US Index Futures were mixed on Thursday, on optimism that talks to raise the country’s debt ceiling are progressing, and traders digesting gains from Walmart and Alibaba, as well as reports of weekly unemployment claims numbers, the Philadelphia Fed’s manufacturing survey numbers for May, and awaiting existing home sales data for April.
By 08:45 AM, Dow Jones futures were down 35 points, or -0.10%. S&P 500 futures were up 0.05%, while Nasdaq-100 futures were up 0.13%. The 10-year Treasury yield was at 3.636%. West Texas Intermediate crude fell 0.37% to settle at $72.62 a barrel.
US President Joe Biden and top US Congressional Republican Kevin McCarthy on Wednesday underscored their determination to reach an agreement soon to raise the US$31.4 trillion debt ceiling dollars from the federal government and avoid an economically catastrophic default. Biden left on Wednesday for the G7 world leaders summit, which takes place from Friday to Sunday in Hiroshima, Japan. Biden plans a news conference in Hiroshima on Sunday before returning to Washington, a White House official said.
On the economic data front, the Federal Reserve Bank of Philadelphia reported on Thursday that its regional business performance index rose to -10.4 in May, up from -31.3 the previous month. Any score below zero indicates deteriorating conditions. This is the ninth consecutive negative score and the eleventh in the last twelve months. Economic experts polled by the Wall Street Journal had expected a -20 score in May.
Claims for unemployment benefits in the United States registered the biggest drop since 2021, after a rise in numbers due to fraudulent claims in previous weeks. Initial jobless claims decreased by 22,000 to 242,000 for the week ended May 13, according to data released by the Labor Department on Thursday. The forecast is 250,000 orders. In unadjusted terms, claims fell further to 215,810, marking the biggest decline in two months, mainly due to the reduction in Massachusetts. Due to reports of fraudulent claims driving the recent bull trend in records, some economists are wary of drawing firm conclusions based on the data.
April pre-owned home sales will be released at 10 am by the National Association of Realtors (NAR). The forecast is for a drop of 3.4%. The April Leading Index will be published at 10:00 am by the Conference Board. The forecast is for a drop of 0.6%. Fed Board of Governors Member Philip Jefferson speaks at 09:05 am and Lorie Logan of the Dallas unit at 10:00 am.
By Wednesday’s close, the Dow was up 408.63 points, or 1.24%, to 33,420.77 points. The S&P 500 gained 1.19% to 4,158.77 points. The Nasdaq Composite advanced 1.28% to 12,500.57 points. In addition to the American data that came out this week and showed numbers above expectations, the negotiation around the debt ceiling also stood out. After the Biden-McCarthy meeting yesterday, the market seems to have calmed down that this crisis should pass without much more turmoil, as it has happened before.
On the earnings front, traders are digesting earnings from Alibaba, Walmart, Bath & Body Works, and others. The most highly anticipated after close reports are from Applied Materials, Farfetch, Ross Stores, Globant, ClearSign, Cavco, and Flowers Foods.
Wall Street Corporate Highlights for Today
Snowflake (NYSE:SNOW) – Snowflake was up 2.3% after The Information reported that the cloud-based data storage company is in advanced talks to acquire Neeva, a research startup founded by former Google Ads Tech, Sridhar Ramaswamy.
BT Group (LSE:BT.A) – British telecommunications giant BT Group has announced that it will cut between 40,000 and 55,000 jobs by 2030, representing a 31% to 42% reduction in its workforce. The company seeks to simplify its structure and reduce costs. However, BT reported a 5% rise in adjusted earnings for the year to March. BT shares fell 8% after the announcement.
Goldman Sachs (NYSE:GS) – Goldman Sachs is bullish on artificial intelligence (AI) and believes it can drive S&P 500 earnings over the next 10 years. Goldman senior strategist Ben Snider said AI could boost productivity by 1.5% a year, resulting in a 30% or more increase in S&P 500 earnings over the next decade. Snider highlighted that AI is driving productivity improvements and advised investors to diversify their investments in US equities into cyclical and defensive sectors. He also noted that high interest rates may be hurting corporate spending.
Barclays (NYSE:BCS) – Egypt has appointed Barclays as an advisor for the sale of state-owned United Bank, as part of a broader plan to sell state-owned assets and boost the economy. The government seeks to sell or partially list several state-owned companies, including banks and affiliated military companies. These efforts are aimed at strengthening the currency and increasing private sector involvement. Authorities are seeking transparency and promoting reforms to attract investment and dollars.
Deutsche Bank (NYSE:DB) – Deutsche Bank has agreed to pay $75 million to victims of Jeffrey Epstein to settle a federal lawsuit accusing him of allowing and profiting from his client’s sex trafficking of young women. The settlement leaves JPMorgan Chase (NYSE:JPM) facing its own class action lawsuit. JPMorgan CEO Jamie Dimon is expected to be ousted in that process. Deutsche Bank’s settlement is intended to compensate victims affected by sex trafficking during the time Epstein was a customer of the bank. Epstein committed suicide in 2019 while in jail on sex trafficking charges.
Mizuho Financial Group Inc (NYSE:MFG) – Mizuho does not plan to partner with a US bank as part of its US expansion, unlike its Japanese competitors. CEO Masahiro Kihara said the bank will look to develop its capabilities on its own and may consider acquisitions in asset management or investment banking globally. Other Japanese banks have expanded their US operations through partnerships with US financial institutions.
Charles Schwab Corp (NYSE:SCHW) – Charles Schwab is looking to raise $2.5 billion in long-term debt. The company will issue US$1.2 billion maturing in 2029 and US$1.3 billion maturing in 2034. The proceeds will be used for general corporate purposes.
Amazon (NASDAQ:AMZN) – Amazon plans to invest $12.7 billion in cloud infrastructure in India by 2030. Other tech giants are also expanding their services in the country, boosting the cloud services market, which is expected to reach US $13 billion by 2026. Amazon has already trained millions of people in cloud skills and invested in renewable energy in India.
Alphabet (NASDAQ:GOOGL) – Google is incorporating artificial intelligence (AI) into its advertising, using large language models (LLMs) to automate services and ads. Google plans to use generative AI to allow advertisers to generate media assets and suggest videos to YouTube creators. Additionally, the company is exploring the use of AI in customer support and imaging. With fierce competition in the AI field, Google is looking to drive revenue and improve margins through these innovations. The official announcement of the new technologies is scheduled for the Google Marketing Live event.
Meta Platforms (NASDAQ:META) – The Facebook owner is facing a possible record European Union privacy fine for failing to comply with a court warning related to protecting consumer data. The Irish Data Protection Commission must order Meta to stop all data transfers to the US that rely on contractual clauses deemed to be insecure. The expected fine could top the record fine previously imposed on Amazon.
Target (NYSE:TGT) – Target forecasts a $500 million increase in merchandise stolen and lost due to organized retail crime, bringing the total reduction this year to more than $1 billion. Target is taking steps to mitigate theft, including installing protective gear and working on policy solutions in partnership with governments and retail industry groups.
Micron Technology Inc (NASDAQ:MU) – Micron is expected to receive about $1.5 billion in financial incentives from the Japanese government to build advanced memory chips. The deal will be announced at a meeting with the Japanese prime minister and aims to strengthen Japan’s domestic semiconductor industry. Micron has invested more than US$ 13 billion in the country since 2013. The company’s shares have increased by 30% this year, but still registered an 8.6% drop in the last 12 months.
ServiceNow (NYSE:NOW) – Nvidia and ServiceNow are collaborating to apply generative artificial intelligence to automate internal enterprise IT systems. This partnership aims to develop custom AI models for various use cases in departments such as IT, customer service and human resources. Generative AI technology has the potential to streamline processes and solve problems efficiently, improving productivity and user experience. The collaboration will leverage Nvidia’s expertise in AI and ServiceNow’s capabilities in workflow software.
Nvidia (NASDAQ:NVDA) – Demand for AI investments propelled Nvidia to be the top performer in the S&P 500. CEO Jensen Huang saw his fortune grow 98% to $27.3 billion, mainly due to the increase in value of Nvidia stock. This comes in contrast to the previous year’s decline. The valuation surpassed even that of Mark Zuckerberg, whose fortune increased by 94% to US$ 88.7 billion.
Intel (NASDAQ:INTC) – Intel is stepping up its competition with Taiwan Semiconductor Manufacturing (NYSE:TSM) to attract more business in chip manufacturing. During a videoconference with reporters, Intel revealed its sales strategy and technology pipeline to capture market share from TSMC. The company emphasized its foundry services offering, highlighting a geographically more secure supply chain with factories and assembly facilities in different countries. Intel is also optimistic about its roadmap of chip packaging technologies and is willing to offer a subset of services to customers, even if that involves using other foundries for manufacturing.
Broadcom (NASDAQ:AVGO) – Broadcom offered interoperability solutions to address EU antitrust concerns regarding its $61 billion bid for VMware (NYSE:VMW). The company hopes to convince regulators that the transaction is beneficial to competition, citing the presence of giants such as Amazon, Microsoft and Google in the cloud computing market. Broadcom reaffirmed its goal to complete the transaction in fiscal 2023.
Paramount (NASDAQ:PARA) – Paramount Global President Shari Redstone purchased $2.5 million worth of company stock when they were near 52-week lows, according to a filing filed Wednesday. Redstone purchased 165,000 Class B shares of Paramount Global for $15.06 per share and now owns 577,064 shares. Paramount stock has been underperforming recently, but is up 4.2% after the Redstone purchase. The Redstone family controls the media company, while Berkshire Hathaway is the largest shareholder.
Netflix (NASDAQ:NFLX) – Netflix’s new ad-supported subscription plan attracted 5 million monthly active users within six months. The goal of the $7-a-month plan is to drive growth in an industry where it’s harder to find new customers. The ad-supported offering appears to be picking up pace, dispelling initial concerns. Netflix has 233 million paying members globally. The company shared these results at its upfronts virtual event after changing plans due to a writers’ strike. The industry has had an unusual week of protests and uncertainty.
Sony (NYSE:SONY) – Sony Group Corp announced that it is considering a partial spin-off of its finance business to focus on entertainment and imaging sensors. Separating from Sony Financial Group would allow the company to retain a minority stake. The move is aimed at balancing investment in growth areas and strengthening Sony’s entertainment business. The decision was well received by the market, with shares rising 4.4% premarket.
Shell (NYSE:SHEL) – Shell is considering the sale of wind developer Eolfi, in a move that reflects CEO Wael Sawan’s new approach to seeking greater shareholder value. The company had already withdrawn from a wind farm project in France and did not participate in a recent tender. This possible sale marks a partial retreat in Shell’s renewable strategy. According to Bloomberg, Shell is emphasizing the need for profitability in its renewable energy business, not just reducing emissions, and is abandoning less successful elements of its clean energy strategy. New CEO Wael Sawan is revamping the company to improve performance and weed out low-return businesses. Shell’s power unit needs to deliver results and reduce or stop less successful projects, seeking to increase returns and improve financial discipline, including divestment of project interests and integration of the power generation business with the commercial arm.
BP plc (NYSE:BP) – A subsidiary of BP will pay a US$40 million fine for violating laws on emissions of benzene and harmful pollutants at its Indiana oil refinery. BP will also have to invest approximately $197 million in technologies and improvements to reduce air pollution. These measures are expected to decrease emissions of benzene, hazardous air pollutants and volatile organic compounds at the refinery. BP said it would make the investments in coordination with state and federal regulators.
Tesla (NASDAQ:TSLA) – Tesla has proposed building a factory in India to manufacture electric cars for domestic and export sales, in response to the Indian government’s refusal to reduce import duties. The automaker did not specify the location or investment, but seeks to align with Prime Minister Modi’s “Make in India” initiative. Tesla executives are meeting with Indian officials to discuss local sourcing of parts. The meeting comes ahead of Modi’s visit to the US in June.
Panasonic (USOTC:PCRFY) – Panasonic plans to build two or more factories in North America by 2030, increasing its battery cell production capacity to 4,680 units. The company seeks to supply the growing electric vehicle market, including Tesla. In addition, Panasonic will open a production technology facility in Osaka in 2024 and a battery development site in Kadoma in 2025, Japan.
Toyota Motor (NYSE:TM) – Toyota, along with automakers Daihatsu and Suzuki, has unveiled a micro-sized electric van aimed at Japan’s delivery industry. The electric commercial van will be launched by the end of the current financial year, which runs until March 31, 2024, with a range of around 200 km per charge.
Stellantis (NYSE:STLA) – British car factories face closure and job losses unless the Brexit deal is renegotiated, Stellantis has warned. The company calls for an extension of the parts supply rules until 2027. Ford (NYSE:F) also supports the order. The British car industry is in crisis over tariffs and a lack of battery production for electric cars. Experts warn that without battery gigafactories, the country could lose much of its auto industry. ACEA and the British Society of Engine Manufacturers and Traders have also called for an extension of the phase-in period.
Boeing (NYSE:BA), Air Canada (TSX:AC) – Air Canada is finalizing the purchase of up to 20 Boeing 787 Dreamliners to renew and expand its long-haul fleet, according to sources cited by Bloomberg News.
Bausch Health Cos. Inc (NYSE:BHC) – On Wednesday, a US court ruled in favor of Bausch Health, barring a rival company, Norwich Pharmaceuticals, from getting FDA approval for a generic version of the drug Xifaxan until 2029. Shares in Bausch were up 24.1% during regular trading and a further 1.47% in premarket trading on Thursday. Bausch Chief Executive Thomas Appio has stated that Xifaxan’s patent claims are valid and infringed by Norwich.
Earnings
Walmart (NYSE:WMT) – Walmart reported fiscal first-quarter earnings and revenue that exceeded analyst estimates. The retailer also raised its earnings outlook for the fiscal year. The shares were up 1.4% in premarket trade.
Alibaba (NYSE:BABA) – Alibaba reported revenue of 208.2 billion Chinese yuan (29.6 billion US dollars) against 210.2 billion yuan expected, up 2% year-on-year. The Chinese tech giant has said it will spin off its highly prized cloud computing division. US Alibaba depository receipts rose 0.8%.
Bath & Body Works (NYSE:BBWI) – Bath & Body Works was up 9.6% after first-quarter adjusted earnings beat analyst estimates and the specialty retailer raised its outlook for fiscal year adjusted earnings.
Take-Two Interactive Software (NASDAQ:TTWO) – Shares jumped 9.6% premarket after the video game company reported $1.39 billion in adjusted revenue for the fiscal fourth quarter, beating US analyst estimates $1.34 billion, according to Refinitiv. Meanwhile, the company’s estimates for first-quarter and full-year bookings were below Wall Street expectations.
Boot Barn Holdings (NYSE:BOOT) – Shares of the cowboy boot company fell nearly 16.3% premarket after revenue missed analyst expectations for the fiscal fourth quarter. Boot Barn reported earnings of $1.51 per share, excluding items, on revenue of $425.7 million. Meanwhile, analysts polled by FactSet were expecting earnings of $1.44 a share and $441.2 million in revenue. The boot retailer’s full-year guidance also fell below analyst estimates.
Synopsys (NASDAQ:SNPS) – The software company’s stock was flat premarket despite Synopsys’ second-quarter earnings and fiscal revenue above Wall Street expectations, according to FactSet. The company reported $1.4 billion in revenue, while analysts estimated $1.38 billion. Synopsys also reported earnings of $2.54 per share, excluding items, beating analysts’ estimates of $2.48 per share. Synopsys also raised its full-year outlook for earnings and revenue growth.
Cisco Systems (NASDAQ:CSCO) – Shares fell 3.6% premarket despite the company reporting outperformed earnings and revenue for the fiscal third quarter. Cisco reported adjusted earnings of $1 per share on revenue of $14.57 billion. Analysts estimated earnings of 97 cents a share and $14.39 billion in revenue, according to Refinitiv.