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Stock Futures Higher, Nvidia, Twitter, Apple and Snowflake In Focus- 5 Things You Must Know
2022-05-26 18:04TheStreet

Here are five things you must know for Thursday, May 26:

1. -- Stock Futures Higher On Fed Minutes Follow-Through

U.S. equity futures moved higher Thursday, while Treasury bond yields continued to slide and the dollar eased against its global currency peers, as investors weighed the impact of the Federal Reserve's inflation fight against a mixed of challenges facing the global economy.

Minutes from the Fed's May 4 policy meeting, published yesterday afternoon, showed a broad consensus for 50 basis point rate hikes at meetings in June and July. However, participants also noted the possible need for faster and deeper moves -- a 'restrictive policy stance' -- that didn't completely eliminate market bets on a 75 basis point move at some point in the tightening cycle.

Set against a backdrop of surging inflation, China's ongoing Covid lockdowns, Russia's war on Ukraine and myriad supply chain disruptions, the Fed's aggressive rate signaling is seen as likely further blunt growth in a domestic economy that is already flirting with recession. 

The Fed's assessment, however, is that by front-loading rate hikes in the summer "would leave the Committee well positioned later this year to assess the effects of policy firming."

That phrase was enough to drive stocks to a modestly firmer close on Wednesday, while supplying at least some momentum into the Thursday session.

European stocks were marked modestly higher in early Frankfurt trading, with the Stoxx 600 rising 0.28%, while the region-wide MSCI ex-Japan index slipped 0.11% lower into the close of trading.

Benchmark 10-year Treasury bond yields -- which move inversely to prices -- slipped 3 basis point lower in overnight trading to 2.715% as growth worries pushed investors into risk-free assets, while the U.S. dollar index, which tracks the greenback against a basket of six global currency peers, was marked 0.02% lower at 101.974 in early European trading.

On Wall Street, futures tied to the Dow Jones Industrial Average indicating a 95 point opening bell gain while those linked the S&P 500 were priced for a 10 point bump. Futures linked to the tech-focused Nasdaq, which id down 27.8% for the year, are looking at 5 point opening bell pullback.

2. -- Nivida Slumps As Muted Gaming Outlook Clouds Solid Q1 Earnings

Nvidia  (NVDA) - Get NVIDIA Corporation Report shares slumped lower in pre-market trading after the chipmaker issued a muted near-term outlook for the sale of its gaming chips that took the gloss off a solid set of first quarter earnings.

Nvidia, which makes both data center and gaming sector chips -- some of which are used for cryptocurrency mining -- posted Street-beating earnings of $1.36 per share for its April quarter last night as overall revenues rose 46% from last year to record $8.29 billion.

Looking ahead, however, Nvidia said current quarter revenues would come in at around $8.1 billion, plus or minus 2%, a tally that fell shy of analysts' estimates thanks in part to weakness in the gaming sector.

"The underlying dynamics of the Gaming industry is really solid, net of the situation with COVID lockdown in China and Russia," CEO Jensen Huang told investors on a conference call late Wednesday. "As we look into the second half of the year, it's hard to predict exactly when COVID and the war in Russia is going to be behind us."

Nvidia shares were marked 5.9% lower in pre-market trading to indicate an opening bell price of $159.72 each, a move that would extend the stock's year-to-date decline to around 45.7%.

3. -- Twitter Leaps As Elon Musk Adds More Equity To Takeover Bid

Twitter  (TWTR) - Get Twitter, Inc. Report shares moved firmly higher in pre-market trading after Tesla  (TSLA) - Get Tesla Inc Report CEO Elon Musk added another $6.25 billion in equity to the financing package in his $44 billion takeover bid.

In a Securities and Exchange Commission filing last night, Musk said he's reduced his margin loan linked to his Tesla shares to zero, while boosting the overall equity portion of his takeover to $33.5 billion.

The move not only reduces the overhang on Tesla shares -- which are down 42.7% since he first made his holding int Twitter shares public on April 4 -- but also reaffirms his commitment to the deal following last week's spat over the size and scope of so-called 'bot' accounts on the social media platform.

Twitter shares were marked 5.5% higher in premarket trading to indicate an opening bell price of $39.20 each, a move that still leave the stock some 27.7% south of Musk's 'best and final' offer of $54.20 per share.

4. -- Apple Slides On Report of Flat iPhone Production For 2022

Apple Inc.  (AAPL) - Get Apple Inc. Report slipped lower in pre-market trading following a report that suggested the world's biggest tech company could keep production rates of its signature iPhone largely unchanged from last year.

Bloomberg News reported that Apple is likely to keep 2022 iPhone production levels at around 220 million units, a figure that matches last year's tally, as supply chain disruptions and China's Covid lockdown impact supply and slowing global growth and Russia's war on Ukraine dampen demand. 

Earlier this month, Apple's key assembler Foxconn cautioned that chip shortages and slumping demand would hit current quarter revenues.

"There are many uncertainties in the market at the moment," said Foxconn chairman Liu Young-way. "They are presenting quite some challenges to demand and supply."

Last month, Apple CEO Tim Cook said Covid and supply chain disruptions around what he called the "Shanghai corridor", as well as Russia's war in Ukraine, would clip between $4 billion and $8 billion from current quarter revenues, marring an otherwise impressive second quarter earnings beat.

Apple shares were marked 1.44% lower in premarket trading to indicate an opening bell price of $138.50 each, a move that would extend the stock's year-to-date decline to around 22%.

5. -- Snowflake Slumps After Q1 Customer Growth, Margins Disappoint

Snowflake  (SNOW) - Get Snowflake, Inc. Class A Report shares plunged lower in pre-market trading after the cloud-based data-storage group posted its weakest rate of customer growth since going public two years ago.

Snowflake, who's Data Cloud business includes customers such as BlackRock BLK FactSet and Zillow ZG, posted first quarter revenues of $422.4 million, an 85% increase from last year that topped Street forecasts, but noted that sequential customer growth to its suite of storage businesses was pegged at only 378, taking its overall total to 6,322.

"We did see weakness in week-over-week growth in our total revenue by customer in April," CFO Mike Scarpelli told investors on a conference call late Wednesday. "But to be honest, the last two weeks of March or May has been very strong. But just given everything in the macro headwinds we're hearing, we're going to be a little bit more cautious going into the full year."

Snowflake also said it would have a negative operating margin over the current quarter, but noted that figure would improve to 16% by the end of the 2023 financial year.

 

Snowflake shares were marked 14.1% lower in pre-market trading to indicate an opening bell price of $132.77 each, a move that would extend the stock's year-to-date slump to around 61%.