Global equities traded mixed ahead of today’s New York open, with weakness in Asia being offset by modest optimism across Europe and the United States following signals of a near-term US Fed rate cut.
St. Louis Fed President, James Bullard, one of Federal Reserve’s most dovish members, noted that a “darkened” narrative on global trade could mean a US economy “that is expected to grow more slowly going forward, with some risk that the slowdown could be sharper than expected due to ongoing global trade regime uncertainty”.
Bullard added to his comments yesterday, stating that a “downward policy rate adjustment may be warranted soon”, triggering a late-session rally that buoyed the Dow Jones (+0.11%) into positive territory on Monday.
This morning’s move comes off of yesterday’s session, where the Technology sector (-1.75%) dragged on Wall Street after threats of antitrust probes into some of the biggest US tech companies including Alphabet (GOOGL: -6.12%), Facebook (FB: -7.51%), Amazon (AMZN: -4.64%) and Apple (AAPL: -1.01%) all contributed to sector losses.
The S&P 500 shed -0.25% of its value, weighed upon most heavily by the Communications Services sector (-2.61%), which counts Facebook and Alphabet among its members.
The Nasdaq Composite retreated -2.20%, leaving the tech-heavy index more than -10% below its recent peak on May 3, past the threshold that defines a technical correction.
Ahead, market participants are expected to pay close attention to comments from Fed Chairman, Jerome Powell, during his speech on Monetary Policy Strategy, Tools and Communication Practices held by the Chicago Federal Reserve Bank at 9:45am EST.
Meanwhile, also in today’s economic calendar, Tuesday includes; Factory Orders for April at 10am EST.
In corporate news; Salesforce.com (CRM), Ambarella (AMBA), Guidewire Software (GWRE), Cracker Barrel Old Country Store (CBRL), GameStop (GME), Tiffany (TIF), Lands’ End (LE), HealthEquity (HQY) and Navistar International (NAV) are amongst the major companies scheduled to report their financials today.
TODAY’S TOP HEADLINES
China & Trade: China warns citizens against travel to the US. (CNBC)
Beijing has stepped up its warnings against the US by cautioning about working, studying and traveling in America. China’s Ministry of Foreign Affairs announced a safety warning on Tuesday for Chinese citizens and companies in the US, stating; “Recently, US law enforcement agencies have on multiple occasions used methods such as entry and exit checks and on-site interviews to harass Chinese citizens in the US”.
Politics & Interest Rates: Trade Risks Prompt Predictions for Fed Rate Cuts. (The WSJ)
President Trump has pursued tariffs and wants the Federal Reserve to cut rates. Economists are projecting that uncertainty created by the administration’s actions on the former will prompt the Fed to deliver the latter later this year.
ECONOMIC CALENDAR
Today’s Economical Announcements.
09:45AM – ★★★ – Fed Chair Powell Speaks
10:00AM – ★★☆ – Factory Orders (MoM) (Apr) (Previous: 1.9%)
STOCKS IN THE SPOTLIGHT
Pre-Market Movers & News Related Stocks.
Box (BOX): [EARNINGS] Reported an adjusted quarterly loss of 3 cents per share, 2 cents a share smaller than Wall Street had anticipated. The cloud storage company’s revenue was also above estimates, however Box lowered its revenue forecast for the full year.
Coupa Software (COUP): [EARNINGS] Earned an adjusted 3 cents per share for its latest quarter, compared to analysts’ forecasts for a loss of 4 cents per share. The business software company’s revenue also came in above estimates. Coupa raised its full-year revenue forecast, as well as the lower end of its earnings outlook range.
Tiffany (TIF): [EARNINGS] Earned $1.03 per share for the first quarter, a penny a share above estimates. Revenue came in below forecasts, however, and a same-store sales decline of 5% was larger than the 1.2% decline anticipated. Tiffany points to currency headwinds and “dramatically lower” spending by foreign tourists.
Lands’ End (LE): [EARNINGS] Lost 21 cents per share for its latest quarter, smaller than the 31 cents a share loss that analysts had been projecting. Revenue beat estimates, and Lands’ End reported a same-store sales increase of 12% for company operated stores.
Fiat Chrysler (FCAU): [NEWS] Fiat Chrysler’s bid to buy French automaker Renault is running into opposition from activist hedge fund CIAM. The fund wrote to the board of Renault saying the proposed $35 billion transaction is “opportunistic” and strongly favors Fiat Chrysler.
Uber (UBER): [RATING] Both Mizuho and Deutsche Bank rate Uber a “buy” in new coverage. Deutsche Bank calls the ride-hailing service the most attractive internet IPO since Facebook, while Mizuho points to Uber’s category leading position in ride sharing.
Netflix (NFLX): [UPGRADE] Upgraded to “buy” from “hold” at Loop Capital, which raised the price target to $425, with the firm citing an “unstoppable lead” in subscription video streaming.
Tesla (TSLA): [NEWS] Is facing skepticism about the depth of demand for its electric cars, according to an article in today’s Wall Street Journal.
Match Group (MTCH): [NEWS] Match Group’s Tinder dating app has been ordered by Russian authorities to share user data and messages with the government and with intelligence agencies.
Navistar (NAV): [EARNINGS] Reported better-than-expected earnings and revenue for its fiscal second quarter, and also raised its full-year revenue forecast on higher-than-projected deliveries of trucks and buses.
Bemis (BMS): [NEWS] Bemis will swap places with toymaker Mattel by joining the S&P 500 while Mattel will join the S&P MidCap 400. The moves will be effective prior to the open of trading on Friday June 7.
Amazon.com (AMZN): [REVIEW] Loop Capital raised its price target on Amazon shares to $2,380 from $2,200, maintaining a “buy” rating on the company.
Facebook (FB): [REVIEW] Loop Capital reiterated a “buy” rating on Facebook while maintaining a $200 price target.
MOMENTUM STOCKS
GAINERS: MRTX, DG
DECLINERS: ZYNE, CNC, SMAR, DOCU, PFPT, RPD, FB, MRCY, DELL
TODAY’S IPOs
None.