Here are five things you must know for Wednesday, August 3:
1. -- Stock Futures Higher as Pelosi Pledges to Stand by Taiwan
U.S. stock-index futures were slightly higher early on Wednesday as investors assessed U.S. House Speaker Nanci Pelosi’s visit to Taiwan -- a move that met with a staunchly negative response from China, stoking concerns of renewed tensions between the two superpowers – and awaited key economic data.
Futures tied to the Dow added 105 points, or 0.32%. S&P 500 futures gained 0.21% and Nasdaq 100 futures were flat. The yield on the benchmark 10-year Treasury note moved higher to 2.7574% and the yield on the 30-year Treasury bond also rose to 3.0138% as investors assessed Pelosi’s Asia trip and looked ahead to Friday’s jobs report.
Pelosi met Taiwan President Tsai Ing-wen on Wednesday in Taipei, where Tsai thanked Pelosi for her support of democratic values and said she was committed to working with the U.S. over security in the Taiwan straits.
“Speaker Pelosi is truly one of Taiwan’s most devoted friends,” Tsai said at ceremony to confer Pelosi with a medal, the “Order of Propitious Clouds with special Grand Cordon.”
Pelosi’s visit to Taiwan makes her the highest-ranking U.S. official to visit Taiwan in 25 years, drawing the ire of China which has called the move a breach of the one-China policy and an interference in China’s internal affairs.
China has warned for weeks that Pelosi should not visit the disputed island, which Beijing considers to be part of its territory.
European stocks were mixed on Wednesday. The pan-European Stoxx 600 slipped 0.2% in early trade, with autos falling 1.5% while tech stocks gained 1.2%.
On the U.S. data front, Services PMIs data will be released at 9:45 a.m. ET and factory orders will be revealed at 10 a.m. ET. Both data points will be important for investors as they track the slowdown of the U.S. economy.
2. -- Oil Futures Fall as OPEC+ Meets
Oil prices fell about 1% in early trade on Wednesday, reversing gains from the previous session ahead of a meeting OPEC+ producers on fears of a slowdown in global growth hitting fuel demand and a firmer dollar.
Brent crude futures edged down 0.9% to $99.60 a barrel. U.S. West Texas Intermediate crude was at $93.74 a barrel, down 0.7%, after climbing 53 cents on Tuesday.
The Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, a group known as OPEC+, convened on Wednesday to decide on September output.
A lack of spare capacity among members to add more barrels as well as the need for further cooperation with Russia as part of the wider OPEC+ group are key points of discussion at Wednesday’s meeting.
OPEC has been increasing output in line with its targets by about 430,000-650,000 barrels per day a month in recent months and has refused to switch to speedier output increases.
The meeting on Wednesday will discuss production policies from September and possibly onwards. Only Saudi Arabia and the UAE are believed to have some spare capacity left to increase production.
By September, OPEC+ would have wound down all of the record production cuts it implemented in 2020 to deal with a collapse in demand caused by the coronavirus pandemic.
3. -- Robinhood Slashes More Full-Time Jobs
Robinhood Markets (HOOD) is slashing nearly a quarter of its full-time staff as the online brokerage once synonymous with meme stock trading and other high-risk retail bets on stocks continues to reel from a sharp slowdown in trading activity.
The job cuts mark the second round of layoffs this year at Robinhood, which in April reduced its staff by about 9%. Together, the two rounds have cut more than 1,000 jobs from the company, according to the Wall Street Journal.
The layoffs come alongside a broader company reorganization, Vlad Tenev, Robinhood’s chief executive, said in a message posted to the company’s blog. In the statement, Tenev said the previous round of layoffs in April “did not go far enough” in helping the company cut costs.
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“Last year, we staffed many of our operations functions under the assumption that the heightened retail engagement we had been seeing with the stock and crypto markets in the Covid era would persist into 2022,” Tenev said. “In this new environment, we are operating with more staffing than appropriate. As CEO, I approved and took responsibility for our ambitious staffing trajectory—this is on me.”
Robinhood also moved up the release of its second-quarter results a day earlier than scheduled, reporting its monthly active users tumbled to 14 million, down 34% from a year earlier. Revenue fell 44% to $318 million.
Shares of Robinhood were up 1.3% at $9.35 in premarket trading.
4. -- Starbucks Stock Gains On Still-Strong Sales
Starbucks (SBUX) shares were higher in premarket trading Wednesday after the coffee-chain giant said U.S. customer demand remains strong, despite higher spending on labor and inflationary pressures weighing on costs.
The Seattle-based company said global same-store sales for the three months ended July 3 were up 3% from the same period last year. U.S. same-store sales increased 9%, while those in the chain’s China market plunged 44% amid the country’s renewed Covid-19 related shutdowns and other restrictions during the period, the company said.
However, the gains were offset by increased employee wages and training as well as costs for ingredients, which hurt store-level profit for the period – even as higher prices partially offset the costs. Starbucks said prices are around 5% higher compared with a year ago.
Starbucks shares were up 1.96% to $85.35 a share in premarket trading on Wednesday.
Starbucks, which has been trying to attract and keep U.S. workers, said on Monday that it raised wages for U.S. baristas, with employees set to make at least $15 an hour or receive a bump of 3%.
5. -- Airbnb Slumps on Weaker Third-Quarter Outlook
Airbnb (ABNB) shares were down more than 6% in premarket trading on Wednesday as a weaker-than-expected outlook overshadowed otherwise strong quarterly results.
San Francisco-based Airbnb posted $2.1 billion in revenue in the three months through June, up 58% from the same period last year as people continued to book suburban rentals despite hosts raising prices.
Airbnb reported a profit of $379 million in the period, topping analysts’ projections for a profit of $295 million and compared with a loss in the year-earlier quarter.
However, the company said it expects nights and experiences booked in the third quarter to grow at the same rate as the second quarter, below analysts' forecasts, even as it projects record revenue in the period on the back of higher prices.
The company said it expects revenue in the three months through September to range from $2.78 billion to $2.88 billion, higher than Wall Street’s average estimate of $2.77 billion.
The July-through-September period is typically Airbnb’s busiest season because of summer vacations.
