Five things you need to know before the market opens on Friday, July 21:
1. — Stock Futures Edge Higher As Tech Looks To Rebound
U.S. equity futures edged higher Friday, while the dollar extended gains against its global peers, as investors looked to claw back some of yesterday’s steep tech market declines while looking ahead to a crucial stretch for stocks over the coming week.
Softer-than-expected second quarter earnings from Netflix (NFLX) – Get Free Report and Tesla (TSLA) – Get Free Report, as well as a profit warning from chipmaker Taiwan Semi, sent the Nasdaq into its steepest one-day decline since March yesterday, with the tech-focused benchmark falling 2.3%.
A planned re-balance of the Nasdaq 100, a collection of the largest U.S. tech companies, that is set to take place prior to the opening bell on Monday added to the volatility, and could do so again today as investors brace for changes in the index that will reduce the weighting of tech giants such as Apple and Microsoft.
A sharp move higher in Treasury bond yields, triggered by the second lowest tally for weekly jobless claims since February, added to the Nasdaq’s decline, as investors worried that the resilient job market will provide enough evidence for the Federal Reserve to continue raising interest rates into the back half of the year.
Central bank decisions, in fact, will form the key plank of market risks next week as the Fed, the European Central Bank and the Bank of Japan will all hold policy meetings over the next seven days.
The CME Group’s FedWatch suggests a 99.8% chance of a quarter point rate hike from the Fed on Wednesday, with bets on a follow-on move in November nudging higher, to 30%, following yesterday’s jobs data.
The U.S. dollar index, which tracks the greenback against a basket of six global currencies, was marked 0.13% higher at 101.03 in overnight dealing, linked in part to weakness in the yen that followed a report suggesting the Bank of Japan will maintain its zero interest rate policies well into the end of the year.
Benchmark 2-year Treasury note yields were holding at 4.839% while 10-year notes rose to 3.843%.
Heading into the start of the trading day on Wall Street, futures contracts tied to the S&P 500 were indicating an 11 point opening bell gain while those linked to the Dow Jones Industrial Average — on pace for its longest winning streak since 2017 — were priced for a 51 point move to the upside. Nasdaq futures were up 60 points.
The Europe-wide Stoxx 600 was marked 0.03% higher in early Frankfurt trading while Britain’s FTSE 100 gained 0.03% in London.
Overnight in Asia, the region-wide MSCI ex-Japan index fell 1.72% into the close of trading, while the Nikkei 225 was marked 0.57% higher in Tokyo.
2. — American Express Earnings On Deck As Travel, Spending Impress
Solid consumer spending over the quarter, supported in part by a resilient job market and fading inflation pressures, alongside the ongoing boom in domestic and international travel is likely to boost American Express earnings over the three months ending in June.
Analysts expect the group to see earnings rise 9.3% from last year to $2.81 per share, with revenues up 15.6% to $15.5 billion. Investors will also pay close attention to the amount of cash the American Express sets aside to cover bad loans over the coming months, as well as its forecast for consumer spending in an economy that is likely to see weaker growth over the back half of the year.
American Express shares were marked 0.4% higher in pre-market trading to indicate an opening bell price of $177.80 each.
3. — President Biden To Meet With Tech Executives To Hammer Out AI Safeguards
President Joe Biden will meet with executives of seven big tech companies Friday as the White House accelerates its efforts to draw-up a voluntary code of ethics and practices around the development of AI technologies.
Biden, who is also looking to spearhead bi-partisan legislation linked to AI risks, alongside an executive order that could curb some of its more concerning elements, will meet with Meta Platforms (META) – Get Free Report, Microsoft (MSFT) – Get Free Report-backed OpenAI and Google parent Alphabet (GOOGL) – Get Free Report, Amazon (AMZN) – Get Free Report among others, later today in Washington.
The group of companies, meanwhile, agreed to sign a set of commitments, including “watermarking’ AI-generated content and protecting users’ privacy, as part of the broader regulatory effort.
“These commitments, which the companies have chosen to undertake immediately, underscore three principles that must be fundamental to the future of AI – safety, security, and trust – and mark a critical step toward developing responsible AI,” the White House said in a statement.
4. — FTX Trading Sues Sam Bankman-Fried, Prosecutors Suggest Witness Tampering
FTX Trading, the bankruptcy court-controlled group formed from the collapse of crypto trading platform FTX, is suing Sam Bankman-Fried and a small group of executives it said looted the group of more than $1 billion.
Bankman-Fried, as well as colleagues Caroline Ellison, Gary Wang and Nishad Singh were all named in the suit, filed yesterday in the Delaware bankruptcy court overseeing FTX Trading’s restructuring.
The company said the collective of former employees spent hundreds of millions of dollars on political contributions, luxury properties and other speculative investments in what lawyers called “”one of the largest financial frauds in history.”
In a separate move late Thursday, federal prosecutors accused Bankman-Fried of witness tampering, and asked U.S. District Judge Lewis Kaplan to bar the FTX founder from making public statements related to the case.
The request followed a New York Times article, “Inside the Private Writing of Caroline Ellison, Star Witness in the FTX Case”, that prosecutors say was influenced in part by documents shared by Bankman-Fried himself.
5. — NFL Owners Approve $6 Billion Sale of Washington Commanders
NFL owners approved the $6.05 billion sale of the Washington Commanders football team late Thursday during a special meeting in Minneapolis, ending the 20-plus year tenue of controversial owner Dan Snyder.
Snyder, who purchased the team — then known was the Washington Redskins — in 1999 for around $800 million, had been under pressure to sell the franchise following multiple investigations into allegations that he presided over a toxic work culture and covered up instances of sexual harassment.
The NFL issued a $60 million fine in connection with the investigation, as well as allegations that he withheld revenue from the league itself.
A investment group lead by Josh Harris, who owns the Harris Blitzer Sports & Entertainment investment vehicle, co-owners of the National Basketball Association’s Philadelphia 76ers, the National Hockey League’s New Jersey Devils as well as part of the Crystal Palace of the English Premier League, agreed to pay $6.05 billion for the Commanders in April.
The $6 billion price tag would top the $4 billion paid by United Wholesale Mortgage CEO Mat Ishiba for the Phoenix Suns late last year, as well as the $4.65 billion paid for the Denver Broncos and marks the most expensive franchise sale in NFL history.