Stock Market Futures Extend Losses As Central Bank Tightens Monetary Policies
Stock market futures appear to be dipping further after yesterday’s sell-off of growth names. The current activity is likely a continuation of investors’ reaction to the Fed’s policy announcement this week. In brief, the Federal Reserve is pulling back on its pandemic-era easy-money policies. This involves tapering its bond purchasing program and a possible interest rate hike down the line. As a result, investors appear to be rotating out of high-growth names. Among the main sectors affected by this would be tech stocks. This is evident as the tech-heavy Nasdaq was down by as much as 2.5% during intraday trading yesterday.
Weighing in on all of this is FS Investments chief market strategist Troy Gayeski. He said, “The thing investors have to understand is, we’re going through a major transition in monetary policy”. Gayeski went on to elaborate, “The Fed has been running emergency policies arguably far longer than they should have been, and as that money supply growth slows down as they ease off the balance sheet expansion and ultimately hike next year, one would at least expect more volatility in markets. And that’s really what we’ve been seeing the last month.”
If all that wasn’t enough, investors have no shortage of exciting stock market news to consider today as well. As of 7:38 a.m. ET, the Dow, S&P 500, and Nasdaq futures are trading lower by 0.25%, 0.47%, and 0.94% respectively.
Rivian Shares Fall On Wide Earnings Miss
Among the companies turning heads at the tail-end of this earnings season is electric vehicle (EV) industry newcomer Rivian (NASDAQ: RIVN). This would be the case given the company’s explosive initial public offering (IPO) back in early November. However, the company’s first quarterly earnings since going public fell short on several fronts.
Namely, Rivian posted a loss per share of $12.21 on revenue of about $1 million from its first customer deliveries of 11 R1T EVs. On one hand, the company missed consensus earnings estimates by $5.53 and revenue projections by $0.03 million. As a result, the company’s shares are sliding by over 9% in pre-market trading, placing RIVN stock below the $100 mark.
By and large, the numbers may not seem all that inviting at face value. However, a loss is expected given the company’s current focus on expanding its operations. After all, it is looking to compete with major names in the industry that already have substantial head-starts. In fact, Rivian also revealed plans to build its second U.S. production plant. The company is looking to begin construction by the summer of 2022. By Rivian’s estimates, it will have an annual production capacity of about 400,000 units. On top of that, the company also notes that it currently has over 71 thousand pre-orders for its EVs. Regardless of where you stand on Rivian’s prospects, RIVN stock will likely be in focus in the stock market today.
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FedEx Back On Track To Deliver On Original Fiscal Year 2022 Profit Goals
In other earnings-related news, FedEx (NYSE: FDX) posted solid figures in its latest quarterly earnings release after yesterday’s closing bell. In detail, the company reported an earnings per share of $4.83 on revenue of $23.5 billion for the quarter. For comparison, this is versus estimates of $4.28 and $22.4 billion respectively.
Providing an overview of the quarter is executive VP and CFO Michael Lenz. Lenz said, “FedEx operating income grew in our second quarter, driven by strong revenue growth and effective management of our cost and expected labor availability challenges.” While the company’s earnings per share were unchanged year-over-year, he also notes that FedEx paid “significantly higher” taxes this year.
Notably, a key highlight of the company’s earnings call would be the update to its fiscal 2022 profit outlook. Thanks to the current momentum in its business, FedEx is reinstating its initial estimates after lowering them in September. For the fiscal year, the company is now expecting an annual earnings per share between $20.50 to $21.50. At the same time, FedEx also announced a $5 billion share repurchase program as well. With FedEx seemingly kicking into high gear across the board, I could see investors watching FDX stock now.
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Goldman Sachs Sees ‘Solid Demand’ For Apple’s iPhones In China
Elsewhere, Apple (NASDAQ: AAPL) received a positive update from analysts over at Goldman Sachs (NYSE: GS). In essence, the firm recently highlighted Apple’s improving iPhone supply in general. According to analyst Rod Hall, this is evident from better lead times for iPhones across “all major geographies”. He added that 13 weeks since launching, lead times for the iPhone 13 Pro models are down by 6 to 7 days in the U.K. In China, lead times also improved by 8 days. Not to mention, Hall also highlights that there is “solid demand” in China while Europe is seeing “slightly weaker” demand.
That’s not all, the analyst also pointed out that there is a notable increase in Macbook orders in China, the U.S., and part of Europe. Hall argued that this could be “suggesting supply is not keeping up with the demand”.
Across the board, it seems that Apple’s vast array of cutting-edge tech remains in demand this holiday season. With consumers looking to spend their saved-up discretionary funds, this comes as no surprise. As such, AAPL stock could be a top stock to watch for some investors now, even as it trades around record levels.
Churchill SPAC Looking To Bring India’s Byju Via $48 Billion Deal
Churchill Capital VII (NYSE: CVII), a special purpose acquisition company (SPAC), is making waves in the stock market as well. Accordingly, this would be thanks to news about its plans to take Indian online education company Byju public. According to Bloomberg, should things go as planned, the company would have a valuation of about $48 billion. Given the sheer scale of the deal, it is no wonder that some consider Byju among India’s most valuable startups.
Overall, the report suggests that among all the SPAC partners Byju has talked to, Churchill Capital has “made the most progress” yet. In terms of the timeline, a deal could potentially be set as soon as next month. For the uninitiated, Churchill Capital brought EV firm Lucid Group (NASDAQ: LCID) public earlier this year. Given the generally positive reception to LCID stock, investors could be keeping CVII stock in view now.
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