Here are five things you need to know for Friday, August 19:
1. — Stock futures fall as rate bets rise, inflation worries mount
U.S. stock futures fell on Friday as the dollar surged and oil prices tumbled as investors worried that soaring inflation in Europe, weaker growth in China and rising Fed interest rates will upset the recent rally in global equities.
A dovish stance on July’s Fed policy meeting minutes, which tipped stocks toward a firmer close on Thursday, was challenged by a range of Fed policymakers amid improving data job market and the overall outperformance of the US economy relative to its global peers.
St. Louis Fed President James Bullard told the Wall Street Journal he sees no need to “extend interest rate hikes into next year” as he pleads for faster and bigger rate hikes that would take the Fed Funds rate in a range of 3.75% to 4% by the end of December.
This was largely echoed by San Francisco Fed President Mary Daly, who said a 75 basis point rate hike next month could be a “reasonable” reaction to inflation and economic data. ‘use.
The CME Group’s FedWatch now indicates a 45.5% probability of a 75 basis point rate hike on September 21, up from 41% in yesterday’s session.
The comments, placed against worrying levels of inflation in Europe, where prices hit a two-decade high of 8.9% last month, reminded investors that the post-pandemic economy faces a myriad of challenges. challenges.
One such challenge remains China, where authorities have now warned of an impending drought, adding to a list of woes in the world’s second-largest economy that has sparked talk of a People’s Bank rate cut. from China.
The Chinese yuan was pegged near two-year lows against the US dollar, while the dollar index rose 0.2% to trade at 107.690 against a basket of six comparable global currencies.
Benchmark yields on 10-year notes, which move in the opposite direction of prices, rose 6 basis points from yesterday to 2.945% while 2-year notes were pegged at 3.261%
European stocks fell following a troubling reading of factory gate inflation in Germany, the region’s biggest economy, fueled in part by a 105% year-on-year rise energy input prices. Europe’s benchmark Stoxx 600 index fell 0.44% at the start of the Frankfurt session, following a 0.48% drop in the MSCI regional index ex-Japan in Asia.
On Wall Street, futures tied to the S&P 500 point to an opening bell drop of 32 points while those tied to the Dow Jones Industrial Average are priced for a drop of 190 points. Futures linked to the technology-focused Nasdaq point to a decline of 137 points.
2. — Applied Materials shares rise on pace with third-quarter earnings, outlook
Applied materials (AMAT) Shares rose in premarket trading after the semiconductor equipment maker posted better-than-expected third-quarter earnings and a strong near-term outlook.
Adjusted profit for the three months ending July, the group’s third fiscal quarter, rose 2% from a year ago to $1.94 per share, firmly beating Street’s consensus forecast of 1 $.79 per share as revenue rose 5.1% to $6.52 billion.
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Applied Materials said it forecast current-quarter revenue in the region of $6.65 billion, with a margin of error of $400 million on either side, even as CEO Gary Dickerson warned that the group would remain “constrained to supply” for “several quarters”.
Applied Materials shares rose 0.9% in premarket trading to point to an opening price of $109.25 each.
3. — Deere Shares In Focus ahead of second quarter results
Deere & Co. (OF) Shares edged higher in premarket trading ahead of the industry group’s third-quarter results ahead of the opening bell on Friday.
Deere, an agricultural equipment maker rival to Caterpillar, is expected to post a 23% rise in June quarter revenue, which is forecast at $12.78 billion, amid soaring crop prices that have helped to one of the fastest food price inflations on record. Earnings are expected to rise 27.5% to $6.69 per share.
Supply chain grunts, transportation costs and rising payrolls are expected to weigh on operating margins, but the group is expected to improve its outlook for fiscal 2022, which currently forecasts net income including between $7 billion and $7.4 billion with strong demand for agriculture and construction equipment, increased infrastructure spending and favorable crop prices.
Deere shares rose 0.95% in premarket trading to show an opening price of $371.50 each.
4. — Bed, Bath & Beyond tumble as Cohen closes stock sale
Shares of Bed, Bath & Beyond tumbled in premarket trading after Securities and Exchange Commission filings late Thursday indicated Ryan Cohen, the retailer’s second-largest shareholder, had completely exited his nearly 12% stake in the group.
Cohen’s RC Ventures no longer owns Bed, Bath & Beyond shares, filings show, after grossing nearly $70 million from the sale of 9.45 million shares over the past two days at prices including between $26.2713 and $18.6848 per share.
Bed, Bath & Beyond said on Thursday it was “working rapidly over the past few weeks with external financial advisers and lenders on strengthening our balance sheet”, and would notify investors before the end of the month of any further plans to raise. of capital.
Shares of Bed, Bath & Beyond were marked down 40.27% in premarket trading to point to an opening price of $11.08 each, a move that would mark a two-day decline of around 62 %.
5. — Foot Locker revenue on deck as Nike Shift raises concerns
Foot Locker will close out a tough week of results for U.S. retailers on Friday as sporting goods specialists update their July quarter performance.
Foot locker (Florida) expected to see second-quarter earnings fall more than 63% from a year ago to around 81 cents a share, with revenue down 9.2% to $2.07 billion, according to Street forecasts .
Nike (NKE) which typically accounts for around 75% of Foot Locker’s sales in any given year, is deeply shifting its focus to direct-to-consumer sales, bypassing retailers such as Foot Locker as it seeks to better control its chain global supply.
Foot Locker warned in February that Nike would likely only account for around 60% of sales this year, reducing sales growth at retail stores and lower-than-expected profits.
Foot Locker shares closed at $31.98 each yesterday on the New York Stock Exchange, a 1.45% decline on the session that extended their year-to-date slump to around 28.6%.