Five things you need to know before the market opens on Wednesday April 19:
1. -- Stock Futures Lower As Inflation Worries Resurface
U.S. equity futures moved lower Wednesday, while the dollar built gains against its global peers and Treasury yields jumped, as investors continue to track a mixed first quarter earnings season while fading bets on a summertime rate cut from the Federal Reserve.
Inflation concerns were also back in focus following data from the United Kingdom showing consumer prices rose 10.1% in March, a figure that eased from the record-high 11.% print in February but still leaves Britain as the only western European country with a double-digit inflation rate.
In the U.S. stronger-than-expected earnings from the country's biggest lenders, as well as commentary from Bank of America (BAC) CEO Brian Moynihan noting that consumer finances remain "generally healthy", credit quality is in "great shape" and its clients are still spending, are adding to both inflation concerns and Fed rate bets over the coming months.
St. Louis Federal Reserve President James Bullard told Reuters yesterday that he favors a Fed Funds rate in the region of 5.5% and 5.75%, a level that would require two more rate hikes, while Atlanta Fed President Raphael Bostic told CNBC he would like to see at least one more increase in order to extend the Fed's inflation fight.
The CME Group's FedWatch suggests an 86% chance of a 25 basis point rate hike next month, which would take the Fed Funds rate to a range of between 5% and 5.25%, with bets that the Fed will hold that rate in place until November now gaining firm traction.
Rate-sensitive 2-year Treasury note yields, meanwhile, were marked 5 basis points higher in overnight trading at 4.271%, while 10-year notes were pegged at 3.621%. The U.S. dollar index was marked 0.18% lower against a baskets of its global peers at 101.882.
Heading into the start of trading on Wall Street, futures contracts tied to the S&P 500 are priced for a 22 point opening bell decline while those linked to the Dow Jones Industrial Average are indicating a 150 point move to the downside. The tech-focused Nasdaq is priced for a 100 point decline.
Regional bank stocks are likely to be in focus today with earnings from U.S. Bancorp (USB), Western Alliance (WALPL) and Citizens Financial Group (CFG) reporting first quarter profits.
Chip stocks, as well, will likely be active after semiconductor equipment maker ASML NV (ASML) posted better-than-expected first quarter earnings but noted "mixed signals on demand from the different end-market segments as the industry works to bring inventory to more healthy levels."
Overnight in Europe, the region-wide Stoxx 600 was marked 0.4% lower in early Frankfurt trading, with London's FTSE 100 falling 0.4% as the pound jumped to 1.2437 against the U.S. dollar following the March inflation data.
Overnight in Asia, the MSCI ex-Japan index was marked 0.39% lower into the close of trading while the Nikkei 225 snapped its eight-day winning streak with a 0.18% decline in Tokyo.
2. -- Tesla Slides Ahead of Q1 Earnings Amid Margin Concerns
Tesla (TSLA) shares edged lower in pre-market trading ahead of the carmaker's highly-anticipated first quarter earnings scheduled for after the closing bell.
After a modestly disappointing set of deliveries for the three months ending in March, which Tesla posted on April 3, analysts now expect the group to see first quarter earnings fall 20% from last year to 85 cents per share, with revenues rising 24.1% to $23.29 billion.
The difference will likely be reflected in Tesla profit margins, which are set to narrow substantially from last year following a series of price cuts in key markets -- including a fresh set in the U.S. last night -- put in place since January.
"The big question will be margins as cutting prices will have an impact on this front although we believe Auto (gross margin) north of 20% remains the key threshold over the coming quarters," said Wedbush analyst Dan Ives.
Tesla shares were marked 2.6% lower in pre-market trading to indicate an opening bell price of $179.70 each, a move that would still leave the stock with a year-to-date gain of around 45%.
3. -- Netflix Slips After Mixed Q1 Earnings, Softer Subscriber Gains
Netflix (NFLX) shares edged lower in pre-market trading following a mixed set of first quarter earnings for the online streaming services that included softer new subscriber sign-ups and better-than-expected profits.
Netflix added 1.75 million new subscribers over the quarter, missing the Street forecast of just over 2 million, as its password-sharing crackdown began in four test markets beginning in early February.
Netflix, which no longer provides specific guidance on new subscriber additions, said its sees earnings in the region of $2.84 per share and revenues of $8.24 billion for the June quarter.
For the three months ending in March, Netflix posted a better-than-expected bottom line of $2.88 per share on revenues of $8.162 billion.
Netflix shares were marked 1.5% lower in pre-market trading to indicate an opening bell price of $328.75 each.
4. -- IBM Earnings On Deck As Global Tech Outlook Weakens
IBM (IBM) shares slipped lower in pre-market trading ahead of the cloud-focused tech and software giant's first quarter earnings after the closing bell.
Analysts expect IBM's adjusted earnings to fall 10% from last year to $1.26 per share, with revenues rising modestly to around $14.345 billion. Earlier this year, IBM forecast 2023 revenues rising by a "mid-single digit" percentage, with free cash flow in the region of $10.5 billion
The group also said it will cut around 3,900 jobs, a figure that represents around 1.5% of its global workforce, a move it linked in part to last year's spin-off of Kyndryl and the divesting of its healthcare data business. IBM said it would take a $300 million hit from the headcount reduction over the first quarter
IBM shares were marked 0.45% lower in pre-market trading to indicate an opening bell price of $127.20 each.
5. -- Meta Planning New Layoffs As Zuckerberg Doubles-Down On Cost Cuts
Meta Platforms (META) shares edged lower in pre-market trading amid reports that the social media group is planning another major round of layoffs that could ultimately affect as many as 4,000 employees over the coming weeks.
Multiple media reports suggest Meta will unveil the cuts as early as today, with Bloomberg citing a company-wide memo asking employees in north America to work from home as the cuts are announced.
Meta, which began its maiden round of job cuts -- the first in company history -- late last year, added to that headcount reduction in early March, when it said it would reduce its global headcount by 10,000 and close out an additional 5,000 roles that are currently being advertised but haven't yet been filled.
The group's focus on cost-cutting -- and multiple references to 'efficiency' in the fourth quarter earnings call by CEO Mark Zuckerberg -- has earned Meta host of upgrades and price target boosts from Wall Street as the broader digital ad industry faces a pullback in corporate marketing spend and softer consumer discretionary spending trends.
Meta shares were marked 0.72% lower in pre-market trading to indicate an opening bell price of $216.33 each.
