OPENING CALL
Stock futures were falling slightly on Tuesday as investors awaited earnings from a number of megacap companies and looked ahead to a decision on interest rates from the Federal Reserve.
The Fed meeting set to conclude Wednesday could give investors additional hints regarding whether the central bank might lower rates by year's end.
Overseas Markets
China's stock indexes saw small moves after data showed its manufacturing sector had lost some steam .
Premarket Movers
Chegg was falling 11% after the company said President and CEO Dan Rosensweig will be stepping down and issued weaker-than-expected second-quarter guidance.
Coursera was down 12% after issuing disappointing guidance for both the second quarter and the rest of 2024.
Logitech International rose 9.5% after it reported better-than-expected fourth-quarter earnings and revenue and issued revenue guidance for the current fiscal year that exceeded analysts' forecasts.
MicroStrategy reported a first-quarter loss of $53.1 million, or $3.09 a share, compared with year-earlier net income $461.2 million, or $31.79 a share. Shares were down 3.5%.
NXP Semiconductors posted first-quarter earnings that beat Wall Street estimates and said it expects second-quarter adjusted profit of $3.20 a share, higher than consensus at $3.14. Shares rose 4.8%.
Paramount Global said CEO Bob Bakish will step down and the company will create an Office of the CEO to be run by three senior company executives. Shares were down 1.1%.
Sensata Technologies was rising 16% after the company posted first-quarter adjusted profit of 89 cents a share, beating analysts' forecasts of 85 cents, and said it had reached a cooperation and information sharing agreement with activist investor Elliott Investment.
Tesla was down 2.4% after closing Monday at $194.05, up 15%.
Post Close Movers
LL Flooring Holdings said it received a new acquisition offer at $2.50 a share, above the stock's recent trading level, as part of its consideration of strategic alternatives. The company said it had also reached a cooperation deal with two shareholders, under which they would support LL's director nominees. Shares rose 26%.
Medifast's revenue fell about 50% in the first quarter from a year earlier as the weight-loss products company saw a drop in its Optavia coaches. The company guided for another decrease in sales in the second quarter. Shares fell 18%.
Watch For:
FOMC meeting; Employment Cost Index for 1Q; S&P CoreLogic Case-Shiller Home Prices Index for February; Chicago Business Barometer - Chicago PMI for April; Conference Board Consumer Confidence for April; Canada GDP for February; earnings from Amazon.com, Coca-Cola, McDonald's, Mondelez International, Starbucks
Today's Top Headlines/Must Reads:
- Fed to Signal It Has Stomach to Keep Rates High for Longer
- Goldman in Talks to Unload GM Credit-Card Partnership to Barclays
- China Hints at Rate Cuts, Property-Market Support as it Warns of Rising Uncertainties
MARKET WRAPS
Forex:
The dollar firmed across the board, while two-year Treasury yields hovered just under recent highs around 5%, supported by expectations that the Fed will keep interest rates high for longer than previously expected, Brown Brothers Harriman said.
ING said the dollar has room to appreciate on Tuesday due to prospects of U.S. employment cost index data--which is the Fed's preferred measure of wage inflation--showing a further increase in the first quarter.
Consensus expectations are for an acceleration from 0.9% to 1.0% in 1Q, ING said. This could encourage bets that the Fed will temper rate-cut expectations further, boosting the dollar.
Still, the U.S. currency could stall if Japan deploys more support to the yen, ING added.
The third quarter could open a window for recent dollar strength to ebb as U.S. growth is likely to slow just as data in the rest of the world point to a recovery, TD Securities said.
"The growth stories continue to evolve to a point where rest-of-the-world growth is converging with U.S. growth. That remains a cross-check to an even stronger dollar rally."
This period of waning dollar strength could be short-lived, however, as political risks related to the U.S. elections, geopolitical uncertainty and fiscal risks await in the fourth quarter, TD Securities added.
Bonds:
The recent rise in Treasury yields provides an opportunity to increase duration in U.S. fixed income investments and build a curve-steepening strategy, Allianz Global Investors said.
It expects the Fed to reiterate the need for continued restrictive policies at this week's meeting, adding that slower growth and higher-than-expected inflation create a complex picture for the Fed.
AllianzGI said the market reacted too strongly to the latest inflation data. The data "merely delays the initiation of a rate cutting cycle, but does not fundamentally call it into question."
AllianzGI sees the two-year segment of the U.S. curve as attractive.
Energy:
Oil prices were broadly stable after falling more than $1 a barrel on Monday as fresh talks over a Gaza ceasefire reduce the risk premium for crude.
Still, supply risks in the region remained high and a tight oil market was limiting the price downside.
"OPEC's voluntary production cuts are in place until end of 2Q, with members who have overproduced committing to compensate in 1Q," ANZ Research said.
"This means OPEC+ output could fall further, especially when demand picks up from refiners ahead of the summer driving season."
Metals:
Base metals and gold prices fell ahead of the Fed's meeting.
Gold's slump over the week beginning April 22 reflects receding geopolitical tensions, and it remained under pressure ahead of the Fed meeting, as the market prices in just one interest-rate cut this year, Exness said.
While the Fed is expected to maintain its interest rates unchanged at this week's meeting, hawkish comments from its president could weigh on gold, it added. High interest rates negatively affect the price of non-interest bearing gold.
TODAY'S TOP HEADLINES
McDonald's Supersizes China Bet as Corporate America Pulls Back
HONG KONG-Some U.S. consumer brands in China are struggling with tepid consumer demand and a trend toward nationalist buying. McDonald's is leaning in.
The fast-food company plans to nearly double its restaurants in China to more than 10,000 by the end of 2028, after recently spending $1.8 billion to buy back a bigger slice of its business in the country.
Walmart Takes On Trader Joe's and Whole Foods With New Premium Brand
Walmart wants to expand its food empire. It thinks gluten-free muffin mix and oat milk ice cream hold the key.
Already the country's largest grocer, the company is introducing a line of premium food called Bettergoods this year, aiming to attract new, often higher income shoppers more frequently and to encourage current shoppers to spend more.
Microsoft to Invest $1.7 Billion in AI Infrastructure in Indonesia
Microsoft will invest $1.7 billion in cloud and artificial-intelligence infrastructure in Indonesia over the next four years, ahead of an expected boom in demand for AI computing in the world's fourth most populous country.
The U.S. tech giant said Tuesday after a meeting between Chief Executive Satya Nadella and Indonesian President Joko Widodo that the investment will build on plans to build the company's first data center region in Indonesia and mark its single biggest investment in Southeast Asia's largest economy.
Eurozone Economy Returns to Growth as War Wounds Start to Heal
The eurozone economy had a stronger-than-expected return to growth at the start of the year as inflation cooled, a sign that the currency area is starting to recover from the damage done by Russia's invasion of Ukraine.
The combined gross domestic product of the 20 countries that share the euro was 0.3% higher in the three months through March than in the final quarter of 2023, above the 0.1% expected by economists, the European Union's statistics agency said Tuesday.
Office-Loan Defaults Near Historic Levels With Billions on the Line
Defaults are reaching historic levels in the office market, as a growing number of owners capitulate to persistently high interest rates and weak demand.
More than $38 billion of U.S. office buildings are threatened by defaults, foreclosures or other forms of distress, according to data firm MSCI. That is the highest amount since the fourth quarter of 2012 in the aftermath of the 2008-2009 financial crisis.
Asia-Pacific Economies' Resilience Spurs IMF Forecast Upgrade
Asia-Pacific economies seem to be weathering the impact of high interest rates, weak global demand and other headwinds rather well, the IMF says as it upgrades its growth forecast for the region.
"With rapid disinflation and resilient growth, Asia and the Pacific is closing in on a soft landing," the International Monetary Fund said in a report.
North Korea Will Soon Be Able to Flout Sanctions More Easily
SEOUL-At a high-security location at the United Nations headquarters in New York, a group of investigators watched a presentation early last year with satellite imagery showing tankers picking up shipments in Chinese waters and elsewhere, and then traveling to North Korea's oil facilities.
The Russian representative in the group posed a question: "How do you know it's oil? Is it water in those tankers? Is it wine?" he asked, according to people familiar with the exchange.
NATO Prepares to Face Russia-and Problems of Its Own
ADAZI MILITARY BASE, Latvia-NATO troops from 14 nations amassed last month in a wooded area here to take part in the alliance's biggest military exercise since the Cold War. Once again, the focus was Russia.
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04-30-24 0617ET
