Here are five things you must know for Friday, August 19:
1. -- Stock Futures Lower As Rate Bets, Inflation Worries Accelerate
U.S. equity futures moved lower Friday, while the dollar surged and oil prices slumped, as investors worried that surging inflation in Europe, weakening growth in China and higher interest rates from the Fed would upend the recent rally in global stocks.
A dovish take on minutes from the Fed's July policy meeting, which tipped stocks to a firmer close on Thursday, was challenged by a series of Fed policymakers amid improving jobs market data and the overall outperformance of the U.S. economy against its global peers.
St. Louis Fed President James Bullard told the Wall Street Journal that he didn't see the need to "drag out interest rate increases into next year" as he made the case for quicker, and larger, rate hikes that would take the Fed Funds rate to a range of 3.75% to 4% by the end of December.
That was was largely echoed by San Francisco Fed President Mary Daly, who said a 75 basis point rate hike next month could be a "reasonable" reaction to inflation and employment data.
The CME Group's FedWatch is now indicating a 45.5% chance of a 75 basis point rate hike on September 21, up from 41% during yesterday's trading.
The comments, placed against worrying inflation levels in Europe, where prices rose at two-decade high of 8.9% last month, reminded investors that the post-pandemic economic faces myriad challenges.
One of those challenges remains China, where officials have now warned of an impending drought, adding to a list of woes in the world's second-largest economy that has sparked talk of a rate cut from the Peoples' Bank of China.
China's yuan was fixed near the lowest levels in two years against the U.S. dollar, while the dollar index rose 0.2% to trade at 107.690 against a basket of six global peer currencies.
Benchmark 10-year note yields, which move in the opposite direction of prices, rose 6 basis points from yesterday to 2.945% while 2-year notes were pegged at 3.261%
European stocks slumped lower following a troubling reading for factory gate inflation in Germany, the region's largest economy, powered in part by a 105% year-on-year increase in energy input prices. Europe's Stoxx 600 benchmark fell 0.44% in early Frankfurt trading, following on from a 0.48% decline for the region-wide MSCI ex-Japan index in Asia.
On Wall Street, futures tied to the S&P 500 are indicating a 32 point opening bell decline while those liked to the Dow Jones Industrial Average are priced for a 190 point slump. Futures linked to the tech-focused Nasdaq are indicating a 137 point decline.
2. -- Applied Materials Shares Bump On Q3 Earnings Beat, Outlook
Applied Materials (AMAT) shares moved higher in pre-market trading after the semiconductor equipment maker posted better-than-expected third quarter earnings and a robust near-term outlook.
Adjusted earnings for the three months ending in July, the group's fiscal third quarter, rose 2% from last year to $1.94 per share, firmly topping the Street consensus forecast of $1.79 per share as revenues nudged 5.1% higher to $6.52 billion.
Applied Materials said it sees current quarter revenues in the region of $6.65 billion, with a $400 million error margin on either side, even as CEO Gary Dickerson cautioned that the group would remain "supply-constrained" for the "several quarters".
Applied Materials shares were marked 0.9% higher in pre-market trading to indicate an opening bell price of $109.25 each.
3. -- Deere Shares In Focus Ahead of Q2 Earnings
Deere & Co (DE) shares edged higher in pre-market trading ahead of the industrial group's third quarter earnings prior to the opening bell Friday.
Deere, a farm equipment making rival to Caterpillar, is likely to see a 23% gain in June quarter revenues, which are forecast at $12.78 billion, amid a surge crop prices that has contributed to some of the fastest food-price inflation on record. Earnings are expected to rise 27.5% to $6.69 per share.
Supply chain snarls, transportation costs and rising wage bills are likely to take their toll on operating margins, but the group is expected to boost its fiscal 2022 outlook, which currently forecasts net income of between $7 billion and $7.4 billion with solid demand for farm and construction equipment, increased infrastructure spending and favorable crop prices.
Deere shares were marked 0.95% higher in pre-market trading to indicate an opening bell price of $371.50 each.
4. -- Bed, Bath & Beyond Plummets As Cohen Completes Share Sale
Bed, Bath & Beyond shares plummeted in pre-market trading after Securities and Exchange Commission filings late Thursday indicated that Ryan Cohen, the retailer's second-largest shareholder, had completely exited his near 12% stake in the group.
Cohen's RC Ventures owns no further Bed, Bath & Beyond shares, the filings indicated, after netting nearly $70 million form the sale of 9.45 million shares over the past two days at prices ranging between $26.2713 and 18.6848 per share.
Bed, Bath & Beyond said Thursday that it's been "working expeditiously over the past several weeks with external financial advisors and lenders on strengthening our balance sheet", and would update investors before the end of the month on any new capital-raising plans.
Bed, Bath & Beyond shares were marked 40.27% lower in pre-market trading to indicate an opening bell price of $11.08 each, a move that would mark a two-day decline of around 62%.
5. -- Foot Locker Earnings On Deck As Nike Shift Raises Concern
Foot Locker will round-out a tough week of earnings for U.S. retailers Friday as the sporting goods specialists updates on its July quarter performance.
Foot Locker (FL) is expected to see second quarter earnings fall more than 63% from last year to around 81 cents per share, with revenues down 9.2% to $2.07 billion, according to Street forecasts.
Nike (NKE), which typically accounts for around 75% of Foot Locker sales in a given year, is deep into its shift in focus towards direct-to-consumer sales, bypassing retailers such as Foot Locker as it seeks more control over its global supply chain.
Foot Locker cautioned in February that Nike would likely only account for around 60% of sales this year, clipping sale-store sales growth and lower than expected profits.
Foot Locker shares closed at $31.98 each yesterday on the New York Stock Exchange, a 1.45% decline on the session that extended their year-to-date slump to around 28.6%.
