US index futures are trading higher in Wednesday’s pre-market,
reflecting a perceived easing of concerns about interest rates
following comments from Federal Reserve members the previous day,
as well as substantial stimulus measures announced by China.
Investors are keeping an eye on the release of the Federal Open
Market Committee minutes and developments in the Israel
conflict.
At 06:50 AM, Dow Jones (DOWI:DJI) futures rose 73 points or
0.22%. S&P 500 futures gained 0.23%, and Nasdaq-100 futures
climbed 0.32%. The yield on 10-year Treasury bonds was at
4.558%.
In the commodities market, November West Texas Intermediate
crude oil fell 0.35% to $85.67 per barrel. Brent crude oil for
December dropped 0.26% to near $87.42 per barrel. Iron ore with 62%
concentration traded on the Dalian Exchange rose 1.04% to $113.29
per ton.
On Wednesday’s economic agenda, investors are awaiting the
weekly mortgage rate at 7:00 AM, while the September Producer Price
Index (PPI) is scheduled for release at 8:30 AM, with an expected
monthly increase of 0.30%. Like in previous days, speeches by Fed
members are planned. At 10:15 AM, Fed Governor Christopher Waller
will speak, and Raphael Bostic, President of the Atlanta Fed, will
address at 12:15 PM. At 1:00 PM, another U.S. Treasury auction is
scheduled. Yesterday, the government placed $46 billion in the
three-year Treasury auction at a stop-out yield of 4.740%.
At 2:00 PM, the minutes of the latest Federal Open Market
Committee (FOMC) meeting from September, in which the central bank
kept the interest rate in the range of 5.25% to 5.50%, will be
released. Despite the pause in the monetary tightening cycle, the
Fed’s decision significantly impacted the markets due to its
tougher stance on inflation. Finally, at 4:00 PM, the American
Petroleum Institute (API) will release the weekly crude oil
inventory report.
In Asia, markets closed higher, driven by news that the Chinese
government is considering issuing at least $137 billion in
additional sovereign debt to fund infrastructure projects as part
of its efforts to achieve 5% growth this year. Evergrande, which
had been a major source of uncertainty for investors, saw a strong
afternoon surge in Hong Kong, closing the session with a gain of
more than 22%. Other real estate companies also recorded
significant gains on the day.
Although the conflict between the Hamas terrorist group and
Israel has not had a significant impact on the markets, investors
continue to monitor it closely. Some analysts suggest that markets
may be underestimating the risks of this conflict, as geopolitical
escalation could have significant effects on the commodities
market, particularly oil. This has led Brent crude oil prices to
fluctuate in recent days due to concerns about the global oil
supply imbalance.
In the European market, which started the day on a positive
note, the highlight is the final reading of inflation in Germany,
which rose by 0.3% in September, exceeding consensus expectations
of a similar magnitude increase. These data indicate the resilience
of the largest economy in Europe, suggesting that restrictive
measures are having an effect, with inflation remaining in line
with projections for the second consecutive month.
At Tuesday’s close, the Dow Jones closed up 134.65 points or
0.40% at 33,739.30 points. The S&P 500 rose 22.58 points
or 0.52% to 4,358.24, and the Nasdaq Composite advanced 78.60
points or 0.58% to 13,562.84. As Federal Reserve officials
hinted at the possibility of halting interest rate hikes, markets
reacted positively, with stocks rising and Treasury yields
falling. Shares of US-listed Chinese companies also posted
gains following news about a possible economic stimulus in
China. Treasury yields fell more than 10 basis points during
the session, reflecting a greater than 60% probability that the Fed
will not make further rate hikes in December. Dollar continued to
weaken. At the same time, geopolitical concerns persisted due to
the conflict between Israel and Hamas, which affected natural gas
prices in Europe due to suspicions of sabotage in the Baltic Sea
pipelines.
Ahead of Wednesday’s corporate earnings, investors will be
watching the report from Richardson Electronics (NASDAQ:RELL).
Wall Street Corporate Highlights for Today
Alphabet (NASDAQ:GOOGL) – Sundar Pichai, CEO of
Google, expressed concerns in 2007 about the Google-Apple
agreement, stating that it was bad in terms of optics as it did not
allow choosing a search engine in the Safari browser. This came to
light during the Department of Justice’s antitrust lawsuit against
Google. The emails reveal worries about Google paying Apple
(NASDAQ:AAPL) to be the default search option, raising questions
about competition. In other news, Google and its subsidiary Discord
maintained an exclusive forum to discuss the AI-based chatbot,
Bard, for months. Google employees debate the tool’s effectiveness
and question whether the massive investment in development is worth
it. Despite ongoing improvements, Bard faces criticism for
generating inaccurate information and potentially hazardous advice.
Concerns have also arisen about the working conditions of service
providers training Bard. For now, Google continues to enhance its
chatbot as it seeks to maintain its leadership in the search
market.
AMD (NASDAQ:AMD) – AMD announced plans to
acquire artificial intelligence startup, Nod.ai, as part of its
strategy to strengthen its software capabilities. AMD seeks to
compete with Nvidia (NASDAQ:NVDA) by
investing in essential software for its AI chips. The company
aims to create a unified collection of software for its various
chips, including the integration of technology from Nod.ai, which
makes it easier to deploy AI models tailored to its
chips. Financial details of the acquisition were not
disclosed, and AMD continues to expand its team of engineers in its
AI group. This is the second recent acquisition by AMD, which
maintains its focus on strengthening its portfolio.
Adobe (NASDAQ:ADBE) – Adobe has launched
new imaging technology, including the “Generative Match” feature,
to compete with companies like Midjourney and Stable
Diffusion. This allows users to create images from text and
upload multiple images as a base. Adobe emphasized the legal
protection of generated images and revealed that its customers have
already created three billion images. Additionally, it
introduced tools for vector graphics and templates for
brochures. Prices will remain unchanged following previous
increases in September.
HP Inc. (NYSE:HPQ) – HP Inc. forecast
fiscal 2024 earnings in line with estimates, increasing its annual
dividend by 5% to $1.10 per share due to stabilizing demand for
PCs. Future Ready plan aims to strengthen the core business, expand
services and improve structural costs.
Micron
Technology (NASDAQ:MU), Intel (NASDAQ:INTC)
– Samsung Electronics (USOTC:SSNLF)
reported a quarterly drop in profits, but less sharp than in
previous quarters, possibly signaling a positive outlook for North
American companies like Micron Technology and Intel. Samsung’s
recovery, particularly in chip production, could benefit Micron,
while Intel expects a broader recovery in demand for chips in PCs
and smartphones. Samsung’s results suggest a possible
stabilization in the consumer electronics market, boosting investor
confidence.
Cisco Systems (NASDAQ:CSCO) – Cisco
Systems has named
former PayPal (NASDAQ:PYPL) CEO Dan
Schulman to its board of directors. Schulman is also a member
of other boards, including PayPal, Verizon
Communications (NYSE:VZ) and Cleveland
Clinic. Additionally, Michele Burns, Rod McGeary and Lisa Su,
CEO of Advanced Micro
Devices (NASDAQ:AMD), announced that they will not
seek re-election at Cisco’s 2023 annual meeting.
MGM Resorts (NYSE:MGM) – MGM Resorts
International CEO Bill Hornbuckle chose not to give in to the
ransom demand of hackers who broke into the company’s casino
network. The attack had been underway for several days before
MGM received the ransom note. The company was able to rebuild
its systems and saw no need to respond to the hackers.
Vodafone Group (NASDAQ:VOD) – The UK
Competition and Markets Authority is asking for market feedback on
the potential merger between the UK units of Vodafone and
CK Hutchison
Holdings (TG:A2R88B). The assessment seeks to
determine the impact on competition and investment incentives on
the quality of mobile networks in the country. The proposed
merger to acquire Three UK faces regulatory scrutiny given the
recent strict stance of antitrust authorities in the UK. The
government is also examining security implications, as the
agreement may involve sensitive technologies.
Walt
Disney (NYSE:DIS), Blackstone (NYSE:BX)
– Private equity firm Blackstone has discussed with Walt Disney
about acquiring a stake in its Indian entertainment
division. Disney is seeking partnerships or asset sales in a
competitive Indian market, including digital and TV
businesses. Candle Media, backed by Blackstone and founded by
former Disney executives, led the talks. Other negotiations
include talks with Indian billionaires Gautam Adani and Kalanithi
Maran.
Amazon (NASDAQ:AMZN), Walmart (NYSE:WMT), Target (NYSE:TGT)
– Amazon, Walmart, Target and other major US retailers began
discount sales in October in anticipation of Black Friday, one of
the biggest shopping days. Total sales between November and
January are expected to grow 3.5% to 4.6%, reaching up to $1.56
trillion, according to Deloitte. Retailers are adopting flash
sales strategies and exclusive offers to build momentum similar to
the “doorbuster deals” of years past. Inflation worries
shoppers, leading them to look for discounts and coupons. Some
wait for Black Friday and Cyber Monday to buy expensive
electronics.
Walmart (NYSE:WMT) – Walmart plans to
expand its online primary care benefits in 28 U.S. states by
partnering with virtual health services provider Included
Health. Employees will have access to virtual care options,
including digestive health and physical therapy, starting next
year.
Groupon (NASDAQ:GRPN) – Groupon shares
took a big hit on Tuesday after selling a portion of its stake in
SumUp at a much lower-than-expected price. The transaction
involved 9.4% of its stake in SumUp, valuing the company at $4.1
billion, well below the $8.5 billion announced in June 2022. This
reduced the value of Groupon’s stake to $94 million of dollars, a
significant drop. SumUp said small transactions between
existing shareholders often do not reflect the true value of the
company and highlighted its long-term prospects. Groupon
shares are down -2.7% in premarket trading.
Walgreens Boots
Alliance (NASDAQ:WBA) – Walgreens Boots
Alliance has named Tim Wentworth as its new CEO following the
departure of Rosalind Brewer. Wentworth, former CEO
of Cigna (NYSE:CI), will also join the
Board of Directors.
Silk Road Medical (NASDAQ:SILK) – Silk
Road Medical faced a 36.5% drop in Wednesday’s pre-market trading
due to its annual revenue estimate of between $170 million and $174
million, lower than the previous outlook of US$ 180 million to US$
184 million and analysts’ expectations, which predicted around US$
182 million.
Fresenius Medical Care (NYSE:FMS) – The early
shutdown of Novo Nordisk‘s
(NYSE:NVO) clinical trial of semaglutide, a promising drug
against kidney failure, caused an 18.3% drop in Fresenius Medical
Care shares. On the other hand, Novo Nordisk shares rose 2.7%
after the news. Novo Nordisk’s GLP-1 drug, Ozempic, is a
specific treatment for patients with type 2 diabetes. Analysts
indicated that the early cessation of the clinical trial suggests
possible negative impacts on the chronic kidney disease patient
population, an area where GLP-1 drugs -1 may have an effect.
Birkenstock – German premium footwear
maker Birkenstock has set its US IPO at $46 per share, raising
$1.48 billion. Valued at US$9.3 billion after the offering, it
became the fourth company to go public in recent months. The
shares will debut under the ticker “BIRK” on the NYSE.
Tesla (NASDAQ:TSLA) – Tesla has rejected
allegations of health and safety issues at its Berlin gigafactory,
emphasizing its commitment to protecting workers. The company
said it has provided training and safety equipment and that the
factory undergoes regular checks by local authorities.
Xpeng (NYSE:XPEV) – Chinese electric
vehicle maker Xpeng has suspended its vice president Li Feng due to
a corruption investigation. The incident affected a limited
area and did not impact the company’s business or
production. Xpeng has strengthened supply chain management and
investigated some of its employees.
Polestar Automotive (NASDAQ:PSNY) –
Swedish electric vehicle maker Polestar Automotive is looking to
raise $1 billion through various forms, including share sales,
reflecting the challenges faced by EV startups. Its shares
fell 6.9% in premarket trading Wednesday, highlighting the pressure
on companies selling electric vehicles with tight profit
margins.
Thor Industries (NYSE:THO) – Thor
Industries announced a 7% dividend increase, reaching 48 cents per
share. Payment will be made on November 10th to shareholders
registered by November 1st.
General Motors (NYSE:GM) – General Motors
and Canadian union Unifor have reached a tentative agreement
following a 12-hour strike that threatened production of large
trucks. The agreement follows the Ford (NYSE:F) standard
and includes salary increases of up to 25%. Workers still need
to vote to approve the agreement. The strike occurred after GM
refused to match Ford’s contract, and Unifor used the “standards
negotiation” approach.
Chevron (NYSE:CVX) – Chevron and unions
have advanced negotiations over wages and conditions at LNG
facilities in Australia. After the threat of strikes,
negotiations are mediated by the Fair Work Commission. This is
the second round in weeks. Chevron seeks agreement on issues
such as travel and meal reimbursement. The threat of a strike
affected European gas prices.
Exxon
Mobil (NYSE:XOM), Pioneer Natural
Resources (NYSE:PXD) – Exxon Mobil plans to buy
Pioneer Natural Resources for about $58 billion, solidifying its
position in the largest U.S. oil field. Exxon will make a
stock offering valued at more than $250 per Pioneer share, marking
the biggest acquisition of the year and Exxon’s largest since 1998.
Exxon’s planned acquisition dwarfs Shell’s purchase of BG Group in
2016 and strengthens its presence in the global liquefied natural
gas market.
Boeing (NYSE:BA) – Boeing 737 MAX
deliveries have fallen to their lowest level since August 2021 due
to manufacturing issues. Boeing booked orders in September for
224 planes and reported 10 cancellations, but deliveries have
slowed to 15 737 MAX, 10 787 and two 777 planes. Boeing is still
awaiting certification of the 737 MAX 7. Additionally, Boeing
opened a technology and engineering in Brazil, seeking to expand
its global presence and collaborate in the production of
sustainable aviation fuel (SAF). Brazil is considered a leader
in SAF production, and Boeing sees opportunities to develop the
aerospace ecosystem in the country.
Albemarle Corp (NYSE:ALB) – Australian
billionaire Gina Rinehart has acquired a 19.9% stake in lithium
miner Liontown Resources (USOTC:LINRF),
possibly hampering Albemarle’s takeover bid. Hancock
Prospecting, Rinehart’s company, seeks to influence Liontown’s
future as the largest shareholder. Albemarle offered A$3 per
share for Liontown, valuing it at US$4.3 billion.
Honeywell (NASDAQ:HON) – Honeywell
announced a restructuring focused on three business megatrends:
automation, future of aviation and energy transition. The new
structure will include four business lines: Aerospace Technologies,
Industrial Automation, Building Automation and Energy and
Sustainability Solutions. The company expects third-quarter
profit to be at or above its previous estimate of $2.15 to $2.25
per share, driven by demand and U.S. labor shortages. The
reorganization will take effect in the first quarter of 2024.
LPL Financial (NASDAQ:LPLA) – LPL
Financial hired a team from RBC Wealth Management that oversaw $900
million in client assets in York, Pennsylvania. The team led
by Brock R. Hively, Josh P. Smeltzer, Aaron N. Gingrich and Emily
C. Sides joined LPL’s Strategic Wealth Services channel on October
3. The team, called Sides Wealth Advisory Group, chose
independence to build their own practice and take advantage of
LPL’s support services. LPL hired a father-son duo
from Morgan Stanley (NYSE:MS) to its SWS
unit in September.
Deutsche Bank (NYSE:DB) – Strategists at
Deutsche Bank have recommended
an overweight rating on stocks in 2024, arguing
that risks are adequately reflected in the market and are poised to
become opportunities. They predicted weaker growth and
disappointing central bank communications in the third quarter, but
say those risks are already priced in.
Goldman Sachs (NYSE:GS) – Goldman Sachs
warned that the 19% rally in Italian stocks this year leaves them
vulnerable to sovereign debt risks as bond yields
rise. Strategists led by Sharon Bell predict that the spread
between Italian 10-year bond yields and German ones will gradually
widen, putting pressure on Italian banking stocks, Milan’s FTSE MIB
index and European stocks generally. Italy is the world’s
second-largest sovereign issuer in terms of its public debt and
faces concerns about its credit rating. Bell suggests the UK’s
FTSE 100 as a safer alternative.
Block (NYSE:SQ) – Despite the big drop in
Block shares since July, BofA Global Research analyst Jason
Kupferberg sees a buying opportunity due to the payments technology
company’s earnings potential, highlighting cost savings and growth
in gross profit. He maintains a Buy rating with a $71 price
target.
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