US Index Futures operate without a defined direction in
pre-market on Tuesday, awaiting economic data and corporate
earnings, while European markets undergo adjustments and operate
higher.
By 6:53 AM, Dow Jones (DOWI:DJI) futures were up 2 points,
or 0.01%. S&P 500 futures were down -0.07%, while
Nasdaq-100 futures were down -0.15%. The 10-year Treasury
yield is at 3.76%.
In Europe, positive investor sentiment was boosted by strong
second-quarter results from UK supermarket chain Ocado. In
addition, Swiss pharmaceutical company Novartis also contributed to
the rise of European markets by increasing its earnings forecast
for the year and announcing a €15 billion share buyback plan, to be
completed by 2025.
On Tuesday’s American economic agenda, attention is turned to
economic data such as retail sales for June, to be released at 8:30
am, for which the market consensus expects a positive variation of
0.50% in comparison with May. Another awaited data is the
American industrial production, to be released at 9:15 am, with a
forecast of stability in the June number, on a monthly
basis. At 10:00 am, the Vice President of Supervision, Michael
Barr, will deliver a speech, and also the July Builder Confidence
Index will be released. At 4:30 pm, oil inventories for the
week up to 7/14 will be announced.
Elsewhere in commodities markets, West Texas Intermediate crude
for August is up 0.46% at $74.49 a barrel. Brent crude for
September is up 0.38% near $78.80 a barrel. Iron ore futures
traded in Dalian, China, follow the movement and rise 0.66%, at
US$117.74 per tonne.
By Monday’s close, the Dow was up 76.32 points or 0.22% to
34,585.35 points. The S&P 500 rose 17.37 points or 0.39%
to 4,522.79 points. The Nasdaq Composite jumped 131.25 points
or 0.93% to 14,244.95 points. On Monday morning, investors
reacted to China’s GDP data, which showed a qualitative worsening,
with household consumption and private sector investment showing
further stagnation. However, with the industry data from the
Empire State Index of Sector Activity from the Fed NY, the market
started to improve. The index decelerated to 1.1 pts., against
the expected -4.3 points. Although it represents a loss of
strength in the economy, given that the last number (from July) was
6.6 pts, the number was much better than expected, indicating some
breath in the North American economy.
On the corporate earnings front for Tuesday, Morgan Stanley
(NYSE:MS), Bank of America (NYSE:BAC), Lockheed Martin (NYSE:LMT),
Prologis (NYSE:PLD), Charles Schwab (NYSE:SCHW), PNC Financial
(NYSE:PNC) and Bank of New York Mellon (NYSE:BK) will be the
highlights of the day.
Wall Street Corporate Highlights for Today
Apple (NASDAQ:AAPL) – According to Morgan
Stanley analyst Erik Woodring, Apple’s India business has huge
growth potential, potentially growing sevenfold over the next 10
years to reach $40 billion in annual revenue. Recent
investments in brand awareness and local manufacturing, combined
with India’s economic growth and digitalization, are laying the
groundwork for this growth. Woodring believes India will drive
15% of Apple’s revenue growth over the next five years and add more
than 170 million users to the company’s ecosystem. In other
news, an original 4GB factory-sealed iPhone sold at auction for a
record $190,373. The rare version of the device that was only
offered for a few months in 2007 attracted a lot of
bids, surpassing the previous sales record for an
iPhone. Auction house LCG Auctions highlighted the rarity and
immaculate condition of the item, which was maintained by a former
member of Apple’s engineering team.
Microsoft (NASDAQ:MSFT), Activision
Blizzard (NASDAQ:ATVI) – Microsoft is negotiating an
extension of its acquisition agreement with Activision Blizzard to
overcome remaining regulatory hurdles for the $69 billion
deal. The extension seeks to prevent Activision from being
targeted by other buyers and gives more time for regulatory
solutions. Furthermore, Microsoft’s appeal against the
blocking of Britain’s takeover of Activision Blizzard has been
stalled by the Competition Court of Appeal. The two-month
break will allow the parties to address the Competition and Markets
Authority (CMA) concerns.
Berkshire Hathaway (NYSE:BRK.A) –
Berkshire Hathaway sold a 70% stake
in Activision
Blizzard (NASDAQ:ATVI) in the second quarter before a
federal judge allowed the acquisition by Microsoft
(NASDAQ:MSFT). The remaining stake indicates that Buffett
exited the arbitrage bet.
Netflix (NASDAQ:NFLX) – Investors in
Netflix will weigh the risks of the ongoing Hollywood strike when
the company reports its quarterly results on
Wednesday. However, analysts say that Netflix is well
positioned due to its solid content pipeline and international
production team.
Walt Disney (NYSE:DIS) – Shares in Walt
Disney reached a 2023 low, approaching a 52-week low, on concerns
about the entertainment industry. Challenges include the
volatile media landscape, strikes and short-term growth prospects
in the theme park business. The company has faced job cuts and
changes in leadership as it grapples with the transition to
streaming.
Salesforce (NYSE:CRM) – Salesforce
announced the appointment of Sabastian Niles of the law firm
Wachtell, Lipton, Rosen & Katz as its new General
Counsel. Niles has experience advising companies facing
pressure from activist investors, including during the recent
dispute with funds such as Starboard Value and Elliott Investment
Management.
FedEx (NYSE:FDX) – FedEx announced the
appointment of John Dietrich as Chief Financial Officer, effective
August 1. Dietrich, former CEO of Atlas Air
Worldwide (NASDAQ:AAWW), brings his experience in the
aviation and air cargo industry. The company is looking to
revitalize its business and protect margins amid cost cuts.
Infosys (NYSE:INFY) – Bears betting
against leading Indian tech firm Infosys Ltd. could face a
turnaround if the company’s upcoming results show an expected
recovery in orders. Short sale contracts have reached a record
high, but Infosys shares have recently rallied due to excessive
investor pessimism and reports of funding for larger
orders. Analysts are projecting a small gain in quarterly
revenue and future recovery could signal caution for short
sellers.
Black Knight (NYSE:BKI) – Mortgage data
company Black Knight will sell its Optimal Blue unit for $700
million to comply with regulatory requirements in relation to its
acquisition by the Intercontinental
Exchange (NYSE:ICE). Constellation Software has
agreed to purchase the unit. Analysts believe this sale could
lead to final approval of the merger. The FTC promised to take
action against the original settlement, but the lower purchase
price is seen as a positive sign. ICE and Black Knight are
willing to fight in court to save the deal.
Starbucks (NASDAQ:SBUX) – President Joe
Biden and Senator Bernie Sanders met young union members from
Starbucks and Minor League Baseball at the White House to discuss
the growing strikes across the United States. The resurgence
of organized work is driven by the high cost of living, housing
shortages and technological advances. Biden emphasized the
importance of workers’ power to the economy.
Dollar General (NYSE:DG) – Dollar General
Corp. was found guilty of “numerous and egregious” violations
of federal labor law by a US labor judge. The judge ruled that
the company had interfered with employees’ rights to unionize and
ordered them to cease the duress, offer reinstatement to the
terminated employee, and inform all employees of their
rights. Dollar General has denied the allegations. The
company is also under scrutiny by the US Occupational Safety and
Health Administration for serious violations of working
conditions.
Marriott (NASDAQ:MAR) – Marriott has
signed a 20-year licensing agreement with MGM
Resorts (NYSE:MGM), allowing Marriott loyalty program
members to earn and redeem points at MGM properties. The
agreement aims to increase Marriott’s net growth and provide
benefits to customers.
Goldman Sachs (NYSE:GS) – Goldman Sachs
has lowered the likelihood of a US recession over the next 12
months to 20%, citing recent data that bolstered confidence that
lowering inflation will not require a recession. Economic
activity remains resilient despite rising borrowing costs. The
bank expects a slowdown in growth, but expects the economy to
continue to grow. The inversion of the Treasury yield curve
was seen as a reflection of overly pessimistic forecasts and not
necessarily a sign of an impending recession.
UBS (NYSE:UBS) – UBS’ acquisition of
Credit Suisse could result in job losses, employee departures and
integration challenges, but UBS investors see it as a good
deal. UBS bought Credit Suisse at a price it considered
advantageous, with potential benefits outweighing the
pitfalls. The integration of companies can take three to four
years. The acquisition strengthens UBS’s position in key
markets and could deliver long-term profits.
Deutsche Bank AG (NYSE:DB) – The European
Central Bank (ECB) has issued criticisms of Deutsche Bank AG in
relation to the forex sales, even after an internal investigation
completed by the bank. The ECB has asked Deutsche Bank to
improve supervision and checks in its business selling currency
derivatives to European companies. The instruction follows a
previous internal investigation that resulted in procedural
changes. The ECB expressed concern at the lack of adequate
explanation of the risks associated with the products sold to
customers by the bank.
BlackRock (NYSE:BLK) – BlackRock has
appointed Amin Nasser, CEO of Saudi Aramco, as an independent
director. His experience in the energy industry will fill a
gap on BlackRock’s board. The company seeks to balance
investments in fossil fuels with the promotion of energy
transition. At the same time, BlackRock will offer proxy
voting options to retail investors in its flagship exchange-traded
fund. This allows for greater investor participation in
determining how the fund votes on environmental, social and
governance issues. The move is a significant expansion of
BlackRock’s efforts to give investors more control.
Coinbase (NASDAQ:COIN) – Brian Armstrong,
CEO of Coinbase, will meet privately with Democrats from the U.S.
House of Representatives to discuss the future of digital asset
legislation. The meeting comes as Coinbase and Binance face
SEC lawsuits for failing to register their trades. Armstrong
will address issues such as taxation, national security, privacy
and climate. He is a critic of the SEC and SEC Chairman Gary
Gensler.
Uber (NYSE:UBER) – The California Supreme
Court has ruled that an UberEats driver can sue the company for
reimbursement of business expenses, even though they have signed a
private arbitration agreement. This decision could have a
significant impact on California businesses and is a victory for
labor rights advocates. Business groups have expressed
concerns and said this could lead to lawsuits without merit.
Advance Auto Parts (NYSE:AAP) – TRC
Capital Investment Corp. made an unsolicited “mini-offer” to
purchase up to 1 million shares of Advance Auto Parts at a price
below the stock’s closing price. The company stated that it is
not associated with TRC and did not express an opinion on the
offer. Offer expires on August 9th.
General Motors (GM) – According to
Reuters, General Motors is experiencing high demand for its
vehicles in the U.S., but is struggling to deliver them quickly to
dealerships due to post-Covid logistical
challenges. Availability at dealerships needs to be improved,
but the company has enough stock. Sales of the Hummer EV and
Lyriq electric vehicles are gaining momentum despite limited
quantities available. GM expects strong sales performance in
the second half of the year.
Ford Motor (NYSE:F) – Ford has slashed
prices on its F-150 Lightning pickup trucks in an attempt to
compete with Tesla (NASDAQ:TSLA) in the
electric vehicle market. The drop in prices was possible due
to improvements in the scale of production and raw material costs
for batteries. Ford shares closed down 6% on Monday.
Tesla (NASDAQ:TSLA) – Tesla will hold a
question-and-answer session with citizens of the German state of
Brandenburg to discuss expansion plans for its EV factory. The
event aims to avoid delays and obtain approval from local
authorities. Tesla’s factory plans to double its production
capacity to one million vehicles a year.
Fisker (NYSE:FSR) – Fisker has announced
that it will produce 100 limited edition electric SUV vehicles for
the Indian market, with deliveries expected in the fourth quarter
of this year. The company plans to complete final checks on
the SUV and offer it at prices in line with the European
market. Fisker has a manufacturing contract with Magna
International and plans to produce future models in partnership
with Foxconn in India.
Raytheon
Technologies (NYSE:RTX), Northrop
Grumman (NYSE:NOC) – Raytheon and Northrop Grumman
have been awarded a US Department of Defense contract to continue
testing and building ultra-high-speed hypersonic missile
systems. The goal is to reduce risk and improve the design of
these systems. The companies will build and fly the flying
vehicles known as HAWC, which use air to reach speeds beyond the
speed of sound. The partnership between the two companies
began in 2013 and this program is crucial to providing essential
capabilities for the military.
Raytheon Technologies (NYSE:RTX) –
Defense and aerospace company Raytheon Technologies announced that
it has changed its name to RTX. However, its shares will
continue to trade under the previous name until July 26th.
AT&T (NYSE:T), Verizon (NYSE:VZ)
– AT&T shares hit a 30-year low on Monday after analysts
downgraded the stock following reports that the company left toxic
lead power cables buried in the US. The news raised concerns
about unquantifiable financial risks and negatively affected share
prices. Verizon shares also fell, reflecting the backlash from
the report. However, analysts do not believe that the telecom
industry will face major legal liabilities arising from this
issue.
Moderna (NASDAQ:MRNA) – One of the
co-founders of Moderna recently acquired more shares
in Evelo Biosciences (NASDAQ:EVLO), a
biotechnology company. Flagship Pioneering affiliates, led by
Noubar Afeyan, paid $12.5 million for 5.4 million shares of
Evelo. Flagship now owns 6.5 million shares of Evelo. The
purchase was made through a private placement. Evelo will use
the proceeds to fund clinical trials and pay down debt. Evelo
is developing inflammation drugs that work in the small intestine,
with the potential to treat inflammatory diseases and cancer.
Novartis (NYSE:NVS) – Novartis raised its
full-year earnings forecast and announced the planned spinoff and
public debut of its generics business Sandoz for
October. Group sales in the second quarter beat expectations,
boosted by the drug Entresto and the Kesimpta
injection. Sandoz will undergo a strategic review as an
autonomous group, focusing on biosimilars. Novartis is also
starting a share buyback program of up to $15 billion.
BridgeBio Pharma (NASDAQ:BBIO) – Shares in
BridgeBio Pharma rose significantly, rising by 76% on Monday after
the biopharmaceutical company reported positive results from a
Phase 3 study of its developing drug called acoramidis, intended to
treat amyloid cardiomyopathy transthyretin (ATTR-CM).
Earnings
Taiwan Semiconductor
Manufacturing (NYSE:TSM) – TSMC, the world’s largest
contract chipmaker, is likely to post a 27% drop in second-quarter
net profit on Thursday due to global demand for
semiconductors. However, analysts expect an improvement in
business in the current quarter, driven by demand for artificial
intelligence and launches of new iPhones.
Bank of America (NYSE:BAC) – Bank of
America is set to announce its financial results before market
open, and Wall Street expects second-quarter profit to rise 11%
year-on-year to $6.90 billion. Earnings per share are
estimated at 84 cents on dollar revenue of $25
billion. Increased net interest income to $14.2 billion is
expected to be the main driver of earnings.
Morgan Stanley (NYSE:MS) – Morgan Stanley
will also report its second quarter results on Tuesday
morning. A slowdown in business activities is expected to
affect investment bank profits. According to analysts polled
by FactSet, earnings per share were estimated at $1.20 during the
period, down from $1.44 a year ago.
FB Financial (NYSE:FBK) – FB Financial
reported second-quarter earnings of 77 cents per share on Monday,
beating estimates of 65 cents.
Masimo (NASDAQ:MASI) – Hospital equipment
maker Masimo (MASI) posted a nearly 27% drop in premarket Tuesday
after announcing it expects sales of between $453 million and $457
million in the second quarter, significantly below analyst
forecasts of $553 million. The company cited the postponement
of large orders to the second half of the year as one of the
factors. Furthermore, Masimo said it is taking steps to reduce
costs in the second half of 2023.
Lockheed Martin (NYSE:LMT) – In the
quarterly results Lockheed reports on Tuesday, attention will be
focused on the F-35 fighter jet as deliveries slow and this could
affect the second half of 2023. Analysts forecast Lockheed to earn
$6.45 per share for the second quarter on sales of $15.92
billion.
International Business
Machines (NYSE:IBM) – When IBM reports its
quarterly earnings, analysts will be eyeing the performance of the
Red Hat software platform, with concerns about its growth
potential. Furthermore, the company’s WatsonX AI initiative
may not have a significant financial impact in the near
term. Analysts highlight the importance of Red Hat’s growth
and the need for evidence of traction in the AI space. While
IBM has bet on AI, the material contribution may not come until
next year. The company recently acquired Apptio, which could
boost its software growth.
Market view
Pinterest (NYSE:PINS) – Pinterest rose
3.5% to $30.18 after analysts at Evercore ISI raised the stock to
“Outperform” from “In Line”, setting a price target of $41.
Shopify (NYSE:SHOP) – Shopify stock has
had a volatile ride over the past three years. After a strong
rally during the pandemic, the stock has dropped significantly, but
has recovered this year. However, Evercore analyst Mark
Mahaney downgraded his rating to In Line from Outperform while
sticking to his $69 price target, citing this year’s robust rally
has reduced the stock’s appeal.
Yelp (NYSE:YELP) – Yelp rose 10% on
Monday after the local recommendation site was upgraded to Buy from
Neutral by Goldman Sachs.
Yeti (NYSE:YETI) – Yeti fell 6.5% on
Monday after the maker of high-end refrigerators was downgraded to
Underweight from Sector Weight by KeyBanc.
Progressive (NYSE:PGR) – Progressive
gained 4.3% on Monday after the insurer was upgraded to Overweight
from Neutral by JP Morgan.
State Street (NYSE:STT) – State Street
closed down 2.4% on Monday after receiving downgrades from UBS, JP
Morgan and Keefe Bruyette. The stock fell 12% on Friday after
it released second-quarter results.
Twilio (NYSE:TWLO) –
Twilio closed down 0.6% on Monday after the software company’s
stock was downgraded to Neutral from Overweight by Piper
Sandler.
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