Stock futures rise ahead of Fed interest rate hike this week
US Stock Futures win before the opening bell this week. For the week ahead, investors will likely focus on the upcoming Federal Reserve interest rate hikes. Although the broader stock market had its worst April since 2008, it looks like more volatility may be in store. In fact, the S&P 500 is currently down more than 13.8% year-to-date. Historically, that would be his worst four-month performance since 1939.
Randy Frederick, Vice President of Trading and Derivatives at Charles Schwab (NYSE: SCHW). Frederic argues: “We’re going to have, I think, more risky, choppy, volatile markets here for a while to come, just because of the uncertainty.Not to mention that all of this could also weigh on this week’s final batch of earnings as well. AMD (NASDAQ: AMD), Shopify (NYSE: SHOP), and Block (NYSE:SQ). As of 4:01 a.m. ET, Dow, S&P 500 and Nasdaq futures are trading up 0.34%, 0.37% and 0.54% respectively.
Berkshire Hathaway reveals additional stake in Activision at annual meeting
Over the weekend, Warren Buffett Berkshire Hathaway (NYSE: BRK.A) has released its latest quarterly financial statements. Overall, the conglomerate now appears to be feeling the heat of declining markets. For starters, Berkshire’s net profit for the quarter is down 53% year over year, totaling $5.46 billion. In terms of operating profit, the company is currently looking at a total of $7.04 billion. According to Berkshire, this is the result of a sharp deceleration in its insurance underwriting activity. In addition to this, the company also notes that the general state of the economy also continues to weigh on operations.
Despite all this, there are also positives in the company’s huge portfolio. Namely, Berkshire’s manufacturing, service and retail division is gaining traction. For the quarter, this segment generated total revenue of $3.03 billion, a 15.5% year-over-year increase. Not to mention that Buffett is also doubling his company’s investments in ActivisionBlizzard (NASDAQ: ATVI). According to the Oracle of Omaha, he personally increased Berkshire’s stake in the company to 9.5%. This would again put ATVI stock in the spotlight even as its ongoing takeover Microsoft (NASDAQ: MSFT) is ongoing. The likes of which, if things go according to plan, would see Microsoft acquire the company for nearly $69 billion.
More importantly, in the event that Microsoft gets the go-ahead for this purchase, Berkshire would benefit. The tech giant is offering $95 per share for Activision in its current deal and Berkshire’s purchases are below that value. In Buffett’s words, “If the deal closes, we make money, and if the deal doesn’t close, who knows what will happen.“So BRK.A and ATVI stocks could be in focus today.
Chinese electric vehicle names hit production as Covid restrictions and supply chain pressures persist
Meanwhile, Chinese electric vehicle stocks appear to be going through a tough time. For the most part, this is evident from the latest monthly delivery figures from China’s leading electric vehicle companies. Namely, it would be the likes of Li-Auto (NASDAQ: LI), Nio (NYSE: NIO), and Xpeng (NYSE: XPEV). For starters, Li Auto’s April deliveries are 4,167. To put it into perspective, that’s a 62% month-over-month decrease for the company. Second, Nio shipments for the month are also down around 50% over the same period. This represents a total of 5,074 vehicles delivered. Third, Xpeng completed orders for 9,002 of its smart electric vehicles in April. This translates to a 42% decrease month over month.
Overall, all three companies cite intensifying pandemic conditions in China for the overall deceleration in deliveries. As a result, as COVID cases continue to rise in the region, supply chain pressures follow suit. By extension, this would impact overall manufacturing and, more importantly, the transportation of automobiles in China. Still, these companies are making increasing efforts to further bolster their manufacturing capabilities amid the current downturns. Although the short-term outlook may seem uncertain, long-term auto investors might see an opportunity amidst it all.
Moderna Eyes Vaccine Review Application for Children Under 6
Modern (NASDAQ: MRNA) appears to be making progress on the COVID vaccine front now. This is particularly apparent from the latest update from the company’s chief medical officer over the weekend. According to Dr. Paul Burton, Moderna is seeking to submit its vaccine for review for use in children under 6 years old. It aims to do so by the June panel meeting of the US Food and Drug Administration (FDA). This comes just days after Moderna filed for emergency use authorization (EUA) last Thursday.
Speaking about this in more detail, Dr. Burton. He notes, “I think the FDA now has all the fundamental data it needs to be able to begin a review of applications. So yes, we are very confident.“If Moderna got the green light on that front, it would be the first to do it. Dr. Burton also adds: “The safety profile we’ve seen in this vaccine in these very young children is very reassuring – actual rates of safety events even lower than what we’ve seen in children 6 to 12 years old and that’s tremendous.“With Moderna expanding the use case for its flagship vaccine, stock mRNA could be the focus now.
Other notable wins to know about today
Apart from all this, there is also no shortage of big companies reporting earnings today. In pre-marketing, we have OnSemi (NASDAQ: ON), six flags (NYSE: SIX), black rock (NYSE:BLK), Enterprise Product Partners (NYSE:EPD), and Global Payments (NYSE: GPN) on tap.
Alternatively, the likes of Devon Energy (NYSE: DVN), Expedia (NASDAQ: EXPE), Avis Budget Group (NASDAQ: CAR), Diamondback Energy (NASDAQ: FANG), and MGM Resorts (NYSE: MGM) could be the center of attention after the closing bell. Additionally, some of the major stock market fertilizer companies are also holding their earnings calls at the same time. They are Mosaic (NYSE:MOS) and Nutrien (NYSE: NTR). With all of this, alongside interest rate talk and increasing market volatility, investors have plenty to watch this week.
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