Stocks futures higher with retail earnings, data in focus; Walmart Q3 earnings to focus on inventory, margins as shoppers seek value; Home Depot earnings in focus as housing market slumps; Taiwan Semi surges as Warren Buffet reveals $4.1 billion stake in chipmaker and FTX bankruptcy details multiple probes, questions SBF leadership.
Five things you need to know before the market opens on Tuesday November 15:
1. — Stocks Futures Higher With Retail Earnings, Data In Focus
U.S. equity futures moved higher Tuesday, while the dollar slipped against its global peers, as investors looked to consolidate last week’s rally ahead of a series of tests of retail and consumer strength in the world’s biggest economy.
Stocks gave back gains last night, however, amid comments from Federal Reserve Vice Chair Lael Brainard that suggested a near-term slowing in the central bank’s rate path while still cautioning that inflation rates remain far too elevated. Her remarks, following on from a hawkish set of comments from Fed Governor Christopher Waller in Australia, suggest markets remain acutely sensitive to any change in tact from policymakers in Washington heading into the Fed’s December meeting.
This week’s focus on retail sales and consumer strength, as evidenced by October quarter updates from Home Depot (HD) – Get Free Report and Walmart (WMT) – Get Free Report today, Target (TGT) – Get Free Report and Lowe’s (LOW) – Get Free Report tomorrow and retail sales from the Commerce Department on Thursday, will likely add another layer of complexity onto stocks before the end of the week.
Investors will also focus on the final throes of the third quarter earnings season this week, with updates from 15 S&P 500 companies between now and Friday. With around 460 reporting so far, collective profits are expected to rise 4.1% from last year to $462.8 billion, thanks in large part to forecast-busting gains from the energy sector.
Looking into the final months of the year, however, earnings are likely to fall 0.1% from their 2021 levels to a share-weighted $456.7 billion, according to data from Refinitiv.
Heading into the start of the trading day on Wall Street, futures tied to the S&P 500 are priced for a 29 point opening bell gain while those linked to the Dow Jones Industrial Average are indicating a 150 point advance. Futures tied to the tech-focused Nasdaq are looking at a 125 point gain.
The U.S. dollar index, which tracks the greenback against a basket of its global peers, was marked 0.35% lower at 106.292 while benchmark 10-year Treasury note yields edged modestly lower to 3.871%, in overnight trading.
Asia stocks were firmly higher, rising on the back of a relatively promising meeting on the G20 sidelines between President Joe Biden and China President Xi Jinping, as well as hopes that officials in Beijing would further loosen Covid restrictions in the world’s second largest economy following disappointing October data on industrial output and retail sales.
The region-wide MSCI-ex Japan index was marked 2.36% higher heading into the close of trading, while in Europe the Stoxx 600 opened 0.015% lower in Frankfurt.
2. — Walmart Q3 Earnings To Focus on Inventory, Margins As Shoppers Seek Value
Narrowing margins and an inventory overhang are likely to see Walmart’s bottom line falling 9% from last year to around $1.32 per share. Increased sale volumes, however, linked to discounting, promotions and a broader consumer shift towards value spending — particularly in the grocery sector — will push overall revenues 2.8% higher from last year to around $26.37 billion, according to Street forecasts.
Walmart cautioned in August that it sees sees adjusted earnings declining by between 9% and 11% from 2021 levels over the back half of the year, thanks to what it called “significant mix shifts in our business”, higher fuel expenses and the costs associated with moving excess inventories that expanded through the summer months.
Walmart shares were marked 0.42% higher in pre-market trading to indicate an opening bell price of $138.97 each.
3. — Home Depot Earnings In Focus As Housing Market Slumps
Home Depot is expected to see a 5.4% boost in its bottom line, to $4.13 share, with revenues rising 3.1% from last year to around $37.95 billion, according to Street forecasts.
Home Depot noted earlier this fall that it sees ‘mid single digit’ earnings growth for its 2022 fiscal year, which ends in January, up from its prior forecast of ‘low single digit’ gains, and comparable sales growth of around 3% and operating margins of around 15.4%.
This earnings release will also mark the first under the dual CEO/chairman tenure of Ted Decker, who replaced the retiring Craig Menear as cheif executive earlier this year and assumed the role of chairman on October 1.
Home Depot shares were marked 0.17% higher in pre-market trading to indicate an opening bell price of $307.45 each.
4. — Taiwan Semi Surges As Warren Buffet Reveals $4.1 Billion Stake in Chipmaker
Taiwan Semiconductor (TSM) – Get Free Report shares surged higher Tuesday after billionaire investors Warren Buffett revealed a $4 billion stake in the world’s biggest contract chipmaker after the close of trading on Monday.
Securities and Exchange Commission filings show Buffett’s Berkshire Hathaway (BRK.B) – Get Free Report investment vehicle owns $4.1 billion in Taiwan Semi (TSMC) stock, or around 60.1 million of the group’s American depositary shares, as of September 30.
Last month, TSMC posted its strongest quarterly profits in two years, with net profits for the three months ending in September of T$280.9 billion on revenues of $20.23 billion, but struck a downbeat note for the chip sector heading into 2023.
TSMC lowered its 2022 capex forecast — a key chip and smartphone industry benchmark — to around $36 billion from a summer estimate of between $40 billion and $44 billion, citing supply chain challenges and a softer near-term outlook linked to a slowdown in global demand and the broader impact of U.S. export restrictions of high-tech chips to China-based companies.
TSMC’s U.S.-listed shares were marked 9.5% higher in pre-market trading to indicate an opening bell price of $79.61 each.
5. — FTX Bankruptcy Details Multiple Probes, Questions SBF Leadership
Alvarez & Marsal, the firm now established as the lead financial advisor to bankrupt crypto exchange platform FTX, said late Monday that it has been in contact with dozens of state, federal and international regulatory officials over the past three days, including a U.S. District Attorney’s office.
The details of potential investigations, both criminal and civil, formed part of a deeper filing with the Bankruptcy Court in Delaware that will oversee the petition of FTX and more than 100 associated companies that was filed late Monday.
“FTX faced a severe liquidity crisis that necessitated the filing of these cases on an emergency basis last Friday,” the filing said. “Questions arose about (former CEO Sam) Bankman-Fried’s leadership and the handling of FTX’s complex array of assets and businesses under his direction.”
Bankman-Fried, thought to be still in the Bahamas where the now-failed FTX was based, Tweeted “What Happened” through his Twitter account last night, following an interview with the New York Times in which he said he had grown the company “too fast” and that this, more than anything else, was what ultimately lead to its collapse.