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Futures dip, Salesforce forecast falls short of estimates - what's moving markets

Published 30/05/2024, 09:00
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Investing.com -- U.S. futures inch lower on Thursday following a drop in equities in the previous session, with concerns rising over weak Treasury sales and the outlook for possible Federal Reserve interest rate reductions. Salesforce (NYSE:CRM) shares drop in extended hours dealmaking after the business software group's second-quarter misses estimates. Elsewhere, activist investor Nelson Peltz reportedly liquidates his stake in Disney after a failed proxy battle earlier this year.

1. Futures lower

U.S. stock futures slipped on Thursday, pointing to an extension in losses logged in the prior session, as investors fretted about a spike in Treasury yields and the timing of potential interest rate cuts by the Federal Reserve.

By 03:41 ET (07:41 GMT), the Dow futures contract had shed 334 points or 0.9%, S&P 500 futures had dipped by 27 points or 0.5%, and Nasdaq 100 futures had fallen by 110 points or 0.6%.

The main averages on Wall Street sank on Wednesday, pulled down by an uptick in Treasury yields sparked by tepid demand for new U.S. government debt auctions. The yield on the benchmark 10-year Treasury yield climbed to a four-week peak of 4.6%, adding to gains clocked on Tuesday.

Signs of sticky inflation and recent commentary from Fed officials have also led some market observers to ratchet down their expectations for rate reductions this year. Instead of two cuts in 2024, the closely-monitored CME FedWatch Tool shows that traders are now betting that the central bank will roll out just one in either November or December.

This sentiment could be further impacted by the release of the monthly personal consumption expenditures price index -- the Fed's preferred measure of inflation -- later this week. Policymakers have suggested that they need to see more evidence that price gains are cooling back to their 2% target level before they can start to lower borrowing costs down from more than two-decade highs.

2. Salesforce slumps after-hours as second-quarter forecast disappoints

Shares in Salesforce tumbled by more than 16% in extended hours trading after the workplace software group unveiled current-quarter guidance that fell short of analysts' estimates.

The outlook was impacted by weak client spending on its business-oriented products and services, denting optimism around the California-based company's plan to use generative artificial intelligence to boost returns. Chief Executive Marc Benioff struck a bullish tone on AI, however, saying that it continues to present a "massive opportunity for our customers to connect with their customers in a whole new way."

For its fiscal second quarter, Salesforce projected that adjusted per-share earnings would be in a range of $1.31 to $1.33 on revenue of between $9.20 billion and $9.25 billion. Wall Street forecasts had seen the figures at $1.47 and $9.34 billion, respectively.

The firm also slashed its expectations for annual subscription and support revenue growth down to "slightly below" 10% versus a year ago. It had previously forecast an increase of 10% in February.

In other corporate news, HP Inc's (NYSE:HPQ) second-quarter sales beat estimates, in a sign of improving strength in the personal computing market. Shares in the group were higher following the closing bell.

3. Peltz liquidates Disney stake - CNBC

Activist investor Nelson Peltz has offloaded his entire stake in Walt Disney Company (NYSE:NYSE:DIS), according to a CNBC report on Wednesday.

Peltz reportedly sold his Disney shares at approximately $120 each, a transaction that raked in roughly $1 billion. The stock closed at $100.88 on Wednesday, and has risen by more than 11% so far this year.

The move comes on the heels of Peltz's investment firm, Trian Partners, losing a proxy battle at a meeting of Disney shareholders in early April. During the gathering, stakeholders backed the re-election of the entertainment giant's full board of directors, rejecting Peltz's attempts to secure seats for himself and Jay Rasulo, Disney's former Chief Financial Officer.

Peltz has been a vocal critic of Disney's governance for some time, specifically hitting out at the company's strategy for its crucial streaming service as well as its succession plans for Chief Executive Bob Iger.

4. UBS reshuffles leadership team, considers CEO succession - FT

Swiss lender UBS has reshuffled its executive board and divided responsibility for its key wealth management segment between two managers who are considered to be the mostly likely successors to current Chief Executive Sergio Ermotti, the Financial Times has reported.

Citing a memo to staff sent from Ermotti, the FT reported that wealth management boss Iqbal Khan and investment bank head Rob Karofsky will become co-presidents of the wealth management unit. Under the plan, Khan will reportedly move to Asia to lead UBS's Asia-Pacific business, while Karofsky will helm its Americas division.

Meanwhile, the bank, which is in the process of assimilating its one-time rival Credit Suisse into its operations following a government-brokered tie-up last year, is seeking internal candidates to replace Ermotti after his expected retirement in 2027, the FT said.

The top-level shake-up will also see the departure of Credit Suisse CEO Ulrich Körner and the retirement of UBS Americas head Naureen Hassan, the paper reported. Körner will be the last chief executive in the 168-year history of Credit Suisse.

5. Crude declines despite U.S. inventory draw

Crude prices edged lower on Thursday, as worries over high borrowing costs outweighed optimism over a bigger-than-expected draw in U.S. inventories.

By 03:42 ET, the U.S. crude futures (WTI) traded 0.5% lower at $78.81 per barrel, while the Brent contract dropped 0.6% to $82.97 a barrel.

Data from the American Petroleum Institute showed on Wednesday that U.S. oil inventories shrank nearly 6.5 million barrels last week, much more than expectations for a draw of 1.9 million barrels.

The data usually heralds a similar reading from official inventory data, which is due later Thursday. The outsized draw suggested that U.S. fuel demand was picking up with the onset of the travel-heavy summer season, widely seen as the Memorial Day weekend.

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