US Index Futures rose on the possibility of the US government reaching a deal to resolve the US debt ceiling problem prevailing in markets on Friday morning. Investors also await the release of the inflation indicator monitored by the Federal Reserve, after mixed signals from US central bank officials regarding the direction of interest rates.
By 7:05 AM, Dow Jones futures was up 50 points, or 0.16%. S&P 500 futures were up 0.20%, while Nasdaq-100 futures were up 0.37%. The 10-year Treasury yield was at 3.787%. West Texas Intermediate crude was up 0.89% to settle at $72.47 a barrel.
On Friday’s economic data agenda, investors await the release of the Personal Expenses Price Index at 8:30 AM. The consensus points to an increase of 0.2% in April, on a monthly basis, after a rise of 0.1% in March. The data will be released simultaneously with the income and expenses of Americans. Durable Goods Orders data at 8:30 AM and University of Michigan Consumer Confidence at 10:00 AM are other leading indicators due out in the US today.
In commodities, iron ore recovered from the low in six months, but still accumulated a weekly drop in the Chinese Dalian stock exchange. The metal’s September contract rose 3.96% to RMB 709.50, or the equivalent of $100.40 a tonne. The boost of the commodity occurred after the report of an increase in the capacity utilization rate of the blast furnace of 247 Chinese steel mills, according to the industry consultancy and data provider Mysteel, cited in a Reuters report. Mysteel said the rate rose for the second consecutive week to 89.93% between May 19 and 25, up 0.8 percentage points from the previous week.
At Thursday’s close, the Nasdaq Composite was up 1.71% to close at 12,698.09 points. The S&P 500 rose 0.88% to close at 4,151.28 points. The Dow Jones rose 35.27 points, or 0.11%, to close at 32,764.65 points, below its 200-day moving average. This disparity was mainly due to the rise of around 25% by Nvidia, companies whose focus is the production of chips, which released a better-than-expected corporate result and also very favorable guidance. On the other hand, activity data in the US came in much stronger yesterday. Starting with the revision of the 1Q23 GDP data, which showed an upward revision, which was not foreseen by the market. Unemployment data and the Chicago Fed’s National Activity Index also beat estimates. As a result, Treasury yields opened strongly, rising more than 10 bps in some peaks. The market pricing of FOMC decisions showed a greater chance (53%) of an increase of 0.25 pp.
On the Friday earnings front, traders are watching earnings from Big Lots, Knot, Diana Shipping Inc, Canaan, Hibbett, Booz Allen Hamilton, PDD Holdings and others.
Wall Street Corporate Highlights for Today
JPMorgan Chase (NYSE:JPM) – JPMorgan Chase is developing IndexGPT, an artificial intelligence-based software service to select investments for clients. The technology is similar to OpenAI’s ChatGPT and is being tested internally by other banks. At the same time, JPMorgan Chase notified about 1,000 First Republic Bank employees that they will be laid off from their jobs following the takeover of the failed bank. Most other employees will be offered temporary or full-time employment.
First Republic (NYSE:FRC) – According to Bloomberg, First Republic Bank was paying more than $10 million a year to dozens of employees before its bankruptcy. JPMorgan Chase has agreed to take over the majority of the bank’s assets, paying $10.6 billion to the FDIC. Potential rescuers were surprised by the high compensation numbers revealed.
BlackRock (NYSE:BLK) – BlackRock hopes to up its stakes in tech giants with the $9 billion exchange-traded fund. The ETF will have to increase its information technology allocation from 3% to 21%, reducing exposure to resilient sectors. The move will make the fund less defensive and will likely trade at a valuation premium. Microsoft, Meta Platforms and Nvidia are estimated to be the focus of the fund. The shift is part of a series of rebalancing and reflects recent macroeconomic forces. Investor interest in MTUM has waned, but there may be a rally for stocks removed from the fund after rebalancing. Other funds will also be affected by the redesign.
Capital One (NYSE:COF) – The New York Banking Commission has suspended deposits into Capital One and KeyBank accounts following a lack of plans to combat discrimination. The city will not make new deposits, but will use existing accounts for payments. Capital One has said it prohibits discrimination and harassment based on protected characteristics.
UBS (NYSE:UBS), Credit Suisse (NYSE:CS) – UBS gained unconditional EU antitrust approval to acquire Credit Suisse as part of a government bailout. The European Commission said the deal would not raise competition concerns, highlighting the competitive pressure faced by the combined entity in the financial market. Both banks are systemically important and the failure of Credit Suisse could affect the financial system. Additionally, Credit Suisse was ordered by the Singapore Court to pay US$926 million to the former Prime Minister of Georgia, Bidzina Ivanishvili. The billionaire’s dispute with Credit Suisse dates back to 2011, when he was a client and victim of a private banker who defrauded some of the Swiss creditor’s most confidential accounts.
Icahn Enterprises (NASDAQ:IEP) – Shares in Icahn Enterprises LP fell to their lowest level in nearly two decades on Thursday after Bill Ackman highlighted the company’s high valuation. Shares in Icahn Enterprises LP fell 24.7% to $18.03, deepening losses of more than 60% recorded after short seller Hindenburg Research’s scathing attack on the company three weeks ago.
Walmart (NYSE:WMT) – Walmart is determined to resist consumer product price increases. With its influence and size, it will likely succeed. The current economic environment, with lower transport and energy costs, suggests that inflation on essentials will ease. According to Bloomberg, while other companies have prioritized prices over sales volumes, Walmart is focusing on volumes over prices.
Target (NYSE:TGT) – After Target pulled its products from the Pride collection due to negative reactions from some customers, transgender designer Erik Carnell experienced a surge in demand for his items. Carnell had to temporarily halt new orders due to high demand. He expressed gratitude for the support received during this difficult time.
Taiwan Semiconductor Manufacturing (NYSE:TSM) – TSMC is in talks with the German government to receive subsidies of up to 50% of the construction costs of its new semiconductor factory in Dresden. Competition for chip manufacturing capacity is increasing, and the proposed subsidies outperform most other chip makers in Europe. The final decision will be taken in August.
Alibaba (NYSE:BABA) – Alibaba Group Holding Ltd plans to hire 15,000 people this year, belying reports of layoffs. The company said its business divisions will need to hire new staff and that reports of layoffs are just “rumors”. Alibaba said it is constantly recruiting and developing exceptional talent.
Amazon (NASDAQ:AMZN) – Sarah Rhoads, head of Amazon’s growing air cargo business, will assume oversight of the company’s workplace health and safety division. Raoul Sreenivasan will assume most of Rhoads’ responsibilities at Amazon Air. Amazon has been expanding its logistics operations and facing pressure to improve workplace safety. Also, it’s worth noting that investors ignored Amazon amid the frenzy of cloud and AI stocks on Thursday after Nvidia’s impressive financial outlook, while rival companies benefited. Analysts suggest that Amazon’s failure to go up yesterday was due to concerns about slowing AWS usage following Snowflake’s recent comments (NYSE:SNOW).
Microsoft (NASDAQ:MSFT) – Microsoft is calling for the creation of a new US regulatory agency to oversee artificial intelligence and establish licensing requirements. The proposal aims to protect against possible damage and ensure human control over the technology. The initiative is in line with the efforts of OpenAI, supported by Microsoft.
Baidu (NASDAQ:BIDU) – Baidu CEO Robin Li revealed that Ernie 3.5 will soon be officially released, a broad language AI model that will power Baidu’s ChatGPT like Ernie Bot app, as well as update its search engine. The announcement was made on the Zhongguancun Forum after months of limited testing and user feedback.
Illumina (NASDAQ:ILMN) – Investor Carl Icahn ousted Illumina’s chairman after receiving support from shareholders. Icahn also asked for the CEO to be removed, but that request was rejected. The company is in a battle over a company acquisition of cancer test maker Grail for $7.1 billion in 2021.
Ford (NYSE:F), Tesla (NASDAQ:TSLA) – Ford and Tesla have reached an agreement to allow owners of Ford electric vehicles access to Tesla’s network of Superchargers in the US and Canada. The partnership aims to provide wider access to fast chargers and drive the growth of electric vehicles.
Tesla (NASDAQ:TSLA) – According to the Handelsblatt newspaper, German authorities have evidence of possible data protection breaches by Tesla. The US electric car maker reportedly failed to adequately protect sensitive data from customers, employees and business partners. A whistleblower leaked around 100 gigabytes of confidential data to the newspaper. Tesla and the Dutch authorities, where the company’s European headquarters are located, were informed about the case. The breach may be at odds with the European Union General Data Protection Regulation (GDPR).
Hyundai Motor (USOTC:HYMLY) – Hyundai Motor Group and LG Energy Solution announced the construction of an electric vehicle battery factory in the US, with an investment of US$ 4.3 billion. The plant, located in Georgia, will have a production capacity of 30 GWh per year and will start operating in late 2025. The joint venture aims to drive the transition to electric vehicles in America and meet component sourcing requirements for tax credits.
Nikola (NASDAQ:NKLA) – Nasdaq has issued a delisting notice for Nikola due to its failure to meet minimum offering price requirements, amid concerns over battery material and production costs. Nikola is looking to raise money and has temporarily halted production due to weak demand.
Embraer (NYSE:ERJ) – Embraer has expressed support for Pratt & Whitney regarding durability issues in jet engines. However, the suspension of a new turboprop plane project was attributed to a separate dispute with engine manufacturers. Embraer is involved in sales campaigns for commercial jets and is looking for a solution for a new turboprop. The lack of attractive offers from engine manufacturers has been an obstacle.
Boeing (NYSE:BA) – Boeing has resumed deliveries of the reworked 737 jets after an interruption caused by manufacturing failures. The company expects to deliver 30 to 40 jets per month in the second half, aiming to reach the target of 400-450 deliveries this year. While the pricing environment is favorable, Boeing will be disciplined in pricing its jets. The supply chain remains a concern.
Lufthansa (USOTC:DLAKF) – Lufthansa will acquire a 41% stake in ITA Airways through a €325 million capital increase. The agreement aims to strengthen ITA Airways and improve competition in the Italian market. Closing of the transaction is subject to regulatory approvals, including the European competition authority. ITA forecasts revenue growth and fleet and workforce expansion.
Michelin (USOTC:MGDDY) – Michelin will sell its Russian tire factory, MRTMC, and Camso CIS to Power International Tires, preserving 250 jobs. The French company ended its activities in Russia due to Moscow’s invasion of Ukraine, resulting in a 25% drop in volumes in the first quarter.
Tilray (NASDAQ:TRLY) – Cannabis company Tilray has filed for a secondary offering. The company will issue $150 million in senior convertible notes to pay down debt.
PDS Biotechnology (NASDAQ:PDSB) – Shares in PDS Biotechnology rose more than 20% in premarket trading on Friday after the company reported promising Phase 2 trial results of its cancer drug candidate in combination with Merck’s Keytruda (NYSE:MRK). The data showed an estimated survival rate of 87% at 12 months.
Bunge (NYSE:BG), Glencore (USOTC:GLNGY) – Global grains trader Viterra is in talks to merge with US rival Bunge Ltd. While the terms of the deal are unclear, the potential transaction will attract the attention of regulators due to the concentration of trade in commodities. The merger would place Viterra among the top global grain traders, providing access to US export terminals.
Ericsson (NASDAQ:ERIC) – The record $279 million award awarded by the Securities and Exchange Commission (SEC) to a whistleblower is linked to a bribery case involving Ericsson, as reported by the Wall Street Journal. The $1.1 billion settlement reached by Ericsson with US authorities in 2019 for illegal payments in five countries is related to the award.
AT&T (NYSE:T) – AT&T’s DirecTV has entered into a multi-year deal to air the NFL’s Sunday Ticket package to commercial locations across the US. The deal begins in the upcoming 2023 season and the partnership was made with EverPass Media, backed by RedBird Capital Partners and the NFL. Competition for live sports streaming is increasing, with YouTube also securing rights to the Sunday Ticket. DirecTV also distributes other sports content via Amazon Prime Video.
Paramount Global (NASDAQ:PARA) – Paramount Global is up more than 6% premarket on Friday after The Wall Street Journal reported that the entertainment company’s controlling shareholder, Shari Redstone’s National Amusements, pledged a US$125 million investment by commercial bank BDT & MSD Partners.
Dish Network Corp (NASDAQ:DISH) – Shares in Dish Network Corp rose more than 10% on Thursday after reports of talks to sell its wireless plans by Amazon (NASDAQ:AMZN). The potential partnership would expand Dish’s sales channel as it seeks to expand its wireless business. Details of the new plans could be announced in June.
Earnings
Gap (NYSE:GPS) – Gap released an earnings report that showed a big improvement in margins. Revenue came in slightly below expectations at $3.28 billion, while analysts polled by Refinitiv had forecast $3.29 billion.
Costco (NASDAQ:COST) – Costco reported revenue below estimates, posting $53.65 billion in its fiscal third quarter, while analysts forecast $54.57 billion, according to Refinitiv. Costco saw $3.43 in adjusted earnings per share, up from the $3.29 forecast by analysts.
Ulta Beauty (NASDAQ:ULTA) – The cosmetics retailer reaffirmed its full-year comparable earnings and sales outlook. Ulta slightly raised its full-year revenue outlook. The company posted earnings of $6.88 per share and revenue of $2.63 billion. Analysts had forecast earnings of $6.87 a share and revenue of $2.62 billion, according to Refinitiv.
Workday (NASDAQ:WDAY) – The cloud company reported a strong earnings report and the announcement of a new chief financial officer. Workday reported $1.31 in adjusted earnings per share, while analysts polled by Refinitiv estimated $1.12. The company also narrowly beat revenue expectations, coming in at $1.68 billion versus a forecast of $1.67 billion. Workday also announced that Zane Rowe, most recently VMware’s chief financial officer, would be the chief financial officer starting next month.
Marvell Technologies (NASDAQ:MRVL) – The semiconductor maker beat analyst expectations for the first quarter. Marvell earned 31 cents adjusted earnings per share on revenue of $1.32 billion, while analysts polled by Refinitiv estimated 29 cents per share on revenue of $1.3 billion. The company also said that revenue growth should accelerate in the second half of the fiscal year.
RH (NYSE:RH) – Luxury retailer RH issued a weak outlook for the current quarter and drew attention to strong first-quarter earnings. The company said it expects between $765 million and $775 million in revenue in the current quarter, below Street’s estimate of $784 million, according to Refinitiv. Still, HR beat expectations for first-quarter revenue, posting $739 million compared to the analysts’ forecast of $727 million.
Autodesk (NASDAQ:ADSK) – Autodesk reported fiscal first quarter adjusted earnings of $1.55 per share, matching Wall Street estimates, revenue increased 8% for the period to $1.27 billion and total sales increased by 4%. The design software maker said it expects fiscal second-quarter revenue of $1.32 billion to $1.33 billion, in line with forecasts. ADSK stock is flat premarket.
Hibbett Inc (NASDAQ:HIBB) – Hibbett Inc reported lower-than-expected fiscal first-quarter sales and earnings and lowered its full-year outlook due to challenges facing consumers such as inflation and job losses. The Birmingham, Alabama-based company had net income of $35.9 million, or $2.74 per share, for the quarter ended April 29, down from $39.3 million, or $2. .89 per share in the prior year period. Sales increased 7.4% to $455.5 million from $424.1 million. The FactSet consensus was EPS of $3.00 and sales of $460.0 million.
Market view
MongoDB (NASDAQ:MDB) – MongoDB’s MDB stock was down 1.74% premarket to $279.94 after the database software provider was downgraded to Sell from Neutral at the Guggenheim. The price target was raised from $205 to $210 “based on modestly elevated forecasts”, analysts said.