Here are five things you must know for Thursday, August 18:
1. — Stock Futures Edge Lower In Fed Minutes Wake
U.S. equity futures nudged lower Thursday, while the dollar held onto gains against its global peers, as investors picked through details of the Federal Reserve’s last policy meeting that suggest a hawkish approach to rate hikes heading into the final months of the year.
Minutes from the Fed’s July meeting indicated Chairman Jerome Powell and his colleagues will take a measured approached to their inflation fight, with data dependence trumping a pre-determined set of rate hikes, but nonetheless noted that inflation remains “uncomfortably high” in the world’s biggest economy despite the recent pullback in headline CPI.
The Fed will see two releases of PCE Price index data, its preferred inflation gauge, an August jobs report and another monthly CPI reading prior to its next interest rate decision on September 21.
“Some participants indicated that, once the policy rate had reached a sufficiently restrictive level, it likely would be appropriate to maintain that level for some time to ensure that inflation was firmly on a path back to 2%,” the minutes read. “Participants concurred that, in expeditiously raising the policy rate, the Committee was acting with resolve to lower inflation to 2% and anchor inflation expectations at levels consistent with that longer-run goal.”
Bets on another jumbo Fed rate hike in September fell to around 38.5% following yesterday’s minutes, down from around 50% last month, while 2-year Treasury bonds yields slipped 3 basis points to 3.285% in overnight trading.
Central banks around the world — at least beyond China — remain firmly in tightening mode, however, with Norway’s Norges Bank adding to the list Thursday following a 50 basis point rate hike that took its key policy rate to 1.75%, the highest in a decade.
With inflation surging in Europe, where harmonized consumer prices are rising at an 8.9% pace, the dollar is still holding onto recent gains against its rivals, with the dollar index marked 0.18% higher at 106.753.
Europe’s benchmark Stoxx 600 was marked 0.13% lower in early Frankfurt trading, following on from a weaker session in Asia that saw the region-wide MSCI ex-Japan index slip 0.54% into the close of trading.
Oil added to yesterday’s gains in overnight trading following Energy Department data that showed domestic crude stocks fell by 7.1 million barrels last week, as crude exports accelerated to around 5 million barrels per day.
WTI crude futures for September delivery were marked 87 cents higher at $89.10 per barrel while Brent contracts for October, the global benchmark, gained $1.28 to $94.96 per barrel.
On Wall Street, futures tied to the S&P 500 are indicating a modest 2.5 point opening bell decline while those liked to the Dow Jones Industrial Average are priced for a 11 point dip. Futures linked to the tech-focused Nasdaq are indicating a 13 point decline.
2. — Cisco Shares Leap After Q4 Earnings Beat
Cisco Systems (CSCO) shares jumped higher in pre-market trading after the the world’s biggest computer network equipment maker posted better-than-expected fourth quarter earnings as supply chain pressures eased
Cisco said adjusted non-GAAP earnings for the three months ending in July, the group’s fiscal fourth quarter, came in at 68 cents per share, down 4% from the same period last year and a penny ahead of the Street consensus forecast. Group revenues, Cisco said, were essentially flat from last year at $13.1billion, topping analysts’ estimates of a $2.73 billion tally.
Orders were up 15% from the prior quarter — although down around 6% from the same period last year — to the second highest total in company history, as supply chains improved and Cisco lapped an exceptionally strong comparable in 2021.
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Looking into its upcoming financial year, Cisco said it sees fiscal 2023 revenue growth of between 4% and 6%, implying a total of $53.2 billion at the higher end of its forecast, with earnings of between $3.49 and $3.56 per share.
“We do expect to continue to experience higher costs in the short term, driven primarily by higher component, freight, and logistics costs, which is reflected in our Q1 guide,” said CEO Chuck Robbins. “However, as you’ll see in our annual guidance, we expect this margin pressure to begin to ease as the year progresses. Long term, there are many multiyear growth opportunities ahead of us that gives me confidence in our future.”
Cisco shares were marked 4.25% higher in pre-market trading to indicate an opening bell price of $48.64 each.
3. — Bed, Bath & Beyond Slumps As Ryan Cohen Moves to Dump Stake
Bed, Bath & Beyond (BBBY) shares fell sharply lower in pre-market trading after key investor Ryan Cohen filed forms with the Securities and Exchange Commission to sell his entire stake in the struggling home goods retailer.
Cohen’s RC Ventures, which purchased call options on Bed, Bath & Beyond stock earlier this year and holds an 11.8% stake in the group, is looking to sell around 9.45 million shares, according to the form 144 filing published late Wednesday, worth around $148.5 million.
Bed, Bath & Beyond shares have risen more than 350% over the past three weeks, on notably heavy trading volume, amid a surge in interest in the stock that could also be linked to a so-called ‘short squeeze’ that seeks to punish investors betting against a particular stock.
Bed, Bath & Beyond shares were marked 11.7% lower in pre-market trading to indicate an opening bell price of $20.38 each.
4. — Apple Reportedly Planning iPhone Launch For September 7
Apple (AAPL) shares edged lower in pre-market trading amid reports that the tech giant is preparing to release its latest series of iPhones early next month.
Bloomberg reported late Wednesday that Apple will host a launch event for the iPhone 14 on September 7 — just two days after the group expects employees to return to the office — as it looks to unveil a series of new products, including lines of the Apple Watch, Mac and iPad, for the holiday season.
Apple has been preparing for ongoing iPhone demand this year, despite a pullback in global consumer sentiment and a cautious outlook from its main assembler Foxconn earlier this month. Apple expects its assembler base to make 220 million iPhones this year — on pace with 2021 levels — and told investors in July that overall revenue growth in the current quarter would likely outpace gains over the three months ending in June.
Apple shares were marked 0.72% lower in pre-market trading to indicate an opening bell price of $173.30 each.
5. — Housing Back In Focus With Existing Home Sales On Deck
Housing data is back in focus following a weaker-than-expected reading for starts and permits earlier this week with new figures on existing home sales likely to confirm a big decline in transactions and demand.
With interest rates on the rise and mortgage rates following suit, new applications slumped lower this week, according to data from the Mortgage Banker’s Association, taking the average cost of payments for home buyers more than 50% higher from this time last year.
That’s likely to hammer demand in a market already suffering from a lack of new inventory, although sellers are now starting to pile into the market with new homes for sale as they look to catch what could be the final run of a multi-year home price rally.
Existing home sales are likely to fall 5.4% from last month to an annualized rate of 4.89 million when the data is released at 10:00 am Eastern time, taking the total year-to-date decline to around 25%.