Coffee With Greta: Chips Slip
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DJIA Futures: -11 (-0.04%)
SPX Futures: -10 (-0.2%)
NASDAQ Futures: -65 (-0.4%)
Good morning friends!
Futures are down as the market gives up Tuesday’s tech-fueled rally.
Let’s get right to it!
Chip Stocks Fall
Chip stocks are falling ahead of the open following a Wall Street Journal report that the Biden administration is considering new restrictions on exporting artificial intelligence chips to China.
Nvidia (NVDA) shares are down 3.6% with Advanced Micro Devices (AMD) down 2.9%.
The Journal’s report said the Commerce Department could “stop the shipments of chips made by Nvidia and other chip makers to customers in China and other countries of concern without first obtaining a license.”
Those restrictions could reportedly begin as early as July.
Nvidia and AMD have already been barred from selling their advanced chips to China and Hong Kong.
Nvidia reportedly started offering a new advanced chip in China, the A800, but the new restrictions would ban the sale of that chip as well.
General Mills Reports Mixed Results
General Mills (GIS) shares are falling 5.2% in premarket trade after reporting mixed fiscal Q4 results.
Here’s how the cereal maker’s results compared to analysts’ estimates:
- Adjusted EPS: $1.12 vs $1.07 expected
- Revenue: $5.03 billion vs $5.17 billion expected
The CEO said for fiscal 2024, “we’ll focus on continuing to compete effectively, driving efficiency in our operations, and maintaining our disciplined approach to capital allocation, which we expect to result in financial performance that meets or exceeds each of our key long-term goals.”
General Mills’ board approved a 9% increase to the dividend, which will take effect with the August payment.
That raises the dividend to $0.59 per share.
The company forecast full-year adjusted EPS growth of 4% to 6%, implying earnings between $4.47 and $4.56.
Mortgage Demand Rises
Mortgage demand rose again last week despite higher rates, driven by sales of new homes.
The Mortgage Bankers Association reported total application volume rose 3% weekly.
Purchase applications rose 3% weekly and were down 21% year over year.
Those applications have increased for three consecutive weeks to the highest level since early May.
Refinance applications also rose 3% weekly and were down 32% annually.
The average 30-year fixed contract rate increased to 6.75% from 6.73%.
Waiting For Powell
Fed Chair Jerome Powell is scheduled to speak at 9:30 a.m. ET.
Powell will speak at a policy panel at the European Central Bank Forum on Central Banking in Sintra, Portugal.
He will be joined by Bank of England Governor Andrew Bailey, European Central Bank President Christine Lagarde, and Bank of Japan Governor Kazuo Ueda.
Traders are looking for more clues from Powell about the Fed’s future plans.
CME Group’s FedWatch Tool currently shows 74.4% of traders expecting a 25bps rate hike at the July 26 meeting.
In Case You Missed It
- The Conference Board’s consumer confidence index surged to a 17-month high in June. That index rose more than 7 points to 109.7 vs expectations for 104. Confidence in current economic conditions rose more than 6 points to 155.3 – the highest level in nearly 2 years. The six-month expectations index jumped nearly 8 points to 79.3 – the highest reading so far in 2023.
- The Census Bureau reported new home sales jumped 12.2% in May to a seasonally adjusted annual rate of 763,000 units vs 675,000 expected. That was the largest monthly increase since February 2022.
- Home prices rose for the third straight month in April. The S&P Case-Shiller national home price index rose 0.5% monthly and was down 0.2% year over year. Prices were just 2.4% below the June 2022 peak. Miami, Chicago, and Atlanta saw the largest home price gains in April.