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Dow Futures Rise 150 Pts; Powell, Jobless Claims in Focus

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© Reuters

By Peter Nurse

Investing.com — U.S. stocks are seen opening a touch higher as investors digest Fed Chair Jerome Powell’s testimony to Congress, with the second session to come, ahead of the release of important economic data.

At 07:00 AM ET (1100 GMT), the Dow Futures contract was up 150 points, or 0.5%, S&P 500 Futures traded 26 points, or 0.7%, higher and Nasdaq 100 Futures climbed 130 points, or 1.1%.

The major indices on Wall Street closed marginally lower Wednesday after Federal Reserve Chair Jerome Powell told the Senate that a recession is a possibility given the central bank’s determination to tame red-hot inflation. 

The blue-chip Dow Jones Industrial Average closed almost 50 points, or 0.2%, lower, the broad-based S&P 500 dropped 0.1%, while the tech-heavy Nasdaq Composite also fell 0.2%.

Investors have been fretting about a potential recession, particularly after the Federal Reserve hiked interest rates by a hefty 75 basis points last week to combat inflation running at levels not seen for 40 years. The broad-based S&P 500 index has fallen more than 23% off its record high from early January, putting it clearly in a bear market.

Powell is set to appear again on Capitol Hill Thursday for another round of questions, this time from the House as part of his semiannual report to Congress.

Before he appears, the new numbers for the weekly jobless claims are due at 08:30 AM ET (1230 GMT). These are expected to be 227,000, roughly in line with the prior week, and indicative of a strong employment market, one of the Fed’s main barometers of the economy’s health.

Additionally, the June manufacturing PMI, which is a reading on business conditions, is due at 09:45 AM ET, and is expected to fall to 56, from 57 the prior month. The equivalent data in Europe showed Eurozone business activity slowed significantly in June, adding to fears of a sharp economic downturn.

It’s a quiet earnings week, but results from the likes of Darden Restaurants (NYSE:DRI), information technology company Accenture (NYSE:ACN), drugstore Rite Aid (NYSE:RAD) and, after the bell, delivery giant FedEx (NYSE:FDX) are due.

Oil prices weakened Thursday, with major U.S. oil refiners set to meet with U.S. Energy Secretary Jennifer Granholm later in an emergency meeting about how to lower record-high fuel prices. President Joe Biden has already called on Congress to pass a three-month suspension of the federal gasoline tax.

Wednesday’s U.S. crude supply data from the American Petroleum Institute showed a surprise build of 5.6 million barrels for last week. Traders will have to wait for official confirmation as the Energy Information Administration’s weekly oil data will be delayed until at least next week due to systems issues.

By 07:00 AM ET, U.S. crude futures traded 0.6% lower at $105.58 a barrel, while the Brent contract fell 0.4% to $111.25. Both benchmarks fell around 3% in the previous session, dropping to their lowest levels since mid-May.

Additionally, gold futures fell 0.4% to $1,831.05/oz, while EUR/USD fell 0.6% to 1.0503.

 

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Easing chip shortages to help Volkswagen in H2 – CEO

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© Reuters. FILE PHOTO: Volkswagen logo is pictured at the 2022 New York International Auto Show, in Manhattan, New York City, U.S., April 13, 2022. REUTERS/Brendan McDermid/File Photo

BERLIN (Reuters) – Volkswagen (ETR:VOWG_p) sees a strong second half of 2022 and expects progress in catching up with rival Tesla (NASDAQ:TSLA) as easing chip shortages start to offset supply chain bottlenecks and rising costs, the carmaker’s CEO said on Tuesday.

“We are earning more than ever,” Chief Executive Herbert Diess said at a works meeting, adding Volkswagen is ramping up electric vehicle volumes in its biggest markets in Germany and China thanks to easing semiconductor shortages.

This should allow the carmaker to narrow the Volkswagen-Tesla gap this year and meet its goal of becoming market leader by 2025 if it seizes the moment while the U.S. electric car maker burns cash on large investments, the CEO said.

“Elon (Musk) has to ramp up two highly complex factories in Austin and Gruenheide at the same time – as well as expand production in Shanghai. That’s going to take strength out of him,” Diess said.

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Reliance Chairman Mukesh Ambani steps down as director of telecom arm

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© Reuters. FILE PHOTO: Mukesh Ambani, Chairman and Managing Director of Reliance Industries, arrives to address the company’s annual general meeting in Mumbai, India July 5, 2018. REUTERS/Francis Mascarenhas

BENGALURU (Reuters) – Reliance Industries Chairman Mukesh Ambani has stepped down as director of Reliance Jio Infocomm Ltd, the conglomerate’s telecom arm said on Tuesday.

Reliance Jio said https://refini.tv/3Nrs773 it has appointed Mukesh’s son and non-executive director Akash Ambani as the chairman of its board. Akash has been involved with the telecom unit since its launch in late 2016, where he started as a director.

India’s telecoms sector had been upended after the entry of Jio, which triggered a price war that forced some rivals out of the market and turned profits into losses.

Jio, which started out offering mobile teleservices, has been aggressively investing in services like internet broadband and forging ties with handset makers to launch low-cost smartphones and providing 5G services.

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UBS Downgrades Ebay, Farfetch to Neutral on Guidance Risks

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© Reuters. UBS Downgrades Ebay (EBAY), Farfetch (FTCH) to Neutral on Guidance Risks

By Senad Karaahmetovic

UBS analyst Kunal Madhukar downgraded shares of Farfetch (NYSE:FTCH) and eBay (NASDAQ:EBAY) to Neutral from Buy.

EBAY shares are cut alongside the price target (to $48.00 from $60.00 per share) despite low expectations. Still, the analyst expects 2022 GMV to fall by 17%, which is worse than the guidance of 16%-14% and the Street’s consensus of 15%.

“We think the buy side may already be lower than the Street. YTD, the stock has been one of the better performers within the eCommerce space, benefiting from both a ~2% dividend yield and aggressive share repurchases. However, when the market rebounds, we think EBAY shares could lag smaller cap peers (which are likely to grow much faster in a recovery) until investors have better visibility into organic growth at eBay. Consequently, we think the shares likely will remain range-bound until visibility improves,” Madhukar told clients in a note.

The price target on Farfetch shares goes to $10.00 from the prior $13.00 as Madhukar sees too optimistic assumptions for growth from the side of the company’s management.

“In addition to slower growth, we think upside is limited by lack of visibility into key drivers of value, including FPS volumes and economics, as well as on China. Granted, the YNAP deal could be a positive catalyst (link), but if the disclosure is limited (like with the recent deal with Neiman Marcus Group or NMG), it may be challenging for investors to understand if it creates shareholder value or not. Last, FTCH remains a profitless-tech company in an environment where investors are acutely focused on profits, and thus, there is limited valuation support,” the analyst added.

Similar to eBay, Madhukar sees shares remaining “range-bound until we have better visibility into growth and/or the path to profitability.”

Shares of eBay and Farfetch are down 2.4% and 2.2%, respectively, in pre-market Tuesday.

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