Here are five things you must know for Wednesday, April 13:
1. — Stock Futures Higher As Markets Look To Earnings Boost
U.S. equity futures moved higher Wednesday, while Treasury bond yields inched further north and the dollar consolidated gains against its global peers, as investors looked to the unofficial start of the first quarter earnings season to drive momentum for stocks in the face of accelerating inflation pressures.
JPMorgan Chase (JPM) – Get JPMorgan Chase & Co. Report will lead a parade of bank earnings this week when it reports its March quarter profits prior to the start of trading, with Delta Air Lines (DAL) – Get Delta Air Lines, Inc. Report also providing an early look into the impact of higher fuel prices on the still-recovering airline industry.
S&P 500 companies are expected to see collective profits grow 6.1% from last year to a share-weighted total of $432.2 billion, according to Refinitiv data, a pace that would be down sharply from the 32.1% clip recoded over the final three months of last year.
That could provide investors with some weaponry to fight the onslaught of faster inflation — and the hawkish central banks moves that come with it — following the fastest annual CPI reading in more than 40 year last month in the United States and the biggest month-on-month change in the U.K. since records began in 1988.
Yesterday’s inflation data also clipped demand for the U.S. Treasury’s $34 billion auction in 10-year notes, where the so-called bid-to-cover ratio fell firmly below the recent average, even as yields on the sale rose to 2.72%. The notes were last seen trading at 2.754%.
Interest rate traders are still pricing in three consecutive 50 basis point rate hikes from the Fed following yesterday’s CPI data, pushing the dollar index, which tracks the greenback against a basket of six major global currencies, to another fresh two-year high of 100.37 in overnight trading.
On Wall Street, futures contacts tied to the Dow Jones Industrial Average indicating a 105 point opening bell gain while those linked the S&P 500, which is down 2.9% for the month, are priced for a 13 point advance. Futures linked to the tech-focused Nasdaq are looking at a 75 point opening bell move to the upside.
2. — JPMorgan Earnings On Tap As Dimon Details Russia Hit
JPMorgan Chase shares edged modestly higher in pre-market trading ahead of the bank’s first quarter earnings report later this morning, with investors focused on its near-term outlook for the U.S. economy and its impact on interest rates and income.
JPMorgan is expected to produce bottom line earnings of $2.69 per share on just under $31 billion in revenues, with investors looking to capital markets trading to offset a slowing in merger activity and the fees that come with it. Expenses are expected to rise to around $20 billion — and $77 billion for the full year — while net interest income, a key metric of profitability, is forecast to rise by around $3 billion from last year to $53 billion across the whole of 2022.
CEO Jamie Dimon also cautioned earlier this month that the impact of the Russia-Ukraine conflict on the bank’s profits, while also warning that rate hikes from the Federal Reserve “could be significantly higher than the market expects’ between now and the end of the year.
JPMorgan shares were marked 0.8% higher in pre-market trading to indicate an opening bell price of $132.58 each.
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3. — Twitter Shareholder Sues Elon Musk Over Stake Building Disclosure
Tesla (TSLA) – Get Tesla Inc Report CEO Elon Musk will face a lawsuit from former Twitter (TWTR) – Get Twitter, Inc. Report shareholders over his stake-building in the social media website amid allegations that he kept share prices low by failing to disclose his purchases.
Marc Rasella, a former Twitter investor leading the proposed class action lawsuit, alleges that, under U.S. Securities law, Musk should have made his 5% holding in Twitter public on March 24, ten days after the billionaire passed that threshold. Rasella sold a small amount of Twitter shares between March 25 and March 29.
Musk made his stake known on April 4, when it had reached 9.2%, sending the shares 27% higher on the session.
The suit alleges Musk made “materially false and misleading statements and omissions” that “”artificially deflated” the price of Twitter stock.
4. — Cathie Wood Says Twitter Revenue Model ‘Maybe Isn’t Right’, Trims Holdings
Twitter shares edged higher in pre-market trading after star fund manager Cathie Wood said she’s been “cutting back” on her holdings in the micro-blogging website since the departure of CEO Jack Dorsey late last year.
Wood, who founded the Ark Innovation ETF (ARKK) – Get ARK Innovation ETF Report, told CNBC’s Bob Pisani during an interview in Miami that, with or without Elon Musk sitting on the board of directors, Twitter is going to face “a lot of management distraction” as it works to balance its advertising model against the need to police content on the self-proclaimed ““global town square”.
“Maybe the model isn’t right around advertising, maybe it is subscription,” said Wood, whose Ark ETF still owns a 1.8% stake in the group, compared to Musk’s 9.1% holding, adding that “one thing for sure (in Musk’s mind) is it should not include censorship. And I think he feels very strongly about that.”
Twitter shares were marked 0.83% higher in pre-market trading to indicate an opening bell price of $44.85 each.
5. — PayPal Shares Slide As CFO Rainey Departs For Walmart
PayPal Holding (PYPL) – Get PayPal Holdings, Inc. Report shares moved lower in pre-market trading after the payments group said CFO John Rainey would be leaving the company after seven years to take on the chief financing role at retailing giant Walmart (WMT) – Get Walmart Inc. Report.
Rainey, a former CFO at United Airlines (UAL) – Get United Airlines Holdings, Inc. Report, will join Walmart on June 6, taking over from the six-year tenure of Brett Biggs, as the world’s biggest retailer extends its e-commerce push. Walmart is also trying to grow both online and in-store sales while managing supply chain disruptions and wage pressures without what it calls a “meaningful” increase in overall prices.
PayPal, for its part, is looking to offset the impact of eBay’s (EBAY) – Get eBay Inc. Report decision to go with an in-house system payments system, a move it says will carve more than $600 million from its near-term revenue forecast as it manages slower consumer spending and the integration of recent takeovers.
Gabrielle Rabinovitch will serve as interim CFO while the group looks for a long-term replacement for Rainey, the company said.
PayPal shares were marked 1.5% lower in pre-market trading to indicate an opening bell price of $106.60 each. Walmart shares, meanwhile, gained 0.5% to $153.98 each.