Here are five things you must know for Friday, July 1:
1. — Stock Futures Edge Lower Following Worst Quarter In 50 Years
U.S. equity futures edged lower Friday as markets kicked-off the second half of the trading year in much the same way the exited the first: focused in the impact inflation will have on growth prospects for the world’s biggest economy.
The S&P 500, the broadest measure of U.S. stocks, ended the first half with a 20.58% decline, entrenching the benchmark in bear market territory and capping the worst January to June slump since 1970.
The contextual declines for the Dow and the Nasdaq were even worse, with the tech-focused benchmark suffering its biggest half-year decline on record while the Dow fell the most, in percentage terms, since 1962.
Yesterday’s reading of the Federal Reserve’s preferred inflation gauge largely encapsulated investor concerns, with the PCE Price index data showing a modest decline in core inflation pressures, which remain uncomfortably close to multi-decade highs, and waning consumer spending.
The Atlanta Fed’s GDPNow forecasting tool, a real-time tracker of growth prospects, now suggests the economy shrank 1% over the second quarter, following-on from a 1.6% contraction over the first three months of the year and indicating a technical recession in the world’s biggest economy.
Overnight data from China offered at least some relief that its post-Covid recovery could ignite global growth prospects, as a private reading of manufacturing activity showed the first expansion in four months and the fastest rate in more than a year.
Europe’s prospects, however, dimmed slightly as a key output reading in its factory activity PMI data fell below the 50 mark which separates growth from contraction for the first time in two years last month.
The region’s Stoxx 600 benchmark was marked 0.04% higher in early Frankfurt trading, following a 1.01% decline for the MSCI ex-Japan index in Asia, while benchmark 10-year note yields fell to 2.987% in overnight trading and the dollar index gained 0.22% to traded at 104.911 against its global peers.
On Wall Street, futures tied to the S&P 500 are indicating an 8 point opening bell dip while those liked to the Dow Jones Industrial Average are priced for a 45 point retreat. Futures linked to the tech-focused Nasdaq are indicating a 35 point slip.
2. — Micron Shares Slide On Grim Chip Sector Sales Forecast
Micron Technology (MU) – Get Micron Technology Inc. Report shares slumped lower in pre-market trading after the chipmaker forecast notably weaker-than-expected near term revenues following a solid third quarter earnings report.
Micron, which posted non-GAAP earnings of $2.59 per share for the three months ending in May on revenues of $8.64 billion — both of which topped Street forecasts — but noted the China weakness and a broader pullback in global chip demand will clip earnings growth over the coming months.
Micron also said it will likely start decreasing the amount of chips it produces in the fall, in order to maintain firm pricing, and said it sees revenues for its fiscal fourth quarter at only 7.2 billion, well shy of the Refinitiv forecast of around $9.1 billion.
“Near the end of fiscal Q3, we saw a significant reduction in near-term industry bit demand, primarily attributable to end demand weakness in consumer markets, including PC and smartphone,” CEO Sanjay Mehrotra told investors on a conference call late Thursday. “These consumer markets have been impacted by the weakness in consumer spending in China, the Russia-Ukraine war, and rising inflation around the world.”
Micron shares were marked 3.6% lower in pre-market trading to indicate an opening bell price of $53.30 each.
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3. — Tesla Shares Bump As Investors Brace For Q2 Deliveries
Tesla (TSLA) – Get Tesla Inc. Report shares, fresh off their worst quarterly decline on record, trimmed their slump in pre-market trading as investors brace for what could be a grim reading on global deliveries in the coming days.
Street forecasts suggest Tesla, which has been hit by a 22 day shutdown at its Shanghai factory as well as surging input costs and capital spending required to ramp-up production at new factories in Berlin and Austin, will deliver around 295,000 cars over the three months ending in June.
That’s down from its first quarter record of 310,048 units and would end a two year run of improving tallies. But indications are that the total may be even worse: analysts have shared what they claim to be consensus estimates collected by Tesla’s investor relations team showing a second quarter delivery estimate of $256,700, comprised mostly of Model 3 and Model Y sedans.
The formal delivery numbers are expected from Tesla on Saturday, but the group has been known to publish them at around 8:30 am Eastern time on the first of the month as well.
Tesla shares were marked 0.2% higher in pre-market trading to indicate an opening bell price of $674.67 each, a move that would extend the stock’s year-to-date decline to around 36%.
4. — Kohl’s Shares Tumble On Report of Cancelled Takeover Talks
Kohl’s Corp. (KSS) – Get Kohl’s Corporation Report shares plunged lower in pre-market trading following a report that the struggling retailer has ended talks with the Franchise Group (FRG) – Get Franchise Group Inc. Report over a possible $8 billion takeover.
CNBC reported late Thursday that Kohl’s has ended the exclusive talks, which began early last month, following market speculation that the Vitamin Shoppe operator was looking to reduce its bid for Kohl’s by $10, to $50 a share, amid the broader market sell-off.
Kohl’s had earlier attracted interest from a host of private equity firms and retail asset investors, including Sycamore Partners, Simon Property Group SPG and Brookfield Asset Management.
However, a spate of disappointing first quarter earnings from big names such as Target (TGT) – Get Target Corporation Report and Walmart (WMT) – Get Walmart Inc. Report, alongside muted near-term outlooks from casual apparel specialists, pared that interest and reduced the level of competition for brand-operator Franchise Group.
Kohl’s shares were marked 14.3% lower in pre-market trading to indicate an opening bell price of $30.60 each.
5. — Bitcoin Tests $19,000 As Global Crypto Markets Wobble
Bitcoin prices slumped below the $19,000 mark in overnight trading, extending losses from the worst quarter on record for the world’s biggest cryptocurrency.
Rattled by the reported unwinding of cyrpto hedge fund Three Arrows Capital, the freezing of withdraws at digital lender Celcius Network and the collapse of the Luna stablecoin — not to mention a surge in risk-free interest rates and the best quarterly gain for the U.S. dollar in six years — bitcoin prices tumbled 60% between April and June, the worst three-month performance on record.
Further concerns were triggered by the European Union’s move to limit the “wild west” crypto market with the toughest regulations to date. The EU’s Markets in Crypto-assets (MiCA) law will require companies to obtain a license, and provide defined customer backstops, in order to sell digital coins in the world’s biggest economic bloc.
Bitcoin prices were last seen 2.5% higher on the session at $19,373.80 each, a move that would mark a 72% plunge from the all-time hits it recorded in late November.
