MARKET WRAPS

Watch For:

Weekly Jobless Claims; Advance Estimate GDP for 2Q; earnings from Amazon.com, Apple, Comcast, Intel, Mastercard, Merck, Pfizer

Opening Call:

Stock futures were slightly weaker on Thursday with Meta's underwhelming third-quarter results denting sentiment ahead of another bumper day of corporate earnings reports, including figures from some of the world's biggest technology names.

Earnings news, an update to Spirit's merger saga, and an unexpected change of position from Sen. Joe Manchin on the Congressional climate package filled Wednesday afternoon with headlines, sending broad groups of stocks in different directions during after-hours trading.

Solar stocks were surging Thursday after Manchin said he supported a spending package that includes funding for energy and climate programs.

They also were getting a lift from Sunnova Energy, which saw its stock soar more than 10% after the company reported better-than-expected second-quarter revenue.

Despite recent gains, investors remain concerned about stretched valuations and fear the pace of Fed rate rises could prompt a recession. Many aren't ready to jump back into the market.

"The rally we have seen looks like a classic bear market rally, rather than the launch of a new bull market," said David Donabedian, chief investment officer of CIBC Private Wealth US.

"We are still going to have a period where inflation is uncomfortably high and growth is uncomfortably low and that is not a good backdrop."

Global markets were mixed on Thursday and didn't price in the euphoric reaction to Jerome Powell's press conference that Wall Street did on Wednesday.

Other Shares on the Move:

Spirit and Frontier Airlines called off their merger Wednesday afternoon, though Spirit plans to continue speaking with JetBlue Airways, which launched an opposing bid.

Ford was another big after-hours gainer after reporting earnings of 68 cents a share, far beyond Wall Street expectations for 45 cents per share.

ServiceNow was sharply lower after cutting its full-year guidance; however, its most recent quarterly profits of $1.62 per share beat estimates.

Data Ahead:

An advance release on gross domestic product for the second quarter arrives Thursday morning. The expectation is for 0.8% positive GDP growth compared with the prior quarter, according to FactSet.

Forex:

The dollar extended its losses in Europe, but ING analysts expect it to strengthen again, albeit with higher volatility as the currency becomes more sensitive to economic data.

Markets currently assume the Fed will slow rate rises, but dollar weakness "may start to fade quite soon," the analysts said.

A global economic slowdown and geopolitical risks should support the safe-haven dollar, while investors should keep buying the currency until clearer signs of the Fed "pivoting to a less hawkish stance."

The dollar may strengthen from now until the Fed's September meeting, ING added.

Energy:

Oil prices pushed higher still in Europe, with SPI Management saying the Fed's change in tone "signaled monetary policy is now in neutral territory," a significant change for markets with fewer rate hikes now expected, thus striking a bullish tone for oil.

Further support has come from reduced U.S. crude stockpiles, SPI added.

Metals:

Metals prices rallied in Europe, with the market now pricing fewer rate increases this year, helping to boost hopes the economy is not in recession, said Peak Trading Research.

Read: Miners Unfazed by China's Plan to Control Iron-Ore Imports


TODAY'S TOP HEADLINES


JetBlue Nears Deal to Buy Spirit

JetBlue Airways Corp. is nearing a deal to buy Spirit Airlines Inc. according to people familiar with the matter.

The agreement could be announced as soon as Thursday, assuming talks don't fall apart, the people said.


Labcorp to Spin Off Clinical-Development Business

Laboratory Corp. of America Holdings plans to spin off its unit focused on clinical drug trials, according to people familiar with the matter, a move that will create a new stand-alone company in the fast-growing contract-research sector.

Burlington, N.C.-based Labcorp is expected to unveil the plan to separate its clinical-development business Thursday when it reports its second-quarter results, the people said. Labcorp will continue its focus on its core diagnostic-testing business and will also retain two related pieces of its drug-development unit, the people said.


Shell Posts Record Quarterly Profit on Soaring Energy Prices

LONDON-Shell PLC reported a second consecutive record quarterly profit as the oil major benefited from soaring global energy prices and a continued rebound in the global economy.

The London-based company said Thursday that strong demand and higher prices had allowed it to reverse $4.3 billion in impairments it took early in the Covid-19 pandemic. It also said that strong fuel-refining earnings had added more than $1 billion in profit in the second quarter.


Barclays Profit Nearly Halves After Fresh Hit From Debt-Sale Blunder

Barclays PLC's profit nearly halved in the second quarter from a year earlier, as the London-based bank took a fresh hit from a debt-sale blunder and braced for an increase in bad loans.

The British bank said Thursday it earned GBP1.07 billion, equivalent to $1.3 billion, in the three months through June. That was down from GBP2.11 billion in the same period a year earlier. Analysts had expected a quarterly profit of GBP1.19 billion, according to FactSet.


Facebook Parent Meta Platforms Reports First Ever Revenue Drop

Facebook parent Meta Platforms Inc. posted its first decline in revenue and issued a muted outlook on digital advertising as it contends with growing competition from rival TikTok.

The company reported quarterly revenue of $28.8 billion, down almost 1% from a year earlier and slightly below the $28.9 billion Wall Street was expecting. It marks the first time that the company has posted a quarterly drop in revenue from the year earlier.


Rivian Automotive Lays Off 6% of Its Workforce

Electric-vehicle startup Rivian Automotive Inc. is laying off 6% of its 14,000 employees, a cash-saving move aimed at responding to inflationary pressures and a rapidly changing economy, according to an internal email sent to workers Wednesday and reviewed by The Wall Street Journal.

The move is part of a cost-cutting effort to ensure Rivian can continue to grow its manufacturing operations without raising additional funds, Chief Executive RJ Scaringe wrote in the email disclosing the layoffs. He confirmed that the layoffs wouldn't apply to the manufacturing operations in Normal, Ill., where Rivian has its sole factory.


Evergrande Creditors Demand Further Explanation for Billions in Seized Cash

A group of offshore creditors to China Evergrande Group are demanding additional information about the seizure of nearly $2 billion by local banks that could explain how the troubled property developer pledged the funds without investors' knowledge, according to people familiar with the matter.

Last Friday, Evergrande released the preliminary results of an investigation into the missing funds pledged as security for loans by an offshore subsidiary that manages Evergrande-built properties. Evergrande also announced last week that it ousted its longstanding chief executive officer, Xia Haijun, and its finance chief, Pan Darong, over their involvement in the arrangements, as well as four executives from Evergrande and its subsidiary.


FAA Faulted for Its Oversight of Southwest in New Report

The Federal Aviation Administration mishandled some of its oversight responsibilities at Southwest Airlines Co. in recent years, a new report from an agency auditor found.

The report made public Wednesday highlighted lapses in the FAA's oversight of Southwest that have previously been documented by the Transportation Department's inspector general and a Senate Committee.


Best Buy Cuts Sales, Profit Outlook on Weaker Demand for Electronics

Electronics retailer Best Buy Co. cut its sales and profit forecast for the year as inflation has tempered demand, becoming the latest retailer that has issued a warning ahead of its quarterly financial report.

On Wednesday, Best Buy said that demand for consumer electronics has softened more than expected as higher prices on food, fuel and other goods continue to weigh on shoppers.


Earplug Plaintiff Lawyers Attack 3M Bankruptcy Backstop

Personal-injury lawyers for U.S. military veterans challenged 3M Co.'s attempt to halt mass lawsuits tied to its military earplugs, focusing on an intercompany agreement the industrial conglomerate signed shortly before its earplug units and more than 230,000 servicemembers' injury claims moved to bankruptcy court.

Lawyers representing the veterans said in a bankruptcy-court hearing Wednesday that they are scrutinizing a funding agreement between 3M and its Aearo Technologies LLC division that was signed a day before Aearo filed chapter 11 to drive a settlement of the earplug litigation.


Joe Manchin Reaches Deal With Chuck Schumer on Energy, Healthcare, Tax Package

WASHINGTON-Sen. Joe Manchin (D., W.Va.) agreed to back a package aimed at lowering carbon emissions and curbing healthcare costs while raising corporate taxes, marking a stunning revival of core pieces of President Biden's economic and climate agenda that the West Virginia Democrat had seemingly killed earlier this month.

The deal, negotiated privately between Messrs. Manchin and Senate Majority Leader Chuck Schumer (D., N.Y.) since the start of last week, would raise roughly $739 billion, with much of the revenue coming from a 15% corporate minimum tax and enhanced tax enforcement efforts at the Internal Revenue Service, as well as projected savings from allowing Medicare to negotiate some prescription-drug prices.


Senate Approves $280 Billion Bill to Boost U.S. Chip Making, Technology

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07-28-22 0524ET