Stock Market Futures Ticked Higher Ahead Of The Holiday-Shortened Week
U.S. stock futures edged higher on early morning Monday, pointing to a positive start for the stock market this week. Adding optimism to the bull market is the possible easing measures by China’s central bank to support the slowing economy. With the holiday season at our door, do note that the U.S. market will be closed on Thanksgiving Day. Against the backdrop, the biggest market moving event is likely going to be President Joe Biden’s nomination for the next Federal Reserve chief.
“I do think in the shortened week, that is probably going to be the biggest driver of market action,” said Jeff Schulze, ClearBridge Investments investment strategist. “If Brainard is nominated as Fed chair, it wouldn’t be a surprise to me to see some near-term volatility. Usually, the market tests a Fed chair.”
Meanwhile, cloud-based telecom company Vonage (NASDAQ: VG) stock soared in pre-market trading after agreeing on a $6.2 billion deal to be bought by Ericsson (NASDAQ: ERIC). As of 7:08 a.m. ET, the Dow, S&P 500, and Nasdaq futures are rising by 0.30%, 0.32%, and 0.98% respectively
Monster Beverage (MNST) Exploring Merger Deal With Constellation Brands (STZ)
Energy drinks maker Monster Beverage (NASDAQ: MNST) is exploring a merger deal with Constellation Brands (NYSE: STZ), according to a report from Bloomberg news. The exact structure of the potential merger is yet to be available to the general public. Of course, a deal between these two beverage giants could be interesting. But, investors shouldn’t speculate on such rumors as it is still unclear if the deal would eventually materialize.
Despite the supply chain challenges, Monster Beverage reported record third-quarter sales earlier this month. The energy drinks maker, which has Coca-Cola (NYSE: KO) as its major shareholder, will need to assess if such a merger could bring any positive synergy. Right now, it’s unclear if such a deal could jeopardize Monster’s exclusive distribution agreement with Coca-Cola. And if it does, it could affect Monster’s international growth ambitions.
“I see little synergy between these two companies, as regulators would not welcome drinks that combine caffeine and alcohol. The products produced would have to leverage their respective brands but be mindful of the limitations with product formulations”- Kenneth Shea, Senior Analyst for beverage and tobacco companies at Bloomberg Intelligence.
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Ford (F), Rivian (RIVN) Cancel Plans To Jointly Develop An EV
Ford (NYSE: F) and Rivian (NASDAQ: RIVN) no longer plan to co-develop an electric vehicle, the companies confirmed Friday evening. The two companies initially announced development of a joint vehicle when Ford invested in the EV start up in 2019. With the plan scrapped, some electric vehicle stock investors are wondering what the impact of the decision is.
According to Ford CEO Jim Farley, part of the breakup was due to the complexities of marrying their hardware and software together. In light of this, the company also reiterated that such a decision has not affected their relationship. Ford continues to believe in the company’s future, retaining a 12% stake in the EV start-up. The legendary automaker aims to produce 600,000 vehicles per year by the end of 2023. What’s more, Ford has several interesting products including the Mustang Mach-E SUV and the F-150 Lightning pickup truck. If anything, the old dog seems to be learning new tricks quickly.
The decision to cancel the joint development was mutual, according to Rivian. “As Ford has scaled its own EV strategy and demand for Rivian vehicles has grown, we’ve mutually decided to focus on our own projects and deliveries. Our relationship with Ford is an important part of our journey, and Ford remains an investor and ally on our shared path to an electrified future,” the company said in an email statement.
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Zoom (ZM) Reports Earnings After The Closing Bell
Zoom Video Communications (NASDAQ: ZM) will report its earnings after the stock market closes today. There’s no question that ZM stock has been under pressure heading into that announcement. Investors are less enthusiastic about the company’s short-term growth as more people return to the office. In addition to that, the increased competition from other players in the video conferencing space may unnerve some investors. In light of all this, it shouldn’t come as a surprise that ZM stock remains under considerable selling pressure.
From its second quarter, sales came in 54% higher year-over-year to $1.02 billion. Now, Wall Street is expecting the same revenue level when it reports today, with non-GAAP earnings of $1.07 to $1.08 per share. It’s also worth keeping an eye on how quickly customers are taking up new offerings like Zoom Phone, the company’s cloud-based telephony business. In addition to that, investors will also focus on the company’s operating margin. The profitability metric came in at 25% of sales in the second quarter. And investors are hoping to see a modest boost later today.
Admittedly, the pandemic acted as a huge catalyst for the company in 2020. But it’s normal for investors to be concerned about its ability to maintain its impressive growth rate. The company, however, is reportedly looking to diversify its revenue stream by entering the contact center market. Nevertheless, for ZM stock to rebound to its previous high, Zoom will have to issue a strong outlook for its business. That includes the new initiatives, which are critical to growing and maintaining its ecosystem.
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Earnings To Watch In The Stock Market Today
If investors have been worried that inflation, supply chain and labor shortages would dampen corporate profits, they’ve been wrong so far. And bullish investors continue to gain from the strong corporate earnings thus far. As the market enters the holiday-shortened week, there’s no shortage of companies reporting their earnings. In the pre-market hours, we have Cerence (NASDAQ: CRNC), Niu Technologies (NASDAQ: NIU), Avaya (NYSE: AVYA), and Zhihu (NYSE: ZH), just to name a few.
Alternatively, for those anticipating the earnings after the closing bell, there are notable tech names reporting as well. Amongst them are Zoom Video Communications, Agilent Technologies (NYSE: A), Keysight Technologies (NYSE: KEYS) and Arrowhead Pharmaceuticals (NASDAQ: ARWR). Whether it is following corporate news, keeping up with earnings, or speculating who the next Fed chair is, there is enough to keep you occupied as we kick start the holiday-shortened week.
