US Index Futures operate in decline this Wednesday, as well as
European markets, reverberating results of large corporations and
caution before the decision of monetary policy in the United
States.
By 6:52 AM, Dow Jones futures (DOWI:DJI) were down 73 points, or
0.21%. S&P 500 futures were down 0.17%, while Nasdaq-100
futures were down 0.30%. The 10-year Treasury yield is at
3.893%.
In Europe, the focus is on financial reports from LVMH (EU:MC),
which registered a slowdown in sales in the United States during
the second quarter, and from Deutsche Bank (NYSE:DB), which
exceeded expectations for the period, despite a 27% reduction in
profit compared to to the previous year.
However, investors are on hold due to the possibility of rising
interest rates in the region. Market consensus suggests the
European Central Bank (ECB) is likely to raise the bloc’s key
interest rate by 25 basis points on Thursday, taking it to
4.25%. Until that happens, investors are cautious.
On Wednesday’s American economic agenda, the Federal Reserve
(Fed) will announce the American interest rate at 2 pm. Then
at 2:30 pm, Fed Chairman Jerome Powell will comment on the decision
and provide more clues about the future.
Currently, interest rates in the United States are between 5%
and 5.25%. Markets have already priced in a 25 basis point
rise, taking rates into the range of 5.25% to 5.75%, the highest
level since January 2001. Investors will also be watching for
signals about future monetary policy during the Fed’s statement and
press conference.
Additionally, investors will follow the July Home Mortgage
Index, which will be released at 7:00 am. At 10:30 am, the
weekly change in oil inventories will be released, with an
expectation of a drop of 1.97 million barrels.
In commodities markets, West Texas Intermediate crude for
September is down 0.95% at $78.87 a barrel. Brent crude for
September is down 0.94% near $82.85 a barrel. Iron ore futures
traded in Dalian, China, rose 1.76% to US$121.06 per ton,
continuing the movement seen yesterday, in view of the expectation
of the Asian giant to announce even more measures to encourage the
construction sector of the country.
At Tuesday’s close, the stock market rose amid anticipation of
Microsoft (NASDAQ:MSFT) and Alphabet (NASDAQ:GOOGL) results and
anticipation of the Fed’s decision. The Dow closed up 26.83
points or 0.08% to 35,438.07 points. The S&P 500 rose
12.82 points, or 0.28%, to 4,567.46 points, hitting its best
closing level in more than a year. The Nasdaq rose 85.69
points, or 0.61%, to 14,144.56 points. The Conference Board’s
consumer confidence indices in the US came in higher than expected,
easing fears of a possible recession in the
country. Meanwhile, the earnings season has been very positive
in the US, which is helping the market rise.
Ahead of Tuesday’s corporate results, traders await reports from
AT&T (NYSE:T), Boeing (NYSE:BA), Coca-Cola (NYSE:KO), Tilray
(NASDAQ:TLRY), Thermo Fisher (NYSE:TMO), Hilton (NYSE:HLT), Union
Pacific (NYSE:UNP), prior to market opening. After the close,
widely anticipated reports are Meta Platforms (NASDAQ:META), Lam
Research (NASDAQ:LRCX), eBay (NASDAQ:EBAY), Mattel (NASDAQ:MAT),
ServiceNow (NYSE:NOW), Chipotle Mexican Grill (NYSE:CMG), among
others.
Wall Street Corporate Highlights for Today
Amazon (NASDAQ:AMZN), iRobot (NASDAQ:IRBT)
– Amazon.com reduced the purchase price of iRobot by about 15% to
about $1.42 billion after iRobot took on new debt. The
modified agreement calls for $51.75 per iRobot share. iRobot
justified the price change due to new debt and is working with
regulators on reviewing the merger, which faces antitrust scrutiny
in Europe. The deal has already been cleared by the UK
antitrust regulator. In other news, Amazon has offered to
change its UK marketplace rules to address concerns raised by the
Competition and Markets Authority (CMA). If accepted, the
changes will ensure equality for third-party sellers regarding the
display of products in the ‘Buy Box’.
Apple (NASDAQ:AAPL) – France’s antitrust
body has issued a statement of objection against Apple, alleging
that the US company may have violated regulations related to the
use of iPhone user data for advertising purposes. Apple has
denied the allegation, saying its mechanism gives users more
control over data tracking.
Microsoft (NASDAQ:MSFT) – Microsoft
unveiled a spending plan to meet demand for artificial intelligence
services, driven by investments in OpenAI. The company intends
to integrate AI into its products, such as the “Copilot” assistant
for Microsoft 365, but heavy spending ahead of commensurate revenue
growth has worried investors. The company expects to be
aggressive in meeting demand and sees Azure as an important part of
its business.
Meta Platforms (NASDAQ:META) – The Federal
Court of Australia has ordered Meta to pay A$20 million for
collecting user data through the Onavo app, without disclosing its
actions. The company is also facing other civil lawsuits
related to the handling of user information. Meta acknowledged
the fine but said it worked to give people more transparency and
control over their data. In other news, Meta has offered
restrictions on the use of data from competitors to Facebook
Marketplace, but EU regulators have rejected the offer to end the
antitrust investigation. The company could face fines of up to
10% of global turnover for antitrust violations. Last
December, the EU accused Meta of abusing its market power by
linking Facebook Marketplace with the Facebook social network and
imposing unfair trading conditions on rival classified ad
services.
Alibaba (NYSE:BABA) – Alibaba Cloud became
the first Chinese company to support the Llama
da Meta (NASDAQ:META) artificial
intelligence model. This will allow Chinese business users to
develop programs using the Llama2 model recently launched by
Meta. The partnership could strengthen Alibaba Cloud in the
Chinese market and help Meta strengthen ties with China. The
move could also boost Alibaba’s AI ambitions amid US restrictions
on Chinese companies in the tech sector.
Intel (NASDAQ:INTC), Ericsson (NASDAQ:ERIC)
– Intel and Ericsson will work together to create a custom chip for
Ericsson’s 5G networking equipment, utilizing Intel’s most advanced
manufacturing technology known as “18A” . The chip will be one
of the first to use this technology, expected to be ready in
2025.
Datadog (NASDAQ:DDOG) – Datadog received a
ratings update Tuesday from Wolfe Research analyst Alex Zukin, who
upgraded the stock’s rating to “Outperform.” Zukin set a price
target of $140, citing a more optimistic view of fundamentals and
growing demand for Datadog’s observability software. He sees
the company as the potential growth leader in the software
industry.
Walt Disney (NYSE:DIS) – Bryan Cranston,
the Emmy-winning actor of “Breaking Bad,” led a rally of Hollywood
actors in New York, criticizing Disney Chief Executive Bob
Iger. Actors are concerned about artificial intelligence being
used to replace their jobs and are demanding higher pay and
protections. The SAG-AFTRA union went on strike in support of
these demands. AMPTP, which negotiates on behalf of Disney and
other companies, has offered pay and benefits increases, but the
dispute continues.
Dish Network (NASDAQ:DISH) – Shares in
Dish Network rose 12.1% in premarket Wednesday after Bloomberg
reports that the company will begin selling its premium wireless
service on Amazon.com’s website still this week.
United Parcel Service (NYSE:UPS) – UPS and
the Teamsters union signed an interim contract for about 340,000
workers, averting a strike that could have cost the economy
billions and disrupted a quarter of US shipments. The
agreement guarantees historic wage increases and improvements in
benefits for workers. Member voting to ratify the pact begins
in August.
Intuitive Machines (NASDAQ:LUNR) – The
space exploration company was selected to be part of an award given
by NASA, aiming to assist in the development of technology for
nocturnal lunar exploration.
Morgan Stanley (NYSE:MS) – Morgan Stanley
has downgraded Israel’s sovereign credit due to the passage of laws
that limit the power of the Supreme Court. Analysts predict
economic uncertainty in the coming months, with rising borrowing
costs and a weakening shekel currency. Mass protests
compounded the crisis, with growth projected at 1.6% in 2024.
LPL Financial (NASDAQ:LPLA) – LPL
Financial is acquiring Crown Capital Securities, expanding its
expansion efforts. Crown Capital Securities which has 260
advisors overseeing approximately $6.5 billion in advisory and
brokerage assets. The acquisition will allow LPL to increase its
resources and technology for Crown Capital advisors, while the
company will retain its brand and structure. Consolidation
continues in the independent brokerage industry. The
acquisition is expected to close in early 2024.
Wells Fargo (NYSE:WFC) – Wells Fargo has
announced the authorization of a new share repurchase program of up
to $30 billion. The bank’s shares rose 2.8% in premarket
trading on Wednesday, boosted by a 57% jump in second-quarter
profit due to interest payments from customers. The lender and
other major US banks raised their dividends in the third quarter
after passing the Federal Reserve’s health check, showing strength
in the face of a possible economic downturn.
PacWest Bancorp (NASDAQ:PACW), Banc of
California (NYSE:BANC) – Following the $1.1 billion buyout deal by
Banc of California, PacWest stock was up 35.4% in premarket trading
on Wednesday. PacWest was hurt by the collapse of regional
creditors, but the sale was seen as profitable by
analysts. Shares in Banc of California also rose 14.4%.
Deutsche Bank (NYSE:DB) – Deutsche Bank
announced a $497 million share repurchase this year, signaling a
more positive outlook and reflecting the improvement in its
financial condition. The buyback will begin in August ahead of
quarterly results on Wednesday.
NatWest (NYSE:NWG) – Alison Rose, CEO of
NatWest, has faced several crises throughout her career, including
the Covid-19 pandemic and the aftermath of Brexit. However, it
was the decision to close the accounts of former Brexit Party
leader Nigel Farage that cost her her job. Widely praised for
her work, her resignation raised questions about the future of the
institution.
Biogen (NASDAQ:BIIB) – Biogen has
announced a cut of about 1,000 jobs (11% of the workforce) to
reduce costs and boost the launch of the new Alzheimer’s drug,
Leqembi. The company faces challenges with competition and
declining sales of other treatments.
Delta Air lines (NYSE:DAL) – Delta
Airlines opened its second lounge at John F. Kennedy Airport in New
York City to meet high demand and alleviate
overcrowding. SkyClub T4-A offers features suitable for
business or short-haul leisure travelers, including private cabins
for Zoom meetings and a glass-enclosed deck with panoramic
views. The airline has adjusted its policies to accommodate
increased air traffic, restricting lounge access to customers
departing within three hours. The lounge also features a menu
of Jewish staples prepared by chef Elyssa Heller.
Raytheon Technologies (NYSE:RTX) – Pratt
& Whitney faced issues with an engine model, leading to a 10%
drop in parent company RTX shares. More than 1,000 engines
have to be removed from Airbus planes to check for microscopic
cracks. These setbacks could affect aircraft production
capacity during the summer travel season.
Tesla (NASDAQ:TSLA) – Tesla vehicles have
been banned from certain areas of the city of Chengdu, China, in
preparation for President Xi Jinping’s visit for the World
University Games. Authorities blocked Teslas in areas related
to the event and Xi’s visit, citing concerns about data collected
by the vehicles’ cameras. Chengdu also imposed broader traffic
restrictions during the games, which run until August 8. China
is a key market for Tesla, with a factory in Shanghai accounting
for most of its global production.
Earnings
Rio Tinto (NYSE:RIO) – In the first half,
Rio Tinto’s underlying earnings fell to a three-year low due to
falling iron ore prices despite rising shipments. The company
cut dividends. Even so, he believes in a recovery of demand
for iron ore in China. Rio Tinto is considering extracting
critical minerals such as gallium and germanium through its mining
process. The mining company faces a shortage of skilled
workers and supply chain issues. Rio reported underlying
earnings of $5.7 billion for the six months ended June 30, down
from $8.63 billion a year ago and a consensus of $5.85 billion,
according to Visible Alpha.
Stellantis (NYSE:STLA) – Stellantis
reported growth in revenue and operating profit in the first half,
beating estimates. CEO Carlos Tavares said the automaker will
need to accelerate cost cuts to maintain profitability in a
challenging pricing environment. Adjusted EBIT margin fell to
14.4%, but the company confirmed its full-year double-digit margin
target.
Deutsche Bank (NYSE:DB) – Deutsche Bank
reported net income of $842 million for the second quarter of 2023,
beating expectations but down 27% from a year earlier. The
bank plans to cut costs, increase investments in technology and
save 2 billion to 2.5 billion euros. After a successful
restructuring, Deutsche Bank posted its 12th consecutive quarterly
profit. The company also announced share buyback plans and
expects to return more than €1 billion to shareholders in 2023.
Hilton Worldwide (NYSE:HLT) – Hilton
Worldwide reported second-quarter earnings and revenue that beat
expectations, driven by increases in occupancy and average room
nights. Net income increased to $411 million, or $1.55 per
share, from $368 million, or $1.32 per share, in the prior-year
period. Total revenue grew by 18.8%. The company also
expects an above-expected adjusted EPS for 2023.
Microsoft (NASDAQ:MSFT) – Shares of
Microsoft were down 4.1% in premarket Wednesday after reporting
slower revenue growth at its cloud business in the fourth fiscal
quarter. Despite that, the company posted earnings of $2.69
per share, beating analysts’ forecasts of $2.55 per share,
according to Refinitiv. Additionally, Microsoft reported
revenue of $56.19 billion, beating estimates of $55.47 billion.
Alphabet (NASDAQ:GOOGL) – Shares in
Google’s parent company were up 6.9% in premarket Wednesday on the
back of surprising second-quarter results, as investors celebrated
strong growth in cloud sales. The company posted earnings of
$1.44 per share and revenue of $74.6 billion, beating
expectations. Analysts were forecasting adjusted earnings of
$1.34 per share and revenue of $72.82 billion, according to
Refinitiv. Solid growth in cloud sales was the main driver of
these impressive results. Additionally, Alphabet announced
that its CFO, Ruth Porat, would assume the role of president and
chief investment officer.
Snap Inc (NYSE:SNAP) – Snap was down 19.2%
in premarket trading on Wednesday after issuing a
lower-than-expected outlook for the current quarter. However,
the company delivered better-than-expected results, with an
adjusted loss of 2 cents per share, compared to the consensus
estimate of a loss of 4 cents per share, according to
Refinitiv. Additionally, revenue hit $1.07 billion, beating
analyst expectations of $1.05 billion.
Texas Instruments (NASDAQ:TXN) – Texas
Instruments shares were down 3.5% premarket. The company
announced an earnings per share projection for the current quarter,
ranging between $1.68 and $1.92, with most of that range falling
below the consensus estimate of $1.91, as pointed out by analysts
consulted by FactSet. As for revenue, Texas Instruments
estimated it to be between $4.36 billion and $4.74 billion for the
quarter, encompassing the analyst consensus estimate of $4.59
billion, as reported by FactSet.
Teladoc (NYSE:TDOC) – Shares of the
virtual healthcare company rose 6.7% in premarket Wednesday after
the release of a better-than-expected earnings report. Teladoc
said it posted a loss of 40 cents a share for the second quarter,
beating analysts’ estimates of a loss of 41 cents a share,
according to Refinitiv. In addition, the company also beat
revenue expectations, reaching $652 million compared to the
consensus estimate of $649 million.
Visa (NYSE:V) – Visa reported
second-quarter earnings and revenue that beat Wall Street
estimates, driven by a recovery in international travel and
spending. Net income increased 7%, and adjusted earnings per
share increased 9% year-over-year. However, the growth in the
volume of payments has slowed down compared to the last few
quarters. Visa generated $5.5 billion in free cash flow and
repurchased $3 billion in stock. The company expects an
above-expected adjusted EPS for 2023.
Robert Half (NYSE:RHI) – The employment
agency did not meet earnings expectations. Management
explained that the company was impacted by its clients’ lengthy
hiring cycles. Financial results showed earnings per share of
$1 on revenue of $1.64 billion, while analysts polled by Refinitiv
had expected earnings per share of $1.14 and revenue of $1.69
billion.
General Electric (NYSE:GE) – GE raised its
earnings outlook for the year after quarterly earnings beat
expectations due to high demand for jet engine replacement parts
and airline services amid increased air travel. GE’s adjusted
earnings for the June quarter came in at 68 cents a share, compared
with a profit of 46 cents a share estimated by analysts in a
Refinitiv survey. CEO Larry Culp said demand remains strong
with no signs of slowing down despite rising interest
rates. The company now expects adjusted earnings per share of
$2.10 to $2.30 for 2023.
GE HealthCare Technologies (NASDAQ:GEHC) –
GE HealthCare anticipates that the commercial launch of Alzheimer’s
treatment and related tests will increase demand for its imaging
equipment in hospitals and medical centers in the coming
year. The US Center for Medicare and Medicaid Services (CMS)
has proposed broader coverage for brain scans used to identify the
key protein of Alzheimer’s disease. The company raised its
full-year profit forecast after beating quarterly profit estimates
as electronic component availability improved. GE HealthCare’s
total quarterly sales were $4.8 billion, and the company now
expects earnings of $3.70 to $3.85 per share in 2023.
General Motors (NYSE:GM) – General Motors
faces challenges with electric vehicle manufacturing and costs,
resulting in declining profit and margins in the North American
market. GM plans to invest less in new products and cut
operating costs, but maintains ambitious EV production and revenue
targets. On a year-over-year basis, GM said second-quarter net
income increased nearly 52% to $2.6 billion, with revenue up 25%
from the same period in 2022.
Verizon (NYSE:VZ) – Verizon beat quarterly
earnings expectations due to lower costs and a surprising increase
in wireless subscribers, driven by efforts to expand its enterprise
customer base and 5G network. Adjusted earnings were $1.21 per
share, above expectations of $1.16. Total revenue fell 3.5% to
$32.6 billion, below analysts’ estimates of $33.24 billion,
according to Refinitiv data.
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