Editorial StaffStock futures slump on recession worries; Consumer sentiment data in focus amid sticky inflation; FedEx shares plunge after pulling profit forecast; General Electric slumps on supply chain, cash flow caution and Uber skids after confirming cybersecurity breach.
Here are five things you must know for Thursday, September 15:
1. — Stock Futures Slump On Recession Worries
U.S. equity futures moved lower Friday, while the dollar resumed its climb on foreign exchange markets and Treasury yields tested new highs, as investors navigate an increasingly narrow path between slowing global growth and hawkish central bank signaling.
Solid data from China Friday, which reported better-than-expected gains for retail sales and industrial output over the month of August, failed to offset global recession concerns expressed yesterday by the World Bank, which said its seeing the steepest slowdown since the early 1970s, adding that a “moderate hit to the global economy over the next year could tip it into recession,”.
The International Monetary Fund wasn’t quite as gloomy, noting it’s too early to make a call on a 2023 recession, but nonetheless trimmed its growth forecasts for this year and next ahead of its more detailed autumn report slated for next month.
Near-term warnings on extended supply chain disruptions from General Electric, meanwhile, as well as a dire near-term outlook from FedEx only echo the concerns underpinning recession forecasts.
At the same time, rate hike signaling from the Federal Reserve, Bank of England and the European Central Bank has investors worried that weakening fundamentals will be made worse by higher borrowing costs, driving them into safe-haven assets such as the U.S. dollar.
The dollar index, which tracks the greenback against a basket of six global currencies, was marked 0.33% higher in the overnight session to 110.098, pushing the pound to its lowest levels since March of 1985.
The odds of a 100 basis point move from the Fed next week, which would be the biggest since 1984, are holding firm at around 24%, based on data reflected in the CME Group’s FedWatch, with bets on follow-on hikes likely to lift the Fed Funds rate to between 4.25% and 4.5% by the end of February.
Bond markets are warning of recession, as well, with 2-year note yields rising to 3.903% in overnight trading, pegging the difference over 10-year note at 43.4 basis points.
On Wall Street, futures contracts tied to the S&P 500 are indicating a 39 point opening bell slump while those linked to the Dow Jones Industrial Average are priced for a 260 point decline. Futures linked to the tech-focused Nasdaq are indicating a 150 point move to the downside.
Still, Europe stocks were marked 0.22% higher in early Frankfurt trading, following on from a 0.2% bump for the Nikkei 225 in Tokyo and a 0.16% dip the region-wide MSCI ex-Japan index.
2. — Consumer Sentiment Data In Focus Amid Sticky Inflation
The University of Michigan will publish its closely-tracked index of U.S. consumer sentiment Friday, with investors again focused on both the demand aspect in domestic growth and any signals on easing inflation expectations.
With gas prices tumbling and stock prices still north of their early June lows, economists expect to see a solid jump in the headline portion of the survey, which was pegged at 58.2 last month but was measured as high as 70.6 prior to Russia’s invasion of Ukraine earlier this year.
The survey’s look at inflation expectations is also crucial, given the headwinds seen in U.S. retail sales — despite the decline in gas prices — and the surprisingly quick rates of both headline and core readings for the month of August.
The data will be published at 10:00 am Eastern time.
3. — FedEx Shares Plunge After Pulling Profit Forecast
FedEx (FDX) shares plunged lower in pre-market trading after the world’s biggest package delivery group pulled its full-year earnings guidance following a surprise quarter update after the close of trading on Thursday.
FedEx said it sees its fiscal first quarter earnings in the region of $3.44 per share, with revenues pegged at $23.2 billion. However, citing softness in package volumes that accelerated over the summer months, the group withdrew its June profit forecast that saw earnings of between $22.45 and $24.45 per share, although it will continue to honor its $1.5 billion share buyback pledge.
“Global volumes declined as macroeconomic trends significantly worsened later in the quarter, both internationally and in the U.S. We are swiftly addressing these headwinds, but given the speed at which conditions shifted, first quarter results are below our expectations,” said CEO Raj Subramaniam.
“While this performance is disappointing, we are aggressively accelerating cost reduction efforts and evaluating additional measures to enhance productivity, reduce variable costs, and implement structural cost-reduction initiatives,” he added.
FedEx shares were marked 19.5% lower in pre-market trading to indicate an opening bell price of $165.00 each.
4. — General Electric Slumps On Supply Chain, Cash Flow Caution
General Electric (GE) shares slumped lower in pre-market trading after the industrial group cautioned that ongoing supply chain disruptions could trim its cashflow forecasts.
GE CFO Carolina Dybeck Happe said supply chain disruptions have extended into the back half of the year, making it difficult to deliver products to customers, with some pushed into the fourth quarter, putting pressure on current quarter cash flows.
Speaking at the Morgan Stanley Laguna conference Thursday, Dybeck Happe nonetheless said third quarter cash flows will likely be in-line, or slightly better, than Q2 levels, adding that the group expects solid organic growth in both its aerospace and healthcare divisions over the final three months of the year.
General Electric shares were marked 4% lower in pre-market trading to indicate an opening bell price of $66.19 each.
5. — Uber Skids After Confirming Cybersecurity Breach
Uber Technologies (UBER) shares slumped lower in pre-market trading after it confirmed a New York Times report of a cybersecurity breach into the ride-sharing group’s internal IT systems.
The Times reported late Thursday that a hacker had gained control of some of Uber’s internal communications systems after posing as an corporate IT expert and using an employee’s workplace Slack account to send company-wide messages claiming he or she had compromised the network.
The Slack channel was shut down shortly afterwards, the Times reported, while Uber said it has been “in touch with law enforcement and will post additional updates here as they become available.”
Uber shares were marked 6.1% lower in pre-market trading to indicate an opening bell price of $31.11 each.
Source: The Street
