Editorial Staff1. — Stock Futures Higher As Growth Concerns Ease, Dollar Retreats
U.S. equity futures moved firmly higher Tuesday, while the dollar extended declines for a third consecutive session, as investors took solace from a rare bit of positive news from China’s Covid crisis and braced for a key reading of U.S. retail sales prior to the start of trading.
The dollar’s three-day retreat, while modest, provided a spark of investor optimism following news that Shanghai had recorded its third consecutive day with no new Covid infections, an important benchmark that could trigger the easing of restrictions on business and travel in China’s biggest city.
Regional stocks got a boost on the news, with the MSCI ex-Japan benchmark rising 2.22% on the session and helping Europe’s Stoxx 600 to an early 1.5% gain in Frankfurt.
Growth concerns remain paramount in global markets, however, with surging inflation and aggressive central bank rate signaling raising the specter of stagflation — or recession — in major economies around the world.
A path around that, at least in the United States, could come from consumer spending, which makes today’s April retail sales reading all the more influential for market direction.
Stocks remain rate-sensitive for the moment, however, moving in tandem with moves in the Treasury bond market, where falling yields suggest deeper growth concerns and rising yields hint towards near-term economic optimism.
Benchmark 10-year Treasury note yields were last seen modestly higher on the session at 2.915% while the U.S. dollar index — a broad indicator of investor caution — fell 0.46% against a basket of its global peers to trade at 103.708 in overnight dealing.
On Wall Street, futures tied to the Dow Jones Industrial Average indicating a 425 point opening bell gain while those linked the S&P 500, which is down 15.9% for the year, are priced for a 71 point move to the upside. Futures linked to the Nasdaq are looking at 285 point opening bell jump.
2. — Consumer In Focus With Retail Sales, Walmart Earnings On Tap
The U.S. consumer will be in focus on Wall Street Tuesday amid a key reading of April retail sales and twin earnings releases from bellwethers Home Depot – and Walmart.
The April data will provide perhaps the starkest assessment to data on the impact of surging inflation and record high gas prices on the domestic consumer, with economists looking for a notable slowdown in core sales but a bump higher in the headline reading thanks to the higher dollar value of gasoline sales and the ongoing strength in auto sales.
Home Depot’s resilience in the face of a slowing housing market will be in focus when the world’s biggest home retail publishes its first quarter report, while investors are likely to focus on rising costs and food sales strength in assessing Walmart’s April quarter results.
3. — Twitter Shares Tumble As Musk Demands Proof On Bot Tally To Keep Takeover Alive
Twitter (TWTR) – shares were in decline again Tuesday, extending their recent slump to an eighth consecutive session, after Tesla CEO Elon Musk said the social media group must prove that spam and bot accounts comprise only a small portion of its user base for his $44 billion takeover to proceed.
Twitter told the SEC last month that the total was under 5% of its 229 million month active users, while Musk, who last week said his Twitter pursuit was ‘on hold’ pending an investigation into that number, alleged early Tuesday that “Twitter’s CEO publicly refused to show proof of <5% (spam accounts)” adding the deal “cannot move forward until he does.”
Musk also told a conference in Miami that he could still be interested in acquiring Twitter at a lower price, but added that “the more questions I ask, the more my concerns grow” with respect to the debate over the number of fake and bot accounts on the micro-blogging website.
Twitter shares were marked 2.83% lower in premarket trading to indicate an opening bell price of $36.33 each.
4. — Take-Two Shares Jump As Investors Bet Zynga Will Offset Muted Outlook
Take-Two Interactive (TTWO) – shares surged in pre-market trading after the Grand Theft Auto videogame maker posted stronger-than-expected first quarter earnings and investors bet that its $12.7 billion purchase of Zynga would offset a muted near-term outlook.
Take-Two earned an adjusted $1.09 per share for the three months ending in March, on revenues of $3.5 billion, both of which topped Street forecasts. Year-ago comparisons on game play, however, are likely to be tough to match as players reduce time spent indoors as the pandemic fades, and Take-Two now sees full-year adjusted sales in the region of $3.75 billion to $3.85 billion, just shy of Refinitiv forecasts.
However, those forecasts didn’t include its early January purchase of Farmville maker Zynga ZNGA, expected to close later this month, which analysts see as leveraging its key video game properties, including Grand Theft Auto and NBA 2k, into the mobile sector.
5G network rollouts, cloud gaming and smartphone upgrades are likely to extend the growth rate of mobile gaming, which is firmly outpacing the industry and attracting younger players who are prepared to commit more time to gaming activity
Take-Two shares were marked 5.7% higher in premarket trading to indicate an opening bell price of $116.35 each.
5. — Citigroup Gets Buffett Boost, But Verizon Slumps As Sage Dumps Stake
Citigroup (C) – shares powered higher in pre-market trading, while Verizon Communications (VZ) – slipped into the red, following the latest quarterly update on market activity from billionaire investor Warren Buffett.
Buffett’s Berkshire Hathaway investment group, which is having one of its most active years in terms of new stakes and takeovers in more than a decade, sold nearly all of its $8.3 billion stake in Verizon by the close of trading on March 31, according to Securities and Exchange Commission filings made public yesterday, while adding to his $3 billion stake in Citigroup.
Verizon cautioned last month that full year adjusted earnings would come in at the lower end of its prior forecast as it continues to loss wireless customers to rivals such as AT&T.
Citigroup, meanwhile, crushed first quarter earnings forecasts, as fee income partly offset Wall Street’s deal-making slump, and returned around $4 billion to shareholders in the form of dividends and buybacks.
Buffett, the so-called Sage of Omaha, also sold its final tranche of Wells Fargo (WFC) , exiting the lender and more than three decades, while added new investments in Ally Financial (ALLY) and Paramount Global (PARA) .
Citigroup shares were marked 4.9% higher in pre-market trading to indicate an opening bell price of $49.78 each. Verizon fell 1.6% to $48.27 each.
Source: The Street
