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Friday’s Wall Street Highlights: SolarEdge, Intuitive Surgical, Knight-Swift, HPE, and more

Fernanda T
Latest News
October 20 2023 03:22AM

US index futures were declining in pre-market trading on Friday following comments by Federal Reserve Chairman, Jerome Powell, regarding the potential for future interest rate hikes. Additionally, escalating tensions between Israel and Hamas have dampened investor enthusiasm.

As of 06:56 AM, Dow Jones futures (DOWI:DJI) were down by 86 points, or 0.26%. S&P 500 futures dropped 0.29%, and Nasdaq-100 futures fell 0.37%. The 10-year U.S. Treasury yield stood at 4.937%.

In the commodities market, November’s West Texas Intermediate crude oil rose 1.38% to $90.60 per barrel. December Brent crude increased by 1.18%, approaching $93.47 per barrel. The 62% concentration grade iron ore, traded on the Dalian exchange, dropped 3.17% to $114.35 per ton.

On economic calendar for Friday, investors await a 09:00 AM speech from Philadelphia Fed President, Patrick Harker. Later, at 12:15 PM, Cleveland Fed President, Loretta Mester, is set to speak. The week’s oil rig count will be announced by Baker Hughes at 1:00 PM.

Tensions continue in the Middle East between Israel and Hamas. In a recent statement, U.S. President Joe Biden criticized Hamas and Vladimir Putin, revealing plans to send a $100 billion security package to Congress.

Asian markets were down, influenced by Wall Street’s performance the day before and Japan’s inflation indicators. Japanese inflation rose 0.3% in September, while core inflation, excluding food and energy, stood at 2.8%, surpassing forecasts. In China, the primary five-year interest rate remained at 4.20% and the two-year rate at 3.45%. Real estate developer Evergrande, with a debt of $186 billion, is reassessing its restructuring plan, adding more uncertainty to the sector.

In Europe, markets are treading cautiously. UK retail sales saw a 0.9% decline in September. In Germany, the producer price index was down by 0.2%, falling short of predictions.

US stock markets closed down on Thursday as long-term U.S. rates reached recent highs. The 10-year yield hit 5% but slightly retreated after Powell’s comments. The Dow Jones declined by 250.91 points or 0.75% to 33,414.17. The S&P 500 dropped by 36.60 points or 0.85% to 4,278.00. The Nasdaq Composite went down by 128.13 points or 0.96% to 13,186.18.

The Federal Reserve Chief stressed the need for caution in future monetary policy actions. Powell mentioned that given stronger-than-expected economic indicators, the FOMC might need to raise rates again. He also pointed out that a rise in the longer end of the yield curve could further tighten financial conditions.

US equity markets closed lower in Thursday’s session as long-duration rates in the United States reached recent highs. The 10-year yield reached 5% but then declined slightly after Powell’s statements. The Dow Jones fell 250.91 points or -0.75% to 33,414.17 points. The S&P 500 fell 36.60 points or 0.85% to 4,278.00. The Nasdaq Composite fell 128.13 points or -0.96% to 13,186.18 points.

The head of the Federal Reserve emphasized the need for prudence in future monetary policy actions. Powell mentioned that, given stronger-than-expected economic indicators, the FOMC may be forced to raise rates again. He also noted that a rise at the longer end of the yield curve could further tighten financial conditions.

On the corporate earnings front on Friday, investors will be watching reports from American Express (NYSE:AXP), Schlumberger (NYSE:SLB), Comerica Incorporated (NYSE:CMA), Huntington (NASDAQ:HBAN), Autoliv (NYSE:ALV), Regions (NYSE:RF), Euronet Worldwide (NASDAQ:EEFT), among others.

Wall Street Corporate Highlights for Today

Alphabet  (NASDAQ:GOOGL) – Google launched Search Generative Experience (SGE) that uses AI to create search summaries. This concerns publishers as it could affect web traffic and compensation for the use of their content. Google offers a blocking option, but it creates uncertainty for publishers. SGE can decrease traffic to traditional search links. However, publishers’ reputations remain strong at SGE. Publishers also block OpenAI’s ChatGPT bot.

Expedia   (NASDAQ:EXPE) – Expedia’s advertising spend on Google has increased dramatically, 10x in five years, without a corresponding increase in traffic. This was revealed in the Justice Department’s antitrust trial against Google. Other companies also highlighted the importance of advertising on Google for their businesses.

Apple  (NASDAQ:AAPL) – Apple, despite being the most valuable company in the world, faces challenges including tepid sales in China and political tensions. The lack of growth and high valuation of the shares raise concerns. KeyBanc downgraded the stock, and the consensus rating fell. Apple will release results in November, with revenue expected to fall. Apple shares trade at high multiples and face pressure from slower growth. Apple rose 0.6% on Thursday, a move that follows four consecutive negative sessions.

Meta Platforms  (NASDAQ:META) – The European Commission has given Meta and TikTok a week to present details on measures to contain terrorist, violent content and hate speech on their platforms, under the new rules of the Law on Digital Services. This comes after Elon Musk received a similar instruction last week.

Nvidia  (NASDAQ:NVDA) – Investors who purchased Nvidia shares in September have had a recent turnaround. What seemed like a prescient bet in mid-September — shares rose 14% in 15 trading sessions — turned sour this week, with shares falling 8.5% in two days. The cause was new US regulations to restrict technology to China, threatening a significant portion of Nvidia’s revenue. The company, despite its prominent position in AI, faces geopolitical and economic challenges.

Adobe  (NASDAQ:ADBE) – European Union antitrust regulators have resumed their investigation into Adobe’s $20 billion bid for cloud design platform Figma, with a deadline of February 5. The deal could eliminate a key rival and raise global competition concerns. Adobe must address these concerns to obtain regulatory approval.

Western Digital   (NASDAQ:WDC) – Kioxia Holdings has sought the support of state-backed Japan Industrial Partners (JIC) to invest in the proposed merger of its flash memory business with Western Digital, with Japanese banks committing to supply 12.67 billion dollars in financing.

WeWork  (NYSE:WE) – WeWork president and chief operating officer Anthony Yazbeck will step down, with the move effective Friday. The departure was amicable and he will receive a payment of around US$1.1 million. WeWork shares rose 3.4% following the announcement.

Teck Resources  (NYSE:TECK) – Japan’s JFE Steel Corp is negotiating a stake in the metallurgical coal business of Canada’s Teck Resources, following the trend of supply diversification due to sanctions on Russia. Negotiations have been ongoing since September. Japan’s Nippon Steel was also interested in a stake. Teck considers splitting its coal and copper businesses. Teck CEO Jonathan Price is considering several options for this division.

Tesla  (NASDAQ:TSLA) – The Chinese government plans to impose additional controls on graphite exports, a crucial component for electric vehicle batteries. This move could affect manufacturers like Tesla and drive the search for alternative sources of graphite. Graphite exports will face restrictions starting on December 1st. Tesla and others are already seeking suppliers outside of China. This measure may impact graphite prices in the industry. Syrah Resources (3S7), a supplier to Tesla, saw a 24.2% increase in its shares in response to the news. Meanwhile, Tesla experienced a drop in its stock prices following disappointing third-quarter results. In other news, Tesla raised the price of its all-wheel-drive Model X Plaid to $94,990 from $89,990 in the U.S. in response to concerns about rising interest rates, despite previous price cuts to sustain demand.

Toyota Motor  (NYSE:TM) – Toyota has signed an agreement to adopt Tesla’s electric vehicle charging technology starting in 2025. Other automakers have also adopted Tesla’s North American Charging Standard (NACS). Toyota will also incorporate NACS ports into its electric vehicles. Additionally, Toyota will resume some production on Monday at factories affected by an accident at supplier Chuo Spring. Five lines at four factories will resume, while eight lines at six factories will remain suspended.

Stellantis  (NYSE:STLA) – Dongfeng Motor Group and Stellantis will expand export business in China through an asset sale. Dongfeng will purchase assets from Dongfeng Peugeot Citroën Automobile, while Stellantis will continue the production and export of Peugeot and Citroen cars.

Merck  (NYSE:MRK) – Merck agreed to pay $5.5 billion to Daiichi Sankyo  (TG:D4S) to develop cancer drug candidates. The agreement could reach US$22 billion. Daiichi Sankyo is targeting $6 billion in oncology revenue by 2026. The Japanese company’s shares rose 15.3%, while Merck is up 0.2% in premarket trading.

Pfizer  (NYSE:PFE) – Pfizer has received EU antitrust approval for its $43 billion acquisition of cancer drug maker Seagen  (NASDAQ:SGEN). The European Commission stated that the agreement would not harm competition or affect prices, considering it without competition concerns.

Walgreens Boots Alliance  (NASDAQ:WBA) – Walgreens has agreed to pay $192.5 million to settle a class-action lawsuit filed by Rite Aid  (NYSE:RAD) investors who accused it of misleading them about merging the two pharmacy chains. The case was intensely fought and now awaits court review. Rite Aid has filed for bankruptcy protection due to high debt and opioid litigation costs, which could result in the stock being dissolved without compensation to shareholders.

CVS Health  (NYSE:CVS) – CVS Health is removing decongestants with phenylephrine from its shelves after an FDA advisory committee declared them ineffective. Although the FDA has not ruled, CVS has chosen to voluntarily recall them. CVS shares are flat in premarket trading Friday.

Morgan Stanley  (NYSE:MS) – A federal judge has issued a temporary restraining order against Morgan Stanley’s former team of consultants, alleging breach of contracts, improper solicitation of clients and possession of confidential information. The team left the firm to launch an independent practice. Morgan Stanley seeks permanent injunctive relief in FINRA arbitration.

KKR and Company  (NYSE:KKR) – The Italian government is confident of restructuring Telecom Italia (TIM) (BIT:TIT) through the sale of its fixed network assets to KKR. The agreement is supported by the government and is seen as crucial to relieving TIM’s debt.

Visa  (NYSE:V) – Analysts at Mizuho Securities revised down the price target for Visa shares while maintaining a “Neutral” rating, due to concerns about US economic growth expectations, which could impact the company’s performance. They predict a possible slowdown in the growth of personal consumption expenditures in the US following a period of post-pandemic inflation and reopening. For Visa’s imminent fourth-quarter earnings release, analysts are predicting a 14% increase in profits compared to the same period last year, reaching $4.6 billion. That translates to earnings of $2.25 per share and revenue of $8.6 billion.

Hewlett Packard Enterprise  (NYSE:HPE) – Hewlett Packard shares fell -4.2% in pre-market trading on Friday following the announcement of its fiscal year 2024 forecast, which came in below expectations. The company expects adjusted earnings of $1.82 to $2.02 per share, while analysts had expected $2.15. Revenue growth is forecast for 2024 at 2% to 4%, while analysts expect 1.6% more than the current estimate for 2023. In the current fiscal year, HPE forecasts revenue growth of 4% to 6% and adjusted earnings of $2.11 to $2.15 per share. HPE shares are up 2.1% year to date.

SolarEdge  (NASDAQ:SEDG) – SolarEdge revised its revenue forecast for the third quarter from $880-920 million to $720-730 million, sending its shares down 22.7% in Friday pre-market trading-fair. Significant cancellations and rejections from European distributors were cited as reasons. This also hit shares of Enphase Energy  (NASDAQ:ENPH) down -13.5% and First Solar  (NASDAQ:FSLR), -4.7%.

Earnings

Intuitive Surgical  (NASDAQ:ISRG) – Intuitive Surgical shares suffered an 8.2% drop in Friday’s premarket after the company missed third-quarter revenue expectations, reporting $1.74 billion in instead of the expected US$ 1.77 billion, according to LSEG. However, the company surpassed analysts’ expectations by reporting adjusted earnings per share of $1.46, while $1.41 per share was expected.

CSX Corporation  (NASDAQ:CSX) – The transportation company posted third-quarter earnings that fell short of analyst projections. CSX reported a profit of 42 cents per share, while LSEG analysts’ forecast was 43 cents per share. However, revenue exceeded expectations, reaching $3.57 billion, compared to analysts’ forecast of $3.55 billion.

Knight-Swift Transportation  (NYSE:KNX) – The shares of the freight transportation company rose by 17.7% in pre-market trading following the release of its third-quarter results, which showed an earnings beat. Knight-Swift reported an adjusted profit of 41 cents per share, surpassing analysts’ estimates of 36 cents per share, according to LSEG. Additionally, the company’s revenue reached $2.02 billion, exceeding analysts’ expectations of $1.89 billion.

Freeport-McMoRan  (NYSE:FCX) – Copper miner Freeport-McMoRan beat profit expectations in the third quarter, but plans to slow expansion due to inflation and falling copper prices. This reflects concerns about the supply of minerals essential for the clean energy transition. Freeport reported third-quarter net income of $454 million, or 31 cents per share, compared with $404 million, or 28 cents per share, in the same quarter a year ago.

Union Pacific  (NYSE:UNP) – Union Pacific faces inflationary pressures and renegotiates contracts while warning about strike at Detroit Three assembly plants. The company adopts a flexible approach to negotiations due to inflation and weak consumer demand. Shares rose 0.77% in premarket trading after reporting a smaller-than-expected drop in third-quarter earnings per share to $2.51, according to LSEG data. Quarterly operating income fell 10% to $5.94 billion, while analysts estimated $5.99 billion.

Western Alliance  (NYSE:WAL) – The regional bank announced third-quarter earnings of $1.97 per share, beating FactSet analyst estimates of $1.91 per share. Additionally, net interest income reached US$587 million, exceeding analysts’ expectations of US$559.1 million.

Blackstone  (NYSE:BX) – Blackstone reported a 12% drop in third-quarter distributable earnings as high interest rates impacted asset valuations and discouraged asset sales. Chief Executive Stephen Schwarzman mentioned that the company chose to sell fewer assets due to the unfavorable environment. Blackstone declared a dividend of 80 cents per share, up from 79 cents in the previous quarter.

WD-40  (NASDAQ:WDFC) – The lubricant maker announced revenue of $140.5 million in the fourth quarter, representing an 8% increase over the $130.4 million recorded a year earlier. Additionally, diluted earnings per share were $1.21, compared to $1.08 a year ago.

American Airlines  (NASDAQ:AAL) – American Airlines beat estimates with adjusted earnings of 38 cents per share in the third quarter, boosted by international demand for long-haul flights due to a stronger dollar, while holiday bookings remained stable. The company lowered its profit forecast for the year due to higher expenses, including increased wages following a labor agreement with pilots.

AT&T  (NYSE:T) – AT&T raised its annual free cash flow forecast due to subscriber growth driven by promotions and phone upgrades. It added 468,000 net postpaid wireless subscribers in the third quarter, surpassing expectations of 398,200 additions. Revenue was $30.4 billion, exceeding estimates of $30.19 billion, according to LSEG data. The adjusted earnings per share of 64 cents beat the expectation of 62 cents. AT&T has been cutting expenses and expanded its cost-cutting plan by $2 billion.