US index futures operate slightly upwards and without a firm trend, showing difficulty in extending Friday’s gains, given the caution with the situation of the banking system and the effect of monetary tightening on economic growth.
By 8:09 AM, futures linked to the Dow Jones Industrial Average were up 103 points, or 0.31%. S&P 500 futures were up 0.25% while Nasdaq-100 futures were up 0.02%.
Last Saturday, during Berkshire Hathaway’s annual shareholder meeting, legendary investor Warren Buffet delivered a calm and confident message regarding the business landscape. He noted that higher lending rates could bring difficulties to commercial real estate and added pressure to banks, but he said bank deposits are safe thanks to the creation of the federal agency FDIC, which guarantees the safety of these deposits. Turning to the economy, Buffet predicts lower gains for Berkshire Hathaway’s businesses as economic activity slows.
In the week, the market will pay attention to the CPI and IPP from the Bureau of Labor Statistics to assess inflation trends. In April, headline inflation is estimated to have increased by 0.4%, keeping the annual rate at 5%. Core inflation should rise 0.4%, reducing the annual rate from 5.6% to 5.5%. Meanwhile, producer prices are expected to grow by 0.3% per month, possibly lowering annual inflation from 2.7% to 2.5%. Furthermore, the market will be watching the preliminary reading of consumer sentiment and inflation expectations from the University of Michigan for May. Export and import prices will also be in focus.
On Friday, risk assets showed a recovery after regional banks recorded highs in their papers and the positive numbers of jobs released by Payroll diminished fears of an economic recession. The technology sector was also boosted by Apple’s strong earnings, which led to a 5% rise in the company’s shares. The jobs report showed that US hiring and wage gains accelerated in April, indicating a resilience in the job market. That news increased the chances of the Fed keeping interest rates higher for longer and potentially keeping the possibility of an 11th straight hike in June. Interest rates on swap contracts linked to Fed meetings rose to levels that indicate a stable policy rate through September, followed by at least two quarter-point cuts by the end of the year. Despite Friday’s rally, the Dow Jones and S&P 500 posted their worst week since March. For the week, the Dow lost 1.24%, while the S&P 500 was down 0.8%. The Nasdaq posted a small weekly gain of 0.07%.
On the front of the week’s quarterly earnings are results from Lucid, PayPal, Palantir, Airbnb, Disney, Roblox, Tapestry, JD.com and Occidental Petroleum.
Wall Street Corporate Highlights for Today
Estée Lauder (NYSE:EL) – Billionaire and activist investor Nelson Peltz is exploring a potential revamp at Estée Lauder, including the departure of longtime CEO Fabrizio Freda, the New York Post reported . The news comes as the cosmetics giant posted mixed fiscal third-quarter results and lowered its full-year outlook, citing a slower-than-expected recovery in the Asian travel retail market. The shares were up more than 3% in Monday’s premarket trade.
PacWest Bancorp (NASDAQ:PACW) – PacWest stock was up 33% premarket following the announcement of a dividend cut and an increase in share buybacks. However, ratings agency Fitch has placed the bank on “Rating Watch Negative” due to uncertainty regarding the ongoing strategic review and the bank’s strategic direction.
Occidental Petroleum (NYSE:OXY) – Occidental Petroleum Corp shares fell -0.54% in premarket after Warren Buffett said Berkshire Hathaway Inc. will not make a bid for full control of the group, dampening speculation that he was trying to own the company after spending months acquiring its shares.
Goldman Sachs (NYSE:GS) – Nearly half of private equity firms responding to a Goldman Sachs survey said they plan to increase exposure to public equities, with 41% looking to increase allocations to private equity, the firm said Monday. fair in a statement. About 12% of family office portfolios, on average, are in cash or cash equivalents, a level higher than that of other institutional investors, according to the report, which surveyed 166 companies worldwide. More than a third plan to decrease their cash allocation in the coming year.
Bitcoin (COIN:BTCUSD) – Binance has suspended Bitcoin withdrawals twice in less than 12 hours, citing congestion on the token’s blockchain. The company has raised fees for pending transactions to incentivize Bitcoin miners to capture them, and has stated that it will monitor on-chain activity and make adjustments if needed. The leading cryptocurrency is down 1.79% over the last 24 hours in response to the suspensions.
Perrigo (NYSE:PRGO) – The US FDA has raised concerns about Perrigo Co. for sale without a prescription, due to the possibility of inappropriate use by consumers. Opill, currently approved for prescription use, would be the first estrogen-free birth control pill in the US if approved. The review comes ahead of an advisory meeting next week where panel members will decide on recommending Opill as an OTC daily contraceptive pill.
Earnings
Berkshire Hathaway (NYSE:BRK.B) – BRK.B shares gained 1.73% premarket after Berkshire Hathaway reported first-quarter earnings. Operating earnings totaled $8.065 billion in the first quarter. This represents a 12.6% increase from the previous year’s $7.16 billion. Insurance underwriting profit reached $911 million, up from $167 million a year ago. Insurance investment income also jumped 68% to $1.969 billion from $1.170 billion.
AMC Entertainment (NYSE:AMC) – Shares of AMC Entertainment fell -3.57% in premarket trading after the company posted a smaller-than-expected quarterly loss. The company generated $954.4 million in first-quarter sales, up 21% year-over-year, although investors had expected $959 million. The company’s adjusted loss was 13 cents a share, lower than analysts’ expectations for a loss of 16 cents.
KKR & Co (NYSE:KKR) – KKR & Co. rose 0.95% premarket after posting a 26% drop in their first-quarter earnings due to lack of trading. The company posted $719.3 million in distributable earnings, beating the average analyst estimate of 74 cents a share. Fee-related earnings fell 9% to $549 million, but the company received $12 billion in new capital and its assets under management grew 6% to $510 billion.
Tyson Foods (NYSE:TSN) – Shares of the food production company fell 9% after Tyson cut its full-year sales outlook and posted an unexpected loss in the latest quarter, according to FactSet. It also warned of a 4% year-on-year decline in domestic beef production and flat pork production.
Viatris (NASDAQ:VTRS) – Stocks rose 2.4% after healthcare stocks beat earnings expectations and reaffirmed the full-year outlook despite a drop in revenue compared to estimates. Viatris reported $932.9 million in first-quarter adjusted net income, above the consensus estimate of $835.8 million from analysts polled by FactSet. Revenue reached US$ 3.72 billion, against a forecast of US$ 3.8 billion.
Market view
American Airlines (NASDAQ:AAL) – Stocks gained about 3% in premarket trade on Monday after JPMorgan lifted stocks from neutral to overweight. Analyst Jamie Baker highlighted the company’s attractive valuation and said the “Big 3” airlines, which includes American, Delta and United, are pulling away from the broader field of providers.
Fortinet (NASDAQ:FTNT) – The cybersecurity firm rose 3.3% after being upgraded to buy from neutral by Bank of America. The Wall Street firm cited Fortinet’s solid execution and strong underlying demand.