Editorial StaffStock futures fall as Wall Street awaits minutes from the latest Federal Reserve meeting; Nvidia, Cisco and Robinhood report earnings; Tilray makes move on U.S. cannabis market.
1. — Stock Futures Fall Ahead of the Fed’s Meeting Minutes
Stock futures declined Wednesday, a day after the S&P 500 fell by the most in four weeks, as Wall Street awaited the Federal Reserve’s update on how close the central bank might be on pulling back stimulus.
Contracts linked to the Dow Jones Industrial Average fell 92 points and S&P 500 futures dropped 6 points. Nasdaq futures were down 2 points.
The yield on the benchmark 10-year Treasury edged up Wednesday to 1.265% ahead of minutes from the Fed’s latest meeting in late July. Caution from investors was evident as they awaited clues on the Fed’s future plans for its $120 billion a month of asset purchases and as the delta variant’s spread raises concerns about its potential impact on the economy’s recovery.
Those concerns, as well as a tumble in U.S. retail sales and a same-store sales miss by Home Depot (HD) – Get Report, sent stocks lower on Tuesday. The S&P 500 declined 0.71%.
Federal Reserve Chairman Jerome Powell, in a virtual town hall Tuesday, said the coronavirus pandemic was “still casting a shadow on economic activity” but added it wasn’t yet clear whether the delta strain will have a major impact on the U.S. economy.
Powell didn’t delve into the Fed’s plans for monetary policy at the town hall. But some Fed officials have been saying recently it will soon be time for the central bank to begin tapering stimulus, while others have emphasized more evidence of a recovery is needed before such action is taken.
2. — Wednesday’s Economic Calendar: Fed Minutes and Housing Starts
The economic calendar in the U.S. Wednesday includes Housing Starts for July at 8:30 a.m. ET, Oil Inventories for the week ended Aug. 13 at 10:30 a.m. and minutes from the Federal Reserve’s July 27-28 meeting at 2 p.m.
Federal Reserve Chairman Jerome Powell told reporters at the Fed’s meeting last month that the economy had yet to make “substantial further progress” toward meeting the central bank’s criteria for policy normalization.
“There’s a range of views on what timing will be appropriate. And those views ultimately track back to people’s views about the economy and what will happen as we make progress towards our goal,” Powell said.
3. — Nvidia, Cisco and Robinhood Earnings Expected
Earnings reports are expected Wednesday from Nvidia, Cisco Systems, Target, Analog Devices, Robinhood Markets, Bath & Body Works and Victoria’s Secret.
Lowe’s reported second-quarter adjusted earnings of $4.25 a share, topping estimates of $4.01. U.S. same-store sales fell 2.2% during the quarter but were narrower than analysts’ estimates that called for a decline of 2.6%.
Lowe’s rival, Home Depot, declined more than 4% on Tuesday after same-store sales during the second quarter rose but came in below analysts’ forecasts.
4. — Tilray Buys Convertible Notes of U.S. Cannabis Company MedMen
Canadian marijuana producer Tilray reached a deal to buy a majority position in senior secured convertible notes of MedMen Enterprise, the California-based pot company.
The notes would convert into a 21% stake in Medmen if cannabis is legalized federally in the United States.
“The investment we are announcing in MedMen securities today, one of the most recognized brands in the $80 billion U.S. cannabis market, is a critical step toward delivering on our objective as we work to enable Tilray to lead the U.S. market when legalization allows,” Tilray CEO Irwin Simon said in a statement.
Simon told Bloomberg in an interview that Tilray potentially would be interested in purchasing all of MedMen if cannabis is legalized at the the U.S. federal level.
“It gives us optionality, ultimately, once legalization does happen,” Simon told Bloomberg.
Tilray shares rose 6.33% in premarket trading Wednesday to $13.95.
5. — Krispy Kreme Dips as Earnings Just Miss Estimates
Krispy Kreme shares dipped in premarket trading after second-quarter adjusted earnings at the doughnut chain missed analysts’ estimates by 1 cents.
Krispy Kreme reported adjusted earnings of 13 cents a share vs. analysts’ expectations of 14 cents. Second-quarter sales of $349.2 million beat estimates of $333.4 million.
The company said it expects adjusted earnings for the full year of $62 million to $68 million on revenue of $1.34 to $1.38 billion. Wall Street expects adjusted profit of $61.8 million on sales of $1.34 billion.
TheStreet’s Jim Cramer spoke with Mike Tattersfield, president and CEO of Krispy Kreme, on Cramer’s “Mad Money” program Tuesday night.
Tattersfield said despite the earnings miss the company had its best second quarter in history. Those strong results were led by Krispy Kreme’s global footprint and its transition to an omni-channel model.
Source: The Street
