Here are five things you must know for Tuesday, May 24:
1. -- Stock Futures Slide On Renewed Growth Worries
U.S. equity futures slumped lower Tuesday, potentially erasing most of yesterday solid opening-week rally, as investors quickly retreated from risk markets amid concerns over the impact of surging inflation on both consumer demand and global economic growth.
JPMorgan, which cut its China growth forecast to suggest a contraction of as much as 5.4% for the world's second largest economy, sees global growth advancing at its slowest pace in two years this quarter and, with just a 0.6% forecast, the second-slowest since the global financial crisis of 2008.
Drilling deeper, social media group Snap SNAP rattled tech sentiment with a surprise warning on profits and sales as global companies pull back on ad spending in the group's popular messaging app.
Still, economic activity data from Europe over the month of May was reasonably solid, with the S&P Global PMI index slipping to 54.9 points amid record inflation in the single currency area, but still holding well above the 50 point mark that separates growth from contraction.
China's Covid lockdown, however, a warning on supply chain disruptions from Toyota, the world's biggest carmaker, on chip supplies that will slash its monthly production rate by 100,000 units and the lingering impact on sentiment -- and demand -- from Russia's war on Ukraine are once again combining to tip stocks into the red, with Europe's Stoxx 600 down 0.97% in early Frankfurt trading and Asia's MSCI ex-Japan benchmark falling 1.39%.
In the U.S., benchmark 10-year Treasury bond yields -- which move inversely to prices -- rallied 6 basis points to 2.805% in overnight trading as investors looked for risk-free assets to park cash, while the U.S. dollar index was little-changed against a basket of six global currency peers at 102.045 in early European trading.
On Wall Street, futures tied to the Dow Jones Industrial Average indicating a 260 point opening bell slide while those linked the S&P 500, which is down 16.63% for the year, are priced for a 47 point move to the downside Futures linked to the Nasdaq are looking at 212 point opening bell slump.
2. -- Snap Plummets On Profit Warning, Social Media Stocks Tumble
Snap Inc. (SNAP) shares plunged lower in pre-market trading Tuesday after the messaging app maker warned that a 'deteriorating' global economy will hammer the group's near-term profits.
Citing a memo from CEO Evan Spiegel, Reuters reported that Snap, which makes the Snapchat messaging app, told employees to expect cost cuts and a hiring freeze, while a late Monday Securities and Exchange Commission filing noted the group is likely to report "revenue and adjusted EBITDA below the low end of our Q2 2022 guidance range".
Snap, which relies on ad spending for the vast majority of its revenues, said that the "macroeconomic environment has deteriorated further and faster than anticipated", causing companies to pull back on ad spending as they reevaluate priorities in a weakening economy.
Snap shares were marked 29% lower in pre-market trading to indicate an opening bell price of $15.95 each. Meta Platforms (FB), the parent of Facebook, was marked 6.75% lower at $182.99 each while Google parent Alphabet (GOOGL) slumped 4% to $2,140.10 each.
3. -- Zoom Shares Surge After Q1 Earnings Beat, Outlook Boost
Zoom Video Communications (ZM) shares surged in pre-market trading after the video conferencing specialists posted better-than-expected first quarter earnings, while boosting their full-year profit forecast, citing robust demand from businesses looking to extend hybrid work models.
Zoom said adjusted profits for the three months ending in April were pegged at $1.03 per share, down 22% from last year but firmly ahead of the Street forecast of 87 cents, with revenues rising 12% to $1.074 billion.
Looking ahead, Zoom said it sees adjusted profits in the region of $3.70 and $3.77 per share, with CFO Kelly Steckelberg telling investors that the group expects "revenue from enterprise customers to become an increasingly higher percentage of total revenue over time" as businesses continue to make hybrid work structures permanent.
Zoom shares were marked 6.1% higher in premarket trading to indicate an opening bell price of $94.76 each.
4. -- Nordstrom Slips Lower Ahead of Retail Earnings Parade
Nordstrom (JWN) shares edged lower in pre-market trading ahead of the mall-based retailer's first quarter earnings after the closing bell.
Nordstrom will form part of a retail earnings parade this week as Macy's (M), Dick's Sporting Goods (DKS), Gap (GPS) and Urban Outfitters (URBN) all publish April quarter results amid a pullback in consumer spending linked to surging inflation and supply chain disruptions that are weaking havoc on inventory controls.
Nordstrom is expected to post a modest profit of 5 cents per share on revenues of $3.28 billion, based on Wall Street forecasts, but disappointing tallies last week from Target and Walmart, particularly in apparel sales, has investors on edge.
The S&P 500 Retailing Group is down around 24% so far this quarter, its worst performance since 1990, as investors expect more pain to come from both the Fed's rate-based inflation fight and the highest nominal domestic gas prices on record, which continue to pinch household budgets and discretionary spending.
Nordstrom shares were marked 0.33% lower in premarket trading to indicate an opening bell price of $21.38 each, a move that extend the stock's year-to-date decline to around 11%.
5. -- Exxon Shareholders Urged to Split CEO, Chairman Role
Exxon Mobil (XOM) shares edged lower in pre-market trading after a investor advisory group recommended splitting the role of chairman and CEO at the biggest U.S. oil major.
Britain-based Pensions & Investment Research Consultants, which advises shareholders on key corporate issues, said CEO Darren Woods should not be re-elected as group chairman at the group's annual meeting on Wednesday, citing a "concentration of power" in the twin roles that could impede its transition into cleaner energy investments.
Exxon, which took a $3.4 billion charge from its Russia exit earlier this year, posted weaker-than-expected first quarter earnings of $1.28 per share, but saw revenues leap 53% to just over $90 billion thanks to an historic surge in global crude prices.
Exxon shares were marked 0.85% lower in pre-market trading to indicate an opening bell price of $93.08 each, a move that would still leave the stock with a year-to-date gain of around 48%.
