The S&P 500 futures are down 42 points (0.7% below fair value), Nasdaq 100 futures are down 230 points (1.1% below fair value), and Dow Jones Industrial Average futures are down 158 points (0.4% below fair value).
Stock futures suggest a lower open after solid gains this week. Tesla (TSLA, Financial) and Alphabet (GOOG) show notable pre-open declines due to earnings results, affecting early trading. Other big tech stocks are also down.
Most companies that reported earnings since yesterday's close are lower. Exceptions include Seagate Tech (STX), AT&T (T, Financial), and Texas Instruments (TXN).
The weekly MBA Mortgage Applications Index fell 2.2% after a 3.9% increase last week.
The 2-year note yield is down six basis points to 4.42%, and the 10-year note yield is down one basis point to 4.23%.
In corporate news:
- Tesla (TSLA 226.88, -19.49, -7.9%): Misses by $0.09, beats on revenue, gross margins down 23 bps year-over-year; 2024 vehicle volume may be lower than 2023 growth rate.
- Alphabet (GOOG 176.75, -6.85, -3.7%): Beats by $0.05, revenues in-line; CFO says Capex investment will stay at or above Q1 levels; Generative AI for Cloud customers generated billions in 2024.
- Visa (V 255.49, -9.30, -3.5%): Reports EPS and revenues in-line.
- Texas Instruments (TXN 201.50, +3.21, +1.6%): Beats by $0.01, revenues in-line; Q3 EPS and revenues guidance in-line.
- Seagate Tech (STX 110.72, +5.42, +5.2%): Beats by $0.29, revenues in-line; Q1 EPS guidance above consensus, revenues in-line.
- AT&T (T 18.75, +0.54, +3.0%): Reports EPS and revenues in-line; reaffirms FY24 EPS guidance; CFO says AI iPhones unlikely to drive upgrades; customers keeping phones longer.
- Boeing (BA 185.48, -1.00, -0.5%): Resumes delivering 737 Max jets to China.
- Rivian (RIVN 16.87, -0.63, -3.6%): Judge rules Rivian will face trial over Tesla (TSLA, Financial) trade secrets.
- Capital One (COF 143.42, -2.08, -1.4%): Misses by $0.25, revenues in-line; reports June card metrics.
Reviewing overnight developments:
Today's News
Tesla (TSLA, Financial) faced a challenging start to Wednesday's trading session after missing its Q2 earnings expectations on several fronts, including EPS, operating margins, and free cash flow. CEO Elon Musk highlighted the impact of sector-wide discounting but expressed optimism about future autonomy and a potential robotaxi fleet. Bank of America adjusted its EPS estimates for Tesla downward due to declining gross margins, partly offset by higher regulatory credits. Despite these setbacks, BofA maintained a Buy rating on TSLA, citing upcoming catalysts such as the Cybertruck ramp-up.
AT&T (T, Financial) saw a positive premarket boost as it exceeded expectations for wireless subscriber additions in Q2, adding 419K postpaid phone net adds against a forecast of 279,929. Wireless service revenue grew by 3.4% to $16.3B, while equipment revenue fell by 8% to $4.2B. Business wireline revenue dropped 9.9% year-over-year, but consumer wireline sales rose by 3% to $3.35B. The company's Latin America and Mexico segment also showed strong performance, with revenue increasing over 14% to $1.1B.
Alphabet (GOOGL, Financial) experienced a 3.6% drop in premarket trading despite beating both top and bottom-line expectations. The decline was mainly due to YouTube ad revenue falling short of consensus estimates. This, coupled with Tesla's weaker-than-expected results, contributed to a broader drag on tech stocks, with Nasdaq futures falling significantly.
Lumen Technologies (LUMN, Financial) announced a strategic partnership with Microsoft (MSFT, Financial) aimed at driving digital transformation and AI initiatives. The collaboration will see Lumen migrate its workloads to Microsoft Azure and use Microsoft Entra solutions for enhanced security. This partnership is expected to improve Lumen's cash flow by over $20M in the next year and elevate customer experience. Additionally, Microsoft has chosen Lumen as a strategic supplier for its network infrastructure needs.
CrowdStrike (CRWD, Financial) identified a bug in a recent threat detection update that led to a significant tech outage affecting 8.5M Windows systems globally. The company has committed to improving its testing and validation processes to prevent future incidents.
Boeing (BA, Financial) resumed deliveries of its 737 Max jet to China after a regulatory halt. China, a crucial market for Boeing, had grounded the 737 Max following two fatal crashes in 2019. Boeing forecasts that Chinese airlines will need 8,830 new commercial planes by 2043, indicating strong future demand.
Pfizer (PFE, Financial) reported that its experimental gene therapy for hemophilia A met primary and key secondary objectives in a late-stage trial. The therapy showed superiority over routine preventative treatments, although 20% of participants experienced serious adverse events. Pfizer plans to continue with its development.
Fiserv (FI, Financial) raised its earnings expectations for the year after exceeding Q2 estimates for the sixth consecutive quarter. Organic revenue grew by 18% year-over-year, driven by strong performance in Merchant Solutions and Financial Solutions. The company now expects adjusted EPS for 2024 to be between $8.65 and $8.80, up from previous guidance.
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