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Monday’s Wall Street Highlights: Philips, Chevron, Textainer, Okta, Roivant, and more

Fernanda T
Latest News
October 23 2023 03:18AM

US index futures are trading lower in the pre-market on Monday due to uncertainties about the direction of interest rates in the U.S. and escalating tensions between Israel and Hamas, leading to investor concerns.

As of 06:55, Dow Jones futures (DOWI:DJI) were down 186 points, or 0.56%. S&P 500 futures dropped by 0.56%, and Nasdaq-100 futures fell by 0.65%. The 10-year Treasury yield stood at 5.002%, levels not seen since 2007.

In the commodities market, November West Texas Intermediate crude oil decreased by 0.70% to $87.46 per barrel. December Brent crude fell by 0.49%, trading around $91.71 per barrel. The 62% concentration iron ore traded on the Dalian exchange dropped 2.45% to $114.03 per ton.

On Monday’s economic calendar, investors are awaiting the Chicago national activity index for September at 08:30. At 18:30, Republicans will decide on a new candidate for the House Speaker position.

Over the weekend, tensions between Israel and Hamas seemed to have eased, allowing for humanitarian aid to be delivered to the Gaza Strip.

In Asia, market indices closed lower, influenced by events in the Middle East and expectations regarding U.S. interest rates. In China, beyond concerns with the real estate market, there’s attention on an investigation into Foxconn, Apple’s (NASDAQ:AAPL) main partner in the country, which may have political motivations. As a result, the company’s shares plummeted by 10%.

In Europe, amidst a quieter economic schedule, markets are showing a decline. The Eurozone consumer confidence preview for October will be released at 10:00 AM, with projections indicating a drop of 18.20 points, suggesting a more pessimistic outlook compared to the previous month.

Stock markets closed lower on Friday due to increasing concerns about the potential escalation of the conflict between Israel and Hamas in the Middle East region. The price of oil declined after reaching the $90 per barrel mark. Yields on 10-year U.S. Treasury bonds, which had approached 5%, retreated due to increased demand for American assets considered safer by investors.

The Dow Jones fell 286.89 points or 0.86% to 33,127.28 points. The S&P 500 dropped 53.84 points or 1.26% to 4,224.16 points. The Nasdaq Composite plummeted 202.37 points or 1.53% to 12,983.81 points. For the week, the Nasdaq declined by 3.2%, the S&P 500 retreated by 2.4%, and the Dow fell by 1.6%.

Loretta Mester, President of the Federal Reserve of Cleveland, commented that the U.S. central bank may soon conclude its phase of monetary tightening, as long as the economy follows the projected path. Regarding corporate financial reports, the situation has been favorable so far: out of the 86 companies listed on the S&P 500 that have reported their results, 74% exceeded profit expectations.

On Monday’s corporate earnings front, investors will be keeping an eye on reports from Philips (NYSE:PHG), Bank of Marin (NASDAQ:BMRC), HBT Financial (NASDAQ:HBT), Sandvik (USOTC:SDVKY), before of market opening. After the closing, results from Cliffs (NYSE:CLF), Cadence (NASDAQ:CDNS), Logitech (NASDAQ:LOGI), Medpace (NASDAQ:MEDP), among others, will be awaited.

Wall Street Corporate Highlights for Today

Alphabet  (NASDAQ:GOOGL) – Japanese competition regulator the Japan Fair Trade Commission (JFTC) announced an investigation into Google’s possible violation of anti-monopoly laws in its web search services, similar to actions taken by regulators in other regions.

Nvidia  (NASDAQ:NVDA) – Nvidia CEO Jensen Huang admitted that building the company was “a million times harder than expected.” He highlighted the importance of believing that it is not that difficult and expressed concern about letting employees down. Huang also noted that AI offers a huge opportunity for business and advised people to learn how to use it to adapt to changes in the job market.

Foxconn  (USOTC:FXCOF) – China is investigating iPhone maker Foxconn, raising risks for Taiwanese companies amid US-China tensions. Foxconn has been the target of raids by Chinese authorities, including tax inspections and investigations into land use in Henan and Hubei provinces. The investigation comes as Foxconn considers investments in India and its founder, Terry Gou, runs in Taiwan’s presidential election. China may be putting pressure on the company due to its plans to diversify outside of China.

Okta  (NASDAQ:OKTA) – Okta reported that a hacker used stolen credentials to access its support system. The incident affected about 1% of its 18,400 customers, resulting in the company’s shares falling to $74.10.

Novo Nordisk
  (NYSE:NVO) – Growth in demand for appetite-suppressing medications, such as Novo Nordisk’s Wegovy, offers opportunities for the food industry. The market’s initial reaction may be exaggerated, but uncertainty remains about the long-term impact. Companies like Nestlé are developing products to accompany these drugs. Junk food manufacturers and restaurant chains could be most affected.

Koninklijke Philips NV  (NYSE:PHG) – Philips reported solid quarterly earnings and an optimistic outlook for 2023. Topline profit more than doubled ($483.3 million) and comparable sales increased 11%. However, new orders fell 9%, affected by government regulations in China. Philips expects sales growth of 6-7% in 2023, but analysts have expressed concerns due to modest near-term growth. The company faces challenges arising from a global respirator recall and regulatory investigations. Its shares have lost about 70% of their value over the past two years.

Roivant  Sciences   (NASDAQ:ROIV)Pfizer   (NYSE:PFE)Roche (LSE:0QQ6) acquired Telavant, a developer of treatments for inflammatory bowel diseases from Roivant Holdings and Pfizer, for US$7.1 billion, securing rights to the experimental drug RVT -3101 for inflammatory bowel diseases in the US and Japan. This is part of Roche’s diversification strategy under new CEO Thomas Schinecker.

Chevron  (NYSE:CVX),  Hess Corp  (NYSE:HES) – Chevron announced the acquisition of Hess in an all-stock deal worth $53 billion. The deal includes assets in Guyana and adds Chevron’s shale position in the US. Hess shareholders will receive 1.0250 Chevron shares for each Hess share, resulting in a total company value of $60 billion.

Toyota  (NYSE:TM) – Toyota will gradually resume production at factories affected by the supplier accident. The world’s largest automaker plans to return to full production at all affected factories following the disruption caused by the Chuo Spring incident. Additionally, Toyota is pressuring the Indian government to reduce taxes on hybrid vehicles by up to 20%, claiming they are less polluting than gasoline cars. India taxes hybrids at 43%, while electrics are taxed at just 5%. Toyota argues that the difference should be greater, requesting proportional political support. The company wants to expand production of hybrids to meet Indian demand.

Tesla  (NASDAQ:TSLA) – Tesla shares have had a rough week due to earnings below expectations. Analyst Tom Narayan suggests Tesla could become an auto parts supplier, but the parts industry has lower margins. Tesla is valued at nearly $1 trillion, far above Narayan’s price target of $301 per share. About 42% of analysts rate the stock a “Buy,” with an average price target of $243 per share. Tesla shares have remained flat over the past 12 months, while the S&P 500 and Nasdaq Composite are up 11% and 19%, respectively.

Farfetch  (NYSE:FTCH) – The EU has approved Farfetch’s purchase of a stake in Yoox Net-A-Porter, according to Cartier owner Richemont. The agreement depends on additional conditions. Farfetch faces financial challenges, and Richemont plans to move its online business to Farfetch technology. The approval is seen as positive, but uncertainties persist, while Farfetch’s problems could affect the industry and trading partners.

Lululemon  (NASDAQ:LULU) – Billionaire Chip Wilson, founder of Lululemon, faces muscular dystrophy and has invested US$100 million in research to find a cure. 

Textainer Group  (NYSE:TGH) – Textainer Group Holdings, a container leasing company, has agreed to be acquired by Stonepeak, an infrastructure investor, for approximately $2.1 billion. Shareholders will receive $50 per share in cash, sending shares up 42.1% to $48.54 in pre-market trading. The deal has a total value of about $7.4 billion, including Textainer’s debt.

Goldman Sachs  (NYSE:GS) – Former Goldman Sachs veteran Luke Sarsfield is set to become chief executive of asset manager P10, which specializes in private market solutions. The change will be announced soon, according to anonymous sources cited by the Wall Street Journal. Sarsfield, who worked for more than 23 years at Goldman Sachs, was named global co-head of the firm’s asset management business last year.

Morgan Stanley  (NYSE:MS) – Gaming platforms such as Microsoft‘s Xbox (NASDAQ:MSFT) and Sony‘s PlayStation (NYSE:SONY) will lead the adoption of AI in the gaming industry, Morgan Stanley predicts. They will become the main distribution of AI tools, bringing changes in costs and competition. Large AAA publishers like Ubisoft  (EU:UBI) stand to benefit, while smaller ones may face challenges. Additionally, Michael Wilson, strategist at Morgan Stanley, predicts risks to a rebound in US stocks later in the year due to elevated earnings estimates and restrictive Federal Reserve policy. Wilson has a target of 3,900 for the S&P 500 by the end of the year, nearly 8% below current levels, citing challenges in earnings, valuations and politics.

Vedanta  (NYSE:VEDL) – Sonal Shrivastava, chief financial officer at Vedanta, has announced her departure, potentially marking the third CFO to leave the Anil Agarwal-controlled company in recent years. Agarwal is searching for a replacement as Vedanta faces bond payments of around $3 billion over the next two years. The company recently approved a plan to split into six listed companies as part of a restructuring.

American Express  (NYSE:AXP) – American Express beat profit expectations in the third quarter, thanks to resilient spending by its wealthy customers amid economic concerns. AmEx reported earnings of $3.30 per share, up from $2.47 per share a year ago. On average, analysts expected earnings of $2.94 per share, according to data from LSEG IBES. Provisions for credit losses increased from last year, but demand for premium products remained strong. The company expects its annual profit to be in line with previous forecasts.