US index futures are declining in Tuesday’s pre-market trading
as investors monitor economic data, earnings reports from key
companies, and follow developments in the conflict between Israel
and Hamas.
As of 07:00, Dow Jones futures (DOWI:DJI) dropped by 61 points,
or 0.18%. The S&P 500 futures were down by 0.23% and the
Nasdaq-100 futures fell by 0.27%. The yield on the 10-year Treasury
note was at 4.767%.
In the commodities market, West Texas Intermediate crude oil for
November increased by 0.27% to $86.88 per barrel. Brent crude for
December went up by 0.39%, to $90.00 per barrel. Iron ore with a
62% concentration grade, traded on the Dalian exchange, rose by
2.12% to US$ 118.28 per ton.
On Tuesday’s U.S. economic calendar, investors await retail
sales at 08:00 AM, with a consensus estimate for a 0.3% rise in
September, and industrial production, which will be released at
9:15 AM, is projected to remain stable on a monthly basis. At 10:00
AM, business inventories are expected, which should increase by
0.3% in August, as well as the NAHB housing market index, projected
to reach 44 points in October. The API will release last week’s oil
stock data at 16:30 PM.
Throughout the day, speeches from Fed members are anticipated. A
speech by New York Fed President John Williams is scheduled for
8:00 AM, followed by Fed Governor Michelle Bowman at 9:20 AM.
Lastly, Richmond Fed President Thomas Barkin is set to speak at
10:45 AM.
In the Middle East, Israel has not yet initiated an invasion of
the Gaza Strip, providing some relief to the markets. Such an
escalation could significantly impact oil prices due to threats
from Iran. Israel’s hesitation follows U.S. President Joe Biden
expressing his opposition to the invasion. Yesterday, U.S.
Secretary of State Antony Blinken announced Biden’s visit to Israel
on Wednesday. The U.S. President will meet with Prime Minister
Benjamin Netanyahu to reaffirm Israel’s right to self-defense.
In Asia, markets closed higher due to decreased tensions in the
Middle East conflict. Furthermore, new stimulus measures in China
were announced to support economic recovery, boosting investor
sentiment in the region. In China, the People’s Bank of China
(PBoC) kept its medium-term lending rate unchanged at 2.5% and
injected a substantial amount of money into the financial system
through the medium-term lending facility. This was done while the
institution withdrew short-term liquidity in open market
operations.
Hong Kong’s HSI index increased by 0.75%, while the Shanghai
Composite rose by 0.32%. Tokyo’s Nikkei 225 index climbed 1.20%.
Country Garden is due to make a coupon payment of $15 million
today. Last week, the developer warned it might not meet all its
debt payments. It’s expected to default on its obligations
again.
In Europe, markets are trading mixed, even after Germany’s and
the Eurozone’s ZEW economic sentiment indices exceeded
expectations. At 13:00 PM, investors await a speech from the
Vice-President of the European Central Bank (ECB), Luis de Guindos,
which may provide new guidance on the central bank’s next
steps.
At Monday’s close, stock markets rose, while US Treasury bonds
fell. The Dow Jones finished up 314.25 points or 0.93% at
33,984.54. The S&P 500 advanced 45.85 points or 1.06% to
4,373.63, while the Nasdaq Composite rose 160.75 points or 1.20% at
13,567.98. The global concern was to prevent Israel’s advance
into Gaza from bringing Iran into the conflict. After a period
of appreciation, the price of oil fell again, and the American
currency depreciated. In a note, the president of the
Philadelphia Federal Reserve, Patrick Harker, mentioned that he
sees no need for interest rate increases in the US this year, which
positively influenced market sentiment.
On Tuesday’s corporate earnings front, investors will be
watching before the market opens for reports from Bank of America
(NYSE:BAC), Goldman Sachs (NYSE:GS), BNY Mellon (NYSE:BK), Lockheed
Martin (NYSE:LMT), Johnson & Johnson (NYSE:JNJ), Prologis
(NYSE:PLD), Ericsson (NASDAQ:ERIC), Albertsons
(NYSE:ACI). After the closing, the results of United Airlines
(NASDAQ:UAL), Interactive Brokers (NASDAQ:IBKR), JB Hunt
(NASDAQ:JBHT), among others, are expected.
Wall Street Corporate Highlights for Today
Apple (NASDAQ:AAPL) – Apple CEO Tim Cook
made a surprise visit to China, highlighting the importance of the
Chinese market. Cook praised gamers who gathered at an Apple
store in Chengdu to play “Honor of Kings,” a popular Tencent
game. The iPhone 15 series has faced lukewarm sales in China,
with Huawei trying to make a comeback with a new
smartphone. Analysts at Jefferies have suggested that Huawei
has overtaken Apple as the top smartphone maker in China.
Microsoft (NASDAQ:MSFT) – Microsoft’s
LinkedIn announced the layoff of 668 employees in engineering,
talent and finance in its second round of job cuts this year due to
slowing revenue. This number represents more than 3% of the
20,000 employees and reflects the economic uncertainty in the
technology sector.
Netflix (NASDAQ:NFLX) – Netflix’s
crackdown on password sharing likely attracted around 6 million new
subscribers in the third quarter. The company, considered a
utility in some markets, may raise prices following the Hollywood
actors’ strike. Netflix also plans to expand advertising, with
estimates suggesting revenue of $188.1 million in the third
quarter. The company expects to record its biggest quarterly
subscriber additions this year, with third-quarter revenue
projected at $8.54 billion, the fastest growth in five
quarters.
Snap (NYSE:SNAP) – Snap shares rose on
Monday, beating expectations as it is forecast to have more than
475 million daily active users (DAUs) by 2024. The company also
expects advertising revenue growth in excess of 20% in 2024,
exceeding Wall Street estimates. Snap has faced recent
competition challenges and falling advertising demand.
Chevron (NYSE:CVX) – Workers at Chevron’s
liquefied natural gas (LNG) plants in Australia have reiterated
their intention to strike as mediated negotiations
continue. Chevron claims workers are being unreasonable.
Ford Motor (NYSE:F) – Ford CEO Bill Ford
called on the United Auto Workers union at a press conference to
end the 32-day strike and reach a new labor agreement, warning of
its growing impact on the automaker and the US economy. The
strike has already cost billions, while negotiations continue.
General Motors (NYSE:GM) – U.S. automotive
safety regulators have begun a preliminary assessment of 594
General Motors autonomous vehicles operated by Cruise LLC. The
investigation was opened due to reports of a lack of caution by
vehicles near pedestrians.
Tesla (NASDAQ:TSLA) – Tesla will recall
54,676 Model Model X vehicles manufactured between 2021-2023,
as the vehicle controller is likely to fail to detect low brake
fluid and not display a warning light. The company has released a
free software update to fix the problem, according to the National
Highway Traffic and Safety Administration (NHSTA). As of
October 10, no accidents, injuries or deaths related to this issue
have been reported.
Toyota Motor (NYSE:TM) – Toyota will
extend the partial production shutdown at its domestic automakers
until Wednesday due to an accident at its supplier Chuo Spring,
which makes automotive components. The incident also affected
companies in the Toyota Auto Body and Toyota Industries group.
Ericsson (NASDAQ:ERIC) – Ericsson revealed
on Tuesday that it foresees persistent uncertainty in its mobile
networks business until 2024, after reporting a decline in revenue
in the third quarter due to demand for 5G equipment in North
America. The company’s shares fell 9% in early trading,
hitting 2017 lows. Ericsson expects the next quarter to perform
similarly. The company increased its cost reduction target to
12 billion SEK, including laying off 8,500 employees, and
highlighted the importance of cost reduction to face the uncertain
market.
Taiwan Semiconductor
Manufacturing (NYSE:TSM) – TSMC is expected to
announce a 30% drop in third-quarter profit, reflecting past
performance and revenue of about $17 billion. Future prospects
include demand for replacement and AI chips, but also concerns
about customer demand.
ASML Holding (NASDAQ:ASML) – Investors are
keeping an eye on ASML Holding, with concerns about sanctions on
China and a possible glut of chips. ASML’s U.S. shares are up
11% this year, but challenges remain, such as export restrictions
and uncertain demand.
NetScout Systems (NASDAQ:NTCT) – Shares of
NetScout Systems fell more than 20% in premarket trading after the
cybersecurity company cut its annual guidance due to slower order
conversions. For the year, they expect adjusted earnings of $2
to $2.20 per share, below previous estimates. NetScout CEO
Anil Singhal attributed this to industry and economic challenges
faced by customers. For the second quarter, they expect
adjusted earnings of 60 cents to 62 cents per share, well below
analyst forecasts.
Baidu (NASDAQ:BIDU) – The Chinese
technology giant unveiled Ernie 4.0, its generative AI model, at an
event in Beijing. CEO Robin Li highlighted the model’s memory
capabilities, but analysts noted the lack of significant advances
over the previous version. Baidu has also integrated
generative AI into its products such as Baidu Drive and Baidu Maps,
enabling natural language queries. The company is at the
forefront of AI in China and has 45 million users for Ernie.
Alibaba (NYSE:BABA) – Alibaba, Tencent,
Xiaomi and Shunwei Capital are among the backers of a Chinese AI
startup, Baichuan, which has raised $300 million in
funding. The company is developing generative AI technologies
to compete with giants
like Microsoft (NASDAQ:MSFT) and OpenAI,
with broad technology support from China and the quest for
leadership in AI globally remains intense despite US sanctions on
the chip sector.
Coca-Cola (NYSE:KO) – Pernod Ricard and
Coca-Cola have agreed to launch a canned version of the Absolut
& Sprite cocktail in selected European markets, including Great
Britain, the Netherlands and Spain, from 2024. The agreement
capitalizes on the growing pre-mixed cocktail trend and the profit
potential of the ready-to-drink alcoholic beverage category.
Diageo (NYSE:DEO) – During the pandemic,
sales of canned and bottled cocktails saw a notable increase,
reaching $1.6 billion in supplier revenue in 2021. Diageo is now
launching the Cocktail Collection, offering classic cocktails from
high quality in 350 ml and 750 ml bottles, with affordable
prices. Recipes have been carefully developed to maintain
shelf stability. The sales trend for ultra-premium spirits
continues to outpace the ready-to-drink cocktail sector, and the
convenience of these options is gaining prominence. Diageo
plans to further expand its range of pre-mixed drinks.
Tyson Foods (NYSE:TSN) – Tyson Foods
workers and activists protested in front of the meat company’s US
headquarters, calling for better working conditions and an end to
child labor in the industry. They marched with signs and
shouted anti-exploitation slogans as Tyson faces pressure to ensure
safer work practices and avoid the use of child labor in its supply
chain.
Novo Nordisk (NYSE:NVO) – Novo Nordisk has
agreed to acquire uncontrolled hypertension drug ocedurenone from
KBP Biosciences for up to $1.3 billion. This acquisition
aligns with Novo’s strategy to expand its focus from diabetes to
other serious chronic diseases.
Moderna (NASDAQ:MRNA) – Moderna reaffirmed
its Covid-19 vaccine sales forecast of between 6 and 8 billion
dollars for the year, in contrast to the reduction in Pfizer’s
(NYSE:PFE) forecast. The company expects greater
visibility into the US vaccine market in October 2023.
Johnson & Johnson (NYSE:JNJ) – Johnson
& Johnson will release its quarterly results without the
consumer health division. Earnings of $2.52 per share are
expected on sales of $21 billion. Investors will also watch
talc litigation and the impact of new obesity drugs on medical
devices. Shares are down 10% this year.
Waystar Holding – Waystar Holding
Corp. has filed for an initial public offering (IPO) with the
aim of listing on the Nasdaq Global Select Market under the symbol
“WAY”. The company plans to use the funds to reduce debt and
assist healthcare providers with complex payments. The IPO
filing did not reveal details about the number of shares or price
range. Waystar, the parent company of Waystar Technologies,
had already announced plans for the IPO in August, with JP Morgan,
Goldman Sachs and Barclays acting as underwriters.
Manchester United (NYSE:MANU) – Manchester
United shares fell on Monday following reports that British
billionaire Jim Ratcliffe is seeking to acquire 25% of the club,
raising concerns about an outright takeover by Qatar’s Sheikh
Jassim. The stock hit its lowest level in more than four
months.
Lululemon Athletica (NASDAQ:LULU) – Shares
of Lululemon Athletica rose on Monday following its addition to the
benchmark S&P 500 index. Replacing
Activision Blizzard (NASDAQ:ATVI), the
move drew demand from institutional investors, sending the stock up
reach its highest level in almost two years. Lululemon has a
market capitalization of more than $52 billion and maintains an
average price target of $450, with a “Buy” recommendation from
analysts.
Walmart (NYSE:WMT) – Walmart has enough
staff for the holiday season, postponing seasonal
hiring. Concerns include high prices, depleting savings and
rising labor costs. U.S. hiring could fall to 2008 levels,
according to Challenger, Gray & Christmas.
Walt Disney (NYSE:DIS) – Walt Disney
celebrated its centennial on Monday, facing recent
turmoil. Founded in 1923, it evolved from classics like Mickey
Mouse to streaming and theme parks. Despite challenges,
long-term shareholders have had solid returns, outperforming the
S&P 500 since 1972. After highs in 2021, Disney faces
challenges in streaming and parks. Shares are down 58% from
their peak. 2023 could mark the third consecutive year of
losses, but history suggests a possible recovery.
WeWork (NYSE:WE) – WeWork has named David
Tolley as CEO. The company has faced crises since its failed
IPO plan in 2019, but has taken steps to save money and
recover.
ServisFirst Bancshares (NYSE:SFBS) –
ServisFirst Bancshares, a bank with a presence in the southern US,
reported third-quarter net interest income below Wall Street
expectations, affected by the narrowing interest spread. The
bank beat earnings per share estimates, with loans up and total
deposits at $13.1 billion. CFO Bud Foshee expects
profitability to improve in the coming quarters as lending channels
recover.
BlackRock (NYSE:BLK) – The BlackRock
Investment Institute said long-term U.S. Treasury yields could
fluctuate in the near term as inflation eases and the Federal
Reserve approaches peak interest rates. However, over the long
term, they expect 10-year yields to reach 5% or higher due to
factors such as persistent inflation and rising fiscal
deficits.
Charles Schwab (NYSE:SCHW) – Charles
Schwab beat profit expectations in the third quarter, driven by
growth in its asset management business. Its shares rose on
Monday, reflecting a 17% rise in rates due to robust inflows into
its funds. However, net interest income fell 23.5% due to
customer allocation decisions in a higher interest rate
environment. The company also announced cost-cutting plans,
including layoffs and reducing corporate offices.
Goldman Sachs (NYSE:GS) – Goldman Sachs
predicts vulnerability in industrial metals markets due to weakness
in demand and higher interest rates. The copper market could
come under pressure from restrictions on Chinese imports, while
aluminum has a more positive outlook. However, the bank
remains bearish on nickel due to increased supply.
Rio Tinto (NYSE:RIO) – Rio Tinto reported
an increase in quarterly copper and aluminum production despite a
reduction in the annual estimate for the Canadian iron ore
business. Iron ore production was affected by plant downtime
and conveyor belt failures, as well as forest fires. Copper
production increased due to the high-grade Oyu Tolgoi mine and
higher grades at Escondida. Quarterly aluminum production also
rose.
Albemarle (NYSE:ALB) – Liontown Resources
has suspended talks to raise financing for its Kathleen Valley
lithium project, following the withdrawal of Albemarle’s A$6.6
billion takeover bid. The mining company increased its stake
to 19.9%, possibly blocking Albemarle’s bid. Liontown is
advancing discussions with lenders to secure financing of at least
A$450 million for the project, which is considered one of the top
five lithium projects in the world.
SunPower (NASDAQ:SPWR) – SunPower shares
fell 5.7% in premarket trading to $5.46 after Morgan Stanley
downgraded its rating from “Equal Weight” to “Underweight” and
lowered its price target to $5 from $8.
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