Melissa Juried Kriebel
Five things you need to know before the market opens on Wednesday November 16:
1. — Stock Futures Gain As Concern Over Poland Rocket Strike Eases
U.S. equity futures edged higher Wednesday as markets around the world breathed a sigh of relief following reports that a missile which struck a small town in Poland was likely wasn’t fired from Russia.
The missile, which landed late yesterday in the small Polish village of Przewodow, around 4 miles from the Ukraine border, could have been linked to Ukraine’s air defense system, a U.S. government official told the Associated Press, while President Joe Biden told reporters on the sidelines of the G20 Summit in Bali that it was “unlikely in the lines of the trajectory that it was fired from Russia” but stressed the NATO allies would continue to investigate.
Reports of the rocket last night pared gains on Wall Street, and held down stocks overnight in both Asia and Europe, but with headlines suggesting an easing in tensions, traders shifted out of the U.S. dollar, a typical safe-haven amid geo-political instability, in a move that allowed for modest gains in U.S. equity futures.
The U.S. dollar index was marked 0.25% lower against a basket of its global peers at 106.152 while benchmark 2-year note yields eased to 4.374% in overnight trading while 10-year notes dipped to 3.805%
Stocks are likely to remain focused on retail and consumer strength again today, with earnings from Lowe’s (LOW) – Get Free Report, Target (TGT) – Get Free Report and TJX Companies (TJX) – Get Free Report prior to the start of trading, following a stronger-than-expected third quarter update from Walmart (WMT) – Get Free Report yesterday that suggested solid, although by no means spectacular, holiday quarter sentiment.
The Commerce Department will also publish its October reading of retail sales at 8:30 am Eastern time, with analysts expecting a solid gain in the headline reading, powered in part by higher gasoline prices, with a modest decline in the so-called control measure that strips out food, energy, gas and other volatile costs.
Heading into the start of the trading day on Wall Street, futures tied to the S&P 500 are priced for a modest 13 point opening bell gain while those linked to the Dow Jones Industrial Average are indicating a 95 point bump. Futures tied to the tech-focused Nasdaq are looking at a 38 point gain.
2. — Target Earnings On Deck After Solid Walmart Update
Target (TGT) – Get Free Report shares nudged lower in pre-market trading ahead of the retailer’s third quarter earnings prior to the opening bell.
Target is expected to post a modest increase in overall revenues, which are forecast to rise 2.8% from last year to $26.37 billion. Higher input costs, rising wages and discounts linked to shifting a build-up in inventory over the summer months, however, will likely lead to slimmer margins and a bottom line of $2.12 per share – down 30% from the same three month period in 2021.
The group brought forward its traditional Target Deal Days event to early October, and unveiled plans to hire around 100,000 employees to support its holiday sales effort in late September.
Earlier this summer, Target had cautioned that its bigger-than-expected 35% build-up in overall inventories over the first quarter would trigger price cuts, adding that deeper discounts would be needed to shift the excess goods onto a customer base that was already pulling back on discretionary spending.
Target shares were marked 0.05% lower in pre-market trading to indicate an opening bell price of $178.90 each.
3. — Nvidia Earnings Likely To Focus on China Restrictions, Data Center Demand
Nvidia (NVDA) – Get Free Report shares slipped lower in pre-market trading ahead of the chipmaker’s third quarter earnings after the closing bell later today.
Analysts expect Nvidia to post an adjusted bottom line of 69 per share as revenues slide 19% from last year to around $5.77 billion, thanks in part to weakness in gaming and PC-related chip demand as well as restrictions on high-tech exports into China.
Nvidia forecast 2022 revenues of around $5.9 billion, plus or minus 2%, earlier this summer, adding that gross margins would come in around 65%, plus or minus 2%.
Those forecasts could improve, however, following news earlier this month that Nvidia had developed a new semiconductor — an advanced A800 graphics processing unit (GPU) — that it can sell to customers in China without violating new U.S. export restrictions.
Nvidia shares were marked 0.55% lower in pre-market trading to indicate an opening bell price of $165.74 each.
4. — Estee Lauder Confirms $2.8 Billion Deal To Buy Luxury Brands Group Tom Ford
Estee Lauder Companies (EL) – Get Free Report shares dipped in pre-market trading after the cosmetics group confirmed a $2.3 billion takeover of luxury brands collection Tom Ford.
Estee Lauder said the deal, which it plans to fund with a mix of cash and debt, as well as a deferred payment of around $200 million, values Tom Ford at around $2.8 billion in total and will likely close in the first half of next year. The two groups have reportedly been in exclusive talks since last week.
“We are honored that Tom Ford has been part of our ELC family for more than fifteen years, from our first collaboration with the Estée Lauder brand to the launch of Tom Ford Beauty and through its most recent successes,” said Estee Lauder chairman William Lauder.
Earlier this month, Estee Lauder slashed its full year earnings forecast amid ongoing weakness in China, and said sales would likely fall between 6% and 8% from 2021 levels thanks in part to the strength of the U.S. dollar.
Estee Lauder shares were marked 0.15% lower in pre-market trading to indicate an opening bell price of $226.64 each. The stock has fallen around 20% since reports of the Tom Ford deal surfaced in late August.
5. — Apple Reportedly Ready to Source Chips From Arizona Factory
Apple (AAPL) – Get Free Report shares were marked modestly higher in pre-market trading following a report that suggested the tech giant will pivot from its reliance on an Asia-centric supply chain and source new chips from a planned factory in Arizona.
Bloomberg reported late Tuesday that CEO Tim Cook told employees in Germany that Apple will begin sourcing chips from “a plant in Arizona, and this plant in Arizona starts up in ’24” in a likely reference to Taiwan Semiconductor’s planned facility in the Vistancia Technology Park area outside of Phoenix.
Taiwan Semi is expected to begin processing some of Apple’s new A-series and M-series chips at the Arizona early next year, according to tech industry reports. The group unveiled plans for the new plant in 2020, saying it will cost $12 billion and create around 1,600 U.S.-based jobs.
Apple shares were marked 0.17% higher in pre-market trading to indicate an opening bell price of $150.33 each.