MARKET WRAPS

Watch For:

Employment Trends Index for March; speech by Fed's John Williams; earnings from PriceSmart, Tilray Brands

Today's Headlines/Must Reads

Corporate Earnings Season Seen as Next Test for Stocks

Tesla to Build New China Plant for Energy-Storage Battery

Food Prices Are New Inflation Threat for Governments and Central Banks

America Is Back in the Factory Business

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Opening Call:

Stock futures traded steady on Monday as investors assessed the monthly jobs report that showed a slowdown in hiring, and looked ahead to inflation data and the beginning of corporate earnings season later this week.

Elsewhere, bond yields edged down after they climbed following the payrolls data.

It is a quiet sort of Monday, with major markets outside the U.S. closed for the Easter holiday.

Stocks to Watch

Walmart has sued Capital One Financial in an effort to end a credit-card partnership between the two companies. Capital One shares fell 3% in premarket trading.

First Republic Bank was down 2% in premarket trading after the lender said it would suspend paying quarterly cash dividends on its preferred stock.

Pioneer Natural Resources rose 5% following a report from The Wall Street Journal that said Exxon Mobil had held preliminary talks with the shale driller about a possible acquisition. Exxon dipped 0.5%.

Tesla said it plans to build a new factory in Shanghai to boost production of its Megapack batteries. Tesla shares were down 0.4% in premarket trading.

American depositary receipts of Taiwan Semiconductor Manufacturing fell 0.6% after the chip maker posted a 3.6% jump in first-quarter revenue but said revenue in March fell 15% from a year earlier.

Economic Insight

China's consumer inflation likely eased further in March as food prices continued to moderate, according to a poll of economists by The Wall Street Journal.

The consumer-price index may have risen 0.9% in March on year, moderating from February's 1.0% rise, according to the median forecast of 17 economists surveyed. The producer-price index likely fell 2.5% in March, compared with a 1.4% decline in February. The National Bureau of Statistics will release the data Tuesday.

Energy:

Oil futures were little changed as investors continued to focus on recent data showing inventory declines and the unexpectedly large production cuts announced by OPEC+ members.

TD Securities said a combination of factors including an upcoming sharp rise in Chinese demand could lift WTI crude into $90-plus a barrel territory in the second half, with Brent seen not far off triple-digit levels.

Metals:

Gold futures were weaker as traders weigh the implications of Friday's jobs report.

Zaye Capital Markets said the data would set the tone for the week ahead, with the focus on how the Fed would respond, noting that market participants had been pricing in a slowdown in the pace of rate increases. Zaye said the latest figures could boost bets for a rate hike.

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Galaxy Futures said copper was likely well supported at current levels, pointing to falling global inventories amid refinery maintenance and the resulting production disruptions in several producing countries.

Demand outlook from China also appears upbeat, with home appliance makers and solar equipment manufacturers stepping up buying activities as macroeconomic conditions recover, Galaxy said.


TODAY'S TOP HEADLINES


Tesla to Build New China Plant for Energy-Storage Battery

Tesla Inc. is building a factory in Shanghai to produce its Megapack battery, the company and its chief executive, Elon Musk, said, further expanding into the country at a time of fraught U.S.-China ties.

The new factory, where Tesla will manufacture its high-capacity battery for energy storage, is scheduled to break ground in the third quarter this year and start production in the second quarter of 2024, Chinese state media Xinhua News Agency reported Sunday. The amount of Tesla's investment wasn't immediately clear.


TSMC Posts First Revenue Drop in Nearly Four Years

Taiwan Semiconductor Manufacturing Co. said Monday that its revenue fell 15% in March from a year earlier, marking the first drop in nearly four years.

TSMC said that revenue fell to 145.41 billion new Taiwan dollars (US$4.78 billion) from NT$171.97 billion in March 2022. That is its first monthly revenue fall since May 2019.


Whole Foods Market Explores Building Off-Site Kitchens to Supply Food Bars

Whole Foods Market is exploring building commercial kitchens that would make prepared meals for the grocer's food bars and refrigerated cases, people familiar with the matter said.

The move is a shift for the Amazon.com Inc.-owned supermarket operator, which has outsourced much of its food production to other companies after years ago closing its own kitchens to cut costs.


Johnson & Johnson's Talc Plan Spotlights Chapter 11 Voting Power

Johnson & Johnson's latest plan to resolve mass cancer lawsuits through bankruptcy could force some cosmetic-talc users and their lawyers into a settlement they don't want, highlighting the leverage that voting majorities enjoy in chapter 11.

Plaintiffs' lawyers are divided over the healthcare-products giant's $8.9 billion offer to compensate women alleging J&J's talcum-based baby powder caused them to develop gynecologic cancer or asbestos disease. Some law firms have rejected J&J's overture, while others representing nearly 70,000 talc claimants have agreed to back the proposed deal and its implementation through bankruptcy.


'The Super Mario Bros. Movie' Has Biggest Opening Weekend of 2023

"The Super Mario Bros. Movie" had a blockbuster opening weekend, racking up $146 million over three days and stomping the competition at the domestic box office, according to studio estimates Sunday.

The animated movie, a collaboration between Illumination, Nintendo and Universal, officially arrived in theaters Wednesday. It took in $204 million domestically over its first five days, and added $173 million internationally. That pushed its five-day tally to $377 million, the biggest opening weekend ever for an animated title globally. Box-office figures aren't adjusted for inflation.


Binance.US Struggles to Find Bank to Take Its Customers' Cash

The U.S. affiliate of global crypto exchange Binance has struggled to find a bank for its customers' cash after the failure of Signature Bank left it without a key banking partner, people familiar with the matter said.

Users' dollar deposits were previously sent to either Signature Bank or Silvergate Capital Corp., according to Binance.US's website. The failures of Signature and Silvergate, both seen as friendly to crypto companies, left many crypto firms rushing to find new banking partners.


Exxon Mobil: Eyes on the Permian Prize

Texas-based oil major Exxon Mobil was once known for exploring for oil in all sorts of exotic places, but right now its own backyard is looking like the best option.

The oil major has reportedly held preliminary talks with U.S. producer Pioneer Natural Resources about a possible acquisition, according to a Wall Street Journal report Friday. An acquisition of Pioneer, which has a market capitalization of about $49 billion, would be Exxon's largest deal since its merger with Mobil in 1999. It is clear that Exxon is itching to put its cash to some use: The company is also said to have approached Denbury, an oil producer with an extensive carbon-dioxide-gathering infrastructure, according to a Bloomberg report late last year.


GameStop, Kohl's, and Calavo See Big Insider Stock Buys

As the first quarter came to a close, some company insiders bought up shares on the open market.

A GameStop (ticker: GME) director just made the first open-market stock purchase this year, while the CEOs of department-store chain Kohl's (KSS) and avocado slinger Calavo Growers (CVGW) picked up millions of dollars of stock.


Google CEO on AI, the Future of Search, Efficiency and Battling Microsoft

Google Chief Executive Sundar Pichai faces one of his biggest tests as the leader of the search giant, as he balances the need to respond to the threat from chatbots such as ChatGPT-developed by the Microsoft Corp.-backed startup OpenAI-with investor pressure on the Alphabet Inc. company to cut costs. Here are edited excerpts from his interview with The Wall Street Journal about this moment:

WSJ: We're entering this difficult economic environment and this amazing moment for artificial intelligence. I think a lot of people are wondering, is Google moving fast enough to capture this moment in AI and is Google set up to do that?


Campbell's Enticing Future in Snacks

Campbell Soup Company has long been more than its name suggests. Now its underappreciated snack business looks set to become its star performer.

Campbell is composed of two divisions: meals and beverages, which includes its namesake soups as well as brands such as Pace salsas and V8 juices; and snacks, which features the Pepperidge Farm line of cookies and Goldfish crackers, among other brands.


Stock Funds Rise 5.6% So Far in 2023

Stocks had their own version of March Madness.

In a first quarter full of unexpected twists, fund investors somehow were able to be winners on average. The challenges included the collapse of Silicon Valley Bank and Signature Bank, the capitulation of Credit Suisse and still-high inflation. But many investors looked on the bright side overall, making bets that the Federal Reserve will begin cutting interest rates after its relentless rate-increase campaign to stem inflation.


Investors View Corporate Earnings Season as Next Test for Stocks

This week's kickoff to the corporate earnings season offers the next trial for the market as investors consider whether U.S. stocks can hold on to recent gains in the face of deteriorating profits.

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04-10-23 0604ET