Editorial StaffStocks edge higher as earnings parade continues; Ford shares surge after blowout Q3 earnings; GDP seen cooling amid Delta, inflation surge; Amazon earnings to highlight supply chain challenges while Apple’s holiday-seasons sales forecasts will likely trump Q4 tallies.
1. — Stocks Futures Edge Higher As Earnings Offset Growth Concerns
U.S. equity futures nudged higher Thursday, while short-term Treasury bond yields continued their recent assent, as investor balance a healthy corporate earnings seasons against the prospect of tighter central bank policies and cooling global growth.
Apple (AAPL) – Get Apple Inc. (AAPL) Report and Amazon (AMZN) – Get Amazon.com, Inc. Report will highlight today’s earnings slate, although both tech giants will report September updates after the close of trading, as investors will first focus on an initial estimate of third quarter GDP growth at 8:30 am Eastern time. The data is likely to show a notable slowdown from the three months ending in June, a fact reflected in recent moves in U.S. Treasury bond yields, where the difference between 2-year notes and 10-year notes is just 98 basis points, suggesting traders are concerned for near-term rates hikes snuffing out longer-term growth prospects.
The Bank of Canada’s signal of an early 2022 rate hike triggered more of that concern yesterday, putting today’s European Central Bank meeting in Frankfurt in sharp focus.
On Wall Street, futures contracts tied to the Dow Jones Industrial Average are indicating a 45 point opening bell gain ahead of earnings from Caterpillar (CAT) – Get Caterpillar Inc. Report and Merck (MRK) – Get Merck & Co., Inc. (MRK) Report, while those linked to the S&P 500 are priced for 10 point move to the upside.
Futures tied to the tech-focused Nasdaq Composite are indicating a 65 point advance ahead of the after-the-bell updates from Apple and Amazon.
2. — Ford Shares Surge As Sales Top GM, Dividend Returns
Ford Motor (F) – Get Ford Motor Company Report shares surged the most in fifteen months in pre-market trading Thursday after the carmaker topped its larger rival, General Motors GM, with stronger-than-expected third quarter sales while boosted its full-year profit outlook.
Ford also reinstated its pandemic-suspended dividend in last night’s blowout earnings report, which showed sales topping $35.7 billion and profits topping Street forecasts at 51 cents per share.
The carmaker also said adjusted earnings for the full year would come in between $10.5 billion and $11.5 billion, up from its prior estimate of $9 billion to $10 billion.
“The result is very encouraging, reminding us of better-than-expected earnings power, a solid capital allocation plan, and ultimately with the ability to fund the transition to an EV/AV/digital world,” said Credit Suisse analyst Dan Levy.
Ford shares were marked 9.7% higher in pre-market trading to indicate an opening bell price of $17.01 each.
3. — Delta Surge, Inflation Spike Likely Slowed Third Quarter Growth
The U.S. economy’s post-pandemic recovery likely slowed notably in the third quarter, GDP data is expected to indicate Thursday, as consumption cooled in the face of a surge in Delta-variant infections and the fading impact of government stimulus and extended jobless benefits.
Economists are expecting a initial estimate of 2.7% for the third quarter growth rate, compared to the 6.7% pace recorded over the three months ending in June. Labor market tightness, supply chain disruptions and the global semiconductor shortage were also significant factors in the third quarter cooling, as was a surge in consumer price inflation over the summer months that took headline levels to the highest in more than two decades.
The Commerce Department will publish the initial third quarter GDP estimate at 8:30 am Eastern time.
4. — Amazon Earnings Will Shed Light on Supply Chain, Labor Market Challenges
Amazon shares bumped higher in pre-market trading ahead of the online retail giant’s third quarter earnings report after the close that is expected to show solid gains in overall sales while navigating labor and supply chain challenges.
Analysts expect Amazon to post a bottom line of $8.92 per share on total revenues of $111.6 billion for the three months ending in September. Amazon has said it sees operating income of between $3.5 billion to $6 billion on revenues in the range of $106 billion to $112 billion, compared to the Refinitiv forecast of $118.9 billion.
Investors are more likely to focus on the company’s comments regarding holiday season fulfillment, given both product delays from overseas supply chains and domestic labor market shortages. Earlier this month, to hire 150,000 workers heading into the holiday season, with wages as high as $21 an hour, adding to its overall cost base.
Amazon shares were marked 0.66% higher in pre-market trading, indicating an opening bell price of $3,414.85 each
5. — Apple Earnings Will Highlight Holiday iPhone Forecasts
Apple will publish fourth quarter earnings after the close of trading Thursday as investors look for any impact from the global chip shortage on iPhone sales for the world’s most-valuable tech company.
Apple is expected to say sales rose 31% from last year to $84.8 billion, thanks in part to surging smartphone demand and a recovery in China. Apple’s expected bottom line of $1.24 per share is also firmly higher than last year’s pandemic-hit tally, although investors will likely focus on the group’s holiday-quarter forecasts following the September launch of the iPhone 13 and reports of production cuts linked to delays from major supplies chip suppliers such as Broadcom (AVGO) – Get Broadcom Inc. Report and Texas Instruments (TXN) – Get Texas Instruments Incorporated Report.
Apple launched its new iPhone 13 last month with a base price of $799, while unveiling higher-priced versions including the iPhone 13 Pro and iPhone 13 Max,
Credit Suisse reported that wait times for the new handsets “remain extended across the board” and include the longest gap between order and delivery for at least four years.
Apple shares were marked 0.4% higher in pre-market trading Thursday to indicate an opening bell price of $149.40 each.
Source: TheStreet
