US index futures were declining in pre-market trading on Friday
following comments by Federal Reserve Chairman, Jerome Powell,
regarding the potential for future interest rate hikes.
Additionally, escalating tensions between Israel and Hamas have
dampened investor enthusiasm.
As of 06:56 AM, Dow Jones futures (DOWI:DJI) were down by 86
points, or 0.26%. S&P 500 futures dropped 0.29%, and Nasdaq-100
futures fell 0.37%. The 10-year U.S. Treasury yield stood at
4.937%.
In the commodities market, November’s West Texas Intermediate
crude oil rose 1.38% to $90.60 per barrel. December Brent crude
increased by 1.18%, approaching $93.47 per barrel. The 62%
concentration grade iron ore, traded on the Dalian exchange,
dropped 3.17% to $114.35 per ton.
On economic calendar for Friday, investors await a 09:00 AM
speech from Philadelphia Fed President, Patrick Harker. Later, at
12:15 PM, Cleveland Fed President, Loretta Mester, is set to speak.
The week’s oil rig count will be announced by Baker Hughes at 1:00
PM.
Tensions continue in the Middle East between Israel and Hamas.
In a recent statement, U.S. President Joe Biden criticized Hamas
and Vladimir Putin, revealing plans to send a $100 billion security
package to Congress.
Asian markets were down, influenced by Wall Street’s performance
the day before and Japan’s inflation indicators. Japanese inflation
rose 0.3% in September, while core inflation, excluding food and
energy, stood at 2.8%, surpassing forecasts. In China, the primary
five-year interest rate remained at 4.20% and the two-year rate at
3.45%. Real estate developer Evergrande, with a debt of $186
billion, is reassessing its restructuring plan, adding more
uncertainty to the sector.
In Europe, markets are treading cautiously. UK retail sales saw
a 0.9% decline in September. In Germany, the producer price index
was down by 0.2%, falling short of predictions.
US stock markets closed down on Thursday as long-term U.S. rates
reached recent highs. The 10-year yield hit 5% but slightly
retreated after Powell’s comments. The Dow Jones declined by 250.91
points or 0.75% to 33,414.17. The S&P 500 dropped by 36.60
points or 0.85% to 4,278.00. The Nasdaq Composite went down by
128.13 points or 0.96% to 13,186.18.
The Federal Reserve Chief stressed the need for caution in
future monetary policy actions. Powell mentioned that given
stronger-than-expected economic indicators, the FOMC might need to
raise rates again. He also pointed out that a rise in the longer
end of the yield curve could further tighten financial
conditions.
US equity markets closed lower in Thursday’s session as
long-duration rates in the United States reached recent
highs. The 10-year yield reached 5% but then declined slightly
after Powell’s statements. The Dow Jones fell 250.91 points or
-0.75% to 33,414.17 points. The S&P 500 fell 36.60 points
or 0.85% to 4,278.00. The Nasdaq Composite fell 128.13 points
or -0.96% to 13,186.18 points.
The head of the Federal Reserve emphasized the need for prudence
in future monetary policy actions. Powell mentioned that,
given stronger-than-expected economic indicators, the FOMC may be
forced to raise rates again. He also noted that a rise at the
longer end of the yield curve could further tighten financial
conditions.
On the corporate earnings front on Friday, investors will be
watching reports from American Express (NYSE:AXP), Schlumberger
(NYSE:SLB), Comerica Incorporated (NYSE:CMA), Huntington
(NASDAQ:HBAN), Autoliv (NYSE:ALV), Regions (NYSE:RF), Euronet
Worldwide (NASDAQ:EEFT), among others.
Wall Street Corporate Highlights for Today
Alphabet (NASDAQ:GOOGL) – Google launched
Search Generative Experience (SGE) that uses AI to create search
summaries. This concerns publishers as it could affect web
traffic and compensation for the use of their content. Google
offers a blocking option, but it creates uncertainty for
publishers. SGE can decrease traffic to traditional search
links. However, publishers’ reputations remain strong at
SGE. Publishers also block OpenAI’s ChatGPT bot.
Expedia (NASDAQ:EXPE) – Expedia’s
advertising spend on Google has increased dramatically, 10x in five
years, without a corresponding increase in traffic. This was
revealed in the Justice Department’s antitrust trial against
Google. Other companies also highlighted the importance of
advertising on Google for their businesses.
Apple (NASDAQ:AAPL) – Apple, despite being
the most valuable company in the world, faces challenges including
tepid sales in China and political tensions. The lack of
growth and high valuation of the shares raise
concerns. KeyBanc downgraded the stock, and the consensus
rating fell. Apple will release results in November, with
revenue expected to fall. Apple shares trade at high multiples
and face pressure from slower growth. Apple rose 0.6% on
Thursday, a move that follows four consecutive negative
sessions.
Meta Platforms (NASDAQ:META) – The
European Commission has given Meta and TikTok a week to present
details on measures to contain terrorist, violent content and hate
speech on their platforms, under the new rules of the Law on
Digital Services. This comes after Elon Musk received a
similar instruction last week.
Nvidia (NASDAQ:NVDA) – Investors who
purchased Nvidia shares in September have had a recent
turnaround. What seemed like a prescient bet in mid-September
— shares rose 14% in 15 trading sessions — turned sour this week,
with shares falling 8.5% in two days. The cause was new US
regulations to restrict technology to China, threatening a
significant portion of Nvidia’s revenue. The company, despite
its prominent position in AI, faces geopolitical and economic
challenges.
Adobe (NASDAQ:ADBE) – European Union
antitrust regulators have resumed their investigation into Adobe’s
$20 billion bid for cloud design platform Figma, with a deadline of
February 5. The deal could eliminate a key rival and raise
global competition concerns. Adobe must address these concerns
to obtain regulatory approval.
Western Digital (NASDAQ:WDC) –
Kioxia Holdings has sought the support of state-backed Japan
Industrial Partners (JIC) to invest in the proposed merger of its
flash memory business with Western Digital, with Japanese banks
committing to supply 12.67 billion dollars in financing.
WeWork (NYSE:WE) – WeWork president and
chief operating officer Anthony Yazbeck will step down, with the
move effective Friday. The departure was amicable and he will
receive a payment of around US$1.1 million. WeWork shares rose
3.4% following the announcement.
Teck Resources (NYSE:TECK) – Japan’s JFE
Steel Corp is negotiating a stake in the metallurgical coal
business of Canada’s Teck Resources, following the trend of supply
diversification due to sanctions on Russia. Negotiations have
been ongoing since September. Japan’s Nippon Steel was also
interested in a stake. Teck considers splitting its coal and
copper businesses. Teck CEO Jonathan Price is considering
several options for this division.
Tesla (NASDAQ:TSLA) – The Chinese
government plans to impose additional controls on graphite exports,
a crucial component for electric vehicle batteries. This move could
affect manufacturers like Tesla and drive the search for
alternative sources of graphite. Graphite exports will face
restrictions starting on December 1st. Tesla and others are already
seeking suppliers outside of China. This measure may impact
graphite prices in the industry. Syrah Resources (3S7), a supplier
to Tesla, saw a 24.2% increase in its shares in response to the
news. Meanwhile, Tesla experienced a drop in its stock prices
following disappointing third-quarter results. In other news, Tesla
raised the price of its all-wheel-drive Model X Plaid to $94,990
from $89,990 in the U.S. in response to concerns about rising
interest rates, despite previous price cuts to sustain demand.
Toyota Motor (NYSE:TM) – Toyota has signed
an agreement to adopt Tesla’s electric vehicle charging technology
starting in 2025. Other automakers have also adopted Tesla’s North
American Charging Standard (NACS). Toyota will also
incorporate NACS ports into its electric
vehicles. Additionally, Toyota will resume some production on
Monday at factories affected by an accident at supplier Chuo
Spring. Five lines at four factories will resume, while eight
lines at six factories will remain suspended.
Stellantis (NYSE:STLA) – Dongfeng Motor
Group and Stellantis will expand export business in China through
an asset sale. Dongfeng will purchase assets from Dongfeng
Peugeot Citroën Automobile, while Stellantis will continue the
production and export of Peugeot and Citroen cars.
Merck (NYSE:MRK) – Merck agreed to pay
$5.5 billion to Daiichi Sankyo (TG:D4S)
to develop cancer drug candidates. The agreement could reach
US$22 billion. Daiichi Sankyo is targeting $6 billion in
oncology revenue by 2026. The Japanese company’s shares rose 15.3%,
while Merck is up 0.2% in premarket trading.
Pfizer (NYSE:PFE) – Pfizer has received EU
antitrust approval for its $43 billion acquisition of cancer drug
maker Seagen (NASDAQ:SGEN). The
European Commission stated that the agreement would not harm
competition or affect prices, considering it without competition
concerns.
Walgreens Boots Alliance (NASDAQ:WBA) –
Walgreens has agreed to pay $192.5 million to settle a class-action
lawsuit filed by Rite Aid (NYSE:RAD)
investors who accused it of misleading them about merging the two
pharmacy chains. The case was intensely fought and now awaits
court review. Rite Aid has filed for bankruptcy protection due
to high debt and opioid litigation costs, which could result in the
stock being dissolved without compensation to shareholders.
CVS Health (NYSE:CVS) – CVS Health is
removing decongestants with phenylephrine from its shelves after an
FDA advisory committee declared them ineffective. Although the
FDA has not ruled, CVS has chosen to voluntarily recall
them. CVS shares are flat in premarket trading Friday.
Morgan Stanley (NYSE:MS) – A federal judge
has issued a temporary restraining order against Morgan Stanley’s
former team of consultants, alleging breach of contracts, improper
solicitation of clients and possession of confidential
information. The team left the firm to launch an independent
practice. Morgan Stanley seeks permanent injunctive relief in
FINRA arbitration.
KKR and Company (NYSE:KKR) – The Italian
government is confident of restructuring Telecom
Italia (TIM) (BIT:TIT) through the sale of its fixed
network assets to KKR. The agreement is supported by the
government and is seen as crucial to relieving TIM’s debt.
Visa (NYSE:V) – Analysts at Mizuho
Securities revised down the price target for Visa shares while
maintaining a “Neutral” rating, due to concerns about US economic
growth expectations, which could impact the company’s
performance. They predict a possible slowdown in the growth of
personal consumption expenditures in the US following a period of
post-pandemic inflation and reopening. For Visa’s imminent
fourth-quarter earnings release, analysts are predicting a 14%
increase in profits compared to the same period last year, reaching
$4.6 billion. That translates to earnings of $2.25 per share
and revenue of $8.6 billion.
Hewlett Packard Enterprise (NYSE:HPE) –
Hewlett Packard shares fell -4.2% in pre-market trading on Friday
following the announcement of its fiscal year 2024 forecast, which
came in below expectations. The company expects adjusted
earnings of $1.82 to $2.02 per share, while analysts had expected
$2.15. Revenue growth is forecast for 2024 at 2% to 4%, while
analysts expect 1.6% more than the current estimate for 2023. In
the current fiscal year, HPE forecasts revenue growth of 4% to 6%
and adjusted earnings of $2.11 to $2.15 per share. HPE shares
are up 2.1% year to date.
SolarEdge (NASDAQ:SEDG) – SolarEdge
revised its revenue forecast for the third quarter from $880-920
million to $720-730 million, sending its shares down 22.7% in
Friday pre-market trading-fair. Significant cancellations and
rejections from European distributors were cited as
reasons. This also hit shares of Enphase
Energy (NASDAQ:ENPH) down -13.5%
and First Solar (NASDAQ:FSLR),
-4.7%.
Earnings
Intuitive Surgical (NASDAQ:ISRG) –
Intuitive Surgical shares suffered an 8.2% drop in Friday’s
premarket after the company missed third-quarter revenue
expectations, reporting $1.74 billion in instead of the expected
US$ 1.77 billion, according to LSEG. However, the company
surpassed analysts’ expectations by reporting adjusted earnings per
share of $1.46, while $1.41 per share was expected.
CSX Corporation (NASDAQ:CSX) – The
transportation company posted third-quarter earnings that fell
short of analyst projections. CSX reported a profit of 42
cents per share, while LSEG analysts’ forecast was 43 cents per
share. However, revenue exceeded expectations, reaching $3.57
billion, compared to analysts’ forecast of $3.55 billion.
Knight-Swift Transportation (NYSE:KNX) –
The shares of the freight transportation company rose by 17.7% in
pre-market trading following the release of its third-quarter
results, which showed an earnings beat. Knight-Swift reported an
adjusted profit of 41 cents per share, surpassing analysts’
estimates of 36 cents per share, according to LSEG. Additionally,
the company’s revenue reached $2.02 billion, exceeding analysts’
expectations of $1.89 billion.
Freeport-McMoRan (NYSE:FCX) – Copper miner
Freeport-McMoRan beat profit expectations in the third quarter, but
plans to slow expansion due to inflation and falling copper
prices. This reflects concerns about the supply of minerals
essential for the clean energy transition. Freeport reported
third-quarter net income of $454 million, or 31 cents per share,
compared with $404 million, or 28 cents per share, in the same
quarter a year ago.
Union Pacific (NYSE:UNP) – Union Pacific
faces inflationary pressures and renegotiates contracts while
warning about strike at Detroit Three assembly plants. The
company adopts a flexible approach to negotiations due to inflation
and weak consumer demand. Shares rose 0.77% in premarket
trading after reporting a smaller-than-expected drop in
third-quarter earnings per share to $2.51, according to LSEG
data. Quarterly operating income fell 10% to $5.94 billion,
while analysts estimated $5.99 billion.
Western Alliance (NYSE:WAL) – The regional
bank announced third-quarter earnings of $1.97 per share, beating
FactSet analyst estimates of $1.91 per share. Additionally,
net interest income reached US$587 million, exceeding analysts’
expectations of US$559.1 million.
Blackstone (NYSE:BX) – Blackstone reported
a 12% drop in third-quarter distributable earnings as high interest
rates impacted asset valuations and discouraged asset
sales. Chief Executive Stephen Schwarzman mentioned that the
company chose to sell fewer assets due to the unfavorable
environment. Blackstone declared a dividend of 80 cents per
share, up from 79 cents in the previous quarter.
WD-40 (NASDAQ:WDFC) – The lubricant maker
announced revenue of $140.5 million in the fourth quarter,
representing an 8% increase over the $130.4 million recorded a year
earlier. Additionally, diluted earnings per share were $1.21,
compared to $1.08 a year ago.
American Airlines (NASDAQ:AAL) – American
Airlines beat estimates with adjusted earnings of 38 cents per
share in the third quarter, boosted by international demand for
long-haul flights due to a stronger dollar, while holiday bookings
remained stable. The company lowered its profit forecast for
the year due to higher expenses, including increased wages
following a labor agreement with pilots.
AT&T (NYSE:T) – AT&T raised its
annual free cash flow forecast due to subscriber growth driven by
promotions and phone upgrades. It added 468,000 net postpaid
wireless subscribers in the third quarter, surpassing expectations
of 398,200 additions. Revenue was $30.4 billion, exceeding
estimates of $30.19 billion, according to LSEG data. The adjusted
earnings per share of 64 cents beat the expectation of 62 cents.
AT&T has been cutting expenses and expanded its cost-cutting
plan by $2 billion.
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