Main subjects of the day
US stock futures fell on Wednesday as investors digested double-digit inflation in the UK that triggered government bond sales, and the latest batch of quarterly earnings.
By 8:39 AM, Dow Jones futures were down 122 points, or -0.36%. S&P 500 and Nasdaq-100 futures fell -0.63% and -0.85%, respectively.
Treasury yields soared overnight, weighing on futures as the UK consumer price inflation (CPI) rate fell to 10.1% year-on-year in March 2023, down from 10.4 % of the previous month, and slightly above market expectations of 9.8%. The rate has remained above the 10% mark for the seventh consecutive period and well above the Bank of England’s 2% target for nearly two years, suggesting that policymakers may continue to raise borrowing costs to fight inflation.
The 2-year Treasury yield approached 4.3%, with market bets that the Federal Reserve is likely to raise interest rates by 25 basis points in two weeks quoted at 88%.
Trader’s attention is currently focused on corporate profits. The mixed season of US first-quarter corporate earnings left equities struggling to extend their recent recovery. The S&P 500 remains stuck, albeit near the top, in the 3,800-to-4,200 range it inhabited for about five months.
After Tuesday’s close, both Netflix and United Airlines reported earnings. Netflix added 1.75 million subscribers last quarter, more than Wall Street expected, and reported revenue below Refinitiv estimates. The streaming giant also said it was delaying the wide rollout of its password-sharing crackdown. The stock dropped in premarket this morning. United Airlines reported a loss for the first three months of the year, but forecast a profit in the second quarter, when the peak summer travel season begins.
On Wednesday’s balance sheet schedule are big names like Morgan Stanley, Nasdaq Inc, Travelers Cos, US Bancorp USB, Baker Hughes, ASML. After the market close, Tesla, IBM, Lam Research Corp and Alcoa Corp will report.
On Tuesday the Dow fell 10.55 points, or -0.03%, at 33,976.63 points. The S&P was up 0.09% at 4,154.87 points. The Nasdaq Composite dropped -0.04% by 12,153.41 points. The CBOE VIX index, a gauge of expected stock market volatility, closed below 17 on Tuesday, the lowest level since January 2022.
Wall Street Corporate Highlights for Today
Western Alliance Bancorp (NYSE:WAL) – Western Alliance said on Tuesday that consumer deposits were on the mend after the collapse of Silicon Valley Bank prompted more consumers to withdraw money from regional financial institutions, and the company reported a year-over-year gain in net interest income in the first quarter. New York-traded WAL shares were up 18.36% in premarket trading on Wednesday.
Zions Bancoration (NASDAQ:ZION) – Shares in the regional bank jumped nearly 4% premarket ahead of its post-close earnings report on Wednesday. Investors may be getting bullish after fellow Western Alliance said in its first quarter that deposits had stabilized since the collapse of Silicon Valley Bank last month.
Bank of America (NYSE:BAC) – Bank of America CEO Brian Moynihan said on Tuesday that he expects only a mild downturn in the US economy as Americans’ spending remains strong. The BofA projects an annual contraction of the US Gross Domestic Product in the range of 0.5% to 1.0% over the next three quarters.
Goldman Sachs (NYSE:GS) – Goldman Sachs Group Inc has been hit by further exits in its Asia equities team, with key exits in Tokyo and Hong Kong for rival banks and hedge funds.
Credit Suisse (NYSE:CS) –US lawmakers have accused Swiss creditor Credit Suisse of holding Nazi-affiliated accounts well into the 21st century.
Tesla (NASDAQ:TSLA) – Tesla Inc has slashed the price of its highest-volume models yet again, in yet another sign that CEO Elon Musk is willing to sacrifice the electric car maker’s profitability to fuel demand. Tesla shares traded in New York fell 1.9% to $180.88 in Wednesday’s premarket.
Fox News (NASDAQ:FOX) – Fox News has agreed to pay $787.5 million to settle a defamation lawsuit against a voting machine manufacturer on the network’s 2020 election broadcasts.
Walt Disney Co (NYSE:DIS) – Walt Disney plans to cut thousands of jobs next week, including about 15% of staff in its entertainment division.
Meta Platforms (NASDAQ:META) – Meta Platforms is scheduled to begin company-wide layoffs on Wednesday as it restructures teams and works toward founder Mark Zuckerberg’s goal of greater efficiency.
Southwest Airlines (NYSE:LUV) – Flights by the Dallas-based carrier have resumed after a vendor-supplied computer network firewall went down Tuesday morning and connection to some operational data was “unexpectedly” lost. Southwest said this forced it to temporarily pause all flights. The airline asked those whose flights were canceled to apply for a refund.
Intel (NASDAQ:INTC) – Shares fell nearly 2% after the semiconductor maker announced it would discontinue its Blockscale series of bitcoin mining chips after just one year of production.
Alphabet (NASDAQ:GOOGL) – Google will launch its first foldable smartphone in June, challenging Samsung’s market-leading foldable phone business, according to CNBC. It plans to announce the device at its annual developer conference, Google I/O, on May 10th.
Boeing (NYSE:BA) – The industrial giant’s shares were down 0.6% in premarket after CEO Dave Calhoun said a fault detected in some of its 737 Max planes will not hurt its supply chain plans to increase capacity. production of its best-selling jet this year. The company disclosed a fault in some of its 737 Max planes last week and said it was likely to delay deliveries.
Lululemon Athletica Inc (NASDAQ:LULU) – Lululemon is looking to sell its Mirror home fitness business and has approached competitor Hydrow as a potential buyer.
Earnings
Morgan Stanley (NYSE:MS) – Shares in the bank are down -2.62% premarket despite the bank beating first-quarter earnings and revenue estimates. EPS and revenue were $1.70 per share and $14.52 billion, respectively. Refinitiv analysts were expecting $1.62 and $13.92 billion.
Travelers Co. Inc (NYSE:TRV) – Travelers shares jumped 3.5% premarket after the insurer beat first-quarter earnings estimates. Revenue increased 10% to $9.704 billion from $8.809 billion a year earlier, well ahead of the FactSet consensus of $9.340 billion.
Abbott Laboratories (NYSE:ABT) – Shares in Abbott Labs rose 2% premarket after the medical device and diagnostics company beat first-quarter earnings estimates, although the slump in sales of Covid tests continued weighing. Global sales related to Covid testing fell to $730 million for the quarter from $3.304 billion a year earlier.
ASML Holding (NASDAQ:ASML) – ASML posted first-quarter earnings that beat expectations despite signs of weakness in end markets. The company’s net profit for the quarter ended March 31 was 1.96 billion euros ($2.15 billion), nearly three times the previous year’s 695 million euros.
Netflix (NASDAQ:NFLX) – Netflix is down -1.66% premarket after the streaming giant reported first-quarter earnings and said it was delaying the wide rollout of its password-sharing crackdown . Streaming posted EPS of $2.88 and revenue of $8.16 billion. Analysts polled by Refinitiv had expected EPS and revenue of $2.86 billion and $8.18 billion, respectively.
United Airlines (NASDAQ:UAL) – United Airlines was up 0.14% premarket after generating $11.43 billion in revenue, essentially in line with analyst forecasts and up 51% from the same period last year. United posted a loss per share of 63 cents, less than the 73 cents analysts polled by Refinitv had expected.
Nasdaq Inc (NASDAQ:NDAQ) – Nasdaq reported earnings of $302 million, or $0.61 per share, compared with $284 million, or $0.57 per share, in the year-ago quarter previous. Nasdaq Inc said on Wednesday that its board increased the quarterly dividend by 10%, from 20 cents to 22 cents.
Interactive Brokers Group (NASDAQ:IBKR) – Shares of the electronic brokerage fell 3.7% after the company reported a loss of first-quarter earnings. The company reported earnings per share of $1.35, below the consensus estimate of $1.41 from analysts polled by Refinitiv.
Ally Financial (NYSE:ALLY) – Shares of the digital financial services company fell 1.3% after first-quarter earnings and revenue missed Wall Street expectations. Ally reported earnings per share of 82 cents, while analysts had forecast 86 cents per share, according to FactSet data. The bank’s total adjusted net income also missed estimates, coming in at $2.05 billion versus the consensus estimate of $2.07 billion by FactSet analysts.
Intuitive Surgical (NASDAQ:ISRG) – Stocks jumped 8.1% after Intuitive Surgical reported a hit in earnings and revenue. The company reported adjusted earnings per share of $1.23, beating a consensus estimate of $1.20 per share, according to FactSet. Revenue grew 14% year-over-year to $1.70 billion, compared to estimates of $1.59 billion.
CDW (NASDAQ:CDW) – Shares of the IT company plunged 10.6% after it released a weaker-than-expected preliminary quarterly report. CDW issued quarterly revenue guidance of $5.1 billion, missing the FactSet analyst consensus estimate of $5.58 billion. The company said it was significantly impacted by more cautious purchasing amid economic uncertainty. It also issued guidance for its annual earnings to fall “modestly below” 2022 levels.
Citizens Financial Group (NYSE:CFG) – Shares fell nearly 4% after the company’s first quarter results disappointed investors. Citizens Financial’s earnings per share were $1, while analysts estimated $1.13, according to Refinitiv data. The company’s revenue of $2.13 billion also missed analysts’ expectations of $2.14 billion. Citizens Financial reported a 4.7% drop in deposits to $172.2 billion.
Market vision
Rivian Automotive (NASDAQ:RIVN) – The electric vehicle maker fell about 2% after being downgraded by RBC Capital Markets to of outperform sector . The Wall Street firm remains constructive on the long-term outlook for the stock but sees limited catalysts for accelerating near-term profitability. It also cut its price target in half, from $28 a share to $14.