Coffee With Greta: Will May Gray Lead To June Gloom?
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Good morning friends!
Futures are higher as traders gear up for a new month of trade.
Let’s get right to it!
Market May See June Gloom
The Dow and the S&P 500 eked out 0.1% monthly gains in May while the Nasdaq fell for the second month in a row.
The tech-heavy index ended the month 2.1% lower, still deep in a bear market.
“Sell in May and go away” rang true as volatility gripped the market with the Fed hiking rates and the global economy showing signs of slowing.
Stocks have historically seen weaker performance between May and October.
The Dow logged its first 8-week losing streak since 1932 last month while the S&P and Nasdaq dropped for 7-straight weeks.
Now traders are gearing up for another month of potential gloom as June includes another Fed rate hike and the beginning of the bank’s balance sheet reduction.
That drawdown of the balance sheet is set to begin today at a pace of $30 billion in Treasury securities and $17.5 billion in mortgage-backed securities.
The market has become increasingly worried the U.S. economy will drop into a recession as interest rates move higher.
Delta Rises on Upgraded Guidance
Delta Airlines (DAL) shares are rising 2% in premarket trade after the company hiked its Q2 revenue forecast.
In an SEC filing today, Delta said it expects revenue to return to 2019 levels in the current quarter.
That’s up from its previous forecast for revenue to be at 93% to 97% 2019 levels this quarter.
The upgraded guidance comes amid a surge in travel demand and higher fares.
Salesforce Pops on Earnings Beat, Upgraded Profit Outlook
Salesforce (CRM) shares are rallying 8.9% ahead of the open after beating fiscal Q1 expectations and hiking its full-year profit forecast.
The software company reported adjusted earnings of $0.98 per share on $7.41 billion in revenue.
That topped analysts’ expectations for adjusted EPS of $0.94 on $7.38 billion in revenue.
Revenue rose 24% year-over-year while net income was down 94% annually as costs jumped.
Salesforce reported $13.64 billion in unearned revenue, which comes from subscriptions.
That was just shy of expectations for $13.76 billion.
The company forecast adjusted fiscal Q2 earnings between $1.01 and $1.02 per share with revenue between $7.69 billion and $7.70 billion.
For the full year, Salesforce sees adjusted earnings of $4.74 to $4.76 per share on revenue between $31.7 billion and $31.8 billion.
That was higher than analysts’ estimates for full-year profits of $4.65 per share.
HP Inc Rises On Strong Fiscal Q2 Results
HP Inc (HPQ) shares are up 0.6% in premarket trade after topping fiscal Q2 expectations.
The computer maker reported adjusted earnings of $1.08 per share on $16.5 billion in revenue.
That was better than analysts’ expectations for adjusted EPS of $1.05 on $16.2 billion in revenue.
The results were also at the high end of the company’s target for earnings from $1.02 to $1.08 per share.
Commercial PC revenue rose 18% year over year while consumer revenue fell 6%.
HP bought back $1 billion worth of stock during the quarter, bringing the YTD total to $2.5 billion.
The company’s CEO said it remains committed to at least $4 billion in buybacks for the full fiscal year.
HP forecast fiscal Q3 non-GAAP earnings of $1.03 to $1.08 per share vs analysts’ expectations for $1.02.
The company expects full-year non-GAAP profits of $4.24 to $4.38 per share, up from the previous forecast of $4.14 to $4.38 and better than analysts’ estimates for $4.25.
Victoria’s Secret Beats Q1 Profit Expectations
Victoria’s Secret (VSCO) shares are jumping 10.2% ahead of the open after beating Q1 profit expectations.
The lingerie retailer reported adjusted earnings of $1.11 per share vs expectations for $0.84.
The company’s $1.48 billion in revenue was in line with expectations.
Sales were down 4.5% year-over-year.
Victoria’s Secret warned business will be challenging through the second half of the year as it faces “supply chain headwinds”.
The company expects adjusted fiscal Q2 earnings between $0.95 and $1.25 per share vs $1.19 expected.
Chinese EV Makers Report May Deliveries
Li Auto (LI), Nio (NIO), and XPeng (XPEV) are all rising in premarket trade after the Chinese electric vehicle makers reported strong May delivery numbers.
Li Auto said it delivered 11,496 vehicles last month, up 166% compared to a year ago.
Nio delivered 7,024 vehicles in May, up just 4.7% year-over-year.
Nio’s deliveries through the first 5 months of 2022 are up 11.8% compared to the same time in 2021.
Xpeng delivered 10,125 EVs in May, up 78% compared to May 2021.
The company’s YTD deliveries are more than double compared to last year.
Oil Prices Rise On EU’s Russian Ban, Shanghai Reopening
Oil prices are rising further today following the EU’s agreement to ban Russian oil imports and as Shanghai, China lifts Covid restrictions.
West Texas Intermediate crude futures are up 1.5% to over $116 bbl while Brent crude futures are up 1.6% to over $117 bbl.
Supply fears are being fueled by the EU’s phased in ban of Russian imports.
As Shanghai emerges from a Covid lockdown, demand from that country is also expected to rise.
U.S. Gas Prices Surge to Fresh Record
The national average for a gallon of regular gas surged overnight.
AAA shows that price jumped to $4.671/gal today.
That’s up nearly 5 cents from just yesterday when the price hit $4.622/gal.
$FB To Become $META
Meta Platforms (FB) announced Tuesday it will change its ticker symbol from $FB to $META next week.
That change will go into effect prior to the start of trade on Thursday, June 9.
The company said, “The new ticker symbol aligns with the company's rebranding from Facebook to Meta.”
The Facebook parent company officially changed its name in October 2021.
Manufacturing Activity Expected to Slow
The Institute for Supply Management and S&P Global both release their May purchase managers index for the U.S. manufacturing sector at 10:00 a.m. ET.
The ISM survey is expected to slip to 54.5% from 55.4% in April.
Economists expect the S&P Global PMI to fall to 57.3 from 57.5.
Manufacturing has remained a bright spot in the U.S. economy but manufacturers are facing increased pressure from an ongoing labor shortage and global supply chain disruptions.
JOLTS Preview
The Labor Department releases its Job Openings and Labor Turnover Survey (JOLTS) for April at 10:00 a.m. ET.
That report is expected to show the number of job openings slipped to 11.4 million in April from a record-high 11.5 million in March.
U.S. employers have said their number one challenge is finding qualified workers as inflation puts more pressure on wages.
This is the first big piece of jobs data this week with the ADP private jobs report due on Thursday and the official May jobs report on Friday.
In Case You Missed It
- U.S. home prices soared in March. The S&P CoreLogic Case Shiller national home price index jumped 20.6% year-over-year. The 20-city index jumped 21.2% while the 10-city index was up 19.5%. All three were an acceleration from February, even as mortgage rates rose. Tampa saw the largest increase, with prices up 34.8% annually. Prices rose 32.4% in Phoenix and 32% in Miami.
- Consumer confidence fell less than expected in May as inflation pressures persist. The Conference Board’s consumer confidence index slipped to 106.4. That was down from a revised 108.6 in April but better than expectations for 103.9. Confidence in current economic conditions fell to 149.6 from 152.9 while the six-month outlook fell to 77.5 from 79.