Is this U.S.-China selloff a buy? A top Wall Street voice weighs in
Investing.com - U.S. stock futures stabilize after the main indices on Wall Street all post fresh record high closes in the prior session. President Donald Trump and Chinese leader Xi Jinping are expected to hold a phone call on Friday morning, with a possible deal on TikTok’s U.S. operations topping the agenda. Shipping firm FedEx’s quarterly profit and revenue surpasses analysts’ projections, while homebuilder Lennar ’s shares dip on a slump in three-month income.
1. Futures steady
U.S. stock futures hovered around the flatline on Friday, suggesting a possible breather to an ongoing bull run on Wall Street.
At 06:50 ET (10:50 GMT), Dow Jones Futures and S&P 500 Futures were both mostly unchanged, and Nasdaq 100 Futures had moved up 21 points, or 0.1%.
On Thursday, the blue-chip Dow Jones Industrial Average, the benchmark S&P 500 and tech-heavy Nasdaq Composite all posted fresh all-time closing highs, as investors continued to digest a Federal Reserve interest rate reduction earlier this week.
"[B]ulls [are] celebrating the fact that both fiscal and monetary policy are now in stimulus mode while the AI mania continues," analysts at Vital Knowledge said in a note.
In individual stocks, shares of Intel (NASDAQ:INTC) jumped by more than 22% after AI-darling Nvidia (NASDAQ:NVDA) revealed a $5 billion stake in the embattled U.S. semiconductor firm. After new shares are issued, Nvidia will be one of Intel’s largest stakeholders.
2. Trump-Xi phone call expected
Traders will be keeping tabs on an expected phone call between President Donald Trump and Chinese counterpart Xi Jinping on Friday morning, with a potential agreement to keep short-form video app TikTok operating in the U.S. likely to be discussed.
U.S. officials have said the deal will be at the top of the agenda when Trump and Xi hold their first known call in three months, according to Reuters. It could reportedly serve as a precursor to a possible in-person meeting between the two at a summit in South Korea later this year, which would come after months of heated negotiations over trade since Trump’s return to power in January.
For TikTok, which is owned by China’s ByteDance, an accord over the fate of its U.S. arm would settle what has been a continued source of uncertainty for the mega-popular platform.
Although Congress has ordered TikTok to divest its U.S. operations or be shut down in the country, Trump has repeatedly extended the deadline for this action to take place, arguing that the measure will give the White House time to find a willing owner. Trump has also been wary not to anger TikTok’s legion of users -- and noted that the app "helped get me elected" in 2024.
On Monday, U.S. and Chinese officials announced a framework deal, with the Wall Street Journal reporting that TikTok’s U.S. operations would be controlled by a consortium of investors including Oracle, Silver Lake and Andreessen Horowitz. But crucial questions are swirling around the precise ownership structure and how much influence China will retain over the app.
3. FedEx quarterly returns top estimates
Shares of FedEx (NYSE:FDX) jumped in extended hours trading after the U.S. shipping group posted better-than-anticipated quarterly revenue and profit.
Memphis-based FedEx was bolstered by a drive to bring down costs, which helped to counterbalance soft international volumes following the end of a tariff exemption for certain low-value products sent directly to consumers.
As part of a bid to slash expenses by $1 billion during its current fiscal year, FedEx has moved to shutter facilities, restructure divisions and park planes. The changes, along with indications of consumer resilience during a time of concern over tariff-fueled price hikes, gave lift to the company’s closely-monitored operating margin.
Executives flagged that the end of the so-called "de minimis" exemption took a $150 million bite out of fiscal first-quarter revenue -- but a top-line figure of $22.24 billion was still above estimates of $21.66 billion. Adjusted profit of $912 million also surpassed projections.
4. Lennar profit slumps
Lennar’s (NYSE:LEN) shares, meanwhile, ticked lower in after-hours dealmaking, weighed down by a 46% drop in fiscal third-quarter profit at the homebuilder.
U.S. housing demand has been dented by inflation fears and it remains somewhat uncertain if the restart of a Fed policy easing cycle will put short-term downward pressure on mortgage costs.
Lennar has rolled out incentives like cost adjustments and mortgage rate buydowns to try to boost home demand, but these have also served to dent profit margins.
At the same time, fourth-quarter home deliveries are anticipated to be in the range of 22,000 to 23,000 units, falling short of estimates of 25,000, according to LSEG data cited by Reuters.
5. Bank of Japan keeps rates steady
The Bank of Japan left interest rates unchanged as expected on Friday amid increased uncertainty over the country’s political future and the effects of U.S. trade tariffs on the economy.
Policymakers at the BOJ also outlined plans to begin selling some of its massive holdings of stocks, exchange-traded funds, and real estate investment trusts, after it flagged plans to halt their purchases in a historic move last year. Japanese stock markets tumbled on this announcement, given that it represents more monetary tightening.
The BOJ left its benchmark rate at 0.5%, in line with market forecasts. The central bank had last hiked rates in January this year.
Friday’s decision was backed by a 7-2 majority vote in the BOJ’s rate-setting board, with two members -- Takata Hajime and Tamura Naoki calling for a 25-basis point hike amid steady inflation.