US index futures are lower on Wednesday morning, due to weak
activity data in China and Europe, which renewed fears of a global
recession.
By 6:59 AM, Dow Jones (DOWI:DJI) futures were down 142
points, or 0.41%. S&P 500 futures were down 0.40%, while
Nasdaq-100 futures were down 0.47%. Yields on 10-year
Treasuries are at 3.853%.
The services and composite PMI indices in China decelerated,
while in the Euro Zone the composite PMI was below
consensus. The PMIs for Germany, France, Italy and India also
frustrated the consensus.
In another matter of the day, China canceled the visit of the
European Union’s foreign policy chief to the country without
offering a specific justification. The cancellation comes one
day before the scheduled visit of US Treasury Secretary Janet
Yellen.
On Wednesday’s American economic agenda, the highlight of the
day is the release of the minutes of the Federal Reserve’s last
interest rate meeting at 2:00 PM, which may provide details on the
strategy for pausing interest rate hikes. Some economists
predict that the Fed will take a stance of raising rates in an
alternating pattern until the fall in inflation is more
pronounced. Other expected indicators are US Factory Orders
and US Economic Optimism both at 10:00 AM. At 4:30 PM, changes
in API oil inventories are expected.
Elsewhere in commodities markets, West Texas Intermediate crude
for August was up 1.95% at $71.15 a barrel. Brent crude for
September is close to $76.01 a barrel. Iron
ore rose 0.73% in Dalian, China, at $114.39.
At the close of Monday, which ended early due to Independence
Day, the Dow Jones added 10.87 points, or 0.03%, closing at
34,418.47 points. The S&P 500 was up 0.12%
to close at 4,455.59 points, while the Nasdaq Composite
advanced 0.21% to 13,816.77 points. The great highlight of the
market was the result of Tesla, which showed record sales figures,
despite the expectation of some slowdown. This, before the
beginning of the earnings season, throws some hope of an extension
of the risk assets rally in the country. Even so, several
factors added up to demand more caution from investors, such as the
slowdown of the US economy – reinforced by the industrial PMI,
which came in lower than expected – and the expectation of at least
one more increase in interest rates by the Fed.
Wall Street Corporate Highlights for Today
Big Tech – Seven companies,
including Amazon (NASDAQ:AMZN), Apple (NASDAQ:AAPL), Alphabet (NASDAQ:GOOGL),
Meta (NASDAQ:META) and Microsoft (NASDAQ:MSFT), claim to comply
with the new “gatekeeper” criteria of European Union, according to
EU industry commissioner Thierry Breton. Samsung and ByteDance
(which owns TikTok) also claimed to meet the criteria, although
TikTok disputed its inclusion on the
list. Booking.com (NASDAQ:BKNG) hopes to move into the
gatekeeper category in the coming year. Under the EU’s Digital
Markets Act (DMA), these companies are subject to stricter rules,
including interoperability of messaging apps and a ban on favoring
their own services over competitors. Fines of up to 10% of
global annual turnover may apply for DMA violations. The
European Commission will confirm gatekeeper designations by 6
September.
Alphabet (NASDAQ:GOOGL) – Alphabet’s
Google removed more than half of links to Twitter pages in search
results. These actions were taken in the wake of limitations
placed by Elon Musk on the amount of how many tweets Twitter users
could read. Musk said verified accounts are limited to reading
6,000 posts a day. For unverified accounts, the number drops
dramatically to 600 posts a day. New unverified users can only
access 300 posts per day.
Meta Platforms (NASDAQ:META) – Meta
Platforms will launch its Twitter competitor Threads app on
Thursday, allowing users to maintain their Instagram
followers. The launch directly challenges Twitter, which has
faced criticism after restrictions imposed by Elon Musk. In
other news, a social media account affiliated with the Beijing
Daily criticized Meta’s founder for his criticism of Chinese
censorship and alleged theft of intellectual property. The
editorial comes after reports of talks between Meta and Tencent
Holdings Ltd. to sell the Quest VR headset in China despite
Facebook and Instagram lockdown. Zuckerberg’s relationship
with China has been rocky, and the editorial suggests he may be the
biggest obstacle to finding a solution in China.
Apple (NASDAQ:AAPL) – The London Court of
Appeal ruled that Apple had infringed two telecommunications
patents essential to 4G standards. Texan company Optis
Cellular Technology sued Apple in 2019. In other news, Reuters
pointed out that the exceptional performance of Apple shares is
raising concerns among fund managers that they may not own enough
of these shares. The rise in Apple’s stock price has boosted
its share of stock indexes to record levels, making its weighting
disproportionately high. This can hurt active fund managers
looking to outperform benchmarks. According to the Financial
Times, Apple is reducing production targets for the Vision Pro
headset due to difficulties with its complex design. The
company hopes to manufacture fewer than 400,000 units next year,
below the internal target of 1 million. Manufacturers have
been struggling with micro-OLED displays, the most expensive part
of the device.
Microsoft (NASDAQ:MSFT) – The European
Union is likely to open an antitrust investigation against
Microsoft in the coming months. Remediation discussions to
avoid this measure have hit a snag. Microsoft has been
targeted by the EU following a complaint
by Salesforce (NYSE:CRM) about Teams
being integrated into Office 365. The company is trying to avoid an
investigation and has offered to reduce the price of Office without
Teams. The European Commission seeks a deeper price
cut. Microsoft remains cooperative and may improve its
proposal prior to the initiation of the investigation.
Amazon (NASDAQ:AMZN) – Amazon is to begin
rolling out first Rivian electric vans
(NASDAQ:RIVN) in Germany in the coming weeks. 300 electric
vans will hit the roads in the Munich, Berlin and Dusseldorf
regions as part of an order for 100,000 vehicles placed in 2019.
Amazon has already launched Rivian vans in the US and plans to have
100,000 Rivian vehicles in its global fleet by 2030. In other news,
Bloomberg reported that Amazon CEO Andy Jassy is reviewing the
company’s Hollywood studio spending on original TV
programming. With an increased focus on costs, he’s looking at
the budgets and performance of the biggest shows. Amazon is
looking to cut costs across the company and Jassy has abandoned
projects deemed unnecessary. In other news, tech companies
known as “the Magnificent Seven” have regained their dominance in
the market, led by Nvidia Corp.
Amazon (NASDAQ:AMZN), Microsoft (NASDAQ:MSFT), Nvidia (NASDAQ:NVDA), AMD (NASDAQ:AMD)
– According to the Wall Street Journal, the Biden administration
plans to restrict China’s access to cloud computing services
provided by American companies such as Microsoft and
Amazon. These restrictions could affect companies like Nvidia
and AMD, making it difficult for Chinese companies working on AI
applications to sell advanced chips. Nvidia has expressed
concerns about a possible “permanent loss of opportunity”. The
move comes amid the Sino-US chip war and trade tensions between the
two countries.
Tesla (NASDAQ:TSLA) – Tesla posted
better-than-expected quarterly deliveries, boosted by discounts and
volume increases, sending its shares up about 7% on
Monday. Tesla’s market capitalization increased by about $57
billion. In other news, Kentucky has become the first state to
require the Tesla charging plug at electric vehicle charging
stations as part of a statewide program to electrify
highways. Adoption of NACS has been a growing trend among
electric vehicle manufacturers in the United States. However,
a group of EV charger manufacturers and operators are contesting
the requirement in Texas, citing safety certification and
standardization concerns.
Lucid (NASDAQ:LCID) – Shares in Lucid
Group posted their sixth consecutive gain on Monday, rising 7.3% to
close at $7.39. Although one analyst downgraded its rating to
neutral, optimism over delivery and production data from other EV
manufacturers buoyed the sector. According to a note from
Citi, near-term demand for the Lucid Air EV and the company’s gross
margin remain uncertain.
Nikola (NASDAQ:NKLA) – Nikola Corp
announced it is liquidating the assets of battery maker Romeo Power
less than a year after the acquisition. The company faced
challenges in meeting investor expectations and is now ending its
operations with Romeo Power. Other electric vehicle startups
are also struggling.
Rivian (NASDAQ:RIVN) – Rivian Automotive
beat expectations for second-quarter deliveries, buoyed by
increased production and steady demand, sending its shares up 17.4%
on Monday. The company delivered 12,640 vehicles, beating
estimates of 11,000. These positive results indicate that
Rivian may be overcoming production and competition challenges in
the electric vehicle market. Its production target of 50,000
vehicles for this year looks achievable. Analysts highlighted
Rivian’s focus on internal development, which has helped the
company stand out among other startups in the industry. The
company expects demand to remain stable through 2023.
Stellantis (NYSE:STLA) – Stellantis will
invest up to €200 million at its Mirafiori site in Italy as part of
its “green campus” program, transforming it into a carbon-neutral
base. The project will house 10,000 workers and be completed
by 2025, with a focus on electrified transmissions and the circular
economy.
Ryanair Holdings (NASDAQ:RYAAY) – Ryanair
announced it carried a record 17.4 million passengers in June, the
most ever recorded for a single month, representing a 9%
year-on-year increase. The company also reported that the
flights had an average occupancy rate of 95%, the same as the
previous year. Ryanair canceled more than 900 flights due to
air traffic controller strikes, affecting around 160,000
passengers.
Exxon Mobil (NYSE:XOM) – Exxon Mobil faces
a dilemma as it expands its global trading division: whether or not
to pay cash bonuses to traders. Unlike other companies in the
industry, Exxon pays regular salaries and small stock awards, which
has led to frustration and hiring difficulties. The company
pursues a cautious approach, without taking the same levels of risk
as its competitors.
Nasdaq (NASDAQ:NDAQ), Blackrock (NYSE:BLK)
– Nasdaq has re-filed an application to the US SEC to list a
BlackRock Bitcoin ETF.
Coinbase (NASDAQ:COIN) – Shares of
Coinbase surged 13% on Monday after Cboe revealed it is working
with the company to launch a bitcoin spot exchange-traded fund
(ETF). Cboe addressed the SEC’s concerns by naming Coinbase as
the cryptocurrency platform that would help detect fraud in bitcoin
markets. The SEC has also raised similar concerns about a
BlackRock ETF filing. On Wednesday, Coinbase was downgraded to
“Neutral” by Piper Sandler, with a target price lowered to $60.
Deutsche Bank (NYSE:DB) – Russian
subsidiary RusKhimAlyans, with a stake in Gazprom, has filed
lawsuits seeking a lump sum of 31 billion rubles ($348 million)
from Deutsche Bank and Commerzbank, according to Russian court
documents. RusKhimAlyans is seeking more than 22 billion
rubles from Deutsche Bank and more than 8 billion rubles from
Commerzbank.
UBS (NYSE:UBS) – The Ethos Foundation,
representing former Credit Suisse shareholders, is supporting a
class action lawsuit brought by LegalPass against the exchange
ratio established in the acquisition of Credit Suisse by
UBS. Credit Suisse shareholders have received an offer that
Ethos considers unfavorable. Other holders of Credit Suisse
bonds are also seeking damages. LegalPass claims the deal was
made without proper consultation with shareholders and the case
will be filed in court in Zurich. In other news, UBS has
started a US recruitment drive for wealth managers despite planned
30% global workforce cuts.
Bank of
America (NYSE:BAC), Citi (NYSE:C)
– Bank of America and Citigroup have entered into a dialogue with
the Federal Reserve to understand divergences between the central
bank’s stress test results and those of the companies
themselves. BofA has yet to announce a potential dividend
increase, unlike its rivals. JPMorgan Chase, Citigroup, Wells
Fargo, Goldman Sachs and Morgan Stanley increased their
dividends. BofA seeks to understand differences in
comprehensive results. Citigroup also made a similar
statement, seeking to understand the differences in its stress test
scores.
HSBC (NYSE:HSBC) – HSBC Holdings Plc will
be the first UK bank to test an advanced data security system, in
partnership with BT Group Plc, Amazon and Toshiba Corp. The
test will involve distributing quantum keys to strengthen cyber
defenses and protect financial transactions from hackers. This
technology is considered an important part of the defense strategy
as modern cryptography may be vulnerable to future quantum
computers. HSBC hopes to analyze threats and better protect
data through this test.
Jefferies Financial Group (NYSE:JEF) –
Rizal Gozali, managing director of Credit Suisse, is joining
Jefferies to strengthen its presence in Asia. He will start in
September and will help oversee Indonesia’s coverage. Gozali
is one of several Jefferies hires from Credit Suisse, with other
top professionals also making the switch. Rival banks such as
Deutsche Bank are also recruiting talent from Credit Suisse.
Pfizer (NYSE:PFE) – Samsung Biologics has
entered into two deals with Pfizer worth a combined $897 million to
manufacture biotechnology products. The contracts involve the
production of biosimilar products in South Korea until 2029. With
these orders, the combined value of Pfizer’s contracts with Samsung
Biologics reaches US$1.08 billion. The South Korean company
sees these agreements as an expansion of its strategic partnership
and has already surpassed last year’s annual contract volume.
Taiwan Semiconductor
Manufacturing (NYSE:TSM) – Globalization is taking a
backseat to national security and technological leadership, with
US-China relations characterized more by competition than
cooperation, said Morris Chang, retired founder of TSMC. He
pointed out that globalization has been redefined to allow
business-to-business transactions as long as they do not undermine
national security, technological supremacy and economic
leadership. Chang mentioned that globalization peaked in the
2010s and has weakened in recent years, with the US and China
strengthening their domestic chip industries.
Alibaba (NYSE:BABA) – Alibaba is
considering options for its video streaming platforms, including
the possibility of transferring assets to Alibaba Pictures Group
and expanding its operations in Hong Kong.
Altria Group (NYSE:MO) – The FTC announced
that it has dismissed a complaint against Altria Group, maker of
Marlboro cigarettes, and Juul Labs, maker of e-cigarettes. The
FTC will also overturn an administrative judge’s decision favorable
to the companies in 2022. Altria dropped its stake in Juul and
asked the FTC to drop the case. Altria expressed satisfaction
with the withdrawal of the complaint.
Mondelez (NASDAQ:MDLZ) – Mondelez Global
LLC has voluntarily withdrawn two varieties of belVita Breakfast
Sandwich crackers from the United States due to the possibility of
an undeclared presence of peanuts in the products. The company
identified the possible presence of peanut protein residues in its
manufacturing line. The recall is being conducted in
compliance with the US Food and Drug Administration. To date,
three possible allergic reactions related to these products have
been reported. This action does not affect other belVita
products or non-US markets.
AstraZeneca (NASDAQ:AZN) – AstraZeneca
announced on Monday that its experimental precision drug,
datopotamab deruxtecan, has been shown to slow the progression of
advanced-stage lung cancer. However, the company’s shares fell
on concerns that the benefits may not be as pronounced as
expected. The drug belongs to the class of antibody drug
conjugates and targets the TROP2 protein. AstraZeneca said the
drug’s safety profile is in line with previous observations in
clinical trials.
View (NASDAQ:VIEW) – The United States
Securities and Exchange Commission (SEC) has accused “smart” window
maker View Inc and its former chief financial officer of
underestimating the costs of replacing defective windows, resulting
in an upgrade. View will not pay a fine for its cooperation
with the SEC, but the former CFO faces fraud charges. The
company will restate its financials and its stock has dropped
significantly since the merger.
UPS (NYSE:UPS) – Negotiations between UPS
and the union representing more than 340,000 workers broke down,
paving the way for a possible massive strike later in the
month. The union rejected an offer deemed unacceptable by UPS
and no further negotiations are scheduled. Workers voted in
favor of a strike if a new agreement is not reached.
Marvell Technology (NASDAQ:MRVL) – Marvell
Technology, with its exposure to artificial intelligence, has the
potential to thrive, analyst Oppenheimer said on Monday. The
analyst reiterated his “Outperform” rating with a price target of
$70. The company, which provides chips and hardware products, has
delivered solid results and expects to double AI revenue by 2024.
Shares rose 2.6% on Monday -Friday, and 44% in the last 12
months.
Netflix (NASDAQ:NFLX) – Netflix was
upgraded from “Sell” to “Neutral” by Goldman Sachs, which also
raised its stock price target to $400.
Mondelez (NASDAQ:MDLZ)
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