S&P 500 futures are down 8 points, trading 0.2% below fair value. Nasdaq 100 futures are down 50 points, trading 0.3% below fair value. Dow Jones Industrial Average futures are down 34 points, trading 0.1% below fair value.
There's a negative mood in early trading ahead of the Personal Income and Spending report for April, which includes the Fed's preferred inflation gauge, the PCE Price Indexes, at 8:30 ET.
Investors are processing mixed earnings news before the report. Costco (COST, Financial) shares are slightly down after better-than-expected earnings. Dell (DELL, Financial) shares are significantly lower due to disappointing guidance. Gap (GPS) shares are up significantly following strong quarterly results.
Treasury yields are mostly unchanged. The 10-year note yield is steady at 4.55%, and the 2-year note yield is up one basis point to 4.94%.
In corporate news:
- Costco (COST, Financial) beats earnings by $0.07, reports revenues in-line, adjusted comparable sales up 6.5%.
- Dell (DELL, Financial) reports in-line EPS, beats on revenue, but guides Q2 EPS below consensus. Raises FY25 EPS and revenue guidance.
- Gap (GPS) beats Q1 revenue expectations, comps up 3%, and projects Q2 and FY24 net sales growth in-line with consensus.
- Nordstrom (JWN) misses earnings by $0.17, beats on revenue, and guides FY25 EPS in-line.
- Ulta Beauty (ULTA) beats earnings by $0.22, reports revenues in-line, but guides FY25 EPS and revenues below consensus.
- NetApp (NTAP) beats earnings by $0.01, reports revenues in-line, guides JulQ EPS and revenues in-line, and increases dividend with a new $1 billion share repurchase authorization.
- Marvell (MRVL) reports in-line EPS and revenues, guides Q2 EPS and revenues in-line.
- Zscaler (ZS) beats earnings by $0.22, beats on revenue, and guides Q4 EPS above consensus with in-line revenues.
- MongoDB (MDB) beats earnings by $0.13, beats on revenue, but guides Q2 and FY25 EPS and revenues below consensus.
- SentinelOne (S) beats earnings by $0.05, beats on revenue, guides Q2 revenues mostly in-line, and guides FY25 revenues below consensus.
Reviewing overnight developments:
Today's News
The Federal Reserve's preferred inflation gauge, the core PCE Price Index, increased by 0.2% in April, aligning with expectations and slightly cooling from March's 0.3% pace. The Bureau of Economic Analysis also reported that consumer spending growth eased more than anticipated, while personal income growth retreated from a strong March print. On a year-over-year basis, core PCE rose 2.8%, consistent with consensus and March's pace. Including food and energy, the PCE Price Index rose 0.3% month-over-month and 2.7% year-over-year, both unchanged from March.
Despite a 127% year-to-date gain, Dell Technologies (DELL, Financial) saw its shares plummet 16% in premarket trading on Friday. The decline was attributed to factors such as a lower-than-expected AI server backlog of $3.8 billion and a projected decline in gross margin for fiscal 2025. However, Bank of America analyst Wamsi Mohan remains optimistic about Dell's future, emphasizing the early stages of AI adoption and reiterating a Buy rating.
Costco (COST, Financial) impressed analysts with its Q1 earnings report, leading Wells Fargo analyst Edward Kelly to highlight the retailer's emphasis on quality and value. Costco's comparable sales outpaced peers, prompting the firm to raise its price target to $775. Additionally, Costco CFO Gary Millerchip hinted at a potential membership fee increase, stating that the company is evaluating the right timing for such a move.
Tesla (TSLA, Financial) is recalling 125,227 vehicles due to a malfunction in the seat belt warning system, according to the National Highway Traffic Safety Administration. The recall affects various models, including the 2012-2024 Model S and 2015-2024 Model X. Tesla will release an over-the-air software update to address the issue, with owner notification letters expected to be mailed in July 2024.
Pfizer (PFE, Financial) received a positive opinion from the European Medicines Agency's Committee for Medicinal Products for Human Use for its gene therapy, Durveqtix, targeting hemophilia B. The recommendation, based on data from an ongoing phase 3 trial, will be reviewed by the European Commission for final marketing authorization. If approved, certain EU adults with severe hemophilia B will benefit from this one-time infusion therapy.
Bill Ackman (Trades, Portfolio) plans to take his investment firm, Pershing Square, public next year. As a precursor to the IPO, Ackman will sell a stake in the firm to investors in a funding round, valuing Pershing Square at approximately $10.5 billion. This move follows Pershing Square's exit from Lowe's (LOW, Financial) and a reduction in its holdings in Chipotle Mexican Grill (CMG, Financial).
Meta Platforms (META, Financial) and BMO Financial (BMO, Financial) were among the companies that announced dividend increases this week. Meta's dividend rose by 1,400.2% to $0.50 per share, while BMO's dividend increased by 2.6% to $1.55. Additionally, companies like Merck (MRK, Financial) and Dick's Sporting Goods (DKS, Financial) declared dividends, with Cigna (CI) and Halliburton (HAL) seeing upcoming ex-dividend dates.
Shares of Chinese electric-vehicle maker NIO (NIO, Financial) surged 10% in Hong Kong on expectations of record May deliveries. Analysts predict NIO could deliver over 20,000 units in May, driven by continued discounts on car prices and batteries. NIO previously delivered 15,620 vehicles in April, marking a 134.6% year-over-year increase.
Apple (AAPL, Financial) is reportedly planning to overhaul its Siri voice assistant with an AI-centric boost, potentially increasing productivity and driving an iPhone upgrade cycle. Bank of America analyst Wamsi Mohan maintains a Buy rating on Apple, citing a multi-year upgrade cycle, gross margin upside, and secular services growth.
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