Here are five things you must know for Thursday, October 20:
1. — Stock Futures Slip Lower As Treasury Yields Extend Climb
U.S. equity futures slipped lower Thursday as investors pulled away from risk markets amid another move higher in Treasury bond yields and a further disruption in global currency markets.
Benchmark 10-year Treasury note yields hit a fresh fourteen year high of 4.169% in overnight trading, extending a sell-off in bonds that began late last week amid concerns over broader market liquidity first raised by Treasury Secretary Janet Yellen.
The sell-off has been coupled with big moves in the currency markets, where Japan’s yen fell past the 1.50 mark against the U.S. dollar for the first time since 1990, extending a year-to-date decline of around 33% and inducing more talk of intervention from the Ministry of Finance, which spent around $19 billion trying to boost the yen’s value last month.
Britain’s sudden political crisis, triggered by an ill-fated economic agenda from new Prime Minister Liz Truss, continues to echo through bond markets as well, with the Bank of England having to thread the needle between taming the fastest inflation in forty years while also being ready to defend any attack on the pound or instability in the bond markets.
The collective concerns has sapped investor sentiment heading into the end of the week, while a softer-than-expected revenue gain from Tesla looks to hold down gains for both the S&P 500 and the Nasdaq heading into the start of trading on Wall Street.
Futures contracts tied to the S&P 500, which has gained 6.3% since Thursday’s open, are indicating an 18 point opening bell decline while those linked to the Dow Jones Industrial Average are priced for a 40 point pullback The tech-focused Nasdaq is priced for a 90 point decline.
In other markets, oil prices jumped in overnight trading following a report that China is prepared to loosen Covid quarantine rules for inbound visitors, a move that could lead to changes in Beijing’s ‘zero Covid’ policy that has tamped industrial demand in the world’s biggest energy market.
WTI crude futures were marked $1.10 higher in overnight trading at $85.62 per barrel, while Brent contracts gained 83 cents to $93.26 per barrel.
The CBOE group’s key volatility gauge was holding at 31.25 points, suggesting daily swings of around 72.2 points over the next 30 days for the biggest U.S. benchmark.
In Europe, stocks were mixed with London’s FTSE 100 up 0.03% while the region-wide Stoxx 600 fell 0.38% in early Frankfurt trading. Overnight in Asia, Japan’s Nikkei 225 ended 0.92% while the MSCI ex-Japan index fell 0.82% to pull the regional benchmark to its lowest levels in two-and-a-half years.
2. — Tesla Slides On Q3 Revenue Miss, Doubt Over 2022 Delivery Target
Tesla (TSLA) shares slumped lower in pre-market trading after posting softer-than-expected third quarter revenues but holding on to its full-year production forecasts.
Tesla said adjusted earnings for the three months ending in September were pegged at $1.05 per share, up nearly 70% from the same period last year and 5 cents ahead of the Street consensus forecast, on revenues of $21.45 billion, which came in just of analysts’ forecasts of a $21.96 billion tally.
Tesla reiterated its summer estimate that deliveries will grow 50% from 2021 levels in the earnings release, a growth rate that implies a target of 1.4 million vehicles for the full year, but noted on the call with analysts that it could be “just under” that level “due to an increase in the cars in transit at the end of the year.”
Tesla shares were marked 6% lower in pre-market trading to indicate an opening bell price of $208.76 each.
3. — IBM Jumps After Q3 Revenue Beat, Full-Year Outlook
IBM (IBM) shares moved firmly higher in pre-market trading after the tech icon posted stronger-than-expected third quarter earnings and said it would exceed full-year revenue targets despite an increasing headwind from the surging U.S. dollar.
IBM said revenues for the three months ending in September rose 6% from last year to $14.1 billion, topping the Street consensus forecast of $13.5 billion. Adjusted earnings of $1.81 per share, a 2% decrease from last year, also beat the Street forecasts by around 3 cents per share.
Looking into the final months of the year, IBM said that it sees the impact of the stronger U.S. dollar, which is up 20.4% from last year against a basket of its global peers, will clip around 7% from the group’s full year earnings, but noted it still expects to beat its prior forecast of “mid-single-digit growth” on a constant currency basis.
IBM shares were marked 3.1% higher in pre-market trading to indicate an opening bell price of $126.30 each.
4. — AT&T Earnings In Focus Amid Network Expansion Reports
AT&T (T) shares edged higher in pre-market trading ahead of the telecommunication group’s third quarter earnings prior to the opening bell.
AT&T is expected to post adjusted earnings of 61 cents per share for the three months ending in September, with revenues essentially flat to the prior quarterly period at $29.86 billion, a figure that reflects the spin-off of its media assets into Warner Bros. Discovery (WBD) earlier this year.
AT&T noted earlier this summer that it expects full-year earnings in the region of $2.42 and $2.46 per share, but trimmed its full-year free cash flow forecast by $2 billion, to around $14 billion as it ramps-up investment in its expanding 5G network.
The group may also speak to reports that it’s looking to create a joint venture worth up to $15 billion that would allow for a significant investment in fiber-optic networks that would help it expand the delivery of super-fast broadband services to underserved markets around the country.
AT&T shares were marked 0.6% higher in pre-market trading to indicate an opening bell price of $15.63 each.
5. — Philip Morris Improves $15.8 Bid For Swedish Match
Philip Morris International (PM) shares edged higher in pre-market trading after the Marlboro cigarettes maker boosted its bid for tobacco giant Swedish Match to just under $16 billion.
Facing a deadline for shareholder approval for the deal, which was first floated in May of this year, Philip Morris raised its bid price to a ‘best and final’ offer of 116 Swedish crowns per share, a 10 crowns improvement from its first offer and a level that values the group at around $15.8 billion.
Philip Morris needs a 90% approval rate from Swedish Match investors to complete the buyout, and said it will “proceed autonomously to develop IQOS and the rest of our smoke-free portfolio in the U.S” if it fails to clear that threshold.
To that end, Philip Morris paid around $2.7 billion to Altria Group (MO) for the rights to sell to sell IQOS in the U.S. late yesterday.
Philip Morris shares were marked 0.61% higher in pre-market trading to indicate an opening bell price of $87.00 each.
Source: https://www.thestreet.com/markets/stocks-lower-tesla-ibm-at-t-and-philp-morris-5-things-to-know?puc=yahoo&cm_ven=YAHOO&yptr=yahoo