The S&P 500 futures are up 7 points, trading 0.2% above fair value. Nasdaq 100 futures are up 46 points, trading 0.3% above fair value. Dow Jones Industrial Average futures are up 125 points, trading 0.3% above fair value.
Early trading shows a positive trend as investors react to better-than-expected earnings from Walmart (WMT, Financial) and Cisco (CSCO, Financial).
Investors are also awaiting another important economic report after this week's favorable inflation data, which supports a potential Fed rate cut in September. The July Retail Sales report is due at 8:30 ET.
On the Federal Reserve front, Chicago Fed President Austan Goolsbee expressed more concern about the labor market than inflation. Additionally, Norges Bank kept its policy rate at 4.50% and issued a somewhat dovish statement.
In corporate news:
- Walmart (WMT, Financial): Up 6.4%, beats earnings by $0.02, revenue in line, guides Q3 EPS below consensus, raises FY25 guidance, Q2 US comps 4.2%.
- Cisco (CSCO, Financial): Up 5.9%, beats earnings by $0.02, revenue in line, guides Q1 EPS above consensus, announces restructuring plan with pre-tax charges up to $1.0 billion.
- Ulta Beauty (ULTA): Up 12.4%, surging as Warren Buffett (Trades, Portfolio) discloses new position.
- NIKE (NKE): Up 4.2%, new position from Pershing Square (Bill Ackman (Trades, Portfolio)).
- JD.com (JD): Up 3.4%, beats earnings by RMB 3.12, revenue in line.
- Deere (DE): Up 1.1%, beats earnings by $0.61, revenue beats, provides FY24 guidance.
- Alibaba (BABA, Financial): Down 3.7%, beats earnings by RMB1.44, misses on revenue.
Reviewing overnight developments:
Today's News
Alibaba (BABA, Financial) saw its stock fall around 4% in premarket trading after delivering mixed first-quarter results. Non-GAAP earnings per American depositary share fell 5% year-over-year to RMB16.44 ($2.26), surpassing estimates, while revenue increased by 4% year-over-year to RMB243.24B ($33.47B), missing analysts' expectations. The company continues to invest in its core businesses and reduce losses in other units through operating efficiency, maintaining margin integrity. Alibaba faces competition from PDD (PDD) and JD.com (JD).
Walmart (WMT, Financial) experienced a boost in early trading after raising its annual outlook, citing strong performance across all business segments. U.S. comparable sales rose 4.2%, exceeding the 3.4% consensus estimate, with e-commerce sales increasing by 21%. Sam's Club saw a 5.2% rise in comparable sales, driven by a 6.1% growth in transactions. International sales grew 7.1% year-over-year to $29.6 billion, while the global advertising business surged 26%.
The U.S. government announced significant price cuts for the first 10 Medicare Part D drugs under the Inflation Reduction Act. Merck's (MRK, Financial) Januvia faced a 79% price cut, the steepest among the listed drugs. Novo Nordisk's (NVO, Financial) Fiasp saw a 76% reduction, while AstraZeneca's (AZN, Financial) Farxiga had a 68% cut. Other notable mentions include Imbruvica from AbbVie (ABBV, Financial) and J&J (JNJ, Financial), Entresto from Novartis (NVS, Financial), and Eliquis from Bristol Myers (BMY, Financial) and Pfizer (PFE, Financial).
SIGA Technologies (SIGA, Financial) plummeted ~42% premarket after its oral mpox therapy, tecovirimat, failed to meet the primary endpoint in a clinical study. The trial, conducted in the Democratic Republic of the Congo, showed no statistically significant improvement in disease resolution within 28 days. Despite the setback, other ongoing trials may provide further insights into the drug's efficacy.
SoftBank's (OTCPK:SFTBY) discussions with Intel (INTC) to manufacture an AI chip fell through recently. The plan aimed to leverage Arm Holdings' chip designs and Graphcore's expertise. Talks may resume as few chipmakers can meet the required volume and speed. SoftBank is now in discussions with Taiwan Semiconductor Manufacturing (TSM).
Iron ore prices continued to decline, reaching their lowest levels in nearly two years. Futures fell by 3.1% in Singapore to $92.65/ton, driven by reduced steel production in China, the largest importer of seaborne iron ore. The ongoing real estate market issues and shrinking factory activity in China are contributing to the downward trend.
Initial jobless claims for the week ended Aug. 10 fell by 7K to 227K, below the 236K consensus and 234K from the previous week. The four-week moving average decreased by 4,500 to 236,500. Continuing claims increased to 1.864M, slightly below the expected 1.880M. The insured unemployment rate remained unchanged at 1.2%.
Retail sales in July bounced back, rising 1.0% month-over-month to $709.7 billion, surpassing the expected 0.3% increase. Core retail sales, excluding motor vehicles and parts, rose by 0.4%, also beating the 0.1% consensus. Excluding auto and gas, sales increased by 0.4%.
Cisco (CSCO, Financial) shares surged nearly 7% after reporting better-than-expected fourth-quarter results and issuing an optimistic forecast. Despite a 10% year-over-year revenue decline, the company saw a 14% growth in product orders and a 22% increase in annualized recurring revenue. The forecast for the first quarter of 2025 and full year 2025 revenue was in line with or slightly above estimates.
Berkshire Hathaway (BRK.A) confirmed that it did not sell any shares of Kraft Heinz (KHC) in Q2, maintaining its 26.6% stake. Warren Buffett (Trades, Portfolio)'s firm acquired the position in 2015 and plans to hold it for five to ten years, despite admitting to overpaying for the stock in 2019.
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