U.S. stocks fall as Waller news weighs; Apple adds to gains
Investing.com - U.S. stock futures edge higher, with analysts on the hunt for any indications that President Donald Trump’s aggressive tariff agenda is beginning to show up in company results or economic data. Shares in Advanced Micro Devices (NASDAQ:AMD) move lower in after-hours trading, as the chipmaker’s quarterly data center revenue receives a lukewarm response from analysts. Earnings are due out from McDonald’s and Walt Disney (NYSE:DIS) before the opening bell, while ChatGPT-maker OpenAI is reportedly in talks for a potential secondary stock sale and weight-loss drug manufacturer Novo Nordisk (NYSE:NVO) says it will cut costs to address rising competition.
1. Futures tick up
U.S. stock futures pointed higher on Wednesday after equities slipped in the prior session, as investors assess emerging signs of the impact of sweeping U.S. tariffs on corporate earnings and the wider economy.
By 03:43 ET (07:43 GMT), the Dow futures contract had added 227 points, or 0.5%, S&P 500 futures had climbed by 30 points, or 0.5%, and Nasdaq 100 futures had increased by 74 points, or 0.3%.
The main averages fell in the prior session, weighed down in part by a statement from KFC-owner Yum! Brands (NYSE:YUM) that the levies are starting to dent consumer spending and hit its quarterly results. Construction equipment maker and economic bellwether Caterpillar (NYSE:CAT) also warned that the duties present headwinds for the second half and could cost the business up to $1.5 billion this year.
Still, the almost-concluded second-quarter earnings season has been broadly solid, with more than 80% of firms who have reported so far beating expectations.
This has helped to assuage some concerns over the trajectory of the American economy, which were particularly exacerbated last week following a soft jobs report for July. A reading of services sector activity on Tuesday was disappointing as well, while a gauge of input costs paid by these firms surged to its highest level in almost three years -- fueling worries that the U.S. may be entering a period of tepid growth and elevated price gains, known as "stagflation."
2. AMD data center revenue disappoints
Shares of Advanced Micro Devices sank in extended hours trading after the group unveiled underwhelming quarterly revenue at its crucial data center business.
Revenue at the unit, which houses AMD’s all-important artificial intelligence chips that are viewed as central to the company’s future growth, rose 14% to $3.2 billion. Analysts had seen the figure at $3.22 billion, according to LSEG data cited by Reuters.
By comparison, AI-darling Nvidia (NASDAQ:NVDA) -- one of AMD’s closest rivals -- posted a 73% jump in data center revenue to $39.11 billion in its fiscal first quarter earlier this year.
AMD CEO Lisa Su later told investors in a post-earnings call that AI chip revenue had fallen versus a year ago, due largely to U.S. restrictions on semiconductor exports to China and an ongoing transition to its next-generation MI350 chips.
The data center performance and Su’s comments overshadowed a higher-than-projected third-quarter revenue outlook of about $8.7 billion, plus or minus $300 million. Notably, AMD flagged that the guidance excludes revenue from shipments of its MI308 AI chip to China, adding that license applications are currently being reviewed by the U.S. government.
3. McDonald’s, Disney to report
Although the earnings stream is steadily ebbing, some members of the blue-chip Dow are still due to report.
On Wednesday, that will include figures from burger chain McDonald’s and media giant Walt Disney.
McDonald’s (NYSE:MCD) is scheduled to report its second-quarter earnings, with investors keenly watching whether the fast-food giant can sustain its momentum amid shifting consumer trends and competitive pressures.
Analysts at Citi expect the company to highlight improvements in comparable sales and its ability to leverage product innovation to drive traffic.
At Disney, markets will be on the lookout for any updates around its streaming service, studios division and theme parks. Executives may also face questions around Disney’s upcoming ESPN streaming offering, which is due to launch this autumn.
Separately, the National Football League has reached a deal to take a 10% in ESPN. In return, Disney’s ESPN will take control of NFL Network and other media assets from the league.
4. OpenAI in talks for possible secondary stock sale - reports
OpenAI is in early talks for a potential secondary share sale valuing the artificial intelligence startup at $500 billion, Bloomberg News reported on Wednesday, citing people briefed on investment discussions.
The $500 billion valuation marks a sharp jump from an earlier report pegging OpenAI at a $300 billion valuation.
OpenAI will look at setting up a secondary share sale for current and former employees, the Bloomberg report said.
Wednesday’s report comes just days after the AI major said it is set to hit 700 million weekly active users for its flagship ChatGPT this week, up from about 500 million users in March.
The company had last week secured $8.3 billion in new funding from a slew of major investors, as part of a SoftBank-led $40 billion fundraising round.
5. Novo to reduce costs
Novo Nordisk has said it will push to bring down costs as the maker of the weight-loss drug Wegovy grapples with intensifying competition and pressure from copycat versions of its treatments.
Once Europe’s most valuable company, Denmark’s Novo has been battling to maintain its previously dominant position in sales of its obesity and diabetes medications.
On Wednesday, Novo backed its full-year guidance, roughly a week after it slashed its 2025 sales outlook, issued a profit warning, and announced a leadership shake-up in a bid to reinvigorate demand and confront challenges from brand-name rival Eli Lilly (NYSE:LLY) and manufacturers of so-called "compounded" drugs.
In its second quarter, Wegovy sales grew by 67% from a year earlire to 19.53 billion Danish krone. Group-wide, revenue rose 18% to 76.86 billion Danish krone, but missed estimates.
Copenhagen-listed shares of Novo were muted in early trading, but have slumped by more than 52% so far this year.