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Wednesday’s Wall Street Highlights: ASML, Carvana, Microsoft, Meta Platforms and More

Fernanda T
Latest News
July 19 2023 03:20AM

US Index Futures rose slightly premarket on Wednesday on anticipation of corporate earnings, a day after the Dow Jones hit its longest streak of gains since 2021.

By 6:52 AM, Dow Jones (DOWI:DJI) futures were up 38 points, or 0.11%. S&P 500 futures were up 0.03%, while Nasdaq-100 futures were up 0.12%. The 10-year Treasury yield is at 3.752%.

European shares were higher, boosted by Kering shares after changes in the luxury group’s top management. Furthermore, the London market stabilized after data revealed a faster-than-expected deceleration in British inflation. The British consumer price index changed by 0.1% in June in the monthly comparison, with market consensus expecting 0.40%. On an annual basis, the data changed by 7.9% in June, against a market consensus of 8.20%.

On Wednesday’s American economic agenda, the Department of Commerce will release data on housing construction starting in June at 8:30 am. Economists polled by Dow Jones forecast a 9.3% drop in new home construction from the previous month, following a sharp 21.7% increase. Consensus estimates call for a 0.7% drop in building permits in June, compared with the 5.2% gain recorded the previous month. Crude Oil Inventories data for the week to 7/14 will be released at 10:30 AM. In addition, the US government is going to hold this Wednesday, at 1 pm, the auction of 20-year Treasuries, whose objective is to finance public expenses.

In commodities markets, West Texas Intermediate crude for August is up 0.09% at $75.82 a barrel. Brent crude for September is up 0.38% near $79.93 a barrel. Iron ore futures traded in Dalian, China, fell 0.60%, at US$115.38 per tonne, once again in the face of the cooling of the Chinese economy and in anticipation of stimuli in the country.

At Tuesday’s close, the Dow jumped 366.58 points or 1.06% to 34,951.93 points. The S&P 500 rose 32.19 points or 0.71% to 4,554.98 points. The Nasdaq Composite advanced 108.69 points or 0.76% to 14,353.64 points. The positive day was driven by favorable results from Bank of America (NYSE:BAC) and Morgan Stanley (NYSE:MS). However, economic activity data disappointed, with retail sales and industrial production below expectations. The market is now pricing in just one more interest rate hike by the Fed. In Europe, there was a positive day in the markets after members of the ECB suggested the possibility of a pause in interest rate increases.

On the front of Wednesday’s corporate results, due before the start of trading, earnings from Goldman Sachs (NYSE:GS), ASML (NASDAQ:ASML), Halliburton (NYSE:HAL), US Bancorp (NYSE:USB) , Nasdaq (NASDAQ:NDAQ), Baker Hughes (NASDAQ:BKR), M&T Bank (NYSE:MTB), among others. After the market close, among the most highly anticipated reports are Tesla (NASDAQ:TSLA), Netflix (NASDAQ:NFLX), United Airlines (NASDAQ:UAL), IBM (NYSE:IBM) and Las Vegas Sands (NYSE:LVS) .

Wall Street Corporate Highlights for Today

Microsoft  (NASDAQ:MSFT) – Microsoft stock closed at a record high on Tuesday after announcing pricing for the new Microsoft 365 service, which adds AI to the Office suite. Copilot will cost $30 more per month, increasing recurring revenue. The service is already being tested by customers such as Goodyear  (NASDAQ:GT) and General Motors  (NYSE:GM).

Alphabet  (NASDAQ:GOOGL) – Google is starting a pilot program restricting some employees’ internet access to reduce the risk of cyberattacks. The measure aims to protect data and prevent security incidents. The company seeks to harden its internal systems against malicious threats.

Meta Platforms  (NASDAQ:META) – Meta announced the commercial launch of its open source AI model, Llama, in partnership with Microsoft. Called Llama 2, the model will be distributed through Microsoft’s Azure cloud service and will be available for direct download and through other providers. Meta hopes Llama will offer a free alternative to the proprietary models sold by OpenAI and Google, threatening its dominance in the generative AI software market.

Teladoc  (NYSE:TDOC)Microsoft  (NASDAQ:MSFT) – Teladoc Health is expanding its partnership with Microsoft to leverage the company’s artificial intelligence services to automate clinical documentation on its telehealth platform. This integration will help ease the workload of healthcare professionals during virtual appointments. The use of AI has been actively discussed in the healthcare industry as a way to deal with administrative burden and staff shortages.

Twilio  (NYSE:TWLO) – ARK funds continued to acquire Twilio shares on Tuesday, bringing a total of $11.4 million in new purchases. The Fintech ETF added 18,099 shares, the Innovation ETF acquired 146,801 shares and the Next Generation Internet ETF added 26,620 shares, based on the closing price of the share and corresponding to the dollar amount purchased on Monday. Twilio represents more than 0.1% of the three funds.

Tesla  (NASDAQ:TSLA) – Tesla has applied for approval to make changes to its factory near Berlin, with a view to expanding it to become the largest car factory in Europe. The company plans to double capacity to 1 million cars a year and 100 gigawatt hours of battery production. In other news, the US National Highway Traffic Safety Administration (NHTSA) is conducting a special investigation into a fatal accident involving a 2018 Tesla Model 3 that is suspected to have had advanced driver assistance systems. The accident occurred in South Lake Tahoe, California on July 5, resulting in two fatalities.

United Airlines  (NASDAQ:UAL) – United Airlines pilots are turning down captain promotions due to unpredictable schedules and poor quality of life. The resulting shortage of captains could reduce the flights available to travelers, impacting the company’s operation. Airlines are facing challenges in attracting pilots to positions of greater responsibility.

American Airlines  (NASDAQ:AAL) – Pilots’ ratification of American Airlines’ new contract is in jeopardy as United Airlines raised the benchmark with its own deal, according to American’s pilots union. The union is seeking contract improvements to meet industry standards and avoid falling behind other airlines.

Altice USA  (NYSE:ATUS) – Armando Pereira, co-founder and former CEO of telecom group Altice, will appear before a judge in Portugal as part of an investigation into corruption. Altice tries to isolate the events, stating that they are isolated to Portugal and individuals without executive functions. Pereira no longer has a formal role, but his influence on the group is profound. Altice faces significant debt due to aggressive acquisitions. Altice USA’s purchasing director was also placed on leave.

AT&T  (NYSE:T) – AT&T has said it will not immediately remove the lead cables from Lake Tahoe pending further review, according to its court filing. The company defended itself against the Wall Street Journal reports, arguing that the cables represent only a small part of its network.

Rio Tinto  (NYSE:RIO) – Rio Tinto has reported production issues at its operations, citing concerns about a global economic slowdown. However, the company expects its iron ore production to be at the upper end of expectations for the year. The fall in iron ore prices due to China’s real estate sector may improve with the Chinese government’s momentum policies. Rio also lowered its expectations for refined copper production and faced challenges at its iron ore operations in Canada.

Yum Brands  (NYSE:YUM) – Taco Bell, owned by Yum Brands, has successfully attempted to trademark the phrase “Taco Tuesday” from competitor Taco John’s. Taco Bell argued that the phrase was commonplace and that Taco John’s had wrongfully monopolized it. Taco John’s has abandoned the mark and Taco Bell is also seeking to cancel a separate trademark relating to the expression. Taco Bell said it wanted to “clear” the phrase for use by restaurants across the country.

Chipotle Mexican Grill  (NYSE:CMG) – With the opening of the first franchised restaurants in Kuwait and Dubai next year, Chipotle is expanding its international presence. Analysts see this as a good sign for the company’s value, enabling opportunities for faster growth, although the focus remains on the domestic business.

Constellation Brands  (NYSE:STZ) – Constellation Brands has agreed to appoint two new independent directors and share confidential information with Elliott Investment Management. The agreement aims to facilitate collaboration and recognizes Constellation’s growth potential.

Pfizer  (NYSE:PFE) – Pfizer and Flagship Pioneering plan to invest $100 million to develop up to 10 new drugs in areas including internal medicine, oncology, infectious diseases and immunology. The companies will collaborate in the discovery and development process, with Pfizer providing funding and an option to purchase the drugs.

Goldman Sachs  (NYSE:GS) – The Goldman Sachs board expressed support for CEO David Solomon in his focus on Wall Street’s core businesses and asset management. Despite rising skepticism, the board is confident in Solomon’s ability to revive the bank’s stock. The expected arrival of Tom Montag also indicates internal support for Solomon’s recovery plans. Though Goldman’s shares have fallen this year, the bank remains one of the top mergers and acquisitions advisors globally.

Bank of America  (NYSE:BAC) – New York’s pension authority asked Bank of America’s board to recover executive pay after the bank agreed to pay a $250 million fine. The city controller demanded transparency on payment recovery and internal reporting.

Morgan Stanley  (NYSE:MS),  Mitsubishi UFJ Financial Group  (NYSE:MUFG) – Mitsubishi UFJ Financial Group and Morgan Stanley announced an expansion of their 15-year alliance, combining some operations in their Japanese brokerage joint ventures. The collaboration will include equity research, sales and execution services, as well as reorganizing the equity underwriting business. The two companies will also collaborate on foreign exchange trading. The partnership builds on MUFG’s $9 billion investment in Morgan Stanley in 2008.

Morgan Stanley (NYSE:MS) – Morgan Stanley is moving more than 200 technology developers from mainland China to Hong Kong and Singapore in response to the country’s restrictions on accessing data stored on land. The bank’s remaining team is building an autonomous system in China to comply with local regulations. These changes reflect multinationals’ growing caution about data security in China. In other news, Morgan Stanley’s expense reduction efforts resulted in termination costs of $308 million in the second quarter, after eliminating about 3,000 jobs. The investment bank has faced spending pressures, and similar cuts have occurred at other Wall Street investment banks. Compensation expenses also increased in the period.

Grab Holdings  (NASDAQ:GRAB) – GXS Bank, Grab Holdings’ new digital bank, has increased the deposit limit on its Singapore savings account from S$5,000 to S$75,000. This indicates that the Monetary Authority of Singapore has raised the limit previously imposed on the company. This change is an advantage for GXS Bank to compete with traditional banks. Other Grab-backed digital banks are also pushing for higher deposit limits.

Blackstone  (NYSE:BX) – Blackstone Group LP will invest $150 million in Astaris Capital Management, a firm specializing in event-driven investing in Europe. The investment will be split between Astaris’ existing hedge fund and a new pool of capital. Blackstone is making the investment through its Strategic Alliance Fund IV.

Yellow Corp  (NASDAQ:YELL) – The International Brotherhood of Teamsters issued a strike notice Tuesday, citing Yellow Corp’s failure to make a crucial payment to health and pension funds. The union warned that benefits could be suspended if payment is not made, while analysts predict negative impacts for Yellow and opportunities for competing companies such as Old Dominion Freight Line  (NASDAQ:ODFL) and ArcBest Corp  (NASDAQ:ARCB).

Cracker Barrel  (NASDAQ:CBRL) – Investors in Cracker Barrel Old Country Store Inc. reacted positively on Tuesday following the announcement of a leadership change. CEO Sandra Cochran will step down after 12 years, to be succeeded by Julie Felss Masino starting in November. The leadership transition comes after a period in which the company faced challenges related to financial results and marketing actions.

Earnings

ASML  (NASDAQ:ASML) – ASML is up 0.4% in premarket trading on Wednesday after it posted higher revenue and profit in the second quarter, but warned of future economic uncertainties. The company raised its 2023 outlook, driven by strong demand for its lithography machines. However, the CEO highlighted macroeconomic uncertainties and possible US export restrictions to China. The company reported net profit of 1.9 billion euros, against 1.82 billion euros expected, and expects net sales in the third quarter of this year to be between 6.5 billion euros and 7 billion euros.

Interactive Brokers  (NASDAQ:IBKR) – Interactive Brokers reported second-quarter results that were below expectations. According to Refinitiv, the brokerage reported adjusted earnings of $1.32 per share, below the average estimate of $1.40 per share.

Carvana  (NYSE:CVNA) – The online auto retailer took a 7.7% drop in premarket trading on Wednesday after it announced it will delay reporting its second-quarter results to the previously scheduled August 3 for today.

Omnicom Group  (NYSE:OMC) – The global marketing company reported second-quarter revenue of $3.61 billion, missing forecasts of $3.67 billion, according to FactSet consensus estimates. Omnicom slightly beat earnings expectations, with adjusted earnings of $1.81 per share, compared to consensus estimates of $1.80 per share.

JB Hunt  (NASDAQ:JBHT) – JB Hunt Transport Services reported second-quarter earnings of $1.81 per share, along with revenue of $3.13 billion. Analyst expectations polled by Refinitiv were for earnings per share of $1.92 on revenue of $3.31 billion.

Western Alliance Bancorporation  (NYSE:WAL) – Western Alliance reported earnings of $1.96 per share, below the consensus estimate of $1.98 per share, according to Refinitiv. However, revenue for the quarter reached $669 million, beating the forecast of $652 million. The bank also reported an increase in deposits during the quarter.

United Community Banks Inc   (NASDAQ:UCBI) – United Community Banks reported lower-than-expected second-quarter results. Competition for new customers has increased costs, while higher interest rates have made borrowing more difficult. Still, the bank recorded an increase in loans and deposits. Management cited price competition from deposits as a challenge.

Morgan Stanley  (NYSE:MS) – Morgan Stanley beat second-quarter earnings estimates, driven by growth in the wealth management business. Net income for the wealth management unit reached a record $6.7 billion. CEO James Gorman expressed optimism about the economic environment and stressed that the choice of successor will not be based solely on the performance of business units.

BNY Mellon  (NYSE:BK) – Bank of New York Mellon Corp beat second-quarter earnings expectations, boosted by Federal Reserve tightening policies. Net interest income increased 33%, while adjusted earnings per share beat analysts’ average estimate. The bank has also seen an increase in assets under custody or administration.

Charles Schwab  (NYSE:SCHW) – Charles Schwab reported a smaller-than-expected decline in second-quarter profit, driven by rising asset management fees. While interest income declined, the company saw an increase in fund inflows, building confidence in a future recovery. Adjusted earnings per share beat analyst estimates.

Lockheed Martin  (NYSE:LMT) – Lockheed Martin raised its full-year sales and profit outlook due to demand for military equipment driven by geopolitical uncertainty. The company reported second-quarter net income of $6.63 per share, above Wall Street estimates of $6.45 per share, according to Refinitiv data. Quarterly net sales increased 8.1% to $16.69 billion, beating expectations of $15.92 billion.

Market view

Joby Aviation  (NYSE:JOBY) – JP Morgan downgraded shares of electric air taxi maker Joby Aviation from “Neutral” to “Underweight”. However, the price target was raised from $5 to $6. As a result, the stock fell 8.8% in Wednesday’s premarket trade to hit $9.17.

Citigroup  (NYSE:C) – Citigroup has been upgraded from “Hold” to “Buy” by Odeon Capital.

UnitedHealth Group  (NYSE:UNH) – UnitedHealth rose 3.3% on Tuesday after the healthcare provider was upgraded to “Outperform” from “Market Perform” by Bernstein.