The S&P 500 futures are down 55 points (1.0% below fair value), Nasdaq 100 futures are down 315 points (1.5% below fair value), and Dow Jones Industrial Average futures are down 89 points (0.2% below fair value).
There's a negative bias in early trading. Semiconductor stocks are declining after reports that President Biden is considering stricter trade restrictions on chip imports from China. ASML (ASML, Financial) also provided below-consensus guidance.
Treasury yields are slightly higher, adding pressure on stocks. The 10-year note yield is up to 4.18%, and the 2-year note yield is up to 4.47%.
The weekly MBA Mortgage Applications Index jumped 3.9% after last week's 0.2% decline. Other data include:
- 8:30 ET: June Housing Starts (consensus 1.310 mln; prior 1.277 mln) and Building Permits (consensus 1.391 mln; prior 1.386 mln)
- 9:15 ET: June Industrial Production (consensus 0.3%; prior 0.9%) and Capacity Utilization (consensus 78.6%; prior 78.7%)
- 10:30 ET: Weekly crude oil inventories (prior -3.44 mln)
In corporate news:
- Five Below (FIVE) lowers Q2 EPS and revenue guidance; now expects Q2 comps to be -7% to -6%; CEO Joel Anderson steps down to pursue other interests; Board launches search for permanent CEO
- ASML (ASML, Financial) beats by €0.31, beats on revenues; guides Q3 revenues below consensus; reaffirms FY24 revenues guidance
- Johnson & Johnson (JNJ, Financial) beats by $0.11, reports revenues in-line; lowers FY24 EPS below consensus, reaffirms FY24 revenues guidance
- J.B. Hunt Transport (JBHT) misses by $0.16, misses on revenues
- Omnicom (OMC) reports EPS in-line, revenues in-line
- Spirit Airlines (SAVE) lowers its Q2 revenue outlook; reduces other targets
- Elevance Health (ELV) beats by $0.12, reports revenues in-line; reaffirms FY24 EPS guidance
- U.S. Bancorp (USB) beats by $0.03, reports revenues in-line
- Interactive Brokers (IBKR) beats by $0.02, grows adjusted revenues by 21%; customer accounts up 28%
- VanEck Semiconductor ETF (SMH) affected by potential new trade restrictions on chip imports from China
Reviewing overnight developments:
Today's News
Semiconductor stocks faced significant pressure in premarket trading as news surfaced about potential further export curb controls by the U.S. government. The government is contemplating the most severe trade restrictions if companies like ASML (ASML, Financial) continue providing China with advanced semiconductor technology. Despite ASML reporting stronger-than-expected second-quarter results, its third-quarter outlook fell short of Wall Street's expectations. ASML saw a sequential surge of about 54% in net bookings to €5.57B, surpassing estimates, although revenue fell approximately 9.5% year-over-year to €6.24B.
Apple (AAPL, Financial) announced a new partnership with the San Francisco Housing Accelerator Fund, Sobrato Philanthropies, and Destination: Home to launch the Bay Area Housing Innovation Fund. This initiative is part of Apple's broader $2.5 billion commitment to address housing affordability in California. The fund will make targeted loans to boost affordable housing development, starting with a $50 million investment to support four projects in the San Francisco Bay Area, creating over 400 homes in the next two years.
Cassava Sciences (SAVA, Financial) revealed changes in its executive leadership, appointing Richard Barry as the principal executive officer and executive chairman of the board. The company is searching for a new permanent CEO following the resignation of Remi Barbier. Barbier will remain with the company in a non-executive role until September 2024. This leadership change comes as Cassava continues its focus on developing treatments for Alzheimer’s disease.
Johnson & Johnson (JNJ, Financial) declared a $1.24/share quarterly dividend, maintaining its previous payout. The company also posted better-than-expected financials for Q2 2024, driven by its pharmaceutical unit. Blockbuster drugs like Stelara, Invega Sustenna, and Darzalex contributed significantly to its revenue, helping JNJ exceed Street estimates by $60M. The company reported $22.4B in sales for the quarter, with notable contributions from its cancer treatments and antipsychotic drugs.
GitLab (GTLB, Financial) is exploring a sale after attracting acquisition interest, causing its stock to jump about 15% in premarket trading. The company is working with investment bankers on a sale process, with interest from firms like Datadog (DDOG, Financial). Google parent Alphabet (GOOG) holds about a 22.2% voting stake in GitLab, which has a market value of approximately $8B.
In a strategic move, V.F. Corporation (VFC, Financial) announced the sale of its Supreme brand to EssilorLuxottica for $1.5 billion in cash. The transaction is expected to close by the end of the year. V.F. Corporation's CEO noted that while Supreme has expanded its presence in key markets, the distinct business model led to a strategic decision to sell the brand, as there were limited synergies with V.F.'s integrated model.
Deere (DE, Financial) announced changes to its participation in social and cultural awareness events, focusing instead on professional development and talent recruitment. The company will no longer support external parades and festivals and will audit training materials to ensure compliance with federal, state, and local laws. This shift comes as Deere's stock has declined 10% over the past year, contrasting with gains in the broader market.
Amazon (AMZN, Financial) experienced a brief disruption in its advertising portal for merchants on Tuesday night. The issue affected the self-service system used by merchants to adjust ad budgets and bid on keywords. Amazon stated that the disruption was limited and has been resolved, with no impact on ad delivery or ongoing campaigns.
Prologis (PLD, Financial) raised the low end of its core FFO guidance for 2024, citing improving customer demand. The industrial REIT now expects core FFO per share of $5.39-$5.47, slightly above analyst estimates. Prologis also increased its spending on acquisitions and dispositions, anticipating continued growth driven by its premier global portfolio and opportunities in data centers and energy.
Aehr Test Systems (AEHR, Financial) saw its stock climb about 10% premarket after Craig-Hallum upgraded it to Buy. The upgrade followed strong fourth-quarter results and a positive fiscal 2025 forecast. Analysts noted Aehr's diversifying pipeline and long-term opportunities in the silicon carbide market, despite near-term challenges in EV adoption.
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