The S&P 500 futures are up 17 points (0.4% above fair value), the Nasdaq 100 futures are up 81 points (0.4% above fair value), and the Dow Jones Industrial Average futures are up 20 points (fractionally above fair value).
S&P 500 and Nasdaq 100 futures are higher, but Dow futures are lagging due to a pre-open drop in Home Depot (HD, Financial) shares. HD reported strong earnings but gave lower-than-expected FY25 EPS guidance.
Investors are waiting for key economic data this week, including the July Producer Price Index (PPI) at 8:30 ET. Treasury yields are down ahead of the report. The 10-year note yield is down three basis points to 3.89%, and the 2-year note yield is down three basis points to 3.99%.
In corporate news:
- Home Depot (HD 337.40, -8.41, -2.4%): Beats earnings by $0.14, beats revenue estimates; guides FY25 EPS below consensus, revenue above consensus.
- General Motors (GM 42.76, -0.23, -0.5%): Plans to cut jobs in China as part of larger structural changes.
- Tencent Music (TME 12.05, -1.08, -8.2%): Misses earnings by RMB0.03, revenue in-line.
- Sea Limited (SE 66.22, -0.70, -1.1%): Misses earnings by $0.20, beats revenue estimates.
- Dell (DELL 96.89, +1.62, +1.7%): Upgraded to Equal Weight from Underweight at Barclays.
- JetBlue Airways (JBLU 4.65, -0.15, -3.1%): Prices $400 million offering of 2.50% convertible senior notes due 2029.
Reviewing overnight developments:
Today's News
Starbucks (SBUX, Financial) shares are rallying in premarket trading following the news that CEO and director Laxman Narasimhan is stepping down effective immediately and will be replaced by Chipotle (CMG, Financial) CEO Brian Niccol. Niccol will step into the CEO role effective September 9. Starbucks CFO Rachel Ruggeri will serve as interim CEO until that time. Additionally, Mellody Hobson, Starbucks board chair, will become lead independent director. Concurrent with the announcement of Narasimhan’s exit, Chipotle announced the departure of Niccol effective August 31. Chipotle's shares dropped 9% while Starbucks surged 11%.
Huawei Technologies is nearing the unveiling of a new AI chip, Ascend 910C, as the company aims to circumvent U.S. sanctions and compete with Nvidia (NVDA, Financial). Chinese internet companies and telecommunications operators have been testing the new chip, which Huawei claims is comparable to Nvidia's H100. However, manufacturing delays and potential additional U.S. sanctions could pose challenges for Huawei. Companies like ByteDance, Baidu (BIDU, Financial), and China Mobile are among the early testers of the chip.
General Motors (GM, Financial) is reportedly laying off staff in China and plans to meet with local manufacturing partner SAIC to discuss a larger structural overhaul of its China business. The cuts are expected to affect research and development departments among others. This shift comes as GM's partnership with SAIC, which has been a cornerstone of its China strategy, is under review for potential production cuts and other strategic changes.
The Home Depot (HD, Financial) fell in early trading on Tuesday after reporting Q2 results that were ahead of consensus estimates but setting full-year guidance below expectations. Comparable sales decreased 3.6% during the quarter, and customer transactions were down 1.8%. The company cited higher interest rates and macroeconomic uncertainty as factors that pressured consumer demand.
Sea Limited (SE, Financial) stock was in the red premarket despite second-quarter revenue beating estimates. The Singapore-based company's revenue grew about 23% year-over-year to $3.81B, but net income dropped to $79.9M from $331M in the second quarter of the previous year. Despite strong growth and higher profitability across its businesses, Sea has seen net losses in the preceding three quarters.
Maravai LifeSciences Holdings (MRVI, Financial) was downgraded to Equal Weight from Overweight by Morgan Stanley due to potential headwinds from Pfizer (PFE) and BioNTech (BNTX) concerning their COVID vaccine. Maravai, which provides technology for mRNA vaccine manufacturing, generated more than 60% of its revenue from Pfizer and BioNTech in 2022. Despite trimming its price target, Morgan Stanley sees long-term prospects for Maravai.
Workplace experience platform CXApp (CXAI, Financial) saw its stock price jump 74% after signing a multi-year, multi-million dollar agreement with Google Cloud (GOOG). The partnership aims to develop advanced AI infrastructure, security, and application products. Google Cloud will also co-invest in the continuous deployment and modernization of CXAI's platform, marking a shift towards an AI-centric approach in workplace innovation.
Eli Lilly (LLY, Financial) has opened a new research and development facility in the Boston Seaport to advance RNA and DNA-based therapies and discover new drug targets. The Lilly Seaport Innovation Center can accommodate around 500 scientists and researchers. The facility will also house the first Lilly Gateway Labs location on the East Coast. Shares of Eli Lilly were marginally up premarket and have gained over 49% year-to-date.
Baxter International (BAX, Financial) has agreed to divest its Vantive Kidney Care Segment to Carlyle (CG) for $3.8B. Baxter will receive around $3.5B in cash and plans to use the after-tax proceeds to reduce its debt. The sale is part of Baxter's broader strategic realignment aimed at enhancing future performance and creating value for stakeholders.
On Holding (ONON, Financial) reported Q2 revenue of CHF 567.7M, a 27.8% year-over-year increase. Adjusted EBITDA rose by 44.7% to CHF 90.8M. The company reiterated its full-year expectation of at least 30% net sales growth on a constant currency basis. The focus will be on advancing On's warehouse automation project in the U.S. in the coming months.
Dell Technologies (DELL) shares rose 1.8% in premarket trading after Barclays upgraded the IT giant. The upgrade comes after Dell's shares fell 34% since its fiscal first-quarter results. Barclays noted that much of the AI hype has now been washed out of the share price, reducing downside risks. Despite some concerns about enterprise server and storage businesses, AI is expected to benefit Dell's overall top-line growth.
Uranium Energy (UEC) announced the restart of uranium production at its Christensen Ranch operations in Wyoming. The company expects yellowcake shipments to resume in November or December. Recovered uranium will be processed at the Irigaray central processing plant, which has a current licensed capacity of 2.5M lbs/year of U3O8, with a license amendment under review to increase capacity to 4M lbs/year.
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