Today, the stock market looks set to open higher, with a slight uptick in futures indicating a positive start. This comes after a dip yesterday, with investors now keen on buying at lower prices. Big tech stocks continue to show strength, and a decrease in market rates is also helping the mood. Specifically, the 10-year note yield has fallen to 4.27%, while the 2-year note yield remains steady at 4.69%.
There's a buzz around earnings news this morning. Adobe (ADBE, Financial) and Ulta Beauty (ULTA, Financial) are seeing their share prices drop before the market opens, due to disappointing earnings reports or future earnings expectations. Additionally, a packed schedule of economic reports today includes updates on import and export prices, industrial production, and consumer sentiment.
In corporate highlights:
- Adobe (ADBE, Financial) reported earnings that beat expectations by $0.10, with revenue as expected. However, its future revenue forecast is below what analysts were hoping for. On a brighter note, Adobe announced a new $25 billion stock buyback program.
- Ulta Beauty (ULTA, Financial) also beat earnings expectations and reported expected revenue. But its future earnings forecast is not as high as anticipated, despite predicting higher future revenue. Ulta is also expanding into Mexico through a joint venture and has approved $2 billion for stock repurchases.
- Several other companies, including Smartsheet (SMAR, Financial), PagerDuty (PD, Financial), and Jabil (JBL, Financial), shared their earnings with mixed results and future guidance that caught investors' attention.
- Noteworthy developments include Madrigal Pharmaceuticals (MDGL, Financial) receiving FDA approval for a new treatment, and Intuitive Surgical (ISRG) getting FDA clearance for its latest robotic system. Meanwhile, McDonald's (MCD) faced a system outage, and United Airlines (UAL) is leasing Airbus jets due to Boeing delivery delays.
Overnight, stock markets in the Asia-Pacific region mostly closed lower, with a few exceptions. Economic updates from China, Japan, South Korea, and India provided mixed signals. In Europe, stock indices are aiming for a positive end to the week, with inflation and retail sales data in focus. Central bank comments and political news are also influencing European markets.
Today's News
Shares of Madrigal Pharmaceuticals (MDGL, Financial) surged in premarket trading as the company received FDA approval for Rezdiffra, a groundbreaking treatment for nonalcoholic steatohepatitis (NASH), marking a significant milestone as the first U.S.-approved therapy for the condition. The FDA's accelerated approval pathway necessitates further evidence to confirm Rezdiffra's benefits, but the initial approval has already sparked a positive reaction from Wall Street, with B. Riley upgrading the stock to Neutral from Sell.
Adobe (ADBE, Financial) experienced a decline in premarket trading following mixed fiscal first-quarter results and guidance. Concerns were raised about Adobe's short-term ability to monetize artificial intelligence, despite Bank of America analysts highlighting Firefly's potential for future monetization paths. The slower-than-expected monetization ramp led to a lowered price target, though Adobe remains viewed as an early beneficiary of AI technology.
Stock index futures indicated a positive start to the trading day, with slight increases across major indexes. This comes as investors anticipate further economic data releases, including the Empire State Manufacturing Survey and import/export prices. Meanwhile, Treasury yields saw a slight decrease, with both the 2 Year and 10 Year Treasury yields dipping slightly.
Several companies faced declines following their earnings releases, with Lucy Scientific Discovery (LSDI, Financial), Kopin Corp. (KOPN, Financial), and Babcock & Wilcox Enterprises (BW, Financial) among the notable premarket losers. Adobe (ADBE, Financial) also featured in this list, with its shares falling 11% after the earnings announcement.
GigaCloud Technology (GCT, Financial) reported impressive fourth-quarter results, showcasing significant year-over-year revenue growth and an increase in active sellers and buyers on its marketplace. The company's performance highlights the growing demand for its e-commerce platform and services.
Snowflake (SNOW, Financial) shares received a boost from an upgrade by Guggenheim, citing an attractive near-term setup despite the company facing numerous challenges. The upgrade reflects a positive outlook on Snowflake's core data warehousing capabilities and its potential for growth.
The occurrence of triple witching day brought heightened volatility and trading volumes due to the simultaneous expiration of various options and futures contracts. This event, happening four times a year, often leads to increased market activity and opportunities for arbitrage.
Dividend activity this week featured increases from Dick’s Sporting Goods (DKS, Financial) and Colgate-Palmolive (CL, Financial), with Microsoft (MSFT, Financial) and Kroger (KR, Financial) also making declarations. The upcoming week will see ex-dividend dates for Broadcom (AVGO, Financial) and Phillip Morris (PM, Financial), highlighting ongoing dividend actions in the market.
Uber (UBER, Financial) and Lyft (LYFT, Financial) announced plans to halt operations in Minneapolis following the city council's decision to increase driver wages, a move that the companies argue makes their business model unsustainable in the city. The ordinance requires ride-hailing services to pay drivers a minimum hourly wage, sparking debate over the impact on workers and service availability.
W. P. Carey (WPC, Financial) announced an increase in its quarterly dividend, reflecting the company's commitment to returning value to shareholders. The dividend hike is part of W. P. Carey's ongoing efforts to provide consistent and growing income to its investors.
Gainers in the premarket included Geron (GERN, Financial) and Cardlytics (CDLX, Financial), with significant movements following FDA advisory backing and optimistic forecasts, respectively. These movements highlight the impact of regulatory decisions and company outlooks on stock performance.
Microsoft (MSFT, Financial) raised concerns with the EU antitrust regulator about Alphabet's (GOOG, GOOGL) advantage in generative AI, citing Google's comprehensive integration across AI layers. This highlights the competitive dynamics in the rapidly evolving AI landscape.
Steel Dynamics (STLD, Financial) provided an upbeat earnings forecast and announced a dividend increase, signaling confidence in its operational performance and commitment to shareholder returns. The company anticipates stronger profitability from its steel operations and "historically strong" results from steel fabrication operations.
Arcadium Lithium (ALTM, Financial) faced a construction halt on key projects in Argentina pending an evaluation of the local indigenous community's impact, underscoring the challenges of balancing development with environmental and social considerations.
El Salvador moved a significant portion of its bitcoin holdings to a cold wallet, emphasizing the country's commitment to the cryptocurrency despite the volatile market. This move reflects ongoing efforts to integrate bitcoin into the nation's financial system.
Cardlytics (CDLX, Financial) saw a notable premarket jump after issuing a positive forecast and receiving an upgrade from Craig-Hallum. The company's improving fundamentals and strategic initiatives are expected to drive growth and enhance its capital structure.
Pure Storage (PSTG, Financial) shares edged higher as Citi initiated coverage with a Buy rating, citing the company's all-flash portfolio and potential growth catalysts from AI and machine learning workloads. This reflects a positive outlook on Pure Storage's market positioning and future prospects.
BofA initiated coverage on TKO (TKO, Financial) with a Buy rating, highlighting the combined entity of WWE and UFC's growth potential and synergies. The analysis points to an attractive combination of revenue growth, margin expansion, and free cash flow generation for TKO.
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