda, investors await speeches from the president of the European Central Bank, Christine Lagarde, and vice-president Luis de Guindos that could provide indications on future monetary policy.
At Wednesday’s close, U.S. stocks were up slightly, driven by inflation data that suggested the Federal Reserve may not raise interest rates. The Dow Jones rose 0.47%, while the Nasdaq and S&P 500 advanced 0.07% and 0.16%, respectively.
Producer price index fell 0.5% in October, after rising 0.4% in September, in a revision. Output prices were expected to rise 0.1%, compared to the 0.5% increase originally reported for the previous month. Retail sales fell slightly in October. Airlines and banking sectors gained, while oil services and pharmaceutical stocks fell.
On Thursday’s corporate earnings front, investors will be watching reports from Alibaba (NYSE:BABA), Walmart (NYSE:WMT), Macy’s (NYSE:M), NetEase Games (NASDAQ:NTES), Bath & Body Works (NYSE:BBWI), Warner Music Group (NASDAQ:WMG), Williams-Sonoma (NYSE:WSM), before the market opens. After the closing, reports from Applied Materials (NASDAQ:AMAT), Ross (NASDAQ:ROST), Gap (NYSE:GPS), Dolby (NYSE:DLB), among others, will be expected.
Wall Street Corporate Highlights for Today
Apple (NASDAQ:AAPL) – US lawmakers questioned Apple over the abrupt cancellation of Jon Stewart’s show, suspecting Chinese influence. The show’s end, cited as being caused by creative differences, raises questions about the censorship of content critical of the Chinese government.
Microsoft (NASDAQ:MSFT) – Microsoft is launching two custom chips for AI and cloud services, focusing on optimizing costs and efficiency. The Maia and Cobalt chips, not intended for sale, aim to leverage Microsoft’s software and compete with Amazon Web Services (NASDAQ:AMZN).
Meta Platforms (NASDAQ:META) – TikTok, following Meta, has appealed against its “gatekeeper” designation under the EU Digital Markets Law, which imposes stricter rules on big tech companies. Meta contested for its Messenger and Marketplace platforms, but not for Facebook, Instagram, and WhatsApp. TikTok argues that its designation as a gatekeeper may protect incumbents rather than promote competition, highlighting its position as a challenger in the European market.
Spotify (NYSE:SPOT), Alphabet (NASDAQ:GOOGL) – Spotify is expanding its collaboration with Google Cloud, applying advanced language models to personalize podcast and audiobook recommendations. Aiming to innovate in non-musical content, the company is betting on AI to improve the listening experience and safety.
Intel (NASDAQ:INTC) – Intel board member Lip-Bu Tan repurchased shares of the company, acquiring 66,000 shares at prices between $37.77 and $37.95 on November 9, totaling about $ $2.5 million. This purchase follows a previous $2.9 million acquisition last November. Additionally, Mizuho analyst Vijay Rakesh upgraded Intel shares to “Buy,” highlighting potential catalysts for further upside after a 54% rally this year. Rakesh highlights opportunities with new server products and expectations for Intel’s foundry business. He anticipates 2024 as a significant year of launches, with products such as Sierra Forest and Granite Rapids. His price target for the stock was raised to $50.
Adobe (NASDAQ:ADBE) – Adobe, known for Photoshop, anticipates an EU antitrust warning over its proposed $20 billion acquisition of Figma, a cloud-based design platform. Its chief advisor expressed willingness to discuss solutions to regulatory issues, with a view to approving the agreement.
Sonos (NASDAQ:SONO) – Sonos is laying off employees in its product development department to focus on launching headphones. Maxime Bouvat-Merlin, product director, reported on the cuts after the company faced a 6% drop in annual sales.
Disney (NYSE:DIS) – ValueAct Capital has acquired a substantial stake in Walt Disney, anticipating that the media and entertainment company’s shares could nearly double. Having known the Disney team for more than a decade, ValueAct collaborates with management while growing its ownership. The news comes as Disney faces challenges such as declining advertising revenue and still-unprofitable streaming. ValueAct could become a preferred director, providing advice on business reform and silencing investor criticism.
General Motors (NYSE:GM) – gigacasting specialist TEI was acquired by GM in 2023, strengthening its strategy against Tesla (NASDAQ:TSLA). While Tesla depends on other suppliers and seeks internal expertise, GM integrates this exclusive technology, aiming for efficiency and reduced costs in car manufacturing. In other news, GM’s interim labor agreement with the UAW is close to ratification after majority support in Arlington, Texas. The vote, which will determine the first agreement by April 2028 with a Detroit automaker, shows a favorable trend despite votes against it at other factories.
Toyota Motor (NYSE:TM) – In 2025, the Toyota Camry will be exclusively hybrid, with a 2.5-liter engine and electric drive, aiming to lead in the US market. The change reflects Toyota’s commitment to fuel efficiency and improved performance while aligning with stricter environmental regulations.
Tesla (NASDAQ:TSLA) – A US federal appeals court ruled that Tesla did not violate labor laws by banning pro-union t-shirts at its Fremont, California factory. Tesla, requiring company uniforms but allowing union stickers, was found to be in compliance with the law. On the other hand, Swedish unions are pushing Tesla for a collective bargaining agreement, supporting the mechanics’ strike. Around 130 mechanics went on strike, with dockworkers and dealerships also refusing to handle Tesla products. Workers at Hydro Extrusions plan to strike, intensifying pressure.
Goodyear Tire & Rubber (NASDAQ:GT) – Richard Kramer, CEO of Goodyear Tire & Rubber Co since 2010, has announced his retirement next year, coinciding with the company unveiling plans to streamline operations. Goodyear, which recently struck a deal with activist investor Elliott, is considering candidates to replace him. The company also plans to restructure, including selling its chemicals business and the Dunlop brand, aiming to double the segment’s operating margin by the end of 2025.
Exxon Mobil (NYSE:XOM) – Exxon Mobil announced it will host a conference call on December 6, with presentations from CEO Darren Woods and Chief Financial Officer Kathy Mikells. The presentation will be made available on the Exxon website prior to the conference.
BP (NYSE:BP) – Petrol Ofisi, a subsidiary of Vitol, has agreed to purchase BP’s gas station operations in Turkey, expanding its leadership in the country’s supply network. Vitol’s Turkish network will increase by 770 stations to more than 2,700 locations. The deal, pending regulatory approval in 2024, also includes BP’s stake in the ATAS oil terminal. Financial terms were not revealed.
Goldman Sachs (NYSE:GS) – Goldman Sachs strategists predict the S&P 500 (SPI:SP500) will reach 4,700 by the end of 2024, an increase of approximately 6% with dividends. Based on modest economic growth, earnings increased by 5% and a valuation ratio of 18, expect a stable market in the first half, with gains following interest rate cuts by the FED and the end of the US election cycle.
UBS (NYSE:UBS) – France’s top court has ordered a new trial to reassess the $1.95 billion fine imposed on UBS for illegal banking practices and money laundering. While maintaining the bank’s guilt, the court demands a new trial at the Paris appeals court to determine an appropriate fine, following correct legal procedures.
Barclays (NYSE:BCS) – Barclays warns that SEC reform to increase central clearing of U.S. Treasury securities could elevate cybersecurity risks. The proposal, which would expand the use of the Fixed Income Clearing Corporation, creates a potential risk of single-point failure, exacerbated by recent cyber attacks such as the ICBC incident, increasing the systemic vulnerability of the market.
Berkshire Hathaway (NYSE:BRK.B) – Berkshire Hathaway sold its shares in General Motors (NYSE:GM), Johnson & Johnson (NYSE:JNJ), and Procter & Gamble (NYSE:PG), and reduced its stake in Amazon (NASDAQ:AMZN), accumulating a record US$157.2 billion in cash. Additionally, it sold stakes in Celanese (NYSE:CE), Mondelez International (NASDAQ:MDLZ), and UPS (NYSE:UPS), acquiring a new position in Atlanta Braves Holdings (NASDAQ:BATRK). The net sales contributed to Berkshire’s cash boost, roughly equivalent to its stake in Apple (NASDAQ:AAPL).
Blackstone (NYSE:BX) – Blackstone is finalizing the raising of approximately US$400 million for its Blackstone Private Credit Fund, aiming to improve its investment opportunities. Blackstone plans to raise funds through collateralized loan securities secured by loans from its $52 billion core fund. The strategy includes selling BCRED loans to the CLO, increasing its competitiveness in the market.
Catalent (NYSE:CTLT) – Catalent anticipates that its prefilled syringe production capacity will soon be exhausted by fiscal 2026 due to high demand for new weight loss drugs. The company, which fills self-injection pens for Novo Nordisk ‘s Wegovy (NYSE:NVO), is expanding rapidly due to the success of drugs in the GLP-1 class. Catalent plans to accelerate investments in facilities in the US and Italy in anticipation of a significant increase in revenue from these medicines. Catalent shares were upgraded from Neutral to Outperform by Baird, which highlighted the attractiveness of the stock’s valuation, as reported by The Fly. The pharmaceutical company saw its shares rise 11% on Wednesday despite reporting a loss of $3.94 per share in the fiscal first quarter and a drop in revenue.
Yum China (NYSE:YUMC) – Yum China announced plans on Thursday to repurchase shares in the US and Hong Kong markets totaling US$750 million in 2024. This move is part of a broader effort to return US$3 billion to shareholders through buybacks between 2024 and 2026. The company’s shares are down 16% year-to-date, in contrast to the S&P 500’s 17% gain.
Diageo (NYSE:DEO) – Debra Crew, CEO of Diageo, expressed uncertainty about when the company will resolve inventory issues in Latin America that have negatively impacted profits. Following an unexpected profit warning that sent the company’s shares down 16%, the world’s largest spirits maker faces challenges with visibility into inventory levels in the region. Crew cited efforts to overcome the disruption, including retail activities during the holiday season.
Earnings
Cisco Systems (NASDAQ:CSCO) – Cisco Systems’ stocks experienced nearly an 11% drop in pre-market trading on Thursday due to the digital communications company providing outlooks for the current quarter and the full year that fell short of expectations. For the second quarter, Cisco expects revenues between $12.6 billion and $12.8 billion, below analysts’ estimates of $14.19 billion. This shifted the focus away from Cisco’s strong performance in the first fiscal quarter, where the company surpassed the average forecasts of analysts polled by LSEG in both metrics. Excluding items, Cisco earned $1.11 per share in the first quarter, exceeding estimates of $1.03.
Palo Alto Networks (NASDAQ:PANW) – Shares of Palo Alto Networks, a cybersecurity company, dropped 5.7% in pre-market trading. Although the company reported better-than-expected earnings and provided a solid profit outlook for the second fiscal quarter and the full year, it issued a revenue forecast below what analysts were expecting for the current quarter. Additionally, Palo Alto revised its revenue projections for the full year downwards. For fiscal year 2024, Palo Alto stated it expects revenues of $10.7 billion to $10.8 billion, representing a 16% to 17% increase from the previous year but falling short of the consensus estimate of $10.96 billion.
Maxeon Solar Technologies (NASDAQ:MAXN) – Maxeon Solar Technologies’ shares fell 6.6% in pre-market trading after reporting a larger-than-expected loss in the third quarter. Maxeon reported a loss of $2.21 per share during the quarter, a surprising figure compared to the average per-share loss estimate of 91 cents, according to analysts polled by FactSet. Although the solar company exceeded analysts’ revenue expectations for the quarter, it provided a weaker-than-expected revenue forecast for both the current quarter and the full year.
Aegon (NYSE:AEG) – Dutch insurer Aegon raised its capital generation forecast for 2023 following strong results in the third quarter, particularly in the United States. The company is focused on its U.S. operations and expects to generate approximately $1.3 billion in operational capital this year, ahead of its 2025 target.
Gambling.com (NASDAQ:GAMB) – Despite Gambling.com, a gambling services evaluation website, surpassing expectations in both metrics for the third quarter, the company chose not to revise its projections for the full year. In the quarter, the company’s adjusted earnings before interest, taxes, depreciation, and amortization reached $6.1 million, slightly below the average forecast of $6.2 million made by analysts polled by FactSet.