Here are five things you must know for Friday, June 24:
1. -- Stock Futures Higher But Growth Concerns Linger
U.S. equity futures moved higher again Friday, setting up Wall Street for its first weekly gain in a month, even as markets around the world continue to suggest that growth concerns have overtaken inflation worries heading into the second half of the year.
Federal Reserve Chairman Jerome Powell told Congressional lawmakers on Capitol Hill yesterday that he and his colleagues "can't fail" in their effort to bring inflation back to the 2% level needed for price stability in the world's biggest economy, a reiteration that points to more Fed rate hikes and slower economic growth.
"We really need to restore price stability," Powell told the House Financial Services Committee. "Because without that we're not going to be able to have a sustained period of maximum employment where the benefits are spread very widely. It's something that we need to do, we must do."
Commodity prices, which have been weakening for much of the past two weeks, extended declines in overnight trading, with Copper on pace for its worst week in more than two years and oil prices hovering near the lowest levels since early May.
Bond yields are rallying, as well, pulling benchmark 10-year Treasury bond yields dipped to 3.085% in overnight trading, putting the spread against 2-year notes at just 6 basis point. A so-called inversion of the yields of 2-year and 10-year notes is typically seen as a signal of near-term recession.
Still, global equity benchmarks are moving higher, buoyed by defensive and growth stocks, the former getting support from investors worried about recession risk, the latter receiving a boost from lower Treasury yields.
In Europe, the region-wide Stoxx 600 was marked 1.14% higher in early Frankfurt trading, on pace for weekly gain of around 0.94%, while Asia's MSCI ex-Japan benchmark gained 1.4% to put its weekly advance at around 1.34%.
On Wall Street, futures tied to the Dow Jones Industrial Average are indicating a 262 point opening bell gain while those linked the S&P 500, which is down 20.36% for the year, are priced for a 33 point gain.
Futures linked to the tech-focused Nasdaq are looking at 130 point opening bell gain.
2. -- U.S. Banks Pass Fed Stress Tests, Paving Way For Dividend Boost
The Federal Reserve said late Thursday that all of the nation's largest banks could weather a severe shock to the U.S. economy in an assessment that will allow them to boost shareholder returns over the coming year.
All 33 U.S.-based banks -- with more than $100 billion in assets -- passed the Fed's annual 'stress test', a report card put in place in the wake of the global financial crisis that probes a bank's ability to keep enough capital on hand to absorb losses -- and protect depositors -- in the event of a severe recession.
"The tests evaluate the resilience of large banks by estimating their capital levels, losses, revenue and expenses under hypothetical scenarios over nine future quarters," the Fed said. "This year's hypothetical scenario is tougher than the 2021 test, by design, and includes a severe global recession with substantial stress in commercial real estate and corporate debt markets."
The clean bill of health will allow banks to boost dividends and share buybacks, given the breadth of their so-called 'capital buffers', and announcements are expected to begin on Monday.
3. -- FedEx Shares Jump After Q4 Earnings Beat, Solid 2023 Outlook
FedEx (FDX) shares moved higher Friday after the world's biggest package delivery group posted better-than-expected fourth quarter earnings alongside a solid near-term profit forecast.
FedEx said it passed on rising fuel costs to customers, while its broader labor costs eased from last year, allowing for improved margins in its key ground shipping unit that helped drive an overall bottom line gain of 37.1%, to $6.87 per share. Group revenues, FedEx said, rose 8.1% from last year to $24.4 billion, narrowly topping analysts' estimates of a $24.05 billion tally.
Looking into the group's coming fiscal year, which ends in February of 2023, FedEx said it sees earnings in the region of $22.45 to $24.45 per share, well ahead of Refinitiv forecasts, adding it expects to repurchase around $1.5 billion of stock over the final six months of the coming financial year.
While Q4 volumes were down year-over-year and all our transportation segments compared to the extra ordinary fiscal year '21 we successfully implemented strategic actions that drove double-digit yield improvement across the board," new CEO Raj Subramaniam told investors on a conference call late Thursday. "As we look ahead to fiscal year '23, we expect the macroeconomic risks both in the U.S. and globally to continue to put stress on supply chains and trade."
FedEx shares were marked 2.88% higher in premarket trading to indicate an opening bell price of $234.70 each.
4. -- Gas Prices Slide As White House Meets With Oil Bosses
U.S. gas prices fell to a multi-week low, data from the American Automobile Association indicated late Thursday, amid slumping crude prices waning consumer demand provided at least some relief from record-high pump costs.
The AAA said the nation-wide average cost for a gallon of gasoline fell 1.4% to $4.926 per gallon. That's down around 10 cents from the all-time highs recorded earlier this month, but still more than 60% higher than this time last year.
This week's moves lower will also be seen as a welcome sign by officials in the Biden Administration, who have been pushing both drillers and refiners to increase their pace of production -- while foregoing excess profits -- in order to bring more supply to the market.
Seven U.S. energy companies, including Exxon Mobil (XOM), Chevron (CVX) and Marathon Oil (MRO), met with Energy Secretary Jennifer Granholm yesterday as part of an ongoing effort to reach an agreement on both near and long term supplies. While President Biden has said oil companies have a patriotic duty to boost output, oil companies themselves say the financial risk -- set against the administration's desire to limit fossil fuel production -- is too great.
"American-made energy solutions are beneath our feet, and we urge you to reconsider the immense potential of U.S. oil and natural gas resources – that are the envy of the world – to benefit American families, the U.S. economy and our national security," the American Petroleum Institute, as well as a group of industry leaders, wrote to the White House Thursday.
5. -- Softbank's Son Says Arm Likely To List On The Nasdaq
Arm Holdings, the chipmaker owned by Japan's SoftBank, will likely list on the Nasdaq when its brought to market later this year, billionaire tech investors Masayoshi Son said Friday.
Britain-based Arm, which was purchased by Softbank for $32 billion in 2016, was intended to be sold to Nvidia (NVDA), but the deal collapsed earlier this year amid antitrust concerns raised by both U.S. and U.K. officials.
Son told Softbank's annual meeting that, given "most of Arm's clients are based in Silicon Valley .... stock markets in the U.S. would love to have" the listing. He added that requests have been made for a London listing -- amid reports of political pressure from Downing Street -- but declined to elaborate.
Earlier this week, a spokesperson for Prime Minister Boris Johnson said he was "not aware of any plans" to compel Arm to list in London following a report that suggested the government would use national security legislation to keep the company on a domestic exchange.
