Here are five things you must know for Friday, August 5:
1. -- Stock Futures Mixed Ahead of July Jobs Report
U.S. stock-index futures were mixed on Friday ahead of a key economic report that investors hope will provide further clarity on the direction of the economy and whether the Federal Reserve’s inflation-fighting rate hikes are proving effective.
Futures tied to the Dow Jones Industrial Average were flat ahead of July’s nonfarm payrolls report, which is expected to show additional job growth last month, albeit at a more tempered pace. S&P 500 futures were also flat, as were contracts for the tech-focused Nasdaq-100.
In bond markets, the yield on the benchmark 10-year Treasury note ticked up to 2.695% from 2.674% Thursday. Yields and prices move inversely.
A key focus for investors ahead of the open is July’s nonfarm payrolls report, which investors hope will provide additional clues on how the labor market is holding up to the Fed’s recent inflation-fighting rate increases and corresponding slowing growth.
Analysts polled by FactSet are expecting 250,000 new jobs were added to the economy last month following June's 372,000 gain.
Even if economic growth is slowing, a strong labor market could keep the economy out of recession territory. Employment typically falls during recessions as companies lay off workers and stop hiring until the outlook improves.
Companies including Walmart (WMT), Amazon (AMZN), Tesla (TSLA) and Robinhood (HOOD) have already planned layoffs, and economists expect to see more job losses from companies in construction, technology, retail and finance, among others.
Inflation continued to soar in June, with the consumer price index jumping 9.1%. But economists expect inflation has peaked, and job growth now seems to have as well.
Overseas, the pan-continental Stoxx Europe 600 was flat. In Asia, major indexes closed with gains. Japan’s Nikkei 225 added 0.9%, South Korea’s Kospi rose 0.7% and China’s Shanghai Composite gained 1.2%.
2. -- Pelosi and Family Slapped With Sanctions Over Taiwan Visit
China on Friday imposed sanctions on U.S. House Speaker Nancy Pelosi and her immediate family in response to what the Chinese foreign ministry described as an “egregious provocation.”
Pelosi visited Taiwan earlier this week, in what was considered a highly controversial move. China views the island as part of its territory, but Taiwan has been governed independently since 1949, according to the Council on Foreign Relations.
“In disregard of China’s grave concerns and firm opposition, Speaker of the U.S. House of Representatives Nancy Pelosi insisted on visiting China’s Taiwan region. This constitutes a gross interference in China’s internal affairs.
It gravely undermines China’s sovereignty and territorial integrity, seriously tramples on the one-China principle, and severely threatens peace and stability across the Taiwan Strait,” a ministry spokesperson said in a statement.
“In response to Pelosi’s egregious provocation, China decides to adopt sanctions on Pelosi and her immediate family members in accordance with relevant laws of the People’s Republic of China,” the spokesperson said.
Political analysts have warned that Pelosi’s decision to visit Taiwan could ratchet up U.S.-China tensions. Pelosi is the highest-ranking U.S. official to visit the island in 25 years.
Pelosi said Friday that the U.S. would continue engaging with Taiwan despite criticism from China, as Beijing encircled the island with rocket and ballistic-missile fire following her visit there.
3. -- Virgin Galactic Shares Fall on Further Commercial Flight Delays
Virgin Galactic (SPCE) shares were down nearly 10% in premarket trading Friday after the space tourism company said it has postponed the beginning of its commercial flights by another three months, citing delays in work refurbishing its carrier aircraft.
Virgin Galactic announced that commercial service is being pushed back to the second quarter of 2023, the latest setback for the debut of its space tourism business. The company had previously pushed back the date from the fourth quarter of this year to the first quarter of next year.
The company currently has one carrier aircraft, or “mothership,” called VMS Eve, which is about 14 years old and is undergoing a lengthy refurbishment. The jet-powered mothership plays a key role in Virgin Galactic’s flights by carrying the company’s spacecraft up to about 50,000 feet altitude for launch.
Virgin Galactic reported a second-quarter adjusted EBITDA loss of $93 million, wider than the loss of $77 million in the previous quarter. The company has $1.1 billion in cash on hand. It also said it plans to sell up to $300 million in common stock, which the company said is intended to add “financial flexibility going forward.”
4. -- Warner Bros. Discovery Launching Ad-Supported Streaming Service
Warner Bros. Discovery (WBD) shares were down more than 12% in premarket trading Friday after the entertainment giant said it is launching a free, ad-supported streaming service, the latest effort by a streaming giant to reach a broader audience as the competition for users intensifies.
The company, the result of Discovery’s merger with AT&T’s WarnerMedia earlier this year, will first focus on a previously announced plan to combine its two main streaming services, HBO Max and Discovery+, executives said on a call with investors.
The combined subscription platform will be rolled out starting in the U.S. next summer, said JB Perrette, the company’s CEO of global streaming.
Once that service has been launched, the company sees potential for a free, ad-supported offering. The free service would cater to cost-conscious consumers and serve as an entry point to the company’s premium service, according to the company.
The announcement came as Warner Bros. Discovery reported its first quarterly earnings as a combined entity, swinging to a loss due to merger-related charges and warning investors that an advertising slowdown had led it to cut its outlook for this year and next.
Shares of Warner Bros. Discovery were down 10.18% at $15.70 in premarket trading.
5. -- AMC Entertainment Issues Special "Ape" Dividend; Shares Drop
AMC Entertainment (AMC) stock was down more than than 10% in premarket trading on Friday after the meme stock mascot announced a special dividend in the form of “Ape” preferred shares.
AMC said it will issue a special dividend of one AMC Preferred Equity unit for each share of AMC Class A common stock with a par value $0.01 per share, outstanding at the close of business on Aug. 15. The special dividend is expected to be paid at the close of business on Aug. 19.
AMC has applied to list its AMC Preferred Equity Units on the New York Stock Exchange under the symbol “APE,” starting Aug. 22. The symbol is a nod to the investors who turned the company into a meme stock, who often refer to themselves as “apes” or “ape nation.”
The dividend marks the latest move in a fight over stock issuances. AMC has turned to the special dividend after it was unable to gain shareholder approval to let it issue more common shares, according to The Wall Street Journal.
“This new AMC Preferred Equity gives AMC a currency that can be used in the future to strengthen our balance sheet, including by paying down debt or raising fresh equity,” AMC CEO Adam Aron said in a statement. “As a result, this dramatically lessens any near-term survival risk for AMC as we continue to work our way through this pandemic.”
The company, which issued an “I own AMC” NFT in January, will also be issuing an “I own APE” NFT to shareholders.
AMC has been the subject of as-yet unsubstantiated conspiracy theories alleging there are millions of synthetic AMC shares in circulation.
