Stock Market Futures Drop Ahead Of Powell’s Address Before Congress
U.S. stock futures are well in the red ahead of Wednesday’s opening bell in the stock market. For the most part, this move follows a broad-based rally in stocks. Evidently, the S&P 500 index gained by about 2.45% while the tech-heavy Nasdaq saw gains of 2.5% throughout intraday trading yesterday. As some would anticipate, a breather in stocks would follow such notable gains at some point. Overall, some would argue that all this is thanks to the ongoing volatility in markets across the board. The likes of which are stemming from concerns over the U.S. economy as the Federal Reserve aims to combat rampant inflation.
For one thing, here’s what Bank of America (NYSE: BAC) economists have to say about the current state of things. They start by writing, “The most likely outlook is very weak growth and persistently high inflation.” They add, “We see roughly a 40% chance of a recession next year. Our worst fears around the Fed have been confirmed: they fell way behind the curve and are now playing a dangerous game of catch up.” At the same time, economists from Deutsche Bank (NYSE: DB) and Goldman Sachs (NYSE: GS) also recently provided less-than-ideal updates regarding the possibility of a recession occurring.
Amidst all this talk of recession, here is how the major U.S. stock futures are doing now. As of 4:59 a.m. ET, the Dow, S&P 500, and Nasdaq futures are trading lower by 1.45%, 1.69%, and 1.92% respectively.
Meta CEO Mark Zuckerberg Showcases Prototype Headset Designs To Bolster Belief In Metaverse Hardware
Making headlines on the tech front now would be Meta Platforms (NASDAQ: META). On the whole, this is likely thanks to a recent showcase from CEO Mark Zuckerberg yesterday. In it, Zuckerberg showed off the company’s latest work on metaverse headsets. While still prototypes, such a move could serve to further bolster support for the company’s ongoing push towards the metaverse. After all, Meta would be a leading name in this emerging area of development. Not to mention, successfully releasing a product line of metaverse headsets would create another revenue stream for Meta. Because of this, investors looking to bet on the metaverse now could be considering META stock.
In the larger scheme of things, this is but a sneak peek at what Meta has in store. As it stands, the company is currently planning to spend at least $10 billion on this front throughout 2022. Namely, Meta would be doing so on research and development on virtual reality (VR) and augmented reality tech (AR). This is likely in the form of computerized eyeglasses and headsets in general. While the adoption of VR/AR tech globally may still be in its early stages, Meta is, apparently, among the major pioneers. If anything, the current adoption of hybrid work arrangements worldwide could create more demand for Meta’s metaverse tech once it releases.
Aside from that, the company is also forming a Metaverse Standards Forum (MSF) with industry-heavy-hitters as well. For now, key members include Nvidia (NASDAQ: NVDA), Unity (NYSE: U), and Microsoft (NASDAQ: MSFT) among others. With all this excitement in the metaverse space, investors would be eyeing META stock today, nonetheless.
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Diamondback Energy In Focus After Bumping Capital Return Program Significantly
In other news, Diamondback Energy (NASDAQ: FANG) appears to be gaining traction following its latest update from management. Getting straight into it, the energy firm is raising its return of capital commitment. In detail, it now has at least 75% of Free Cash Flow (FCF) committed to its capital return efforts. This would be a significant bump from its previous commitment of at least 50%. Accordingly, this will see a greater allocation of Diamondback’s FCF towards returning value to shareholders. Because of this, FANG stock could become a more attractive pick for investors among its energy industry peers.
Providing some insight into Diamondback’s latest move is CEO Travis Stice. He states, “This is a natural progression of our shareholder returns program that began with the initiation of our base dividend in 2018, which has been increased 500% since then and continues to deliver significant value to our stockholders.” Looking forward, Stice also notes, “we will continue to remain flexible, using a combination of our growing and sustainable base dividend, variable dividend and opportunistic share repurchase program to generate the highest value proposition for our shareholders.” With all this in mind, I could see investors turning to FANG stock in the stock market now.
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Elon Musk Clarifies Plans To Trim Tesla Workforce By 3.5% Following Pushback From Employees
Meanwhile, Tesla (NASDAQ: TSLA) appears to be feeling the heat from CEO Elon Musk’s recent statements regarding workforce trimming. For those unaware, a report from Reuters noted that Musk is planning to cut 10% of jobs at Tesla. This information, according to Reuters, comes from an internal email that Musk wrote. In the same memo, the Tesla CEO also adds that he has a “super bad feeling” regarding the economy. Because of this, former Tesla employees are now launching a lawsuit, claiming that Tesla is breaching U.S. labor laws in doing so.
To remedy this, Musk, in a follow-up statement, is clarifying what the earlier memo means. According to Musk, Tesla’s layoff plans are to reduce salaried headcount by 10% while increasing hourly staffing. Moreover, the company also clarifies that the layoff plans will affect about 3.5% of its overall workforce. In Musk’s words, “A year from now, I think our head count will be higher in both salaried and obviously in hourly.” As such, it would not surprise me to see all eyes on TSLA stock now.
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Target CEO Brian Cornell On Inflation And Retail Inventories
Target (NYSE: TGT) is among the major retailers in the U.S. today. Because of this, an update from Target CEO Brian Cornell on inflation and retail inventories could be worth tuning in to. According to Cornell, inflation alongside “historic highs with inventory levels” remain a key point of pressure for retailers. So much so that he cites these two factors as a key reason behind Target’s plans to mark down its inventory. While summer sales may be more available than ever now, it would also clear up space for Target to bring in more desirable merchandise.
All in all, Cornell says that he recognized the need to do all this after analyzing the retail scene. He explains, “I recognized after a few weeks of looking at our own stores, analyzing our business, looking at competition, and hearing from our team that we [had] to address this problem upfront.” Despite all of this, the Target CEO does highlight that Target is ready for seasonal sales as well. Among the ones that he names are the back-to-college and upcoming holiday seasons. The real question now is whether TGT stock could be worth jumping on now because of this.
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