Stock futures higher on earnings boost, treasury yield pullback; Nike soars after Q2 earnings beat, optimistic outlook; FedEx leaps as cost-cuts drive Q2 earnings beat; Elon Musk will step down as Twitter CEO when replacement found and mortgage investor Mat Ishbia buys the NBA’s Phoenix Suns for a record $4 billion.
Five things you need to know before the market opens on Wednesday December 21:
1. — Stock Futures Higher On Earnings Boost, Treasury Yield Pullback
U.S. equity futures bounced higher Wednesday, while Treasury bond yields eased from multi-year highs, as investors look to extend yesterday’s modest advance into an end-of-year rally despite persistent recession concerns and a hawkish Federal Reserve.
Better-than-expected second quarter earnings from Nike NKE and FedEx FDX after the close of trading last night added to this morning’s improved sentiment, as did a pullback in Treasury bond yields following Tuesday’s surprise move by the Bank of Japan to widen the trading band on 10-year government bonds as it slowly shifts its broader policy stance from growth stimulus to inflation fighting.
Benchmark 10-year Treasury note yields, which hit a three-week high of 3.71% yesterday, eased to 3.689% while 2-year notes peeled back to 4.236% in overnight trading.
Market volatility gauges were also in decline, with the CBOE’s benchmark VIX index falling 6.65% in the overnight session to 20.93 points and within touching distance of the lowest levels in six months.
Stocks overnight were modestly higher, with the Asia ex-Japan index rising 0.22% into the close of trading while Europe’s Stoxx 600 was marked 0.8% higher in Frankfurt.
World stocks, however, are on pace for their worst year since 2008 as December looks to round out eight months of declines against only four months of gains.
Heading into the start of the trading day on Wall Street, futures contracts tied to the S&P 500 are indicating an 18 point opening bell gain while those linked to the Dow Jones Industrial Average are priced for a 236 point advance. The tech-focused Nasdaq Composite is looking at a 35 point bump
2. — Nike Soars After Q2 Earnings Beat, Optimistic Outlook
Record Black Friday demand, powered in part by price cuts and discounting, drove overall sales 17.1% higher to a Street-beating $13.3 billion. Nike’s bottom line was pegged at 85 cents per share, well ahead of forecasts, although higher input costs, discounts and a stronger dollar pressured profit margins, which fell 3% yo 42.9%.
Inventories remained elevated, but eased by $400 million on a sequential basis to around $9.3 billion.
“We believe the inventory peak is behind us as actions we’re taking in the marketplace are working,” said CEO John Donahoe. “Overall, our Q2 results give us confidence that we will deliver the year, and we remain on a path toward our long-term goals as well.”
Nike shares, which have fallen more than 37% so far this year, were marked 12.6% higher in pre-market trading to indicate an opening bell price of $116.25 each.
3. — FedEx Leaps As Cost-Cuts Drive Q2 Earnings Beat
FedEx shares powered higher in pre-market trading after the world’s biggest package delivery company unveiled stronger-than-expected second quarter earnings and outlined deeper cost-cuts heading into the coming year.
FedEx said it would add another $1 billion in cost savings to its already-established $2.7 billion program, as it reduces FedEx Express flights and parks as many as eight planes. It also cut back on Sunday deliveries and closed some domestic sorting warehouses.
For the three months ending in November, FedEx said earnings came in at $3.07 per share, well ahead of Street forecasts, Revenues were light, however, at $22.8 million down 2.9% from last year.
“We will continue to provide updates on our (Drive cost-cutting plan) progress, and we plan to host a DRIVE deep dive call in the first half of calendar 2023 to provide additional details on our ongoing transformation,’ CEO Raj Subramaniam told investors on a conference call late Tuesday.
FedEx shares were marked 4.22% higher in pre-market trading to indicate an opening bell price of $171.29 each.
4. — Elon Musk Will Step Down As Twitter CEO When Replacement Found
Elon Musk said late Tuesday he will step-down as CEO of Twitter, the social media group he bought earlier this year for around $44 billion, but not until he is able to find a suitable replacement.
Musk, who polled his 122 million Twitter followers over the weekend as to whether he should remain as group CEO or step aside, said he would resign as CEO as soon as I find someone foolish enough to take the job! After that, I will just run the software & servers teams.”
The confirmation of Musk’s plans, should they materialize, will likely provide some relief for Tesla (TSLA) – Get Free Report shareholders, which watched the stock fall another 8% yesterday to close at a fresh two-year low of $137.80 each.
Musk closed his purchase of Twitter in late October, and has been active on both the platform and in the company’s San Francisco headquarters ever since, managing a controversial series of layoffs, content rules and suspensions, including several prominent journalists whom he accused of tracking and reporting his location via the movements of his private jet.
5. — Mortgage Investor Mat Ishbia Buys the NBA’s Phoenix Suns For Record $4 Billion
United Wholesale Mortgage CEO Mat Ishbia agreed terms with Robert Starver and the Phoenix Suns late Tuesday that will see him and his brother become majority owners of the NBA franchise in a deal that values the group at a record $4 billion.
Ishbia and his brother Justin, a private equity specialist, will also buy the Suns’ affiliated WNBA franchise — the Phoenix Mercury — as part of the deal, the pair said. The purchase, which requires approval from the National Basketball Association’s owners group, followed the suspension of Starver earlier this year after an investigation into workplace harassment.
“Mat is the right leader to build on franchise legacies of winning and community support and shepherd the Suns and Mercury into the next era,” Sarver said in a statement.
U.S. sports franchises have soared in value over the past five years, with the Brooklyn Nets valued at $2.35 billion following a deal that saw Joe Tsai buy out his ownership partners in 2019 and the sale of the Houston Rockets to billionaire investor Tilman Fertitta for $2.2 billion in 2017.
The pending sale of the NFL’s Denver Bronco’s values the three-time Super Bowl champs at $4.65 billion while hedge fund billionaire David Tepper paid $2.275 billion for the Carolina Panthers in 2018.