In Wednesday’s pre-market, U.S. index futures extended the downward trend seen in the previous session.
As of 6:02 AM, Dow Jones futures (DOWI:DJI) fell 164 points, or 0.44%. S&P 500 futures fell 0.48% and Nasdaq-100 futures retreated 0.58%. The yield on 10-year Treasury bonds was at 4.062%.
In the commodities market, West Texas Intermediate crude oil for February fell -2.11%, to $70.87 per barrel. Brent crude for March fell 1.77%, close to $75.99 per barrel. Iron ore with a 62% concentration, traded on the Dalian exchange, fell 0.75%, to $129.21 per metric ton.
On Wednesday’s economic agenda, investors await December retail sales numbers, with the LSEG consensus predicting a monthly increase of 0.4% at 08:30 AM. At the same time, December import prices will be released. At 09:15 AM, December industrial production data, with LSEG consensus projecting stability compared to November. The January builder confidence index will be published at 10 AM by the NAHB. The Beige Book will be released by the Federal Reserve at 2 PM.
Asian markets closed lower on Wednesday, impacted by disappointing economic data from China and uncertainties about U.S. interest rate policy. Hong Kong’s Hang Seng led the losses with a 3.71% drop, followed by significant declines in mainland China indices. Japan’s Nikkei, South Korea’s Kospi, and Taiwan’s Taiex also recorded drops. China’s annual GDP expansion of 5.2% in the fourth quarter of 2023 was below expectations. Moreover, the Chinese real estate sector continues to face crises. In Oceania, the Australian stock market registered a slight decline.
European stock markets recorded drops of more than 1% this morning, influenced by ECB statements that moderated expectations of interest rate cuts and by weak data from China. Uncertainties in monetary policy in the United Kingdom and the United States also weigh on the market.
On Tuesday, U.S. stocks faced a notable decline due to rising Treasury yields above 4% and concerns that the Federal Reserve might delay interest rate cuts. The major indices finished in the red, with the Dow recording a more significant drop. The Empire Manufacturing Index underperformed expectations, the worst since May 2020, signaling potential economic challenges. Additionally, hawkish comments from some central bank officials and disappointing quarterly results from Morgan Stanley (NYSE:MS) influenced the market. However, there were exceptions, such as Goldman Sachs (NYSE:GS), which reported solid earnings, and Advanced Micro Devices (NASDAQ:AMD), which stood out due to optimistic comments about semiconductor demand.
For Wednesday’s quarterly earnings front, scheduled to present financial reports before market opening are Charles Schwab (NYSE:SCHW), Prologis (NYSE:PLD), US Bancorp (NYSE:USB), Citizens Financial Group (NYSE:CFG), and more. After the close, numbers from Discover (NYSE:DFS), Alcoa (NYSE:AA), Wintrust Financial (NASDAQ:WTFC), Kinder Morgan (NYSE:KMI), H.B. Fuller (NYSE:FUL), among others, are awaited.
Wall Street Corporate Highlights for Today
Apple (NASDAQ:AAPL) – Apple became the largest smartphone supplier in shipments in 2023, surpassing Samsung for the first time in history. Apple’s smartphone shipments increased by 3.7% over the year, while the overall industry fell by 3.2%. The company maintained its position thanks to the demand for premium devices and attractive trade-in offers.
Alphabet (NASDAQ:GOOGL) – Alphabet’s subsidiary YouTube is profiting millions from advertising on channels that disseminate misinformation about climate change, due to evasive tactics by content creators, according to a report from the Center for Countering Digital Hate (CCDH). Moreover, Google announced layoffs of hundreds of employees from its advertising sales team as it continues its transition to automation and artificial intelligence. These cuts follow earlier layoffs in units like voice assistant, hardware, and augmented reality, suggesting that job cuts may persist into 2024. Google Pay signed an agreement with the National Payments Corporation of India (NPCI) to expand its mobile device-based payment services outside India. The partnership aims to make international payments more convenient for Indian travelers and establish digital payment systems similar to UPI in other countries, aligning with the Indian government’s efforts to make UPI globally accepted.
Nvidia (NASDAQ:NVDA), AMD (NASDAQ:AMD) – Shares of Nvidia and AMD are slightly down in Wednesday’s pre-market, after rising the previous day due to optimism about artificial intelligence (AI) chip demand, leading analysts to raise price targets. Barclays (NYSE:BCS) raised AMD’s price target to $200, while KeyBanc increased it to $195. Nvidia also saw its price target raised to $740. Both stocks are among the top gainers in the PHLX semiconductor index. Nvidia plans to produce an AI chip for Chinese customers, while AMD launched new AI chips for data centers.
Synopsys (NASDAQ:SNPS), Ansys (NASDAQ:ANSS) – Synopsys, a chip design software manufacturer, plans to acquire Ansys, a deal valued at $35 billion in cash and stock. This deal will create a new competitor in the enterprise software sector, with regulatory uncertainties.
Hertz (NASDAQ:HTZ) – Hertz, the largest operator of electric vehicle fleets in the U.S., is discarding 20,000 of them, including Teslas, due to high repair costs and low demand. This could impact the used electric vehicle market and concern buyers, as the lack of knowledge and spare parts raises repair costs. Consumer Reports revealed that electric vehicles had 79% more problems than conventional cars. Hertz may need to offer significant discounts on its used electric vehicles. However, experts believe repair costs will decrease as infrastructure develops.
Uber (NYSE:UBER) – Uber is collaborating with Tesla to encourage its drivers to adopt electric vehicles in the U.S. They offer purchase incentives and share data to improve charging infrastructure. Uber aims to be emission-free by 2030 in U.S. and Canadian cities.
Tesla (NASDAQ:TSLA) – Tesla CEO Elon Musk wants at least 25% voting control to lead the company in artificial intelligence and robotics. He prefers to develop products outside Tesla if he can’t gain this influence, which could create conflicts with his CEO duties. Moreover, Tesla cut prices of Model Y in Germany after losing its sales lead to Volkswagen in 2023. The Model Y Long Range and Performance saw cuts of 5,000 euros, while rear-wheel drive models dropped 1,900 euros. Competition and the temporary suspension of production in Berlin also influenced this decision, occurring amid a discount race in China and the anticipated end of the German electric vehicle subsidy program.
Toyota Motor (NYSE:TM) – Toyota plans to overhaul its subsidiary Daihatsu following an investigation into misconduct in collision safety tests. Possible measures include breaking down barriers between businesses, sending engineers, and leadership changes. Production at Daihatsu’s factories in Japan remains halted due to irregularities in 64 models.
Stellantis NV (NYSE:STLA) – Stellantis signed a multi-billion dollar deal with rental company SIXT SE to sell up to 250,000 vehicles in Europe and North America over the next three years. Deliveries will start in 2024, covering various Stellantis models, including electric vehicles. Additionally, the companies are exploring cooperation opportunities in areas like Data as a Service (DaaS).
Boeing (NYSE:BA) – Boeing appointed retired U.S. Navy Admiral Kirkland H. Donald as a special advisor to the CEO to improve quality control following an incident with a 737 MAX 9. Additionally, Ryanair CEO Michael O’Leary expressed uncertainty about the certification of Boeing’s 737 MAX 10 jet, initially expected for the fourth quarter of 2024, suggesting it may not occur before 2025. Ryanair (NASDAQ:RYAAY) has 150 firm orders for the MAX 10.
Spirit AeroSystems (NYSE:SPR) – Spirit AeroSystems, a supplier to Boeing, will implement additional inspections in its 737 fuselage production line following an incident where a cabin panel exploded in mid-air on an Alaska Airlines (NYSE:ALK) 737 MAX 9 jet. The inspections will follow airlines’ practices for returning 737 MAX 9 aircraft to service. The measure aims to improve quality assurance and controls across the production system. The FAA grounded 171 MAX 9s after the incident, resulting in a drop in Spirit AeroSystems’ shares.
Spirit Airlines (NYSE:SAVE), JetBlue Airways (NASDAQ:JBLU) – Spirit Airlines faces tough decisions after the blockage of its $3.8 billion merger deal with JetBlue Airways. The low-cost carrier is considering seeking another buyer or may opt for a Chapter 11 filing and reorganization to strengthen its finances, facing challenges from rising operating costs and outstanding debt.
Exxon Mobil (NYSE:XOM) – Mexico Pacific announced a deal with Exxon Mobil to supply an additional 1.2 million tons per year of liquefied natural gas (LNG), enabling a final investment decision to expand its Saguaro Energia LNG plant on Mexico’s west coast. Exxon will purchase the LNG free on board for a 20-year period. The Saguaro Energia project will send 15 million tons per year of LNG to Asia, using gas from the U.S. Permian Basin, with an estimated cost of over $15 billion.
BHP (NYSE:BHP) – Australian nickel producers are facing low prices due to increased supply from Indonesia and declining demand, leading to a reassessment of BHP’s strategy, which bet on nickel as a key component in its green strategy. The drop in prices and innovations in nickel use in batteries have posed challenges to the nickel market. BHP recorded a 61% decline in profits from its nickel business in 2023.
DuPont (NYSE:DD), Dow Inc. (NYSE:DOW) – In an unusual twist, BofA Securities analyst Steve Byrne downgraded DuPont’s shares directly from “Buy” to “Sell”. This rare move, which typically involves a gradual transition between categories, had a notable impact on the market. Meanwhile, Dow Inc. saw its shares upgraded from “Hold” to “Buy”, indicating a cautious approach by investors towards the chemical sector.
Honeywell (NASDAQ:HON) – Honeywell announced that its quantum computing company, Quantinuum, achieved a valuation of $5 billion following a $300 million funding round led by JPMorgan Chase (NYSE:JPM). Mitsui & Co (NYSE:SMFG) and Amgen (NASDAQ:AMGN) also participated, raising Quantinuum’s total raised to about $625 million.
Walt Disney (NYSE:DIS) – Disney rejected activist shareholder nominees and emphasized its transformation efforts, including prioritizing streaming and cost savings, led by CEO Bob Iger. The company faces pressures to improve performance.
Restaurant Brands International (NYSE:QSR), Carrols Restaurant (NASDAQ:TAST) – Restaurant Brands International, owner of Burger King, plans to acquire Carrols Restaurant Group Inc. for about $1 billion, aiming to transform and revitalize over 600 franchises. This action, part of a broader plan to remodel units and enhance customer experience, seeks to strengthen Burger King’s market presence, challenging competitors like McDonald’s and Wendy’s. The purchase is expected to be completed in the second quarter, with an additional investment of $500 million in renovations.
Alibaba (NYSE:BABA), PDD Holdings (NASDAQ:PDD), JD.com (NASDAQ:JD) – Following China’s GDP growth of 5.2% in the fourth quarter and throughout 2023, U.S.-listed shares of Alibaba, JD.com, and PDD Holdings fell. This was the slowest annual growth rate, excluding the three Covid-19 pandemic years, since 1990, as reported by The Wall Street Journal.
GameStop (NYSE:GME) – GameStop, the video game retailer and original meme stock, had its biggest daily drop in months on Tuesday, falling 5.2%. They also extended their losing streak to three days and are 31.8% below the last year. The shares are down 1% in Wednesday’s pre-market, with a market value of $4.27 billion.
AMC Entertainment Holdings (NYSE:AMC) – The shares of AMC Entertainment continued their decline on Tuesday, hitting an intraday record low and closing at another record low. The recent decline reflects the end of the meme stock status for the cinema company. Over the past 52 weeks, AMC’s shares have fallen 90.6%.
Thomson Reuters (NYSE:TRI) – Thomson Reuters announced the acquisition of World Business Media Limited, a subscription news and analysis company in the insurance and reinsurance market. The London-based company will join Thomson Reuters’ Reuters News division, expanding its offerings to professionals in the field. The financial details of the deal were not disclosed.
The New York Times (NYSE:NYT) – OpenAI’s CEO Sam Altman denied the need for large volumes of training data from publishers like The New York Times. He emphasized that AI does not need to use the Times’ data, as the company is seeking to license news content from various sources to provide accurate information to users. OpenAI is currently in negotiations with various publishers for this purpose, seeking to balance the need for accurate data with concerns about copyright. This effort comes after a lawsuit by The New York Times alleging copyright infringement by OpenAI.
Amer Sports – Amer Sports, the maker of Wilson tennis rackets, plans to conduct its initial public offering (IPO) in the U.S. by the end of January, aiming to raise $1 billion and value the company at $10 billion. Amer Sports, owned by a Chinese consortium led by Anta Sport and including Tencent, has already revealed its regulatory filings and is in early discussions with investors ahead of the formal launch of the deal’s roadshow. The company’s revenue grew to $3.05 billion in the nine months until September 2023, driven by increased operations in China. Amer Sports went private in 2019 in a deal valued at over $5 billion.
Kaspi.kz – Shareholders of Kaspi.kz, a mobile app provider from Kazakhstan, plan an initial public offering of 9 million American Depositary Shares (ADS), valuing the company at $873 million at current prices. Kaspi.kz operates the Kaspi.kz Super App, with 13.5 million monthly active users. The company will not receive funds from the IPO. Kaspi.kz reported a net profit of $1.27 billion and revenue of $2.83 billion in the nine months to September 30. The offering plans to list the shares on the Nasdaq Global Select Market under the symbol KSPI.
GSK (NYSE:GSK) – The British pharmaceutical company GSK raised $1.24 billion (£978 million) by selling its stake in Haleon at a discount, reducing its stake to 4.2% in the world’s leading independent consumer healthcare company.
Berkshire Hathaway (NYSE:BRK.A) – Warren Buffett’s Berkshire Hathaway acquired the remaining 20% of the truck stop operator Pilot Travel Centers from the Haslam family following an agreement. The deal’s value was not disclosed, but it involved a dispute over the company’s valuation. Berkshire now owns 100% of Pilot Travel Centers.
UBS (NYSE:UBS) – UBS Global Research raised its year-end target for the S&P 500, projecting a level of 5,150, the highest among major global banks, indicating a potential 8% increase from current levels, based on expectations of interest rate cuts, controlled inflation, and solid corporate profits. The forecast for S&P 500 companies’ earnings growth this year is 6.3%, below the consensus of 11.4%.
Earnings
Morgan Stanley (NYSE:MS) – Morgan Stanley’s fourth-quarter profit was impacted by $535 million in charges, resulting in a drop to $1.5 billion, or $0.85 per diluted share, compared to $2.2 billion, or $1.26 per diluted share, in the previous year. Lower-than-expected guidance for wealth management margins disappointed investors, leading to a more than 4% drop in the bank’s shares on Tuesday. However, the company expects to benefit from a recovery in investment banking fees and client asset growth.
Goldman Sachs (NYSE:GS) – In the fourth quarter, Goldman Sachs reported a profit of $2.01 billion, or $5.48 per share, compared to $1.33 billion, or $3.32 per share, in the same period last year. Total revenue increased, with equity trading revenue rising 26% for the quarter. Asset and wealth management revenues also grew by 23%, totaling $4.39 billion. Investment banking fees fell 12% to $1.65 billion, while fixed income, currencies, and commodities (FICC) revenues plunged 24%.
PNC Financial Services (NYSE:PNC) – The PNC Financial Services Group reported a 44% drop in net profit to $0.9 billion, due to higher charges to replenish the government’s deposit insurance fund and workforce reduction expenses. Its net interest income (NII) fell 8% to $3.4 billion. The company expects an NII of $13.91 billion in 2024, a 5% decrease from the previous year.
Interactive Brokers (NASDAQ:IBKR) – Interactive Brokers reported an adjusted profit of $1.52 per share in the fourth quarter, slightly below analysts’ estimates by 1 cent. Revenue grew 17%, reaching $1.14 billion, in line with forecasts. During the period, the number of client accounts at the electronic broker increased 23%, totaling 2.56 million, while client equity grew 39%, reaching $426 billion. As a result, the company’s shares fell 3.5% in Wednesday’s pre-market trading.
Impinj (NASDAQ:PI) – Impinj, an Internet of Things company, revised its projections for the fourth quarter, now forecasting revenue of over $70 million, exceeding its previous forecast of $65.5 million to $68.5 million. Additionally, the company expects adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) for the period to be more than $2.5 million, an improvement over the previous guidance of negative $900,000 to positive $700,000. As a result, Impinj’s shares rose 5.2% in Wednesday’s pre-market trading.
Progress Software (NASDAQ:PRGS) – Progress Software announced adjusted earnings in the fourth quarter that, although decreased compared to the previous year, exceeded Wall Street’s expectations. The company recorded revenue of $177 million, also beating estimates. Additionally, Progress Software’s outlook for the fiscal year 2024 was in line with analysts’ predictions.