Here are five things you must know for Thursday, April 28:
1. — Stock Futures Power Higher On Tech Sentiment; Dollar Nears 20-Year Peak
U.S. equity futures roared higher Thursday, powered by surging tech stock sentiment ahead of Apple’s closely-watch second quarter earnings later today, as investors tracked a relentless climb for the dollar and a modest move higher in Treasury bond yields ahead of a key reading of domestic growth prior to the start of trading.
The Commerce Department’s first estimate of first quarter GDP estimate, scheduled for 8:30 am Eastern time, is expected to show a sharp slowdown in the world’s biggest economy, with estimates suggesting a 1.1% growth rate for the three months ending in March.
The early year Omicron wave, as well as the fastest inflation in forty years and the Federal Reserve’s rate hike signaling have all combined to blunt consumer sentiment and slow growth from the near 7% pace recorded over the final three months of last year, while the dollar’s recent surge has kept export markets firmly in check.
The dollar index, in fact, is testing the highest levels in 20 years against a basket of its global peers, with gains built on bets of faster and deeper Fed rate hikes over the coming months.
The CME Group’s FedWatch tool now suggests a 96.5% chance of a 50 basis point move early next month, that would take the base Fed Funds rate to a range of 0.75% to 1%, with an 80% chance of a 75 basis point move in June.
On Wall Street, earnings continue to drive sentiment — as they have for much of the week — following better-than-expected updates from Facebook parent Meta Platforms (FB) – Get Meta Platforms Inc. Class A Report last night, as well as a bullish outlook from Ford Motor Co. (F) – Get Ford Motor Company Report.
Investors will also digest another wave of pre-market earnings, with updates from Eli Lilly (LLY) – Get Eli Lilly and Company Report, Merck & Co. (MRK) – Get Merck & Co., Inc. Report, McDonald’s (MCD) – Get McDonald’s Corporation Report, Mastercard (MA ) – Get Mastercard Incorporated Class A Reportnd Twitter (TWTR) – Get Twitter, Inc. Report, as well as Apple (AAPL) – Get Apple Inc. Report, Amazon (AMZN) – Get Amazon.com, Inc. Report and Intel (INTC) – Get Intel Corporation Report after the close of trading.
With all of that ahead in the next few hours, futures contacts tied to the Dow Jones Industrial Average are indicating a 330 point opening bell gain while those linked the S&P 500 are priced for a 66 point move to the upside. Futures linked to the tech-focused Nasdaq are looking at a 285 point opening bell advance.
2. — Meta Shares Surge As Facebook User Rebound Offsets Mixed Q1 Earnings
Meta Platforms shares surged in pre-market trading after the social media group posted a rebound in posted a rebound in daily active users that offset a near $3 billion loss in its metaverse and the slowest revenue growth in ten years.
After suffering its first-ever decline in daily active users last quarter, Meta said the figures rose 4% from last year at 1.96 billion, just ahead of the Street consensus of 1.951 million, suggesting it’s been able to offset the market share gains of China-based TikTok with both its Facebook and Instagram apps.
Group revenues, Meta said, rose 6.6% to $27.908 billion, with the the new ‘Family of Apps’ division the company created last year producing a bottom line of $2.71 per share.
Reality Labs, the division that will house the company’s metaverse plans, generated revenues of $695 million, but lost $2.96 billion for the quarter after a 2021 loss of $10.2 billion.
Meta shares were marked 16.55% higher in pre-market trading to indicate an opening bell price of $203.90 each.
Apple shares moved higher in pre-market trading ahead of its second quarter earnings after the close of trading, perhaps the most anticipated of the reporting season, with investors focused on the tech giant’s ability to navigate past chip shortages and production shutdowns to meet demand for its 5G-enabled iPhones.
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Apple has suffered a series of production wobbles, linked in part to the global shortage in semiconductor supplies as well as the shutdown of production in key Asia-based assembly plants amid the region’s recent Covid surge.
Rising inflation, blunted consumer sentiment and Russia’s war on Ukraine have also taken a bite of out global smartphone demand, even with the better-than-expected launch last year of the iPhone 13, compelling Apple to seek growth in other product areas.
iPhone revenues are expected to nudge around 1% higher from last year, to $48.3 billion, based on estimates of the sale of around 64.4 million units at an average price of $813 each. Overall sales, including both products and the group’s fast-growing services division, are forecast to rise 4.8% from last year to around $93.9 billion, helping produce a bottom line of $1.43 per share.
Apple’s longer-term goal of achieving a ‘cash neutral’ position on its massive balance sheet could also produce a buyback plan of as much as $90 billion, a figure that would take some of the sting out of a likely muted June quarter outlook — traditionally Apple’s weakest — as China grapples with its Covid crisis and U.S. and European economies continue to slow.
Apple shares were marked 2.45% higher in pre-market trading to indicate an opening bell price of $160.41 each.
4. — Ford Shares Jump As Carmaker Holds Outlook Amid Q1 Struggles
Ford (F) – Get Ford Motor Company Report shares moved higher in pre-market trading after the carmaker held to its full-year profit forecast despite a surprise second quarter loss linked in part to a hit from its investment in Rivian Automotive (RIVN) – Get Rivian Automotive, Inc. Class A Report.
Operating profits were down 57% from last year, but narrowly topped the Street consensus forecast at 38 cents per share. Revenues were up 2.8% at $34.5 billion, handily topping analysts’ forecasts.
Ford said pricing power and robust demand, particularly for its just-launched F-150 Lightning electric truck, would offset supply constraints and the impact of Russia’s war on Ukraine as it stuck to its full-year operating earnings forecast of between $11.5 billion and $12.5 billion.
“Supply chain constraints continue to impact our business, including some of our key profit pillars. That said, we’re making progress on launching and scaling new products as you can see with Lightning.” CEO Jim Farley told investors on a conference call late Wednesday.
“That said, our major focus now is accelerating a more fundamental change in our supply chain management,” he added. “We’re absolutely committed to unlocking value by improving our growth profile, our profitability and ability to generate sustainable cash flows from our automotive-related businesses.”
Ford shares were marked 2.3% higher in pre-market trading to indicate an opening bell price of $15.20 each.
5. — Teladoc Shares Collapse After Q1 Loss, Outlook Cut
Teladoc Health (TDOC) – Get Teladoc Health, Inc. Report shares collapsed in pre-market, potentially wiping $3.3 billion in value from the pandemic-era darling after it lowered full-year sales forecasts following a bigger-than-expected first quarter loss.
Teladoc, the third largest holding in Cathie Wood’s Ark Innovation ETF ARKK, said 2022 revenues will likely come in at around $2.45 billion, following a 25% tumble over the three months ending in March, with adjusted earnings of between $39 million and $49 million, well shy of Street forecasts that were based on Teladoc forecast from only 5 weeks ago.
“For investors, Teladoc has been a house of pain with the continued share price decline related to the return-to-normal trade and selling companies that flourished during Covid,” said Canaccord Genuity analyst Richard Close, who kept his ‘buy’ rating on the stock but lowered his price target to $50 following last night’s report. “Management credibility will be questioned.”
Teladoc shares were marked 37.2% lower in pre-market trading to indicate an opening bell price of $35.15 each.
