The S&P 500 futures are up 18 points, trading 0.3% above fair value. The Nasdaq 100 futures are up 111 points, trading 0.6% above fair value. The Dow Jones Industrial Average futures are up 85 points, trading 0.2% above fair value.
There's a positive trend in early trading, driven by gains in large-cap stocks continuing from yesterday's rebound. Calm action in Treasuries also helps. The 10-year note yield is down two basis points to 4.32%, and the 2-year note yield is unchanged at 4.77%.
The weekly MBA Mortgage Applications Index fell 5.2% after last week's 5.7% drop. The ISM Non-Manufacturing Index for May will be released at 10:00 ET. Other data today include:
- 8:15 ET: May ADP Employment Change (consensus 175,000; prior 192,000)
- 9:45 ET: Final May S&P Global U.S. Services PMI (prior 51.3)
- 10:30 ET: Weekly crude oil inventories (prior -4.16 mln)
In corporate news:
Today's News
HP Enterprise (HPE, Financial) has made significant strides in the artificial intelligence sector, catching Wall Street's attention. The company reported fiscal second-quarter results and raised its full-year guidance, driven by a robust performance in its server segment. Revenue in this segment, the largest for HPE, soared 18% year-over-year to $3.9 billion, with AI revenue doubling sequentially. Despite declines in other areas like Intelligent Edge and hybrid cloud, shares surged over 16% in premarket trading. HPE is also collaborating with Microsoft (MSFT) and OpenAI to enhance its AI infrastructure capacity and services. UBS analyst David Vogt upgraded his price target for HPE to $17 from $16, while maintaining a Neutral rating.
Alphabet (GOOG, Financial) (GOOGL, Financial), Google's parent company, has appointed Anat Ashkenazi as its new chief financial officer. Currently serving as executive vice president and CFO at Eli Lilly (LLY, Financial), Ashkenazi will assume her new role on July 31, 2024. This move comes nearly a year after Alphabet announced that current CFO Ruth Porat would transition to a new role as president and chief investment officer. Ashkenazi's extensive experience at Eli Lilly, including roles in finance, strategy, and operations, makes her a valuable addition to Alphabet's leadership team.
Developers of drugs targeting nonalcoholic steatohepatitis (NASH) saw their stocks trend lower after detailed data from a mid-stage trial for Eli Lilly's (LLY, Financial) weight-loss drug tirzepatide was released. Madrigal Pharmaceuticals (MDGL, Financial), Sagimet Biosciences (SGMT, Financial), 89bio (ETNB, Financial), Akero Therapeutics (AKRO, Financial), and Viking Therapeutics (VKTX, Financial) were among those affected. The trial results highlighted tirzepatide's potential against NASH, causing a ripple effect across the sector.
ASML (ASML, Financial) will ship its latest High Numerical Aperture Extreme Ultraviolet lithography (High NA EUV) system to major customers like Taiwan Semiconductor Manufacturing (TSM, Financial), Samsung Electronics (OTCPK:SSNLF), and Intel (INTC, Financial) by the end of 2024. This new system can imprint semiconductors with lines as narrow as 8 nanometers, significantly advancing chipmaking technology. ASML shares rose about 4% in premarket trading on this news.
OPEC+ announced a series of production cuts and extensions, but oil prices have struggled to respond positively. Brent crude fell below $80 per barrel, and WTI moved closer to $70. The group extended collective cuts of 3.7 million barrels per day until the end of 2025, but additional cuts of 2.2 million bpd were only extended until Q3 2024. This complex agreement has left the market uncertain about the future direction of oil prices.
Deere (DE, Financial) plans to cut production and salaried jobs to align with its strategic priorities and reduce redundancy. The company, which employs about 83,000 people worldwide, announced that these cuts will occur in the current quarter ending in July. Despite lowering its earnings outlook for the fiscal year, Deere stated that the job reductions would not affect its revised guidance.
Hanesbrands (HBI, Financial) has entered into a deal with Authentic Brands Group to sell the intellectual property and certain operating assets of its Champion business for $1.2 billion, with the potential to reach $1.5 billion based on performance thresholds. The transaction is expected to be completed in the second half of 2024, and Hanesbrands will provide certain transition services for Champion during this period.
GFL Environmental (GFL, Financial) saw a 2% rise in premarket trading after hiring JPMorgan to assess two offers: one for the entire business and another for its environmental services division. A consortium of infrastructure funds and sovereign wealth funds has shown interest in acquiring the entire company, while another bidder has offered to pay approximately 15 times the unit's EBITDA for the environmental services division.
Brown-Forman (BF.A) (BF.B) reported a mixed FQ4 earnings report, with sales down 8% year-over-year but operating income up 26%. The company's net income increased by 29% due to lower advertising expenses, and diluted earnings per share rose by 31%, beating consensus expectations. However, organic sales were down 5%, reflecting some underlying challenges.
Dollar Tree (DLTR, Financial) posted mixed Q1 earnings, with sales up 4.1% year-over-year but same-store net sales for Family Dollar only increasing by 0.1%. The company confirmed it is reviewing strategic alternatives for the Family Dollar segment, which could include a potential sale or spin-off.
Applied Materials (AMAT, Financial) and KLA Corp. (KLAC, Financial) received upgrades from Barclays, which expects higher equipment spending in 2024 and 2025. Barclays now forecasts wafer fab equipment spending to reach $96.3 billion in 2024 and $106.4 billion in 2025, driven by increased demand in the semiconductor industry.
GuruFocus Stock Analysis
- Bad News Is Good News? by Wade W. Slome, CFA, CFP
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