Stock Market Futures Slip On Recession Fears
U.S. stock futures are well in the red in early morning trading today. As the second half of the year comes round, turbulence and uncertainty remain key themes in the stock market. For instance, we could look at how investors are reacting to the somewhat better-than-expected economic data from yesterday. Namely, the Fed’s preferred inflation measure, the personal consumption expenditures (CPE) data from the Commerce Department is out. Throughout May, the PCE is up by 4.7% year-over-year. This reflects a constant rise in consumer prices excluding food and energy costs.
While this is below the consensus figure of a 4.8% rise on Wall Street, the measure is still holding at levels last seen in the 80s. Additionally, also in the report, real personal spending is down by 0.4%. This would be a notable shift following an increase of 0.7% in the previous month. Accordingly, figures like this would still reaffirm the Fed’s resolve to reel in inflation. Clarifying this is Fed Chair Jerome Powell at the European Central Bank’s annual economic conference. He says, “Is there a risk we would go too far? Certainly, there’s a risk.”
However, Powell does add, “The bigger mistake to make — let’s put it that way — would be to fail to restore price stability.” While taking all this information in, here’s how the major U.S. stock futures are doing now. As of 6:06 a.m. ET, the Dow, S&P 500, and Nasdaq futures are trading lower by 0.20%, 0.17%, and 0.22% respectively.
Micron Posts Mixed Results In Latest Quarterly Update; Provides Downbeat Earnings Outlook
Among the notable names to consider on the earnings front today would be Micron (NASDAQ: MU). Overall, this major player in the semiconductor space posted somewhat mixed figures in its third fiscal quarter update. According to the press release, Micron’s earnings per share for the quarter is $2.59. Furthermore, the firm’s total quarterly revenue is $8.64 billion. For reference, consensus figures on Wall Street are earnings of $2.45 per share on revenue of $8.66 billion. At face value, Micron’s earnings are notably above estimates while revenue is slightly shy of Street figures. Nonetheless, the real focus could be on the company’s guidance for the current quarter.
In detail, Micron notes that it is anticipating revenue of between $6.8 billion to $7.6 billion for its fourth fiscal quarter. Also, in the earnings report, the company is forecasting an earnings per share of between $1.43 to $1.83. To compare, this is versus current Wall Street estimates of $9.05 billion and $2.62 respectively. Explaining these less-than-ideal estimates is Micron CEO, Sanjay Mehrotra. According to him, industry demand for Micron’s key offerings, recently, is weakening. To address this, Mehrotra explains, the company is planning to moderate supply growth in fiscal 2023.
Despite all this, the CEO also notes that Micron remains positive regarding its long-term strategy. In his words, “We are confident about the long-term secular demand for memory and storage and are well-positioned to deliver strong cross-cycle financial performance.” As MU stock faces some deceleration because of all this, investors could be eyeing the company’s shares now.
Kohl’s Reportedly Looking To Terminate Business Sale With Franchise Group
At the same time, a report from CNBC indicates that Kohl’s (NYSE: KSS) could be reconsidering its sales plans. In essence, according to CNBC sources, Kohl’s is planning to exit talks to sell its business to the Franchise Group (NASDAQ: FRG). This follows ongoing declines in the firm’s stock price and sales across the board. Not to mention, the company has been facing pressure from activist investors for the past few months to pursue a potential sale.
For one thing, the timing of this deal reversal, should it be true, is not all that surprising. As the broader stock market remains on the downturn, financing major deals would be an issue for most firms. We could take a look at Walgreens Boots Alliance (NASDAQ: WBA) for example. Just earlier this week, the company axed plans to sell its U.K. pharmacy business, Boots. The reasoning for this, Walgreens claims, is that no third-party buyers could make a proper offer amidst uncertainty in global financial markets.
Likewise, this report on Kohl’s does come just a week after mentions of Franchise Group lowering its takeover bid emerged. According to an earlier CNBC report, Franchise Group is looking to decrease its bid to about $50 per share. Should this be the case, it would mark a significant decrease from its initial $60 per share offer. Safe to say, all this would have KSS stock be in focus in the stock market now.
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Google Reaches Agreement With App Developers Over Latest App Store Policy Changes
In other news, the likes of Alphabet’s (NASDAQ: GOOGL) Google is making changes on the software front. Getting straight into it, the firm, as of yesterday, now has an agreement with U.S. app developers. Through this, consumers can now subscribe to in-app services outside Google’s app platform. Additionally, Google is also providing $90 million towards supporting developers who earn under $2 million annually from 2016 to 2021. Ideally, this could serve to further enable a wider range of app developers on its platform. Also, Google will still be charging its 15% fee on the first $1 million in annual revenue earned from the Play Store by U.S. developers.
On the whole, this change in the company’s Play Store would be a major one. It serves to further regulate the smartphone app-store platform market. The likes of which, Google alongside Apple’s (NASDAQ: AAPL) App Store has a strong presence over. Through the current change, Google notes that its new policies allow developers to contact customers outside the Play Store. This includes “about subscription offers or lower-cost offerings on a rival app store or the developer’s website.” With this change in mind, investors could be taking a look at GOOGL stock today.
Meta CEO Mark Zuckerberg On Slashing Hiring Plans For 2022 As Economic Uncertainty Looms
Meta Platforms (NASDAQ: META) is also making headlines today thanks to recent statements from CEO Mark Zuckerberg. During the company’s weekly employee Q&A session, Zuckerberg spoke on Meta’s latest hiring plans. In general, he notes that Meta is cutting plans to hire engineers by about 30% in 2022. This Zuckerberg explains is due to the current economic conditions. To be precise, he states, “If I had to bet, I’d say that this might be one of the worst downturns that we’ve seen in recent history.”
As such, the firm is now decreasing its engineer hiring target for 2022 to a range of between 6,000 to 7,000. The CEO notes that this is the latest change from Meta’s initial plans to bring on 10,000 new engineers before this. Alongside this streamlining of its workforce expansion strategy, Meta is also “turning up the heat” on performance management, according to Zuckerberg. This, he explains, will come in the form of more aggressive performance goals. In the larger scheme of things, it seems like Meta is optimizing operations for a bumpy second half of 2022. The question now is whether META stock could be worth considering because of this.