On Thursday, US stock futures saw a pullback as investors eyed the Fed’s recent decision, as well as ongoing banking sector stress and Apple’s upcoming earnings release.
By 8:07 AM, Dow Jones futures were down 131 points, or -0.39%. S&P 500 futures were down -0.41%, while Nasdaq-100 futures were down 0.15%.
On Wednesday, the Dow fell 270.29 points (-0.80%), ending the day at 33,414.24 points. The S&P 500 was down 0.70% to close at 4,090.75 points, and the Nasdaq Composite was down 0.46% to close at 12,025.33 points. The increase in interest rates by the Fed was expected and generated greater volatility throughout the day.
Apart from raising the FFR by 0.25 pp, now in the range of 5% to 5.25%, the FOMC communique did not bring major changes, but the removal of the phrase “the Committee anticipates that some further policy tightening may be appropriate ” was relevant, suggesting the possibility of no more interest rate hikes. Expert opinion is that this may have been the last adjustment, although the Fed has not closed the door to further increases.
As journalist Nick Timiraos of the Wall Street Journal noted, “The FOMC statement used language broadly similar to how policymakers completed their 2006 interest rate hikes, with no explicit promise of a pause to maintain a tightening bias.” Thus, it is very likely that this vision will be confirmed.
Monetary tightening should continue by reducing the Fed’s balance sheet, as the statement made clear, and employment and credit data will be important to assess the next steps of monetary policy in the US, as indicated by Powell himself. The Payroll, which will be released on Friday, will be one of those data, which economists polled by the Dow Jones predict an increase of 180,000.
On Thursday, attention is also focused on the European Central Bank’s rate decision. The ECB raised its benchmark interest rate by 25 basis points, reaching levels not seen since 2008, amid a surge in consumer prices. Inflation figures showed an increase in the base rate to 7% in April. At the same time, core inflation, which excludes food and energy prices, eased slightly to 5.6%.
US economic updates set to be released today include initial weekly jobless claims; Q1 Productivity and Unit Labor Costs; and the March trade deficit.
US regional lenders fell on renewed concerns about financial stability. PacWest posted a significant 37% drop in premarket trading due to renewed concerns about the health of the US banking sector. The company has seen a sharp decline in prolonged trading after Bloomberg News reports indicated the company was weighing strategic options, including a potential sale. As a result, Western Alliance Bancorp (NYSE:WAL) stock was down 19.61%, a fall for the fifth straight day.
On the quarterly reporting front, investors are watching reports from Moderna, which reported results ahead of the market open today, along with Ab InBev, Kellog, Shopify, Royal Caribbean, Peloton, Shell and ConocoPhillips.
Apple (NASDAQ:AAPL) is scheduled to report earnings after the market closes. The company is expected to announce $90 billion in buybacks and dividends when it reports its results. The company has already guided investors to a 5% drop in revenue mainly due to falling Mac and iPad sales. Along with Apple’s balance sheet, the results of Lyft, DraftKings, Block and Coinbase will be expected.
Wall Street Corporate Highlights for Today
PacWest (NASDAQ:PACW) – Shares in PacWest fell 37% in premarket trading after a Bloomberg News report that the regional bank was exploring strategic options, including a potential sale. The news also weighed on other medium-sized banks. Shares in Western Alliance Bancorp (NYSE:WAL) fell 19.61%, while Comerica (NYSE:CMA) and KeyCorp (NYSE:KEY) fell 5.56% and 5.85%, respectively.
Johnson & Johnson (NYSE:JNJ) – Kenvue, created out of the spinoff of Johnson & Johnson’s healthcare arm, priced its initial public offering (IPO) at $22 a share, at the high end of its expected price range, the which resulted in a raising of US$5.28 billion, making it the largest IPO of 2023 to date. The shares will begin trading on Friday on the New York Stock Exchange under the ticker “KVUE”.
Salesforce (NYSE:CRM) – Tech company Slack is launching a chatbot that uses artificial intelligence to summarize messages and perform tasks, and much more. Ali Rayl, senior vice president of product at Slack, said he estimates Slack GPT will launch next year.
Microsoft (NASDAQ:MSFT) – Microsoft removed Bing’s waitlist for new users in the United States, making the search engine open. Furthermore, the company has added a new chat history feature, allowing users to keep track of their chats across different devices, and also providing a way to export chats to Microsoft Word documents. These moves are aimed at improving the user experience and increasing search engine adoption.
Macy’s (NYSE:M) – Macy’s is experimenting with a new format called “Market by Macy’s” and “Bloomie’s” to try to attract customers who are looking for a differentiated shopping experience. The new locations are smaller than traditional Macy’s stores and offer fewer brands with frequently changing displays. The company has opened ten of these mini-stores and plans to open five more this year, when Macy’s CEO Jeff Gennette says the success of these new stores will be tested.
Novo Nordisk (NYSE:NVO) – Drug maker Novo Nordisk is temporarily reducing supplies of its obesity drug, Wegovy, due to high demand. The company said the measure is necessary to ensure that patients who are already on treatment can continue to receive the drug without interruption.
Darden Restaurants (NYSE:DRI) – Darden Restaurants entered into an agreement on Wednesday to acquire Ruth’s Hospitality Group (NASDAQ:RUTH) for $21.50 per share in an all-cash transaction with an equity value of approximately $715 millions. Ruth’s is the owner and operator of Ruth’s Chris Steak House.
Shopify (NYSE:SHOP) – Shopify sold its logistics business, called 6 River Systems, to Flexport for $1.3 billion. The shift comes as Shopify looks to focus on its core eCommerce operations and partnerships with other logistics companies. The sale will allow Flexport to expand its technology and services to Shopify’s merchant base.
Alphabet (NASDAQ:GOOGL) – According to internal documents obtained by The Verge, hundreds of Google employees signed a letter demanding an explanation for the pay raise given to CEO Sundar Pichai last year. The letter expresses concern about inequality and accuses Pichai of failing to deliver on his promise to close the pay gap between full-time and part-time Google employees.
United Airlines Holdings (NASDAQ:UAL) – United Airlines expressed plans to pursue an ambitious hiring initiative in the coming years on Wednesday. Airline executives have indicated that the carrier has hired 15,000 new employees in 2022 and intends to hire another 15,000 by the end of 2023. A total of 50,000 new employees are expected to be hired by the end of 2025.
HSBC (NYSE:HSBC) – Hong Kong banks, including HSBC Holdings Plc, raised their key lending rates for the first time this year as liquidity tightens in the financial hub, according to a Bloomberg report. HSBC, the city’s biggest lender, raised its Hong Kong dollar benchmark rate by 12.5 basis points to 5.75% per annum, effective Friday. Standard Chartered Plc and Bank of China (Hong Kong) also announced that they would increase their preferential rates.
Credit Suisse (NYSE:CS) – Credit Suisse is facing new claims from holders of Additional Tier 1 (AT1) bonds in Asia that were wiped out in the bank’s 2020 stock meltdown. The bank already faces similar lawsuits from AT1 investors in Switzerland and the United States.
First Horizon (NYSE:FHN) – Shares of the banking and financial services company plunged 46% after First Horizon and Toronto Dominion Bank (TD) said they had canceled the $13.4 billion acquisition deal. The companies cited uncertainties about whether regulatory approvals could be obtained in a timely manner.
Arconic (NYSE:ARNC) – Arconic surged 27.5% in premarket trading after the industrial parts maker agreed to be acquired by private equity firm Apollo Global for $30 a share in cash.
Earnings
Moderna (NASDAQ:MRNA) – Moderna rose 1.81% premarket after beating first-quarter earnings and revenue estimates, with earnings per share of 19 cents per share versus a loss of $1.77 per share action expected by analysts consulted by Refinitiv. Moderna has maintained its full-year target of about $5 billion in revenue from its Covid vaccine, which will come from signed government contracts for the vaccine.
SolarEdge Technologies (NASDAQ:SEDG) – SolarEdge Technologies jumped more than 11% premarket after beating Q1 expectations. The company reported adjusted earnings of $2.90 per share versus an estimate of $1.92, on revenue of $944 million that beat a consensus of $933 million, according to analysts polled by Refinitiv.
Etsy (NASDAQ:ETSY) – Etsy jumped more than 2% premarket after beating Q1 revenue expectations. The craft-focused online marketplace saw revenue of $641 million, beating an estimate of $622 million, according to consensus data from Refinitiv. Earnings per share of 53 cents lived up to expectations.
Qualcomm (NASDAQ:QCOM) – Qualcomm fell more than 7% premarket after issuing a weaker-than-expected Q3 outlook. The semiconductor maker expects earnings per share of between $1.70 and $1.90, below the consensus estimate of $2.16. Second-quarter revenue beat estimates, while earnings per share came in as expected, according to Refinitiv.
Zillow Group (NASDAQ:Z) – Shares rose more than 4% premarket after Zillow Group beat first-quarter revenue estimates. The online real estate market posted revenue of $469 million, up from an estimate of $425 million, according to analysts polled by Refinitiv. Zillow did not publish earnings per share information in its press release.
TripAdvisor (NASDAQ:TRIP) – TripAdvisor declined more than 5% premarket after disappointing Q1 results. The online travel company reported adjusted earnings of 5 cents a share, below the consensus forecast of 7 cents a share, according to Refinitiv. Revenue of $371 million beat consensus estimates of $359 million.
Frontier Group Holdings (NASDAQ:ULCC) – Stocks were flat premarket after Frontier Group Holdings posted a smaller-than-expected first-quarter loss. The company reported a loss of 6 cents a share, better than the 8 cents a share expected by analysts, according to Refinitiv. Revenue beat estimates.
Volkswagen (USOTC:VWAPY) – Volkswagen reported better-than-expected earnings for the first quarter of 2023, with an operating profit of €5.3 billion ($6 billion), due to strong demand for its electric vehicles and cost-cutting measures. The company also confirmed its outlook for the year, expecting to deliver more than 1 million electric vehicles and hybrid models.
Shell (NYSE:SHEL) – Oil giant Shell reported a 13% increase in first-quarter earnings, beating market expectations as strong demand and higher oil and gas prices boosted its performance. The company also announced a $2 billion share buyback program and said it will increase dividend payouts to shareholders by 30%.
Anheuser-Busch InBev (NYSE:BUD) – AB InBev rose 0.97% premarket after it reported a better-than-expected first-quarter 2023 profit increase due to increased beer sales and higher prices. The company is expected to continue raising its prices to offset rising costs for commodities such as aluminum and barley.
Paramount Global (NASDAQ:PARA) – The media company fell 10.4% after reporting quarterly earnings and revenue that missed analyst forecasts and slashing its quarterly dividend from 24 cents to 5 cents a share.
Shopify (NYSE:SHOP) – The e-commerce platform reported better-than-expected quarterly results and also announced the sale of parts of its fulfillment operation, as well as its logistics division. Shopify was up 15.6% premarket.
Peloton (NASDAQ:PTON) – The fitness equipment maker rose 2.6% in premarket trade after revenue beat expectations and issued a better-than-expected forecast.
Shake Shack (NYSE:SHAK) – Shake Shack jumped 7% premarket after reporting a lower-than-expected quarterly loss, with revenue and same-restaurant sales beating Wall Street forecasts.