Stock futures are showing a positive outlook this morning, as investors sift through more earnings reports and brace for significant economic data set to release later in the week. Notable reports for weekly jobless claims and existing home sales are expected before the highly anticipated inflation report arrives tomorrow. Despite delivering solid quarterly results, Cisco’s shares are on a downward trend, driven by investor anxiety regarding the ongoing memory chip shortage’s potential impact on profit margins. Meanwhile, shares of Applovin are also declining after the adtech firm’s revenue growth failed to meet investor expectations. In contrast, AB InBev’s shares are climbing following a better-than-forecast earnings report, bolstered by the influence of major sporting events.
Futures linked to the Dow Jones Industrial Average indicate a slight increase of 0.2%, while the S&P 500 and tech-centric Nasdaq are up by 0.3%. This comes after a relatively flat trading day on Wednesday, which resulted in slight declines across all major indexes, breaking a three-day record-high streak for the Dow. Precious metals also saw minor dips, with gold futures down about $5 to around $5,090 an ounce, and WTI crude oil prices falling to $64.50 per barrel. Cryptocurrency markets are stabilizing with Bitcoin trading just below $68,000, while the yield on the 10-year Treasury note decreased slightly to 4.16%, down from 4.18%.
Today marks a critical juncture in the economic landscape as reports on existing home sales and initial jobless claims are released. Economists forecast jobless claims will decline slightly to 225,000, a decrease from the prior week. Concurrently, housing data suggests existing home sales may drop to 4.15 million, down from 4.35 million in December. A stronger-than-expected jobs report released on Wednesday has tempered investor expectations regarding future interest rate cuts by the Federal Reserve, with many awaiting the Consumer Price Index data on Friday for further clarity.
Cisco Systems is grappling with stock price challenges; shares fell around 7% in premarket trading. Despite posting revenues of $15.35 billion and adjusted earnings per share of $1.04—both surpassing analysts’ expectations—the company faces pressure from higher costs due to a prevalent shortage of memory chips, primarily driven by skyrocketing demand for AI hardware. This had led to significant price increases that could adversely affect Cisco’s profit margins in the approaching quarters.
Applovin Corp. is also in focus, with shares down more than 7% ahead of the market open. The adtech company reported quarterly revenue of $1.66 billion and an adjusted EPS of $3.24, exceeding Wall Street forecasts. However, analysts from JPMorgan expressed concerns over the pace of revenue growth and revised their price target from $650 to $500. Applovin’s stock had previously surged after a short seller retracted claims of money laundering, but ongoing scrutiny regarding its business practices, including an SEC investigation into data collection, continues to create volatility.
On a more positive note, Anheuser-Busch InBev is enjoying a boost in its stock price, which has risen roughly 3% following a fourth-quarter earnings report that surpassed estimates. The company reported revenues of $15.55 billion and adjusted earnings of $0.95 per share, buoyed by the anticipated benefits from advertising tied to major sporting events, including the recent Super Bowl and upcoming World Cup. Anheuser-Busch indicated its unique position to leverage these events, enhancing consumer engagement and maximizing sales opportunities.
