Five things you need to know before the market opens on Wednesday August 9:
1. -- Stock Futures Higher With Banks, Inflation Data In Focus
U.S. equity futures bumped higher Wednesday, while Treasury yields held steady ahead of a 10-year note auction, as investors looked to key inflation data later in the week amid a pullback in risk appetite and worrying developments in China's post-Covid recovery.
U.S. stocks have had a difficult start to August, having closed out July with the S&P 500 just 5% from its all-time high, falling in five of the first six trading sessions as the second quarter earnings season grinds to a close and investors look to the next Federal Reserve policy meeting in September.
Overnight data in China, meanwhile, added to concerns that the world's second-largest economy is flirting with recession risk following the first year-on-year decline in headline CPI since 2021 over the month of July.
The inflation data, which followed yesterday's surprise slump in exports and imports over the month of July, also noted a big 4.4% decline in factory gate prices, a move that could put downward pressure on inflation readings in the U.S. over the coming months.
In the U.S., bank stocks are likely to be back in focus following a decision by Moody's Investors Service to lower credit scores for ten mid-sized lenders, while placing another six on watch for a possible cut, on concerns that higher interest rates and tighter funding conditions will curtain profits.
Several big-name lenders, including Citigroup C and Wells Fargo WFC, caught in yesterday's sell-off were marked modestly higher in pre-market dealing, while the VIX index, a key measure of broader market volatility, eased from the two-month high it reached during yesterday's session.
In other markets, crude prices were moving higher in overnight trading amid a pullback in the U.S. dollar and ahead of Energy Department data on domestic supplies at 10:30 am Eastern time.
WTI futures for September delivery rising 62 cents to $83.54 per barrel, while the national average for U.S. gas prices at the pump hit $3.82 per gallon, up from $3.54 last month, and the highest since October of last year.
Heading into the start of the trading day on Wall Street, futures contracts tied to the S&P 500 are indicating a 13 point opening bell gain while those linked to the Dow Jones Industrial Average are priced for a 70 point advance. Futures tied to the tech-focused Nasdaq futures were up 62 points.
In Europe, the region-wide Stoxx 600 was marked 1.04% higher in early Frankfurt trading as bank stocks in Italy posted solid gains after the government backtracked on a windfall tax that would have been pegged to the net interest margins of the country's biggest lenders.
Overnight in Asia, the MSCI ex-Japan index was marked 0.55% higher into the close of the session while the Nikkei 225 closed 0.53% lower at 32,204.33 points.
2. -- 10-Year Treasury Auction On Deck As Bond Markets Rally
U.S. Treasury bond yields were steady in overnight trading ahead of what could be a key test for foreign investor interest in new bond auctions later in the session.
The Treasury will sell $38 billion in new 10-year notes later this morning as part of its new quarterly refunding program that includes bigger auction sizes as it looks to raise around $103 billion from coupon-bearing bond sales over the coming three months.
The auction, while also $3 billion larger than the last 10-year note debut in May, comes shortly on the heels of the Fitch Ratings decision to lower its triple-A credit grade on U.S. debt, which triggered a volatile market reaction last week and, alongside some stronger U.S. economic data, pushed 10-year yields to a 10-month high of 4.2%.
Yesterday's $42 billion sale of 3-year notes, meanwhile drew record interest from foreign buyers and the lowest-ever take-up from the Treasury's network of 24 primary dealers, adding even more need for non-traditional buyers to help fund the U.S. budget deficit.
Benchmark 10-year notes were last seen pegged at 4.014% in overnight dealing, with 2-year notes trading at 4.758%.
3. -- Lyft Share Tumble As Uber Price War Adds To Growth Concerns
Lyft (LYFT) -) shares tumbled in pre-market trading after the ride-sharing group indicated its price war with larger rival Uber could eat into near-term profits, clouding a solid second quarter earnings report.
Lyft posted adjusted earnings for the three months ending in June of 16 cents per share, surprising analysts looking for a penny-per-share loss, and said September quarter revenues would rise to between $1.13 billion and $1.15 billion.
However, lower ride fares carved out 5% from Lyft's revenue per active user, which came in at $47.51 for the second quarter, and will likely extend into the current period, although it does see adjusted core earnings for the full year of between $75 million to $85 million.
"Q2 represents a full quarter, pricing rideshare competitively," said CFO Erin Brewer. "We had strong driver growth and a strong mix of new and returning riders with the average number of rides taken by each active rider, which we refer to as frequency, reaching the highest level in more than two years."
Lyft shares were marked 7.7% lower in pre-market trading to indicate an opening bell price of $10.67 each.
4. -- Penn Entertainment Surges On $2 Billion Sports Betting Deal With ESPN
PENN Entertainment (PENN) -) shares surged higher in pre-market trading reached a lucrative $2 billion sports-betting deal with Disney's ESPN.
Penn said the deal will see it pay $1.5 billion in cash, as well as $500 million in warrants allowing for the purchase of its common shares, in exchange for the use of brand rights, promotions and other forms of co-operation over the next ten years as it re-launches under the a new name: ESPN Bet.
Penn also sold its stake in Barstool Sports, which it purchased earlier this year, to founder Dave Portnoy.
"This transformative, exclusive agreement with ESPN marks another major milestone in PENN’s evolution from a pure-play U.S. regional gaming operator to a North American entertainment leader," said PENN CEO Jay Snowden.
PENN shares were marked 12.1% higher in pre-market trading to indicate an opening bell price of $27.84 each.
5. -- Disney Reports After The Bell With Eyes on Streaming, Parks Trends
Walt Disney (DIS) -) shares edged higher in pre-market trading ahead of the media and entertainment giant's third quarter earnings after the closing bell.
Disney, which recently extended the contract of interim CEO Bob Iger until the end of 2026, is expected to post a bottom line of 97 cents per share, down 11% from the same period last year, on revenues of $22.5 billion.
Investors are likely to focus on both the subscriber gains for its streaming services, which includes Disney+, ESPN+ and Hotstar, following a series of price increases aimed at offsetting content and acquisition costs. Disney expects the streaming division to be profitable in the coming fiscal year, which begins in October, as it starts to offer ad-support tiers following a similar move by rival Netflix (NFLX) -).
Disney+ paid subscribers fell by 4 million to 157.8 million over the three months ending in March, thanks in part to the loss of televised cricket rights in India.
The group's Parks division, which generated nearly $8 billion in revenues over the March quarter, will also be in focus, although attendance trends are slowing as a result of price increases in key markets and a pullback in consumer discretionary spending.
Disney shares were marked 0.9% higher in pre-market trading to indicate an opening bell price of $88.91 each.
