Editorial Staff1. — Stock Futures Edge Higher, With Earnings, Inflation in Focus
U.S. equity futures edged higher Tuesday, while oil prices eased from their recent seven-year peak, as investors continue ride a solid fourth quarter earnings season while closely tracking interest rate markets ahead of a key reading on inflation later this week.
Soaring wage gains, which underpinned last week’s stronger-than-expected January jobs report, have all but cemented the case for a series of 2022 rate hikes from the Fed, with the CME Group’s FedWatch tool pricing in a more than 30% chance of a 50 basis point move next month.
That’s helped lift 2-year note yields to a multi-year high of 1.319% and narrowed the spread between 10-year notes to just 62 basis points. That gap, along with global oil prices trading worryingly close to the $100 per barrel level — a near certain signal of recession — has traders on edge this week, although the prospect of a breakthrough in talks with Iran over its nuclear program pulled crude modestly lower in overnight trading.
Earnings have provided something of a floor for stocks this week, with fourth quarter S&P 500 profits expected to rise 27.2% from last year to a share-weighted $448.4 billion. Pfizer and DuPont will post December quarter figures before the start of trading, part of weekly slate of 82 companies updating on fourth quarter earnings.
2. — Peloton Shares Slide Amid Report CEO John Foley Will Step Down
Peloton shares moved lower in pre-market trading following a report that John Foley will step down as CEO of fitness equipment maker.
The Wall Street Journal said Foley, 50, will transition to the Peloton board to make room for Barry McCarthy, a former Spotify and Netflix CFO, as part of the group’s cost-cutting and business overhaul.
The group is also planning to cut 2,800 jobs, or nearly a fifth of its overall staff, as activist investors at Blackwells Capital LLC continue to press for changes and prompt the group into a takeover following last month’s multi-billion dollar sell-off and a disappointing set of pre-released fourth quarter earnings.
Peloton shares were marked 2.86% lower in pre-market trading to indicate an opening bell price of $28.45 each.
3. — Meta Shares Extend Slide As Early Investor Peter Thiel Leaves Board
Meta Platforms shares extended declines in pre-market trading following the planned departure of board member Peter Thiel, one of the earliest major investors in Facebook, as he plans a move into politics.
Thiel, 54, stumped-up $500,000 in capital for Facebook in 2004, earning a 10% stake and a seat on the board of the nascent social media group following a pitch from founder and CEO Mark Zuckerberg.
“Peter has been a valuable member of our board and I’m deeply grateful for everything he has done for our company — from believing in us when few others would, to teaching me so many lessons about business, economics, and the world,” Zuckerberg said in a statement. “I’m grateful he’s served on our board for as long as he has, and I wish him the best in his journey ahead.”
The departure comes at an awkward moment for Meta, which lost an historic $250 billion in market value last week following disappointing fourth quarter earnings and a muted outlook on growth, capital spending and used engagement as its grapples with new rules on privacy, competition from rival social media platforms and transitions to Zuckerberg’s — increasingly expensive — vision of the so-called Metaverse
Meta shares were marked 1.9% lower in pre-market trading to indicate an opening bell price of $220.67 each.
4. — Nvidia Shares Slip After Dumping $40 Billion Arm Takeover From SoftBank
Nvidia shares slipped lower in pre-market trading after it formally called off its planned $40 billion takeover of chipmaker Arm Holdings from Japan’s SoftBank Group.
Nvidia had called the Arm deal a “great opportunity for the industry” on its third quarter earnings call, but noted that it was being probed by the China Antitrust Authority as well as regulators in the U.S. and Europe.
Britain’s Competition and Markets Authority raised ‘serious competition concerns’, and called for an in-depth investigation into the $40 billion deal in August, while the U.S. Federal Trade Commission sued to block the deal in early December, alleging that the combined firm” would have the means and incentive to stifle innovative next-generation technologies, including those used to run datacenters and driver-assistance systems in cars.”
Cancelling the deal will cost it $1.25 billion in pre-paid breakup fees, the company said Tuesday.
“Arm is becoming a center of innovation not only in the mobile phone revolution, but also in cloud computing, automotive, the Internet of Things and the metaverse, and has entered its second growth phase,” said SoftBank CEO Masayoshi Son. “We will take this opportunity and start preparing to take Arm public, and to make even further progress.”
Nvidia shares were marked 1.1.4% lower in pre-market trading to indicate an opening bell price of $243.84 each.
5. — TakeTwo Interactive Shares Slide After Q3 Revenue Miss
Take-Two Interactive shares moved lower in pre-market trading after the video game maker posted weaker-than-expected December quarter revenues and muted near-term outlook.
The maker of Grand Theft Auto and NBA 2K, which is also buying Farmville maker Zynga for around $12.7 billion, said current quarter revenues would come in between $808 million and $858 million, firmly south of Street forecasts, following an $866.1 million tally over the three months ending in December.
“This continues a trend of relatively soft holiday reports, which seem to be a result of game quality rather than broader market concerns,” said KeyBanc Capital Markets analyst Tyler Parker. “We believe quality content will drive results, and Take-Two is positioned to deliver an accelerating volume over the next two years.”
Pinterest shares were marked 18.1% higher in pre-market trading to indicate a Friday opening bell price of $28.94 each.
This article was originally published by TheStreet.
