Five things you need to know before the market opens on Thursday May 18:
1. -- Stock Futures Hold Gains On Debt Ceiling Deal Hopes
U.S. equity futures edged modestly higher Thursday, following on from a strong finish on Wall Street tied to hopes of a debt ceiling deal over the coming days, as investors looked to first quarter earnings from Walmart and jobless claims data to sustain the market's recent rally.
President Joe Biden told reporters in Washington yesterday he was "confident" of reaching a deal with House Speaker Kevin McCarthy on raising the $31.4 trillion debt ceiling by the time he returns from the G-7 leaders' summit in Japan that, a timeframe that still leaves several days before the June 1 deadline that Treasury Secretary Janet Yellen was deemed the U.S. at risk of potential default.
The debt talk progress helped stocks break out of their recent torpor, with the S&P 500 rising 1.2% on the session to close around 20 points south of the year-to-date high the benchmark reached in early February.
Benchmark 2-year note yield moved higher, as well, and were stuck at 4.167% in overnight trading, with 10-year notes changing hands at 3.589%, as traders tracked solid retail sales data a series of hawkish comments from Federal Reserve officials ahead of today's weekly jobless claims data at 8:30 am eastern time.
Better-than-expected data from the housing sector, including solid starts data and improving homebuilder sentiment, is also feeding in to bets that the economy will avoid recession over the back half of the year. The Atlanta Fed's GDPNow forecasting tool, in fact, suggests the economy is growing a 2.9% clip, thanks in part to a surge in real residential investment growth.
The CME Group's FedWatch, meanwhile, is pricing in a 27.3% chance of a 25 basis point increase in the Fed Funds rate next month in Washington, up from just 10.7% a week ago.
The U.S. dollar index, which tracks the greenback against a basket of its global peers, jumped another 0.22% to 103.111, the highest since late March, as China's yuan extended declines amid a mixed post-Covid recovery and Japan's yen slid lower on bets that its monetary policy would remain loose for at least the next year.
On Wall Street futures contracts tied to the S&P 500 indicating a modest 5.5 point opening bell gain while those linked to the Dow Jones Industrial Average priced for a 16 point advance. The tech-focused Nasdaq was marked 22 points higher.
In Europe, the region-wide Stoxx 600 was marked 0.58% higher in early Frankfurt trading following last night's rally on Wall Street, with Britain's FTSE 100 marked 0.56% higher in London
Overnight in Asia, the region-side MSCI ex-Japan index was marked 0.5% higher into the close of trading while the Nikkei 225 closed at a fresh 20-month high 30,573.93 points - just 200 points from the all-time high it reached when domestic markets peaked in late 1990.
2. -- Walmart Earnings On Deck Amid Cautious Retail Outlooks
Walmart (WMT) shares edged higher in pre-market trading ahead of the retail giant's first quarter earnings prior to the opening bell.
Walmart, the third of the three biggest U.S. retailers to report April quarter earnings this week, is expected to post a bottom line of $1.31 per share, a one penny increase from the same period last year, with revenues rising 5% to $148.5 billion.
Walmart's own forecast for the March quarter sees adjusted earnings of between $1.25 and $1.30 per share, with sales rising between 4.5% and 5%.
The group's profit margins are like to be the focus of the release, however, as world's biggest retailer has seen its share of grocery sales rise to more than half its overall total, helping same store sales improve notably from last year but reducing the amount of profit it can squeeze from each visit in a low-margin business.
Earlier this week, both Target (TGT) and Home Depot (HD) posted better-than-expected first quarter earnings that were clouded by muted near-term outlooks linked to fading consumer demand.
Walmart shares were marked 0.44% higher in pre-market trading to indicate an opening bell price of $150.19 each.
3. -- Take-Two Interactive Surges As NBA 2K23 Maker Tops Sales Forecast
Take-Two Interactive (TTWO) shares surged higher in pre-market trading after the Grand Theft Auto and NBA 2K23 video game maker posted better-than-expected fourth quarter sales after the closing bell late Wednesday.
Take-Two said net bookings for the three months ending in April were up 65% from last year to $1.39 billion, topping Street forecasts. A big ramp-up in new game launches should drive the group to deliver 36 new titles over the next two fiscal years, Take-Two said, while forecasting $8 billion in 2025 revenues.
"For the last several years, we've been preparing our business to release an incredibly robust pipeline of projects that we believe will take our company to even greater levels of success," said CEO Strauss Zelnick.
Take-Two Interactive shares were marked 9.56% higher in pre-market trading, indicating an opening bell price of $137.05 each.
4. -- Applied Materials Q4 Earnings In Focus As Chipmakers Rally
Applied Materials (AMAT) shares were little-changed pre-market trading ahead of the semiconductor equipment maker's second quarter earnings after the closing bell.
Analysts expect Applied Materials, which had taken a hit from U.S. sanctions on the export of high-tech semiconductors and chipmaking equipment to China-based companies, to post an April quarter bottom line of $1.84 per share, down a penny from last year, on revenues of $6.38 billion.
The Street's revenue tally matches Applied Materials' own forecast from earlier this year, which noted a robust order backlog as well as easing supply chain disruptions and the ongoing demand for AI chips that should offset weakness in demand for mobile phones and personal computers.
Applied Materials shares, which closed 3.95% higher on the Nasdaq yesterday, were indicated to open at $125.70 each.
5. -- Micron Shares Jump As Chipmaker Unveils Japan Investment Push
Micron Technology (MU) shares jumped higher in pre-market trading after the group said it will invest $3.7 billion to make next-generation memory chips in Japan.
Bloomberg News reported that Micron, which is subject to a 'security review' by China's Cyberspace Administration in retaliation for the Biden administration's ban on the export of high-tech equipment and chips, will use around $1.5 billion in Japanese government incentive funding to make next-gen memory chips at its existing facility in Hiroshima.
“Micron’s Hiroshima operations have been central to the development and production of several industry-leading technologies for memory over the past decade,” said CEO Sanjay Mehrotra said. “We are proud to be the first to use EUV in Japan and to be developing and manufacturing 1-gamma at our Hiroshima fab. Our plans reflect our continued commitment to Japan, strong relationship with the Japanese government and the exceptional talent of our Micron Hiroshima team.”
Micron Technology shares were marked 1.9% higher in pre-market trading to indicate an opening bell price of $66.14 each.
