US index futures are declining this Wednesday in pre-market
trading as investors await new quarterly financial reports and
assess recent information on inflation in Europe and economic
performance in China. Additionally, developments in the conflict
between Israel and Hamas are under the market’s scrutiny.
At 07:02, Dow Jones futures (DOWI:DJI) dropped by 93 points, or
0.27%. S&P 500 futures fell by 0.41% and Nasdaq-100 futures
declined by 0.57%. The 10-year Treasury yield stood at 4.824%.
In the commodities market, West Texas Intermediate crude oil for
November rose by 2.82%, reaching $89.10 per barrel. Brent crude for
December increased by 2.68%, nearing $92.31 per barrel. Iron ore
with a 62% concentration traded on the Dalian exchange fell by
0.40%, priced at $117.66 per ton.
On Wednesday’s U.S. economic calendar, investors await mortgage
data from the previous week at 07:00 AM, while at 8:30 AM, new home
construction figures are anticipated. At 10:30 AM, the Department
of Energy will release last week’s oil stockpiles. The main event
on the macroeconomic calendar is the release of the Beige Book at
14:00 PM. At 16:00 PM, the monthly capital inflow and foreign
securities investment will be disclosed.
Throughout the day, speeches from Fed members are scheduled. At
12:00 PM, a speech from Fed Director Christopher Waller is
expected, followed by New York Fed President John Williams at 12:30
PM. At 13:00 PM, Fed Governor Michelle Bowman will speak, and at
15:15 PM, Philadelphia Fed President Patrick Harker will
address.
In the Middle East, tensions between Israel and Hamas escalated
following an attack on a hospital in Gaza, leading to mutual blame
for casualties. U.S. President Joe Biden is visiting Israel to meet
with Prime Minister Benjamin Netanyahu.
In Asian markets, results were mixed. Hong Kong’s HSI index
declined by 0.23%, while the Shanghai Composite dropped by 0.80%.
Tokyo’s Nikkei 225 index remained stable. Economic indicators from
China surpassed expectations, highlighting GDP growth and
industrial production.
Chinese investors are closely watching real estate companies
Country Garden and Evergrande. Country Garden recently missed a
payment, and Evergrande, heavily indebted, faces a trial concerning
asset liquidation later this month.
In Europe, despite inflation data in line with expectations in
the UK and the Eurozone, stock markets are down.
At Tuesday’s close, stock markets closed mixed as more robust
economic data was released and US Treasury bond yields rose,
strengthening the case for the Federal Reserve to keep interest
rates high for an extended period. Meanwhile, the corporate
earnings season continued, with many companies reporting positive
performance, although Goldman Sachs (NYSE:GS) stood out for
disappointing market expectations with a drop in
earnings. Furthermore, the ongoing conflict in the Middle East
was being closely watched, with Israel’s attacks gaining
intensity. United States President Joe Biden is scheduled to
visit the country today.
The Dow Jones closed up 13.11 points or 0.04% at 33,997.65
points. The S&P 500 fell 0.01% to 4,373.20 points, while
the Nasdaq closed down 34.24 points or 0.25% to 13,533.75
points.
US economic data released on Tuesday relating to retail sales
and industrial production exceeded expectations. Retail sales
rose 0.7% in September, more than double what was expected,
especially retail sales excluding automobiles, which increased
significantly by 0.6%, in contrast to the expectation of just
0.1%. Meanwhile, despite the market forecast of stable
industrial production, the numbers showed an increase of 0.3% in
September.
On the corporate earnings front on Wednesday, investors will be
watching before the market opens for reports from ASML
(NASDAQ:ASML), P&G (NYSE:PG), Morgan Stanley (NYSE:MS), Abbott
(NYSE:ABT), US Bancorp (NYSE:UBS), Nasdaq (NASDAQ:NDAQ), Ally
Financial (NYSE:ALLY), Elevance Health (NYSE:ELV). After the
closing, earnings from Tesla (NASDAQ:TSLA), Netflix (NASDAQ:NFLX),
Lam Research (NASDAQ:LRCX), Las Vegas Sands (NYSE:LVS), among
others, are expected.
Wall Street Corporate Highlights for Today
Nvidia (NASDAQ:NVDA) – New US rules
deprive China of AI chips and affect
Nvidia, Intel (NASDAQ:INTC)
and AMD (NASDAQ:AMD). The rules aim
to stop Chinese supercomputers and keep the focus on military
capabilities. Authorities seek “tamper-proof” way to limit AI
chip interconnections. Restrictions also harm Chinese
competitors, while Nvidia can adapt. Nvidia considers
transferring operations to avoid restrictions. New rules
restrict exports of deep immersion ultraviolet (DUV) lithography
machines and affect China in the long term. In other
news, Foxconn (USOTC:FXCOF) and Nvidia
will collaborate on AI data centers for applications including
autonomous vehicles. The partnership aims to use Nvidia chips
and software.
Meta Platforms (NASDAQ:META) – Chris Cox,
chief product officer at Meta Platforms, emphasizes that AI
chatbots are evolving as high-value tools for advertisers and not
just for attracting users. Meta seeks to monetize this
technology after launching it on Instagram and WhatsApp, aiming to
meet business demand for AI solutions. In other news,
financial companies are considering monitoring and retaining
employee video calls to ensure compliance with strict
regulations. This comes as regulators such as the US SEC focus
on unregistered business-related communications on unauthorized
platforms such as WhatsApp. Expanded recording requirements
for video calls could become a reality, prompting companies to take
preventative measures.
Microsoft (NASDAQ:MSFT), Amazon (NASDAQ:AMZN)
– Microsoft is set to acquire Amazon as a customer for its cloud
productivity tools in a deal worth more than $1 billion, according
to Reuters. Amazon has committed to acquiring more than one
million Microsoft 365 licenses over five years.
Amazon (NASDAQ:AMZN) – Amazon announced that it
currently has
10,000 Rivian (NASDAQ:RIVN)
electric delivery vehicles in operation in the United
States and Europe. The partnership between Amazon and Rivian
aims to reach at least 100,000 electric delivery vans by 2030.
Rivian recently increased its production forecast to 52,000
vehicles in 2023 and has already completed 150,000 deliveries with
its vans. Additionally, Amazon is collaborating
with Volvo (USOTC:VLVLY) to add
heavy-duty electric trucks to its delivery fleet. In other
news, Amazon has announced that it will launch its online shopping
service in South Africa in 2024, making it only the second African
country after Egypt to have a dedicated local website. The
South African economy is seen as a base for Amazon’s expansion on
the continent. Amazon will have to comply with local
competition rules when setting up its platform.
Lucid Group (NASDAQ:LCID) – Lucid Group
reported a nearly 30% drop in third-quarter production and a
marginal increase in deliveries, raising concerns about
competition, pricing pressures, and demand for its luxury electric
vehicles.
Tesla (NASDAQ:TSLA) – Tesla has urged
Biden administration to adopt stricter fuel economy standards
through 2032 than those proposed by the NHTSA. The company is
seeking a 6% annual increase in average fuel efficiency for cars
and 8% for trucks and SUVs. This led to disagreement with
other automakers.
General Motors (NYSE:GM) – General Motors
will delay production of electric pickup trucks in Michigan for a
year due to reduced demand for electric vehicles. The
production plan has moved from 2024 to 2025, but GM maintains its
EV production goals.
Stellantis (NYSE:STLA) – Stellantis plans
to use a fifth low-cost platform for seven models, including the
Citroen e-C3, to compete with affordable Chinese electric cars in
Europe. This platform, called “Smart Car,” will be used
primarily for EVs, but will also allow for internal combustion
versions. Other Stellantis brands will also launch vehicles
based on this platform from 2024, aiming for competitive prices,
taking advantage of low-cost suppliers and Chinese battery
technology. Additionally, Stellantis is canceling its
participation in CES 2024 due to the ongoing strike by the United
Auto Workers (UAW) in the US. Rising costs resulting from the
UAW’s actions led to the decision to cancel the planned exhibit at
the fair.
AutoNation (NYSE:AN) – AutoNation
announced on Tuesday that it will not submit a bid
for Pendragon (LSE:PDG), following the
withdrawal of Hedin Mobility and PAG International, the British
automotive retailer’s main shareholders, who also withdrew from the
bid partnership.
Ryanair (NASDAQ:RYAAY), Wizz
Air (LSE:WIZZ) – Ryanair plans to expand its business
in Poland and across Eastern Europe, facing competition from Wizz
Air. Poland is seen as a growth market due to increasing disposable
income, making an attractive prospect as Western European markets
mature. Both airlines plan to add more planes to the region to
meet growing demand.
Chevron (NYSE:CVX) – Workers at Chevron
natural gas facilities in Australia have suspended industrial
action after endorsing pay and conditions agreements. The
dispute affected energy markets, representing 7% of global
supply. Chevron is now awaiting an employee vote for
approval.
TotalEnergies SE (NYSE:TTE) – Bruno Le
Maire, French Minister of Finance, announced that TotalEnergies
will extend the limit of 1.99 euros per liter for diesel and
gasoline at French service stations until 2024. Le Maire emphasized
the importance of this measure for protect the country’s citizens
and economy.
Thermo Fisher Scientific (NYSE:TMO) –
Thermo Fisher Scientific plans to acquire Olink Holding AB in a
$3.1 billion deal to strengthen its life sciences
portfolio. Sweden-based Olink provides products for advanced
protein analysis, driving drug research. Thermo Fisher faces
decreased demand for its life sciences offerings and expects to
complete the deal in mid-2024.
Ardelyx (NASDAQ:ARDX) – Ardelyx won FDA
approval for tenapanor, marketed as Xphozah, as a treatment for
controlling serum phosphorus in patients with chronic kidney
disease on dialysis, ending an approval battle. The approval
marks a remarkable comeback, following a previous rejection in
2021. More than 550,000 patients in the US can benefit from
Xphozah, which offers a more convenient alternative to traditional
phosphate binders.
Viking Therapeutics (NASDAQ:VKTX) – Viking
posted an 11.9% increase in premarket after releasing promising
data from the Phase 1 trial of its weight loss treatment, called
VK2735.
Rite
Aid (NYSE:RAD), McKesson
Corp (NYSE:MCK) – Rite Aid resolved a dispute with
McKesson Corp, ensuring continued drug supply during its
bankruptcy. Rite Aid had filed for bankruptcy and sued
McKesson to avoid ending a drug supply agreement. Now, they
have agreed to continue supply during the bankruptcy process while
they negotiate a long-term solution.
Wyndham Hotels and Resorts (NYSE:WH)
– Wyndham Hotels and Resorts rejected Choice Hotels’ $7.8 billion
acquisition offer, citing regulatory risks and calling it
“disappointing.” The potential merger would have created a
hotel giant, but would face regulatory scrutiny due to its
size.
Hasbro (NASDAQ:HAS) – Baldur’s Gate 3, a
video game based on Dungeons & Dragons, is attracting players
and expanding the D&D audience. Hasbro, owner of the
franchise, expects a positive financial impact from the game.
Goldman Sachs (NYSE:GS) – Goldman Sachs
warns that growing geopolitical uncertainty, including the ongoing
conflict between Israel and Hamas, could threaten the stock market
rally. This could impact oil supplies and raise concerns about
monetary policy and bond yields. Strategists believe any
relief will be short-lived, although markets have remained
relatively stable so far. Other analysts have also expressed
concerns about geopolitical tensions affecting risky assets and
economic activity.
JPMorgan Chase (NYSE:JPM) – JPMorgan
and Nomura (TSX:2083) revised upward
their economic growth forecasts for China after the economy posted
better-than-expected performance in the third
quarter. JPMorgan now forecasts GDP growth of 5.2% in 2023,
while Nomura raised its forecast to 5.1% from 4.8%. China’s
economic growth in the third quarter exceeded expectations, but
economists still warn of challenges such as private investment and
the correction in the property market.
Bank of America (NYSE:BAC) – Bank of
America reported unrealized losses of $131.6 billion on securities
in the third quarter, although it believes these losses will not
result in real long-term losses. These losses are mainly on
government-backed bonds. The bank plans to hold these bonds
until maturity to avoid losses in the market. However,
holdings in low-yielding assets have limited their ability to earn
higher profits.
UBS (NYSE:UBS) – The Monetary Authority of
Singapore (MAS) plans to inspect Credit Suisse’s local unit to
assess its monitoring of wealthy clients following a client’s money
laundering accusation. The investigation will involve
interviews and review of documents at several banks. In
August, Singapore police detained 10 foreigners in a major money
laundering case, seizing 2.8 billion Singapore dollars in
assets.
Charles Schwab (NYSE:SCHW) – Financial
advisor John Robinson planned to transfer his clients’ funds from
TD Ameritrade to Charles Schwab over Labor Day weekend, but ran
into problems. One account worth $1.7 million was
misattributed to him, and three client accounts totaling more than
$4 million were misattributed to another advisor. The
experience left Robinson discouraged, and Schwab could lose his
business. The migration of TD Ameritrade clients to Schwab
faced several obstacles, including technical issues and
dissatisfaction from some advisors. Schwab saw a drop in
shares, bank deposits and net new assets, putting pressure on its
profits. The company is facing challenges, but many analysts
remain optimistic due to its scale and leadership
position. Schwab plans to cut costs, expand services and
attract younger investors to drive growth.
Earnings
ASML Holding NV (NASDAQ:ASML) – ASML
reported lower-than-expected orders and warned of flat sales next
year due to economic uncertainty. The company considers the
semiconductor industry to be in decline, with customers cautious
due to uncertainty, expecting a transition year in 2024. ASML
predicts little immediate financial impact from the new US
guidelines on exports to China. However, it anticipates
regional impact in the medium and long term, but does not expect it
to affect its financial outlook for 2023. China has become its
largest market, accounting for 46% of sales, surpassing Taiwan,
which represented 24%. The company reported net profit of
US$2.01 billion for the three months ended September 30, in line
with analysts’ expectations.
United Airlines Holdings (NASDAQ:UAL) –
United Airlines forecasts weaker fourth-quarter earnings due to
higher costs, resulting in a more than 4.7% drop in its shares in
premarket trading. The Chicago company estimated adjusted
earnings of between $1.50 and $1.80 per share, below analysts’
expectations. Rising fuel prices and the suspension of flights
to Israel negatively impacted costs. The company also noted a
slowdown in domestic travel demand. However, passenger revenue
increased in the third quarter and business travel bookings are
improving. Third-quarter adjusted earnings were $3.65 per
share, higher than the $3.35 estimated by Wall Street analysts.
Interactive Brokers Group (NASDAQ:IBKR) –
Interactive Brokers Group recorded a 2.8% drop in pre-market
trading. The electronic brokerage reported third-quarter
results with adjusted profits and revenue that exceeded
expectations, as well as a 21% increase in customer accounts,
reaching 2.43 million.
Omnicom Group (NYSE:OMC) – The marketing
company released a slightly better quarterly report than analysts
expected. Omnicom announced third-quarter earnings of $1.86
per share on revenue of $3.58 billion, beating FactSet estimates of
$1.84 per share on revenue of $3.55 billion.
Procter & Gamble (NYSE:PG) – P&G
reported quarterly earnings of $1.83 per share and revenues of
$21.87 billion, surpassing forecasts. Shares rose 1.2% in
pre-market trading. Net profit increased and sales grew by 6%.
Earnings per share were expected to be between $1.72 (FactSet) and
$1.74 (Estimize) and revenue between $21.580 billion (FactSet) and
$21.761 billion (Estimize). P&G also widened its outlook for
fiscal 2024 revenue as it anticipates that foreign exchange rates
could be a larger drag than previously expected.
Morgan Stanley (NYSE:MS) – Morgan Stanley
is poised to release results with lower earnings expectations on
Wednesday, the last of the major U.S. banks to do so. FactSet
analysts project earnings of $1.28 per share, down from $1.47 a
year ago, while Estimize’s estimate is $1.37. Expected revenue
is $13.22 billion (FactSet) or $13.327 billion
(Estimize). Morgan Stanley shares fell 4.4% in the third
quarter and the performance of its wealth management unit is of
interest, especially during the leadership transition.
Tesla (NASDAQ:TSLA) – Tesla is about to
release its third-quarter results, raising concerns about margins
and demand due to recent price cuts. Investors are cautious
about future profits, with the next year seen as
volatile. Analysts expect adjusted earnings of 73 cents per
share on sales of $24.3 billion, compared with $1.05 per share on
$21.5 billion in sales in the same period a year ago. Tesla
shares are up 114% this year.
Netflix (NASDAQ:NFLX) – Netflix is in
transition, focusing on maximizing profits through price increases,
advertising and combating account sharing as it prepares to report
third-quarter results. Margins and competition are worrying
investors, despite the boost during the pandemic. Analysts
expect earnings per share of $3.49 and revenue of $8.54
billion.
JB Hunt Transport
Services (NASDAQ:JBHT) – JB Hunt Transport
Services reported third-quarter results below Wall Street
expectations, reflecting the continued decline in demand for
shipping. The company reported net income of $187.4 million,
or $1.80 per share, compared with $269.4 million, or $2.57 per
share, in the same quarter a year ago. Revenue fell to $3.16
billion, compared with $3.84 billion in the year-ago
quarter. Company executives have signaled that they are seeing
signs of recovery despite ongoing challenges in the sector.
Johnson & Johnson (NYSE:JNJ) –
Johnson & Johnson announced a two-year restructuring program
for its orthopedics business due to lower-than-expected sales in
the third quarter. The company plans to exit certain markets
and discontinue the sale of some orthopedic
products. Meanwhile, the focus on the pharmaceutical business
aims to achieve its drug sales target of $57 billion by 2025.
J&J raised its annual profit forecast and, excluding the
consumer health unit, now expects 2023 adjusted profit of $10.07 to
$10.13 per share.
Netflix (NASDAQ:NFLX)
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