Stock Market Futures Rise Ahead Of Fed Interest Rate Hike This Week
U.S. stock futures are gaining before this week’s opening bell. For the week ahead, investors will likely be focusing on the Federal Reserve’s upcoming interest rate hikes. Despite the broader stock market seeing its worst April since 2008, it seems like more volatility could be in-store. In fact, the S&P 500 is currently down by over 13.8% year-to-date. Historically, this would be its worst four-month performance starting any year since 1939.
Weighing in on all this is Randy Frederick, the VP of trading and derivatives over at Charles Schwab (NYSE: SCHW). Frederick argues, “We’re going to be in for, I think, more dicey, choppy, volatile markets here for a while longer, just because of the uncertainty.” Not to mention, all this could also weigh in on the latest batch of earnings rolling in this week as well. Among the headliners on tap this week would be AMD (NASDAQ: AMD), Shopify (NYSE: SHOP), and Block (NYSE: SQ). As of 4:01 a.m. ET, the Dow, S&P 500, and Nasdaq futures are trading higher by 0.34%, 0.37%, and 0.54% respectively.
Berkshire Hathaway Reveals Additional Activision Stake At Annual Meeting
Over the weekend, Warren Buffett’s Berkshire Hathaway (NYSE: BRK.A) reported its latest quarterly financials. Overall, the conglomerate appears to be feeling the heat from declining markets now. For starters, Berkshire’s net earnings for the quarter are down 53% year-over-year, totaling $5.46 billion. In terms of operating earnings, the company is currently looking at a total of $7.04 billion. According to Berkshire, this is a result of a sharp deceleration in its insurance underwriting business. On top of that, the firm also notes that the overall state of the economy continues to weigh on operations as well.
Despite all of this, there are bright spots from the firm’s massive portfolio as well. Namely, Berkshire’s manufacturing, service, and retailing division is gaining traction. For the quarter, this segment raked in a total revenue of $3.03 billion, a 15.5% year-over-year increase. Not to mention, Buffett is also doubling down on his company’s investments in Activision Blizzard (NASDAQ: ATVI). According to the Oracle of Omaha, he personally boosted Berkshire’s stake in the company to a whopping 9.5%. This would put ATVI stock in the spotlight again even as its ongoing takeover from Microsoft (NASDAQ: MSFT) is underway. The likes of which, should things go as planned, would see Microsoft acquire the firm for almost $69 billion.
More importantly, in the case that Microsoft gets the green light for this purchase, Berkshire would stand to benefit. The tech giant is offering $95 per share for Activision in its current deal and Berkshire’s purchases are below that value. In the words of Buffett, “If the deal goes through, we make some money, and if the deal doesn’t go through, who knows what happens.” As such, both BRK.A stock and ATVI stock could be in focus today.
Chinese EV Names Hit Production Snag As Covid Restrictions And Supply Chain Pressures Linger
Meanwhile, Chinese EV stocks appear to be going through a rough patch now. For the most part, this is evident from the latest monthly delivery figures of the top Chinese EV firms. Namely, these would be the likes of Li Auto (NASDAQ: LI), Nio (NYSE: NIO), and Xpeng (NYSE: XPEV). For starters, Li Auto’s April deliveries are 4,167. To put things into perspective, this adds up to a 62% month-over-month decrease for the company. Secondly, Nio’s deliveries for the month are also down by about 50% over the same period. This adds up to a total of 5,074 vehicles delivered. Thirdly, Xpeng completed orders for 9,002 of its Smart EVs throughout April. This translates to a month-over-month decline of 42%.
Across the board, all three firms cite the intensifying pandemic conditions in China for the overall deceleration in deliveries. Accordingly, as COVID cases continue to rise in the region, supply chain pressures are following suit. By extension, this would impact the overall manufacturing and, more importantly, transportation of automobiles in China. Even so, there are growing efforts across these firms to further bolster their manufacturing capacities amidst the current slowdowns. While the short-term outlook may seem uncertain, long-term auto investors could see an opportunity in the middle of all this.
Moderna Eyes Vaccine Review Application For Kids Under 6-Years-Old
Moderna (NASDAQ: MRNA) seems to be making headway on the COVID vaccine front now. Notably, this is apparent from the company’s chief medical officer’s latest update over the weekend. According to Dr. Paul Burton, Moderna is looking to submit its vaccine for review for use in children under the age of 6. It aims to do so by the U.S. Food and Drug Administration’s (FDA) June panel meeting. This comes just days after Moderna’s emergency use authorization (EUA) application on Thursday last week.
Speaking on this in further detail is Dr. Burton. He notes, “I think the FDA now have all of the core fundamental data they need to be able to begin an application review. So yes, we’re very confident.” Should Moderna get the greenlight on this front, it would be the first to do so. Dr. Burton also adds, “The safety profile we’ve seen in this vaccine in these very youngest kids is very reassuring – actual rates of safety events even lower than we’ve seen in the 6-year-olds to 12-year-olds and that’s great.” With Moderna expanding the use case for its flagship vaccine, MRNA stock could be in focus now.
Other Notable Earnings To Know About Today
Aside from all that, there is no shortage of major firms reporting their earnings today as well. In the pre-market, we have OnSemi (NASDAQ: ON), Six Flags (NYSE: SIX), BlackRock (NYSE: BLK), Enterprise Products Partners (NYSE: EPD), and Global Payments (NYSE: GPN) on tap.
Alternatively, the likes of Devon Energy (NYSE: DVN), Expedia (NASDAQ: EXPE), Avis Budget Group (NASDAQ: CAR), Diamondback Energy (NASDAQ: FANG), and MGM Resorts (NYSE: MGM) could be in focus after the closing bell. Additionally, some of the top fertilizer firms in the stock market today are also hosting their earnings calls at the same time. They are Mosaic (NYSE: MOS) and Nutrien (NYSE: NTR). With all this going on alongside interest rate talks and growing market volatility, investors have plenty to keep track of this week.
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