US index futures showed mixed sentiment in early trading on
Thursday. This comes amid a rise in long-term interest rates,
reaching their highest levels since 2007 due to expectations of
sustained high rates. Investors are digesting another batch of
quarterly earnings while closely monitoring the evolving conflict
between Israel and Hamas, which begins to influence economic policy
outlooks. Throughout the day, remarks from Federal Reserve
Chairman, Jerome Powell, could influence investment decisions.
At 7:08 AM, Dow Jones futures were down by 19 points or 0.06%.
S&P 500 futures declined by 0.05%, while Nasdaq-100 futures
increased by 0.12%.
The 10-year U.S. Treasury yield stood at 4.966%, ahead of
Powell’s speech. This is likely his final address before the Fed’s
meeting set for November 1st. Powell is expected to emphasize that
the current long-term interest rates are sufficient to counteract
further increases in the benchmark rate, signaling an end to the
rate hike cycle.
In the commodities market, West Texas Intermediate crude oil for
November declined by 1.20%, trading at $87.26 per barrel. Brent
crude for December was down 1.44%, near $90.18 per barrel.
Meanwhile, 62% concentrated iron ore, traded on the Dalian
Exchange, rose 0.40% to $118.81 per ton.
On Thursday’s U.S. economic calendar, investors are awaiting the
8:00 AM weekly unemployment insurance data, projected to show
212,000 new claims. At the same time, the Philadelphia Fed
manufacturing index will be released, with a consensus drop of 6.4
points for October. At 10:00 AM, September’s existing home sales
data is expected, with projections of 3.89 million.
Regarding the Fed, apart from Powell’s speech at 12:00 PM, there
will be several other speeches throughout the day, though market
attention will likely focus on the remarks of the central bank’s
chairman. At 9:00 AM, Fed Vice Chairman Philip Jefferson is
scheduled to speak, followed by Austan Goolsbee and Michael Barr,
President of the Chicago Fed and Fed member, respectively, at 1:20
PM.
Scheduled for 4 PM is a speech by Raphael Bostic, President of
the Atlanta Fed. Patrick Harker of the Philadelphia Fed will speak
at 5:30 PM, and to wrap up the day, Lorie Logan, President of the
Dallas Fed, is set to speak at 7:00 PM.
During his visit to Israel, U.S. President Joe Biden asserted
that “terrorists will not prevail” and pledged to request from
Congress unprecedented support for Israel’s defense against Hamas.
Additionally, he announced humanitarian aid of $100 million for
civilians in Gaza.
In Asia, concerns about the Middle East conflict and China’s
faltering real estate sector impacted the markets. In September,
China’s property prices declined by 0.1% year-on-year.
Uncertainties persist around companies like Country Garden and
Evergrande due to potential financial issues. In Japan, September
trade data exceeded expectations, pointing to a resilient economy.
The HSI index in Hong Kong fell 2.46%, while the Shanghai Composite
decreased by 1.74%. Tokyo’s Nikkei 225 index was down 1.91%.
In Europe, weak corporate results combined with geopolitical
issues resulted in market downturns. Notably, Nestlé’s shares
dropped after releasing disappointing third-quarter results.
At Wednesday’s market close, stock markets ended lower, while
oil prices surged due to escalating tensions between Iran and
Israel following an incident at a Gaza hospital, undermining Middle
East diplomatic efforts. The Dow Jones dropped 332.57 points, or
0.98%, to 33,665.08 points. The S&P 500 declined 58.60 points,
or 1.34%, to 4,314.60, and the Nasdaq Composite fell 219.44 points,
or 1.62%, to 13,314.30.
In the corporate arena, Morgan Stanley (NYSE: MS) faced a
decline after reporting reduced profits. The US Treasury market
remained stable after a strong demand in a 20-year bond auction.
Investors closely monitored Federal Reserve members’ statements
regarding the North American economy, noting varying views on
monetary policy. New York Fed Chief John Williams emphasized the
need to maintain high interest rates for a period to control
inflation.
Before Thursday’s market open, investors will focus on earnings
reports from AT&T (NYSE:T), American Airlines (NASDAQ:AAL),
TSMC (NYSE:TSM), Blackstone (NYSE:BX), Nokia (NYSE:NOK), Truist
Financial (NYSE:TFC), Union Pacific (NYSE:UNP), and others. After
the closing bell, results from Intuitive Surgical (NASDAQ:ISRG),
CSX (NASDAQ:CSX), WD-40 Company (NASDAQ:WDFC), and more are
expected.
Wall Street Corporate Highlights for Today
Amazon (NASDAQ:AMZN) – Amazon announced
plans to introduce drone deliveries in the UK, Italy and another
location in the US as part of its expanded aerial delivery
program. Customers will be able to opt for drone deliveries
from 2024, integrated into Amazon’s existing fulfillment
network. The Prime Air service is now available in two cities
in the US, and the company has been working to use unmanned drones
for commercial deliveries since 2020. Additionally, Amazon
implemented the “Sequoia” robotic system in a Houston warehouse to
improve management inventory and speed up deliveries. This
technology, which includes mobile robots and robotic arms,
increases inventory storage efficiency by up to 75% and reduces
order processing time by up to 25%. Amazon is also testing the
“Digit” bipedal robot from Agility Robotics.
Alphabet (NASDAQ:GOOGL) – The US
Department of Justice continues its antitrust case against Alphabet
alleging Google’s monopoly. The 10-week trial is halfway over,
focusing on payment agreements with companies
including Apple (NASDAQ:AAPL) and
Samsung. In other news, Alphabet announced that it will
manufacture Pixel 8 smartphones in India from 2024, as announced at
the Google for India event. They will partner with local and
global suppliers for assembly. Furthermore, Google’s Russian
subsidiary was declared bankrupt by a Moscow court after a process
that lasted more than a year. Alphabet’s Russian unit filed
for bankruptcy in the summer of 2022 after authorities seized its
bank account, affecting payments to employees and
suppliers. The company faced challenges related to censorship
and access to Russian content on YouTube.
Meta Platforms (NASDAQ:META) – Meta
Platforms will introduce broadcast channels on Facebook and
Messenger, enabling public distribution of messages. This
occurs in a context of online competition, while Telegram plays an
important role in global events. Meta is testing this function
and plans to launch it soon. WhatsApp and Instagram already
have similar features.
Intel (NASDAQ:INTC) – Intel CEO Pat
Gelsinger emphasized the importance of a coordinated plan between
industry and the US government to compete globally in chip
manufacturing and research. According to him, it is crucial to
accelerate funding for the Chips Act and address the talent
shortage by supporting the immigration of STEM
students. Gelsinger believes the US and Europe can capture a
significant share of the advanced chip market by the end of the
decade with the right policies and investment in long-term
innovation.
VMware (NYSE:VMW), Broadcom (NASDAQ:AVGO)
– Beijing is considering blocking Broadcom’s purchase of VMware,
valued at $69 billion. China’s State Administration for Market
Regulation has not yet approved the deal due to recent US chip
controls.
Walt Disney (NYSE:DIS) – Disney will
report sports programming revenue starting in the fourth quarter,
dividing its media and entertainment businesses into separate
segments: entertainment and sports. The move follows a company
restructuring announced earlier this year.
Starbucks (NASDAQ:SBUX) – Starbucks has
launched a smaller cup in China called the “Intenso Collection,”
measuring 259ml, aiming to attract consumers in a competitive
market. The novelty is a strategy to maintain customer
interest in a scenario of increasing competition from local brands,
such as Luckin Coffee and Manner Coffee, which are launching
innovative products. The new size is only available in
mainland China for now, and its international offering will depend
on customer response.
Costco Wholesale (NASDAQ:COST) – Craig
Jelinek, longtime CEO of Costco Wholesale, will step down from the
role early next year, handing it over to Ron Vachris, the company’s
veteran chief operating officer. Vachris, who joined Costco
more than 40 years ago as a forklift driver, takes over as CEO on
January 1, 2024, while Jelinek will remain as a consultant until
April to assist with the transition.
Foot Locker (NYSE:FL) – Goldman Sachs
downgraded Foot Locker’s recommendation to “Sell” from “Neutral”
and set a price target of $18 per share, according to information
from Fly. As a result, Foot Locker shares fell 5.2% to
$20.80.
Rite Aid (NYSE:RAD) – Rite Aid, a US
drugstore chain, expressed concerns about its survival in the
market after filing for Chapter 11 bankruptcy. The debt-ridden
company plans to close underperforming stores, sell its Elixir unit
and resolve legal actions related to addictive opioids. Rite
Aid is focused on successfully exiting Chapter 11 and generating
post-restructuring liquidity.
AstraZeneca (NASDAQ:AZN) – AstraZeneca
revealed data on its experimental lung cancer drug that
disappointed analysts. A greater improvement in patients’
lifespan was expected compared to chemotherapy.
Icahn
Enterprises (NASDAQ:IEP), Illumina (NASDAQ:ILMN)
– Investor Carl Icahn filed a lawsuit against Illumina’s board of
directors, alleging breach of fiduciary duties, related to the
acquisition of Grail. Icahn, who recently won a seat on the
board, pressured the company to scrap the deal. Illumina’s
share price has fallen 36% since January.
Rentokil Initial (NYSE:RTO) – Rentokil
Initial warned that annual revenue and margins in North America
will be below expectations, leading to a 14.8% drop in shares in
Thursday’s pre-market. This is due to weak demand for
chemicals and economic uncertainty in the US.
Spirit
AeroSystems (NYSE:SPR), Boeing (NYSE:BA)
– Spirit AeroSystems reached an agreement with Boeing for financing
and price adjustments in production of the 737 and 787, boosting
Spirit shares by 23% on Wednesday. Additional sales of $455
million are expected through 2025 and a reduction of $265 million
from 2026 to 2033. Boeing will extend financing and provide $100
million in tooling. The agreement includes a control clause in
the event of an acquisition of Spirit. This could lead to
future deals with Airbus. Spirit projects third-quarter
revenue of $1.43 to $1.45 billion. Shares of Spirit closed at
$21.16 and Boeing at $185.69 on Wednesday.
Tesla (NASDAQ:TSLA) – Elon Musk, CEO of
Tesla, warned about challenges in the production of the Cybertruck
electric pickup truck and announced deliveries starting on November
30th. Demand for electric vehicles has declined, leading to
price cuts by Tesla. Elon Musk cited concerns about financing
costs and economic uncertainty, expressing caution in expanding
electric vehicle production due to economic uncertainty and
demand. Elon Musk also expressed concerns about high interest
rates affecting car buyers and was hesitant about factory expansion
in Mexico. Tesla announced in March an investment of more than
US$5 billion in Mexico. Two Chinese Tesla suppliers plan to
invest nearly a billion dollars in the state of Nuevo León, Mexico,
where Tesla is building the new factory. The investment
includes US$700 million from Ningbo Tuopu Group and US$260 million
from Hesai Technology.
Lordstown Motors (NASDAQ:RIDE) – Lordstown
Motors has obtained court approval to sell its manufacturing assets
for $10.2 million to LAS Capital, a company affiliated with its
founder Stephen Burns. The sale includes intellectual property
and machinery, but does not involve legal action against directors
or officers of Lordstown Motors.
Ford Motor (NYSE:F) – Ford has warned that
proposed increases in fuel economy standards through 2032 by the
U.S. government could cause “substantial economic
hardship.” The company asked for reductions in the proposed
increases. Additionally, Ford is recalling 35,000 Mustang
Mach-E electric vehicles due to possible overheating of
high-voltage battery contactors resulting in loss of driving
power. Ford also announced a management change, promoting
Kumar Galhotra to chief operating officer. On the front of the
United Auto Workers strike, Ford announced additional layoffs of
150 workers in Michigan, bringing the total laid off to 2,730.
Stellantis (NYSE:STLA) – Stellantis aims
for a 25% increase in light commercial vehicle (LCV) sales by 2027
to compete with Ford (NYSE:F). In
2022, Stellantis sold 1.6 million LCVs under various brands,
generating $63.4 billion in revenue. Stellantis seeks to
become a global leader in LCVs and expand in regions such as North
and South America. Stellantis has introduced a new line of 12
refreshed vans. Its plan by 2030 includes doubling LCV
revenues and having 40% of sales come from zero-emission
vehicles.
Visa (NYSE:V), Mastercard (NYSE:MA)
– Visa and Mastercard stocks declined on Wednesday following news
that the Federal Reserve plans to reduce the fees banks can charge
retailers for processing debit card transactions. The cap has been
a subject of controversy, with retailers seeking reductions. The
proposed changes are likely to trigger intense lobbying among the
involved industries. Visa and Mastercard would see a drop in
revenue if debit processing fees decrease. The move is praised by
retailers, while the Fed seeks to balance interests.
Equifax (NYSE:EFX) – Equifax, the credit
rating agency, revised downward its projections for 2023 due to a
declining housing market. The company attributed this revision
to current high interest rates, predicting that the US housing
market will remain weak in the fourth quarter. Consequently,
Equifax expects an approximately 34% reduction in mortgage
inquiries throughout the year.
Evercore Inc (NYSE:EVR) – EQT AB has
chosen Evercore to assist in a potential sale of Rimes
Technologies, a data management company. Rimes’ value could
reach $2.1 billion, with a formal sale process possibly beginning
next year. The deliberations are at an early stage, with no
guarantee of completion. EQT is also considering selling
Sitecore, another investment. Other private equity firms are
also exploring asset sales.
Nasdaq (NASDAQ:NDAQ) – A U.S. appeals
court upheld Nasdaq’s board diversity rule, which requires listed
companies to have women and minority directors on their boards or
explain why they do not. The court dismissed lawsuits seeking to
block the rule.
Earnings
Tesla (NASDAQ:TSLA) – Electric
vehicle maker Tesla saw its shares fall 5.1% in premarket trading
after missing estimates in third-quarter financial
results. Tesla reported an adjusted profit of 66 cents per
share on revenue of $23.35 billion, while analysts surveyed by LSEG
had forecast a profit of 73 cents per share on revenue of $24.10
billion. The company also reported that its margins decreased
compared to the same period last year.
Netflix (NASDAQ:NFLX) – Netflix saw shares
rise 13.8% in premarket trading Thursday after beating
third-quarter profit projections, surprising Wall Street. The
company reported a profit of US$3.73 per share on revenue of
US$8.54 billion, while analysts surveyed by LSEG had predicted a
profit of US$3.49 per share and revenue of US$8. 54
billion. Additionally, Netflix saw stronger-than-expected
subscriber growth, adding 8.76 million subscribers in the quarter,
compared to the 5.49 million estimate made by Street Account
analysts.
TSMC (NYSE:TSM) – TSMC reported a
third-quarter net profit drop of 25%, but forecasts a recovery next
year, driven by demand for personal computers and smartphones, as
well as the growth of artificial intelligence. TSMC said
third-quarter revenue fell 14.6% to $17.3 billion, in line with the
company’s previous forecast of $16.7 billion to $17.5
billion. The company is cautiously optimistic, watching for
signs of stabilization in the market. However, it recognizes
the short-term uncertainty and has controlled its capital spending
for this year.
Lam Research (NASDAQ:LRCX) – The
semiconductor company’s shares fell approximately 2.8% in
pre-market trading. This decline occurred despite Lam
Research’s fiscal first-quarter results exceeding financial
expectations. The company reported adjusted earnings of $6.85
per share on revenue of $3.48 billion, while analysts surveyed by
LSEG had projected earnings of $6.12 per share on revenue of $3.41
billion.
SAP (NYSE:SAP) – The enterprise software
maker confirmed its annual forecast for cloud business revenues
after slightly underperforming expectations in the third
quarter. Cloud revenue rose 16% to $3.66 billion, slightly
below analyst estimates. Orders in the cloud area grew
25%. The company reaffirmed its full-year cloud revenue
outlook of $13,287.4 to $13,481.8 billion. Chief Financial
Officer Dominik Asam highlighted the resilience of the business
despite macroeconomic challenges.
Nokia (NYSE:NOK) – Nokia reported that
comparable quarterly net sales fell to approximately $5.62 billion
from last year’s roughly $7.07 billion, falling short of an
estimate of around US$6.0 billion, according to an LSEG
survey. Nokia also announced that it plans to cut up to 14,000
jobs to reduce costs after a 20% drop in sales in the third quarter
due to weak demand for 5G equipment. The company seeks to save
between €800 million and €1.2 billion by 2026 and reduce its
workforce by around 16%. Chief Executive Pekka Lundmark cited
a challenging market, especially in the United States, where net
sales fell 40%.
Abbott Laboratories (NYSE:ABT) – Abbott
Laboratories said the market has exaggerated the negative impact on
glucose monitoring sales due to competing diabetes
medications. While there are immediate challenges with
reimbursement and pricing, the company saw a 30.5% increase in
FreeStyle Libre sales, exceeding expectations and boosting the
stock. Abbott’s adjusted earnings per share were $1.14,
beating estimates. The company adjusted its full-year earnings
outlook to $4.42 to $4.46 per share, compared with its previous
forecast of $4.30 to $4.50 per share.
Las Vegas Sands (NYSE:LVS) – Shares of the
casino and resort company registered a 5.3% increase in pre-market
trading after surpassing revenue estimates in the third
quarter. The company announced revenue of US$2.8 billion,
exceeding LSEG analysts’ projections, which predicted US$2.73
billion. Adjusted earnings were in line with Street
expectations, coming in at 55 cents per share.
Kinder Morgan (NYSE:KMI) – Kinder Morgan
reported below-expected Q3 earnings due to higher interest
expenses. Shares are flat in premarket trading. Kinder
Morgan reported adjusted earnings of 25 cents per share, compared
with LSEG’s average estimate of 26 cents. The company cited
higher interest rates and lower-than-expected commodity prices as
factors, while the CEO is optimistic about 2024.
Discover Financial (NYSE:DFS) – Discover
Financial announced third-quarter earnings of $2.59 per share,
which was considerably below Wall Street’s expectations of $3.17
per share. During the quarter, the credit card company
recorded a provision for credit losses of $1.7 billion, an increase
of $929 million. This increase was driven by an increase in
reserves, which grew by US$297 million.
Zions Bancorporation (NASDAQ:ZION) – Zions
Bancorporation reported a decrease in profits. In the third
quarter, Zions reported a profit of US$1.13 per share, below the
expectations of analysts surveyed by LSEG, who expected US$1.15 per
share. Additionally, net interest income was US$585 million,
representing a 12% reduction compared to the same period in the
previous year.
Morgan Stanley (NYSE:MS) – Morgan
Stanley’s third-quarter profit was hit by slow trading and declines
in investment banking revenue. Wealth management also had
weaker results. The bank reported a 27% drop in investment
banking revenue. Profit fell 9% to $2.4 billion, exceeding
expectations. CEO James Gorman announced his departure, but a
successor has not yet been announced. Fixed income
underwriting revenue declined. The bank also set aside $134
million in provisions for credit losses.
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