Market Update: U.S. Futures Lower Amid Treasury Concerns and Fed Rate Speculations
U.S. stock futures edged lower on Thursday, extending losses from the previous session as investors grappled with rising Treasury yields and uncertainties over potential Federal Reserve interest rate cuts. On Wednesday, major Wall Street indices declined, driven by an uptick in Treasury yields following tepid demand in U.S. government debt auctions. The benchmark 10-year Treasury yield hit a four-week high of 4.6%.
Investor sentiment has been dampened by sticky inflation and recent comments from Fed officials, prompting market participants to lower their expectations for rate cuts this year. The CME FedWatch Tool now indicates that traders expect just one rate cut in November or December, rather than the previously anticipated two cuts in 2024. This outlook could be further influenced by the upcoming personal consumption expenditures price index, the Fed’s preferred inflation measure, set for release later this week. Policymakers have emphasized the need for more evidence of cooling inflation before reducing borrowing costs from their current multi-decade highs.
Salesforce Shares Drop After Disappointing Forecast
Shares of Salesforce fell over 16% in after-hours trading following a disappointing fiscal second-quarter forecast. The company’s guidance missed analyst estimates, citing weak client spending on its business-oriented products and services. This has dampened optimism around Salesforce’s plans to leverage generative artificial intelligence for growth. CEO Marc Benioff remained optimistic about AI, calling it a “massive opportunity” for customer engagement.
For the fiscal second quarter, Salesforce projected adjusted earnings per share between $1.31 and $1.33 on revenue of $9.20 billion to $9.25 billion, below Wall Street’s forecasts of $1.47 and $9.34 billion, respectively. Additionally, the company reduced its annual subscription and support revenue growth expectations to “slightly below” 10%, down from a previously forecasted 10%.
Activist Investor Nelson Peltz Exits Disney Stake
Activist investor Nelson Peltz has sold his entire stake in Walt Disney Company, according to CNBC. Peltz’s sale, at approximately $120 per share, brought in around $1 billion. This follows Trian Partners’ failed proxy battle to gain board seats at Disney’s shareholder meeting in April. Peltz has been critical of Disney’s governance, particularly its streaming strategy and CEO succession plans.
UBS Reshuffles Leadership Amid CEO Succession Plans
Swiss lender UBS has announced a significant leadership reshuffle, as reported by the Financial Times. Wealth management head Iqbal Khan and investment bank head Rob Karofsky will become co-presidents of the wealth management unit. This move positions them as potential successors to current CEO Sergio Ermotti, who is expected to retire in 2027. The restructuring follows UBS’s acquisition of Credit Suisse last year, leading to the departure of Credit Suisse CEO Ulrich Körner and the retirement of UBS Americas head Naureen Hassan.
Crude Prices Dip Despite U.S. Inventory Draw
Crude prices declined on Thursday, overshadowed by concerns over high borrowing costs despite a larger-than-expected draw in U.S. oil inventories. Data from the American Petroleum Institute revealed a 6.5 million barrel drop in U.S. oil inventories last week, far exceeding expectations. This decline typically signals increased fuel demand as the summer travel season begins, highlighted by the Memorial Day weekend.
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