US Index Futures were broadly flat on Monday as traders watched talks on the US debt ceiling.
By 7:49 AM, Dow Jones futures were up 8 points, or 0.03%. S&P 500 futures were down 0.01%, while Nasdaq-100 futures were down 0.06%. The 10-year Treasury yield was at 3.68%. West Texas Intermediate crude rose 0.21% to settle at $71.70 a barrel.
The President of the United States, Joe Biden, has another meeting scheduled for today with the Speaker of the House of Representatives, Kevin McCarthy. Negotiations on the debt were resumed on Sunday. Timing is crucial, McCarthy said. Spending levels are a central focus in negotiations. Biden proposed spending cuts and challenged Republicans to change their demands. Before flying back to the US from Japan, Biden said yesterday that “it’s time for Republicans to accept that there is no bipartisan deal to be done exclusively – on their partisan terms.” “They also need to change,” added the American president, who also said that he proposed cutting spending.
Four members of the Federal Reserve speak during the day and could prompt an adjustment in expectations about the flight plan for the US benchmark rate. Derivatives projected an 82.6% chance of the US interest rate being maintained at the next meeting of the Federal Reserve on June 14, according to the FedWatch tool, from the Chicago Mercantile Exchange.
In commodities, iron ore delivered part of last week’s gains on persistent fears about the weakening of the real estate sector in China. On the Chinese Exchange in Dalian, the metal contract for September, the most traded, retreated 2.7% to 716 yuan, or the equivalent of US$103.59 a tonne.
Amid patchy signs of recovery, the People’s Bank of China, the PBoC, kept its prime lending rates for one and five years unchanged. China’s recovery should reduce some of the US dollar’s exceptionalism, leading to a weaker US dollar, Ashish Agrawal, head of Asia FX and Emerging Markets Macro Strategy Research at Barclays, said in an interview with CNBC.
For the week ahead, the economic data agenda is relatively light, with the highlight being the second reading of Q1 GDP on Thursday and the Personal Consumption Spending Gauge, a measure of inflation favored by the Federal Reserve, on Friday.
All three major indexes closed last week with gains. The S&P 500 rose 1.65% for its biggest one-week advance since March. Meanwhile, the Nasdaq Composite gained 3.04% for the week, also its best weekly performance since March. The Dow Jones rose 0.38% for the week.
At the close of Friday, US stock markets ran out of steam and ended the session with modest losses. The Dow Jones Industrial Average fell 109.28 points, or 0.33%, to 33,426.63 points. The S&P 500 fell 0.14% to 4,191.98 points. The Nasdaq Composite fell 0.24% to 12,657.90 points. The main pivot for the worsening of sentiment in the USA was the report that the negotiations for raising the debt ceiling between Democrats and Republicans reached a new impasse, with Republicans announcing a pause in the talks when assessing that the position of the White House. Despite the most likely scenario still being a resolution of the impasse, the proximity of the D-day for the US debt – which should occur in the first weeks of June, according to Janet Yellen – kept investors cautious.
Another factor that contributed to the weaker performance of US indices was Yellen’s warning that more mergers and acquisitions are likely to be needed to avoid problems in the banking sector. The index of regional banks retreated more than 2.0% on Friday. On the other hand, the speech by Fed Chairman Jerome Powell, in the early afternoon, was received as milder by investors, since he reiterated that the most likely scenario is a pause in the current cycle of monetary tightening. However, his speech was not enough to ease the pressure that the debt impasse has put on US interest rates. The dollar also felt the worst moment, losing strength against its main developed peers.
On Monday’s earnings front, traders will be looking at earnings from Zim, GlobalE, Nanox, Niu, Nordic American Tankers, IceCure, Ryanair and One Connect. After the market closes, reports from Zoom, Capital Southwest, Ryvyl, Heico, Nordson, among others, will be awaited.
Wall Street Corporate Highlights for Today
Microsoft (NASDAQ:MSFT) – The European Commission is investigating Microsoft in relation to the Azure cloud contracts. Regulators asked cloud service providers for information about contractual clauses that require sharing customer data with Microsoft. The EU is also investigating whether the company used this information to directly reach the providers’ customers. Microsoft is in talks with CISPE to resolve the issue.
Meta Platforms (NASDAQ:META) – Meta Platforms Instagram plans to launch an app based on text to compete with Twitter, according to sources. The company is testing the product with influencers and creators, and has reached out to talent agencies and celebrities to gauge interest. The app will be integrated with Instagram and will also be compatible with other apps. Meta was also fined a record €1.2 billion by European privacy regulators for transferring user data from the EU to the US. The decision relates to a case brought by Max Schrems, a privacy activist, who argued that the existing structure does not protect Europeans from US surveillance. Meta plans to appeal the decision and hopes that a new EU-US privacy agreement will be implemented before deadlines imposed by the Irish regulator.
Alphabet (NASDAQ:GOOGL), Samsung (USOTC:SSNNF) – Samsung will not change the default search engine from Google to Microsoft’s Bing on its smartphones at this time, as reported last month, according to Reuters. The company has suspended its internal review of replacing Google with Bing in its web browsing app. Google earns an estimated $3 billion in annual revenue from the Samsung contract, according to an April 16 report in the New York Times.
Micron Technology (NASDAQ:MU) – Micron Technology products have not passed China’s network security review and infrastructure operators are prohibited from purchasing their products. The decision, in the midst of the technological dispute between the US and China, could affect different sectors, from transportation to finance.
Warner Bros Discovery (NASDAQ:WBD) – David Zaslav, CEO of Warner Bros Discovery, was booed during his commencement speech at Boston University, while film and TV writers were on strike for better pay. The incident reflected tension between media companies and the writers’ union.
AstraZeneca (NASDAQ:AZN) – AstraZeneca, a global pharmaceutical company, aims to be a patriotic company in China and a “lover of the Communist Party,” its Chinese chairman said. The commitment was expressed during an event celebrating the company’s 30th anniversary in the country. This stance is unusual for foreign companies, but AstraZeneca has a large and growing business in China.
Intercept Pharmaceuticals (NASDAQ:ICPT) – Shares of Intercept Pharmaceuticals fell more than 13% in premarket trading following the company’s setback in gaining FDA approval for obeticholic acid as a treatment for NASH. The advisory committee voted against fast-track approval, demanding more data. There are no currently approved treatments for NASH.
Hepion Pharmaceuticals (NASDAQ:HEPA) – Shares in Hepion Pharmaceuticals posted gains of more than 70% in premarket trading following a successful Phase 2 study of its drug candidate rencofilstat for NASH. The positive results strengthened the company’s confidence in its anti-fibrotic approach and potential to reduce liver fibrosis in progressive disease without approved treatment.
Kymera Therapeutics (NASDAQ:KYMR) – Kymera Therapeutics has announced the hiring of Jeremy Chadwick, former Senior Vice President of Takeda Pharmaceuticals, as its next Chief Operating Officer. Chadwick will bring his extensive experience in the life sciences industry to help develop the company’s programs and drive its R&D organization.
Avrobio (NASDAQ:AVRO) – Shares in Avrobio jumped about 67.7% following the sale of its cystinosis gene therapy program to Novartis (NYSE:NVS) for $87.5 million. The deal strengthens Avrobio’s financial position, focuses its pipeline and validates its innovative approach to gene therapy with hematopoietic stem cells.
American Airlines (NASDAQ:AAL) – American Airlines pilots have agreed in principle to a new contract that includes a 21% pay increase through 2023. The Allied Pilots Association (APA) will finalize the wording of the contract before submitting it to the board for approval. Details of the contract were not publicly disclosed.
Lockheed Martin (NYSE:LMT), Boeing (NYSE:BA) – Blue Origin, led by Jeff Bezos, has won a $3.4 billion contract with NASA to build a lunar spacecraft. The partnership with Lockheed Martin, Boeing, Draper and Astrobotic will result in the creation of the Blue Moon landing module. The decision gives NASA a second option to send astronauts to the Moon besides SpaceX. The Artemis program envisions building a lasting presence on the Moon.
Volkswagen (USOTC:VWAPY) – Volkswagen has completed the sale of its Kaluga plant in Russia along with its local subsidiaries. The transaction involves production facilities, importer structure and financial services, but the price was not disclosed. The factory has been inactive since March 2022 due to the Russian invasion of Ukraine.
Tesla (NASDAQ:TSLA) – Tesla is offering discounts of more than $1,300 on select Model 3 cars in the US, following an incentive strategy to drain inventory amid economic challenges and fierce competition. CEO Elon Musk seeks to increase demand and recognizes global economic difficulties.
Ford (NYSE:F) – Ford will host its capital markets day to convince skeptics of its ambitious growth plans in electric vehicles. CEO Jim Farley will highlight how the company expects to achieve targets such as an 8% EBIT margin and 2 million EV production by 2026. Ford will present its strategy, second-generation products and raw materials deals. Analysts expressed doubts, but the event could bring more comfort to investors. Ford’s stock rose significantly under Farley’s tenure. The company seeks to focus on connected digital products to drive growth.
Albermarle (NYSE:ALB) – Albemarle Corp shares rose 1.1% in premarket trade after the company announced a 5-year contract to supply Ford Motor Co with lithium hydroxide to manufacture 3 million batteries of electric vehicles. The deal starts in 2026. Financial terms were not disclosed. EnergySource Materials also announced a lithium supply agreement with Ford.
Adidas AG (USOTC:ADDYY) – Adidas will release some sneakers from the Yeezy partnership with Kanye West, planning to donate a portion of the proceeds to organizations fighting anti-Semitism and racism. The company ended its partnership with West following his anti-Semitic remarks. The launch of the sneakers marks the first sale since.
Sacyr (USOTC:SYRVF) – Sacyr is negotiating with Bestinver the sale of its stake in the Irish road N6, ending its concession business in Ireland. Bestinver will manage half of the highway under an inflation-indexed toll agreement with the FCC. The deal is still under negotiation.
Blackstone (NYSE:BX) – Blackstone has fully acquired the International Gemological Institute (IGI) from Fosun and the founding family for approximately $530 million. IGI is a leader in jewelry certification and has gemology laboratories and schools in several countries, with a primary focus on India.
Vodafone (NASDAQ:VOD) – Following the appointment of Margherita Della Valle as CEO of Vodafone, she unveiled a comprehensive assessment of the issues facing the company, leading to a brutal drop in shares. Della Valle has promised to cut jobs and accelerate the launch of new offerings to reshape the company. Vodafone faces complex challenges, including concerns about dividends, debt, shareholders with conflicting demands and difficulties closing deals. The new CEO is looking to increase emphasis on the business division and expand presence in growth markets.
Telecom Italia (BIT:TIT) – Telecom Italia (TIM) is under pressure to call an extraordinary board meeting and nominate a candidate supported by Vivendi. The dispute arises from disagreements between TIM and Vivendi over the company’s reformulation plans. TIM set a deadline to receive offers for its fixed network until June 9th. The directors will discuss the proposals at a meeting scheduled for June 22.
Disney (NYSE:DIS) – Lawyers for Florida Governor Ron DeSantis are asking that a federal judge be disqualified from a case against Disney, citing his bias. Disney sued DeSantis for retaliation over criticism of sex education legislation. DeSantis is a possible candidate for the presidency in 2024.
Wise (LSE:WISE) – Shares of British fintech Wise fell after the announcement that its chief financial officer, Matt Briers, will leave the company next year, and CEO Kristo Kaarman will go on paternity leave from September. The search for a new CFO is already underway, and Chief Technology Officer Harsh Sinha will take over as interim CEO. Analysts speculate about a possible overhaul of the company’s leadership.
UnitedHealth (NYSE:UNH) – UnitedHealth Group is the highest priced company per share on the Dow Jones and one of the most valuable stocks in the S&P 500. It is the largest US healthcare conglomerate, surpassing JPMorgan Chase in size. Experts have an optimistic view on the company, with most analysts rating it a Buy. Its acquisition and capital management strategy, along with its business diversity, make UnitedHealth attractive and relatively immune to economic cycles. However, the company’s size and power raise concerns about its influence on the healthcare system. UnitedHealth seeks to improve access and reduce costs in the industry.
PacWest (NASDAQ:PACW) – Shares in PacWest Bancorp (PACW), a regional lender criticized by investors during the market turmoil, rose more than 3% premarket after the company announced the sale of a portfolio of home loans worth US$ $2.6 billion to Kennedy-Wilson Holdings. The transaction will be completed in installments during the second and third quarters.
Plug Power Inc (NASDAQ:PLUG) – The shares of Plug Power Inc. rose 0.5% premarket after the company announced three deals in Europe for its green hydrogen electrolysers. Pioneering agreements with Ardagh Glass Limmared AB, Hydro Havrand and the APEX Group drive Plug’s vision of scaling the green hydrogen economy. The European Union plans to produce 10 million metric tons of green hydrogen annually by 2030.
Ironwood Pharmaceuticals (NASDAQ:IRWD) – Ironwood Pharmaceuticals Inc has agreed to acquire VectivBio Holding AG (NASDAQ:VECT) for $17 per share in cash, totaling approximately $1 billion. VectivBio is a biotechnology company focused on developing treatments for rare and serious conditions. The deal will strengthen Ironwood’s portfolio and is expected to close in the second half. Shares in VectivBio were up 39.92%, while shares in Ironwood were down 14.52% premarket.
Earnings
Ryanair (NASDAQ:RYAAY) – Ryanair reported annual net income of €1.43 billion, driven by increased traffic and fares, as well as favorable oil hedging positions. Despite a difficult first quarter in 2022, travel demand rebounded throughout the year. The airline plans to buy 300 new aircraft and is looking to expand its presence in Europe. Consolidation in the aviation industry is seen as inevitable.
Full Truck Alliance (NYSE:YMM) – Full Truck Alliance, the China-based digital freight company, reported first-quarter fiscal earnings and revenue that beat analyst estimates. Full Truck Alliance American Depositary Receipts were up 5.8% premarket.
Daxor Corporation (NASDAQ:DXR) – Shares of Daxor Corp fell 22% in premarket trading following the announcement of its share issuance plans. The company intends to raise funds for its medical device and biotechnology operations, but has not disclosed the exact number of shares to be issued. Resources will be used for general corporate purposes.
Market view
Apple (NASDAQ:AAPL) – Shares of the iPhone maker fell about 1% premarket after Loop Capital downgraded Apple shares to Hold from Buy. Loop predicts the company will miss its June quarterly revenue forecast, the company said in a note on Monday.
Foot Locker (NYSE:FL) – Foot Locker was down 2.35% in premarket trade to settle at $29.50. Shares fell more than 27% on Friday after the shoe retailer cut its earnings and sales guidance for the fiscal year. Williams Trading has downgraded the stock to a Sell from Hold rating with a price target of $25, down from $38, the Fly reported.
Nike (NYSE:NKE) – Nike has been downgraded to Sell from Hold at Williams Trading. Nike fell 1.62% after falling 3.5% on Friday.
DraftKings (NASDAQ:DKNG) – DraftKings was up 2.86% after shares in the sportsbook company were raised to Buy from Neutral by UBS.