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.
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