Here are five things you must know for Friday, February 18:
1. -- Stock Futures Bounce Higher As U.S, Russia Set Ukraine Crisis Talks
U.S. equity futures bounced higher Friday, following on from one of the biggest single-day declines of the year for the Dow, as investors looked for a diplomatic resolution to the Russia-Ukraine crisis that has rocked markets for much of the week.
U.S. Secretary of State Anthony Blinken is set to meet Russia's Foreign Minister Sergei Lavrov next week, the State Department said late Thursday, with President Joe Biden scheduled to speak with NATO leaders later today. Both moves suggest the U.S. has yet to exhaust its diplomatic efforts, while Russia has insisted its withdrawn troops and tanks from the Ukraine border.
The overnight easing of tensions, while potentially only temporary, lifted stock futures and trimmed the recent march of global oil prices, but safe-haven investment flows continue to hold down Treasury bond yields -- which move in the opposite direction of prices -- following last night's market sell-off.
"Investors, wary of any bad news, have been unable to maintain positive momentum in equity markets across the globe as geopolitical risks dominate headlines," said Peter Essele, head of portfolio management for Commonwealth Financial Network. "A further escalation of tensions in the near term could roil markets due to the potential impact on a tenuous global supply chain, particularly as the Fed prepares for its first-rate hike in years. A perfect storm may be on the horizon if calmer heads don’t prevail."
The CME Group's FedWatch tool suggests investors have tamped down expectations for a 50 basis point rate hike next month, although St. Louis Fed President James Bullard reiterated his view that a full 1% worth of hikes is needed between now and July 1 during a CNN television interview Thursday.
On Wall Street, futures tied to the Dow Jones Industrial Average are indicating a 125 point opening bell gain while those linked to the S&P 500 are priced for a 23 point advance.
Nasdaq Composite futures are indicating a 105 point gain for the tech-focused benchmark as 10-year Treasury note yields hold at 1.967% in overnight trading.
2. -- Roku Shares Plunge As Investment Ramp, Streaming Slump Tames Outlook
Roku (ROKU) shares plunged in pre-market trading after the streaming service hub posted weaker-than-expected fourth quarter earnings
Roku said revenues for the three months ending in December were pegged at $865.3 million, with active accounts rising 17.4% from last year to 60.1 million. The revenue total, however, missed Street forecasts, as did the current quarter outlook of $720 million, as supply chain disruptions clip sales of its bespoke sets and devices.
Plans for a big ramp-up in spending in order to create original content that Roku can take a larger cut of ad revenue against, is also adding to concerns over its ability to generate near-term earnings, and margins are set to retreat back to pre-pandemic levels as a result.
Roku shares were marked 25% lower in pre-market trading to indicate an opening bell price of $108.46 each.
3. -- Intel Shares Edge Lower After Cautious Investor Day Presentation
Intel (INTC) shares edged lower in pre-market trading after the biggest U.S. chipmaker told investors to expect muted profit margins as it accelerates spending on new foundries and technologies to meet future demand.
Intel, which unveiled a $5.4 billion takeover bid for Tower Semiconductor earlier this week, told an investor conference that gross margins would fall by 6 percentage points this year, to 52%, before slowly improving by 2025, when revenues from its new investments will start to accelerate.
Intel is also planning to invest $20 billion into two chipmaking plants in Ohio - following on from similar investments in Arizona last March -- that it hopes have have up-and-running within three years as it expands domestic production.
"We thought Intel made its case that the company is undergoing a major transformation, and that the CEO Pat Gelsinger is making big and bold bets to win back Intel's crown," said BMO Capital Markets analyst Ambrish Srivastava.
Intel shares were marked 0.57% lower in pre-market trading to indicate a Friday opening bell price of $47.30 each.
4. -- Shake Shack Shares Slump On Muted Near-Term Outlook, Covid Costs
Shake Shack (SHAK) shares slumped lower in pre-market trading after the restaurant group posted softer-than-expected December quarter earnings thanks in part to last year's Omicron wave and rising wage and input costs.
Shake Shack said fourth quarter revenues rose to $203.3 million, just ahead of Street forecasts, but posted a 25 cents per share loss as costs linked to supply chain disruptions and Covid impacts ate into its bottom line. Current quarter sales guidance of around $197.5 million was also light of forecasts.
The environment of commodity and labor wage inflation is still taking a material impact on our restaurant margins. We expect this dynamic for the foreseeable future," CEO Randy Garutti told investors on a conference call late Thursday. "A combination of lower-than-average sales per hour, reduced operating hours and outright closures due to Covid resulted in materially lower sales versus our seasonal expectations."
Shake Shack shares were marked 11.3% lower in pre-market trading to indicate an opening bell price of $66.70 each.
5. -- Dropbox Shares Slide After Solid Q4 Earnings
Dropbox (DBX) shares slumped lower in pre-market trading after the online document sharing and storage group posted better-than-expected fourth quarter earnings but failed to lift its near-term outlook for sales and free cash flow.
Dropbox said December quarter revenues rose 12% to $565.5 million, topping Street forecasts, as paying user growth jumped 8.5% to 16.8 million. A bottom line of 41 cents per share was also ahead of estimates, but the group's current quarter sales guidance, which tops out at $560 million, and no changes to its longer-term look for free cash flow generation fell shy of what analysts were hoping to hear from CEO Drew Houston
Dropbox shares were marked 6.3% lower in pre-market trading to indicate a Friday opening bell price of $901.75 each.
