Here are five things you must know for Wednesday, June 8:
1. -- Stock Futures Lower As Stagflation Worries Mount
U.S. equity futures slipped lower Wednesday, while oil prices and the dollar continued to climb, as investors continued to navigate the impact of surging inflation and central bank tightening on global economic growth.
The OECD, in fact, slashed both its U.S. and global growth forecasts on Wednesday, while doubling its inflation estimate, but noted that it doesn't yet see the risk of stagflation that some analysts suggest could characterize the world economy over the second half of the year.
Still, headline inflationary pressures remain powerful, particularly in the United States, where WTI crude is trading at $120.30 per barrel ahead of the Energy Department's weekly update on domestic inventories, while gas prices rose to a fresh all-time high of $4.955 per gallon, according to the most recent AAA assessment.
Target's (TGT) warning on profit margins yesterday, as well as its plans to run-down its excess inventory through deeper price discounts, may offer consumers some near-term relief, but overall prices are likely to remain close to their forty-year peaks until at least the autumn, putting even more pressure on the Federal Reserve to maintain its projected pace of interest rate hikes.
Stocks were mostly weaker in Europe Wednesday, with a profit warning from Credit Suisse holding down gains for the banking sector and dragging the region-wide Stoxx index to a 0.25% decline in early Frankfurt trading.
Overnight in Asia, the region-wide MSCI ex-Japan index gained 1.05% in a follow-on rally from Wall Street's solid close, while a weaker yen, which is trading at the lowest levels against the U.S. dollar in more than twenty years, helped the export-focused Nikkei 225 in Japan close at a two-and-a-half month high of 28,234.29 points.
In the U.S., benchmark 10-year Treasury bond yields held at 3.011% in overnight trading while and the dollar index rose 0.42% against a basket of six global currencies to 102.749 in early European trading.
On Wall Street, futures tied to the Dow Jones Industrial Average indicating a 160 point opening bell retreat while those linked the S&P 500, are priced for an 18 point move to the downside. Futures linked to the tech-focused Nasdaq are looking at 38 point opening bell dip.
2. -- Novavax Surges As FDA Panel Recommends Covid Vaccine
Novavax (NVAX) shares soared in pre-market trading after an advisory panel to the U.S. Food and Drug Administration recommending granting Emergency Use Authorization for the group's Covid vaccine to patients over the age of eighteen.
If ultimately approved by the FDA, NVX-CoV2373 will become the fourth Covid vaccine authorized for use in adult patients in the United States. The drugmaker said late last year that trial data indicates solid immune responses against both existing Covid strains as well as the Omicron variant.
"The advisory committee's positive recommendation acknowledges the strength of our data and the importance of a protein-based COVID-19 vaccine developed using an innovative approach to traditional vaccine technology," said CEO Stanley Erck. "Consistent with submissions to regulatory authorities worldwide, we have already submitted an amendment with updated manufacturing information for the EUA to the FDA for review. We look forward to collaborating with the FDA as it makes its final decision."
Novavax shares were marked 17.75% higher in pre-market trading to indicate an opening bell price of $55.98 each.
3. -- Western Digital Leaps After Board Agrees To Consider Flash Memory Sale
Western Digital Corp. (WDC) shares jumped higher in pre-market trading after the chipmaker said it would launch a review of its strategic options following a renewed push by activist investors for the sale of its flash memory business.
Activists at Elliott Management, which claims a 6% stake in the group valued at around $1 billion, pledged another $1 billion in financing last month to help fund either a spin-off, sale or merger with a strategic partner of the flash memory unit, which its says could be valued at between $17 billion and $20 billion.
Western Digital said late Tuesday that its board is "aligned in the belief that maximizing value creation warrants a comprehensive assessment of strategic alternatives focused on structural options for the company’s Flash and HDD businesses.”
“Through this process, we are actively engaging in a broad range of strategic and financial alternatives that will help further optimize the value of Western Digital, including Elliott’s offer to invest incremental equity capital in our Flash Business," said CEO David Goeckeler. "We look forward to continuing our constructive dialogue with Elliott as this process unfolds.”
WDC shares were marked 4.2% higher in premarket trading to indicate an opening bell price of $62.86 each.
4. -- Credit Suisse Slumps After Third Straight Profit Warning
Credit Suisse Group CS shares slumped lower in pre-market and European trading after the Swiss-based investment bank issued its third consecutive quarterly profit warning.
Citing both the impact of Russia's war on Ukraine, as well as the rapid pace of central bank tightening amid the surge in global inflation, Credit Suisse said it's likely to book another quarterly loss over the three months ending in June.
"The impact of these conditions, together with continued low levels of capital markets issuance and the widening in credit spreads, have depressed the financial performance of this division in April and May," the bank said.
In response, the bank plans to bring forward a series of cost-saving measures, including job cuts, that could amount to between $1 billion and $1.5 billion over the next two years.
Credit Suisse's U.S.-listed shares were marked 6.05% lower in premarket trading to indicate an opening bell price of $6.52 each, while its main listing in Zurich slumped 5.3% to 6.354 Swiss francs.
5. -- Denver Broncos Sold to Walmart Heir For Record $4.65 Billion
The Denver Broncos of the National Football League have reached a sale agreement with an investor group backed by Walmart (WMT) scion Rob Walton that values the three-time Super Bowl Champions at around $4.65 billion.
The sale, which is subject to approval from both the NFL's finance committee and league ownership, shatters the previous record of $2.275 billion, set when hedge fund billionaire David Tepper purchased the Carolina Panthers in 2014.
The League's most-valuable franchise, however, remains the Dallas Cowboys -- which Jerry Jones purchased the Cowboys for $150 million in 1989 -- with an estimated value of around $6.5 billion.
"We look forward to earning the confidence and support of the NFL as we take the next step in this process," Walton said in a statement. "When the necessary approval procedures are met, our family is excited to share more with Broncos fans, the organization and the community."
