US futures mixed
- Dow Jones Industrial Average is down 0.1%
- S&P 500 is up 0.1%
- Nasdaq 100 is up 0.4%
The S&P 500 and Nasdaq 100 are both looking to rebound from two-week lows today, as hawkish central banks and recession fears have weighed on sentiment recently.
European Central Bank president Christine Lagarde said this morning that the central bank must push ahead with ‘persistent’ interest rate rises to bring inflation down, dashing hopes that it is approaching the end of its tightening cycle. She was speaking at an annual conference in Portugal, stating that it is not known when rates will peak given the strong labour market. ‘Under these conditions, it is unlikely that in the near future the central bank will be able to state with full confidence that peak rates have been reached,’ Lagarde said.
Notably, Federal Reserve chair Jerome Powell will be speaking at the same conference tomorrow, when markets will get the latest insight into how the US central bank views the future path of interest rates. Markets remain convinced the Fed will only make one more 25bps rate hike next month and then hold them there before pivoting toward cuts in 2024, defying a more hawkish pushback from the Fed.
As for the economic calendar today, we have consumer confidence and new home sales figures out this afternoon, followed by the API crude oil stock change this evening.
Most discussed Reddit stocks
Below is a list of the top 10 most mentioned US stocks on the WallStreetBets thread on Reddit over the last 24 hours on June 27, 2023, according to data from Quiver Quantitative. Exchange-Traded Funds (ETFs) and other instruments have been excluded:
- NVIDIA
- Tesla
- Carnival
- Visa
- Apple
- C3.ai
- Advanced Micro Devices
- Meta
- Lucid Group
- Disney
Most active US stocks before the bell
Below are the most active stocks with a valuation of at least $500 million before the bell, based on trading data taken from Bloomberg:
- Lucid Group
- Tesla
- Nikola
- Walgreens Boots Alliance
- Marathon Digital
- Virgin Galactic
- Carnival
- Delta Air Lines
- Amazon
- American Airlines
US premarket winners and losers
Here are the stocks worth at least $500 million experiencing the sharpest movements in premarket trade, according to data from Bloomberg:
| Winners | % | Losers | % |
| American Equity Investment | 14.9% | Applied Digital Corp | -6.6% |
| Enovix | 9.5% | Walgreens Boots Alliance | -6.5% |
| Origin Materials | 8.0% | DaVita | -5.5% |
| CIRCOR International | 7.0% | Akero Therapeutics | -4.9% |
| Lucid Group | 6.0% | Beneficient | -3.6% |
| Cargurus | 5.2% | Callon Petroleum | -3.4% |
| Soundhound AI | 5.2% | Digimarc | -3.3% |
| Pagaya Technologies | 4.8% | SES AI | -2.7% |
| Aurora Innovation | 4.6% | Lumen Technologies | -2.5% |
| Super Group | 4.0% | Chijet Motor | -2.4% |
Top US stocks to watch
Walgreens Boots Alliance is down 6.5% and at its lowest level since 2012 after its bottom-line missed expectations in the latest quarter and the retail pharmacy giant cut its earnings outlook for the full year. It said it now expects to deliver annual adjusted EPS of $4.00 to $4.05, down from its previous range of $4.45 to $4.65. It said this was to reflect tougher conditions for consumers, a lower contribution as Covid-19 demand fades and a ‘more cautious macroeconomic forward view’. It said it is taking immediate action to grow adjusted operating income in 2024, issuing a preliminary view to increase it by a mid-single digit rate, as it upped its cost-saving target to $4.1 billion from $3.5 billion. Its loss-making US healthcare business, a core component of its strategy, should reach profitability sooner than previously expected. That came as third quarter adjusted EPS of $1.00 increased 3.3% from the year before but fell short of the $1.06 estimate, despite sales coming in higher than forecast.
Eli Lilly is up 1.5% and within touching distance of the all-time highs hit yesterday. The rise comes despite the National Institute for Health and Care Excellence in the UK revealing it is not recommending the pharmaceutical giant’s weight loss drug for diabetes patients because it wants to see more evidence around its effectiveness. ‘Our committee can see the promise in tirzepatide, but it requires more evidence to be able to evaluate both its clinical and cost effectiveness,’ said the director of medicines evaluation Helen Knight. That comes after the same committee recommended Novo-Nordisk’s weight loss drug name Wegovy be used at a specialist weight management service within the National Health Service back in March.
Snowflake is up 2.8% after announcing it is teaming up with chipmaker NVIDIA to help rollout generative artificial intelligence applications to businesses. The cloud computing firm said it will use NVIDIA’s NeMo platform used to develop large language models that train AI applications such as chatbots as well as its GPUs needed to power computing systems, all wrapped-up in Snowflake’s cloud service. ‘Snowflake’s partnership with NVIDIA will bring high performance machine learning and artificial intelligence to our vast volumes of proprietary and structured enterprise data, a new frontier to bringing unprecedented insights, predictions and prescriptions to the global world of business,’ said Snowflake CEO Frank Slootman. No financial details were revealed, but it cements NVIDIA’s position as Wall Street’s favourite AI stock and is sending the semiconductor firm up 0.7%. Separately, Snowflake has also expanded its partnership with Microsoft, which will also bring more AI capabilities to Snowflake’s service. Microsoft is up 0.5% before the bell.
C3.ai is up 1.1% and looking to snap a five-day losing streak that saw the AI stock close at a three-week low yesterday. The company is still worth almost treble what it was at the start of 2023 after soaring higher thanks to the hype around AI, but investors have pulled back as they revaluate valuations. Some analysts were left disappointed by its investor day last week, with Deutsche Bank saying it remains sceptical about the differentiation of C3.ai’s platform and ability to hit its financial targets. Wedbush took a more optimistic view but admitted it is now ‘all about execution and proving the skeptics wrong quarter by quarter’.
Delta Air Lines is up 1.1% and among the most traded stocks before the bell after stating it will hit the top end of its $5 to $6 EPS target in 2023, which was welcome news considering analysts had pencilled-in earnings of $5.81. It also upped its cashflow and operating margin targets while reiterating its outlook for 2024. Rival American Airlines, which is also among the most traded in premarket hours, is trading 0.4% higher.
Cryptocurrency stocks are finding support after bitcoin rose 1.6% today, having managed to stay above the $30,000 threshold since last Saturday. Marathon Digital is up 3.6% while Coinbase is up 2.1%.
Tesla is up 0.8% at $242.89 after closing at its lowest level in two weeks yesterday after the rally that has seen the electric carmaker more than double in value since the start of the year snapped last week after numerous brokers warned the surge had sent the stock too high, too quickly. Goldman Sachs downgraded the electric vehicle maker to Neutral yesterday. ‘The stock now better reflects our positive long-term view of the company’s growth potential and competitive positioning,’ the broker said. ‘We are also cognizant of the difficult pricing environment for new vehicles.’ That follows on from similar downgrades from both Barclays and Morgan Stanley last week, while analysts at DZ Bank told investors to cash-in and sell. The stock is finding support today from news around its Supercharger network that is being opened up to rival automakers like Ford, General Motors and Rivian. Reuters reported that Washington will require charging stations to include Tesla’s connector if they want to access federal funding, following in the footsteps of Texas. Bernstein said that its connector looks set to become the de facto standard across the US and said its Supercharger network could be generating up to $12 billion in annual revenue by 2030, although said this was using ‘very generous assumptions’ and would come with low margins. Bernstein currently has an Underperform rating on Tesla with a target price of $150.
Lucid Group is down 6%. The electric carmaker popped yesterday after revealing it is teaming up with British luxury carmaker Aston Martin but struggled to keep hold of most of the gains by the end of the day. Lucid is being given a stake in Aston Martin, which will also pay its US partner to access its powertrain components and battery technology to help it electrify its own lineup, with ambitions to go fully electric by 2030. Notably, they both share an investor in the form of Saudi Arabia’s Public Investment Fund, which injected another $1.8 billion of equity into Lucid last month to take its stake to over 60% and bought a stake of over 16% in Aston Martin last year.
Bad news for investors at Lordstown Motors, which is down 61% and at fresh all-time lows after the electric vehicle startup said it has filed for bankruptcy and put itself up for sale. That comes as Lordstown takes legal action against Foxconn, the firm also known as Hon Hai Precision that is renowned for making Apple’s iPhones. Foxconn previously invested over $52 million in Lordstown and had agreed to invest $170 million until it claimed Lordstown breached its agreement, which was part of a broader deal that would have seen it produce the company’s Endurance pickup truck. ‘The litigation details Foxconn's fraud and willful and consistent failure to live up to its commercial and financial commitments to the company. Foxconn's actions led to material damage to the company as well as its future prospects,’ Lordstown said in a statement today. Lordstown hopes it can find a buyer that can revive its fortunes. Foxconn is trying to build partnerships to make electric vehicles for other firms, so this conflict could test the manner of its relationships within the industry.
Apple shares briefly hit fresh all-time highs yesterday before ending the day lower, with the iPhone maker up 0.2% this morning. The stock reversed course yesterday afternoon after the US Supreme Court rejected an appeal filed by Apple and Broadcom to reignite their fight against patents owned by Caltech. Broadcom is up 0.8%.
Meta is up 1.1% at $281.58 after Citigroup raised its target price on the social media company to $360 from $315, marking the highest set on Wall Street, believing that ad revenue will grow faster than previously forecast and a more buoyant view on Reels. The stock remains below the new 18-month highs hit during the past two sessions. That comes just a day after UBS hiked its price target to $335 from $300 on expectations that it can become an ‘AI winner’ by integrating it into its products and services. Meanwhile, Meta announced it is beginning to test a new paid feature within the WhatsApp Business app, giving small businesses the option to send personalised texts to customers and create ads. WhatsApp Business has over 200 million customers, up from just 50 million in the middle of 2020. News it is trying to monetise WhatsApp will be welcome. Meta also launched its new Meta Quest+ subscription service that will allow users to access two new virtual reality gaming titles each month for $7.99 per month.
US banks including JPMorgan, Citigroup, Wells Fargo, Bank of America and a slew of regional lenders are on the radar this week as the Federal Reserve prepares to carry out its latest stress tests. The results will be released on Wednesday and the annual review is critical as it can determine how much cash they will have to return to shareholders. It comes in the wake of the banking crisis in March, which is set to lead to tighter capital requirements being introduced.
Carnival shares are up 0.3% at $14.65 after a number of brokers raised their target price on the stock, including Morgan Stanley to $11.50 from $7, Barclays to $19 from $18, and Stifel to $20 from $18. That comes after the cruise line operator sank over 7.5% yesterday following its latest set of quarterly results, marking the steepest single-day drop in over seven months. Carnival beat expectations as the industry continues to bounce back from the pandemic, with revenue more than doubling from last year and its adjusted loss per share of $0.31 coming in smaller than the $0.34 loss pencilled-in by Wall Street. However, the bar was high ahead of the results considering Carnival shares had more than doubled ahead of the results, making it among the top performers within the S&P 500 in 2023. Stifel said the positive results twinned with the rally meant it was a ‘classic sell the news type of day for Carnival shares’.
Disney is trading marginally lower before the bell. The stock has been rebounding after ending last week at June-lows. Bloomberg Intelligence said today that the potential for Disney to take full control of streaming service Hulu by buying Comcast’s 33% stake – speculation that has been lingering for years - is the only large-sector M&A deal on the horizon within the communications sector.
Virgin Galactic is up 2.4% after confirming yesterday that its first commercial spaceflight, named Galactic 01, will fly on Thursday, when a three-person crew will experience a 90-minute flight to conduct science experiments.
