US index futures are declining in Tuesday’s pre-market as
investors monitor the rise in Treasury yields.
At 07:31 AM, Dow Jones futures (DOWI:DJI) fell 90 points, or
0.27%. S&P 500 futures dropped 0.32%, and Nasdaq-100 futures
were down 0.44%. The yield on 10-year Treasury bonds stood at
4.735%, adding to yesterday’s 10-point increase.
In the commodities market, West Texas Intermediate crude oil for
November fell 0.42% to $88.45 per barrel. Brent crude oil for
December dropped 0.61% to near $90.14 per barrel.
In the U.S. economic calendar for Tuesday, investors are
awaiting a speech by the President of the Federal Reserve Bank of
Atlanta, Raphael Bostic, at 08:00 AM. At 10:00 AM, the Job Openings
and Labor Turnover Survey (JOLTS) report for August will be
released, with expectations of 8.8 million job openings.
In Europe, utility company stocks, considered fixed-income
alternatives, experienced significant declines, while retail stocks
were pressured by a warning from online retailer Boohoo Group Plc,
resulting in a 10% drop in Boohoo’s shares.
Asian financial markets faced limited liquidity on Tuesday, with
the mainland China and Seoul markets closed. In Hong Kong, the Hang
Seng index fell by 2.7%. Shares of real estate developer
Evergrande, after resuming trading, surged by 60% and closed with a
38% gain, driven by expectations of a new debt restructuring plan.
However, other real estate companies, such as Country Garden
(-7.05%) and Longfor (-6.5%), experienced declines. Concerns about
the Chinese economy affected all sectors. In Tokyo, the Nikkei 225
index fell by 1.64% to its lowest level in four months due to
rising U.S. interest rates and hawkish comments from the Federal
At Monday’s close, the indices showed a mixed performance,
reacting to the increase in long-term interest rates in the United
States and the ISM industrial index, which pointed to greater
strength in the country’s economy. The Dow Jones fell 74.15
points or 0.22% to 33,433.35 points. The S&P 500 rose 0.34
points or 0.01% to 4,288.39. The Nasdaq Composite rose 88.45
points or 0.67% to 13,307.77 points.
During the session, yields on 10-year US Treasury bonds reached
their highest levels since 2007, closing the day near
4.70%. The ISM industrial index, which is a crucial indicator
for the US economy, recovered, reaching 49.8 points in
September. This indicates that the industrial sector is almost
stable, after months of contraction. The number was well above
market expectations, but a subcomponent of the index that measures
prices paid by producers showed a more significant drop than
expected, suggesting that despite the economic recovery, inflation
should continue to decline in the short term.
On Tuesday’s corporate earnings front, investors will be
watching, before the market opens, reports from McCormick
(NYSE:MKC) and Trinity Biotech (NASDAQ:TRIB). After closing,
results from Cal-Maine Foods (NASDAQ:CALM) and Novagold Resources
(AMEX:NG) will be awaited.
Wall Street Corporate Highlights for Today
Apple (NASDAQ:AAPL) – Apple acknowledged
that new iPhones may heat up more due to a bug in iOS 17 and
third-party apps like Asphalt 9, Instagram and Uber. A
corrective update will be released, and the company has assured
that there is no security risk. In other news, the Dutch
competition watchdog (ACM) fined Apple $53 million for violating
competition laws on dating apps in the Netherlands. Apple
objected, but its objections were overruled. The company plans
to appeal the decision in Dutch courts. In China, Apple now
requires new apps on the App Store to present government licenses,
bringing it in line with local regulations.
Microsoft (NASDAQ:MSFT) – Microsoft CEO
Satya Nadella criticized
Google (NASDAQ:GOOGL) for exclusive deals
with publishers for AI content. Testifying at an antitrust
trial, Nadella commented on the competition for content to train
artificial intelligence. He also mentioned Microsoft’s failed
attempt to make Bing the default on Apple iPhones and acknowledged
Google’s dominance in search.
Meta Platforms (NASDAQ:META) – Meta
Platforms has proposed charging a monthly fee for ad-free use of
Instagram and Facebook in Europe, reacting to EU rules on
personalized advertising. The suggested price is 10 euros per
month on desktop and 13 euros on mobile devices. The
initiative represents a significant change for Meta, traditionally
supported by advertising. The proposal could still face
resistance from EU regulators.
Manufacturing (NYSE:TSM) – Since June, shares of
Taiwan Semiconductor Manufacturing have fallen 11%, reducing its
market capitalization by $77 billion due to concerns about weak
demand and the macroeconomic outlook. Volatility suggests more
declines. Leading chipmaker TSMC has faced disappointments
with its 3-nanometer chip. Analysts remain cautious,
predicting a slow recovery. However, TSMC still has positive
points, such as its dominant position in the market.
Micron Technology (NASDAQ:MU) – Japan
approved subsidies worth $1.3 billion for Micron’s Hiroshima
factory, seeking to boost production of advanced chips. The
funds will cover equipment from ASML Holding
NV (NASDAQ:ASML) and represent 40% of Micron’s
investment in Japan. This initiative aims to promote economic
security and combat challenges faced in the US and
China. Prime Minister Kishida aims to triple domestic chip
production by 2030, strengthening Japan’s technological
JPMorgan Chase (NYSE:JPM) – Jamie Dimon,
CEO of JPMorgan, said that artificial intelligence (AI) improves
workers’ lives and is crucial to the bank’s future. Despite
the benefits, Dimon warns of risks, such as misuse of AI by
Goldman Sachs (NYSE:GS) – Wall
Street strategists, including those at Goldman Sachs, warn about
the negative impact of higher interest rates on stocks. They
highlight the growing gap between the S&P 500 and real 10-year
rates. Despite the concerns, some still see optimism in the
Discover Financial Services (NYSE:DFS) –
Discover Financial Services has agreed to improve its compliance
and governance with the Federal Deposit Insurance Corp
FDIC. The bank has already been working to strengthen its
compliance management following previous account classification
Bain Capital (NYSE:BCSF) – Bain Capital
invested US$200 million in Vietnamese conglomerate Masan Group,
potentially reaching US$500 million. This agreement is
expected to intensify competition in Vietnam’s retail
market. Masan, which manages more than 3,200 stores, sees
growth with the investment.
Ally Financial (NYSE:ALLY) – Due to the
turbulent economy, Ally Financial will cut 5% of its
employees. After pausing hiring last year, the decision to
reduce was made. The company, based in Detroit, is renowned
for auto loans.
KKR and Company (NYSE:KKR) – KKR sold a
500,000-square-foot industrial portfolio for more than $560
million, spanning more than 50 buildings across multiple
cities. Demand for such spaces has grown due to the rise of
online commerce. Since 2021, KKR has sold 21 million square
feet. In addition, the KKR fund is exclusively negotiating the
purchase of Eugin fertility clinics in Spain and Portugal from
Fresenius, valued at approximately US$528.55 million. KKR
would make the acquisition with a Spanish partner and already has
assets in the sector.
Hathaway (NYSE:BRK.B), HP
Inc (NYSE:HPQ) – Warren Buffett’s Berkshire Hathaway
sold 5.1 million shares of HP, totaling $142 million. The
company now owns 100.9 million shares of HP, valued at $2.6
billion. This sale reduced its stake in HP to 10.2%.
Visa (NYSE:V) – Visa launched a $100
million fund for generative AI startups. Generative AI, which
creates new content from previous data, could impact commerce,
according to Visa.
WeWork (NYSE:WE) – WeWork withheld
interest payments of $95 million to restructure its
capital. The company, which faced challenges after its failed
IPO in 2019, has 30 days to pay before a possible
default. Shares are down 1.7% in premarket trading
Motors (NYSE:GM), Ford
Motor (NYSE:F) – General Motors and Ford laid off 500
workers at four plants due to the United Auto Workers
strike. The UAW has submitted a new contract offer to GM, but
significant differences remain. The strike has already cost
companies millions and affected production and distribution.
Motors (NYSE:GM), Stellantis (NYSE:STLA)
– Biden’s proposal for fuel economy standards through 2032 could
cost GM $6.5 billion and Stellantis $3 billion in fines. The
American Automotive Policy Council claims the penalties are
“alarming.” The letter requests reconsideration, highlighting
disproportionate challenges for U.S. automakers.
Ford Motor (NYSE:F) – NHTSA is expanding
its investigation into 708,000 Ford vehicles due to engine failures
linked to a faulty valve. This may cause a loss of power in
2021-2022 Ford Bronco, Edge, Explorer, F-150, Lincoln Aviator and
Nautilus vehicles. Ford is cooperating in the
Rivian (NASDAQ:RIVN) – Electric vehicle
maker Rivian reported quarterly deliveries above expectations,
increasing production to meet demand. Based in California, the
company plans to produce 52,000 vehicles in 2023. While rivals such
as Tesla have slashed prices, Rivian has focused on cutting
Tesla (NASDAQ:TSLA) – Tesla missed
third-quarter delivery estimates due to the shutdown to update the
Model 3. Analysts predict recovery in the fourth quarter. The
company maintained its annual target of 1.8 million
vehicles. In other news, Tesla has reintroduced the rear-wheel
drive version of the Model Y in the US at a starting price of
$43,990, replacing the all-wheel drive variant.
Uber (NYSE:UBER) – Uber is facing a legal
dispute in the Netherlands over whether its drivers are classified
as employees or freelancers. The Amsterdam Court of Appeal
requested guidance from the Supreme Court due to the relevance of
the issue. Previous decisions favored the rights of workers in
Boeing (NYSE:BA) – Boeing intends to
increase production of its 737 jet to a record 57 monthly by July
2025, reflecting the increase in orders and the recovery after the
737 MAX crisis.
Spirit AeroSystems (NYSE:SPR) –
Spirit AeroSystems CEO Tom Gentile has resigned due to industrial
challenges, being replaced on an interim basis by Patrick Shanahan,
a former Boeing executive. Shanahan, a board member since
2021, takes over immediately as Spirit searches for a new
CEO. Gentile will serve as a temporary consultant. The
company has faced recent financial and production setbacks.
Delta Air Lines (NYSE:DAL) – Delta Air
Lines has reported that some overhauled engines contain
nonconforming parts. Working to replace them under FAA
guidelines, Delta did not reveal the supplier. AOG Technics,
previously involved in irregularities, certified the parts.
Ryanair (NASDAQ:RYAAY) – In September,
Ryanair carried 9% more passengers than the previous year, totaling
17.4 million. Average occupancy was 94%. The company
expects a 9% increase in annual traffic, although it has faced
plane delays and strikes.
Airbnb (NASDAQ:ABNB) – Brian Chesky, CEO
of Airbnb, faced challenges in 2023, such as controversy over
profit margins, competition with Vrbo, and new regulations in New
York. Chesky recognized the need to stabilize the company’s
foundation before innovating. Keybanc analysts reduced
Airbnb’s rating to “sector weight” from “overweight” without
setting a target price. They argued that the company’s margins
have already reached their near-term maximum and anticipate that
revenue growth could slow to 11% in 2024 as occupancy rate and
average daily growth slow. The company’s shares fell 2.4% in
trading before the market opened.
Kellanova (NYSE:K), WK
Kellogg (NYSE:KLG) – On Monday, Kellanova announced the
spin-off of its cereal business, forming WK Kellogg Co. Kellanova
shareholders received shares in WK Kellogg under the
agreement. WK Kellogg shares closed down 9.1% and Kellanova
fell 6%. The reorganization aims to optimize resources and
improve supply chain efficiency. However, investors were
cautious due to concerns about Kellanova’s debt and declining
demand for cereals. Goldman Sachs analysts began their review
of WK Kellogg (KLG) with a sell recommendation and set a price
target of $11.
Birkenstock – Birkenstock is
targeting a $10 billion valuation in its US IPO, planning to sell
32 million shares at between $44 and $49 each. Despite the
uncertain IPO market, the company, backed by L Catterton, is moving
forward with its plans. Financière Agache and other funds have
expressed interest in buying shares. Birkenstock, known for
comfort, has recently gained fashion prominence and plans to use
IPO funds to pay down debt.
Jabil (NYSE:JBL) – Jabil announced a $200
million restructuring following the BYD Electronics deal, including
staff cuts. BYD plans to buy Jabil’s mobile electronics unit
for $2.2 billion. Details about the layoffs were not
Oddity Tech (NASDAQ:ODD) – Oddity Tech, a
beauty company, announced that it anticipates its third quarter to
be one of its strongest yet. An increase in annual revenue for
the quarter is estimated to be between 29% and 31%, exceeding
initial forecasts of 18% to 23%. Additionally, Oddity expects
a gross margin of 68.5%, exceeding previous expectations by about
100 basis points.
Novo Nordisk (NYSE:NVO) – The U.S. Patent
Office court upheld two Novo Nordisk patents for its drugs Wegovy
and Ozempic, rejecting challenges from Mylan
Pharmaceuticals. Novo has promised to defend its intellectual
property, while a decision on a third patent is expected soon.
Eli Lilly (NYSE:LLY) – The FDA has
expressed concerns about Eli Lilly’s treatment for atopic eczema,
citing problems with a third-party manufacturing
inspection. Eli Lilly said there were no concerns about the
drug’s clinical data.
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