North American Morning Briefing: Inflation Worries Overshadow AI Enthusiasm

OPENING CALL

Stock futures inched higher on Friday, however, both the S&P 500 and the Dow industrials were on track to record their first weekly drops since mid-April, despite Nvidia surging to a record close.

Concerns about price pressures were reignited by purchasing managers index data Thursday suggesting economic activity was growing at its fastest clip in more than two years.

This weighed on markets as investors pulled back expectations for interest-rate cuts.

Cryptocurrencies edged down, despite the SEC approving the first ETFs for ether , the biggest digital token after bitcoin

Overseas Markets

Global stocks fell after Thursday's U.S. selloff. Indexes in Hong Kong and Japan both shed more than 1%. Europe's Stoxx 600 slipped.

Premarket Movers

Boeing led the Dow lower Thursday, falling 7.6% after CFO Brian West warned that free cash flow should be about as bad in the second quarter as it was in the first quarter. Boeing was rising 0.7% premarket.

Intuit raised its fiscal-year profit and sales outlook. The stock was down 6.3%, however, after it warned of a decline in the number of people who use TurboTax for free.

Nvidia rose 0.3% in premarket trading, after surging to a record close Thursday following another set of strong earnings.

Ross Stores first-quarter earnings and sales topped analysts' projections and the company raised its fiscal-year profit forecast. Shares rose 8.2%.

Workday fell roughly 12% after it cut its annual forecast for subscription revenue, a key metric.

Post Close Movers

Deckers Outdoor's sales rose 21% and handily beat Wall Street expectations, buoyed by strong growth in sales of Hoka-brand shoes. Shares rose 8.1%.

Verastem said that its trial evaluating a combination of therapies to treat pancreatic cancer found a high overall response rate in one cohort. Shares rose 52%.

Watch For:

Durable Goods for April; University of Michigan Final Consumer Survey for May; Canada Retail Trade for March; Earnings from Booz Allen Hamilton, Buckle: Fedspeak from Christopher Waller

Today's Top Headlines/Must Reads:

- U.S. Real-Estate Fund Details Limits to Investor Redemptions

- Treasury Bills Are the Best Place to Park Your Cash. Just Ask Warren Buffett.

- Jeep and Ram Dealers Gripe to Stellantis as Cars Sit on Lots

MARKET WRAPS

Forex:

The dollar index turned slightly lower, trimming gains made Thursday following Fed minutes and strong data ahead of a long weekend.

"We don't see a strong argument for directional changes in the dollar crosses today," ING said.

"Domestic stories should remain central amid a relatively quiet calendar and the Memorial Day break," ING said, adding that durable goods orders for April due at 0830 ET should come in "on the soft side."

Energy:

Oil edged lower with prices likely to tread water in the run-up to the OPEC+ meeting early in June, Commerzbank said.

With just over a week to go, members of the expanded production cartel have been tight-lipped so far, helping to limit price fluctuations in recent days, Commerzbank added.

Survey-based estimates for OPEC production in May should support prices, and after the meeting, the market is likely to increasingly focus on demand again, it said.

The upcoming Memorial Day weekend marks the start of summer driving season in the U.S., and gasoline demand has already picked up, Commerzbank added.

Metals:

Gold futures edged up and Goldman Sachs said solid demand from emerging central banks and Asian households, and the prospect of eventual lower U.S. interest rates should see bullion rise to $2,700 an ounce by the year end.

Elsewhere, a structural deficit in the market on improving global manufacturing activity, rapid green demand growth and constrained mine supply should see copper prices climb to $12,000 a ton by year-end, Goldman Sachs said.

TODAY'S TOP HEADLINES

Elon Musk denies report SpaceX may make tender offer with $200 billion valuation

Elon Musk has dismissed a report that his privately held SpaceX aerospace company is considering selling existing shares.

A tender offer of those shares that would value the company at around $200 billion is being discussed and could possibly take place in June, Bloomberg reported late Thursday, citing sources. The offer would allow employees and investors to sell SpaceX shares at roughly $108 to $110 each, the sources said. Late last year, Bloomberg reported another tender offer that valued SpaceX at around $180 billion.

Intuit warns of fewer TurboTax users who file for free. It says it's not interested in them anyway.

Shares of Intuit Inc. fell after hours on Thursday, as the tech company behind TurboTax filing software and the personal-finance site Credit Karma warned of a decline in the number of people who use TurboTax for free.

The drop came even as the company raised its full full-fiscal-year profit and sales outlook. Shares fell 6.3% after hours.

Alibaba to Raise $4.5 Billion Through Convertible Bonds to Fund Buybacks

Alibaba Group Holding plans to raise $4.5 billion through a convertible-bond issue to fund share repurchases, following a similar move by rival e-commerce giant JD.com.

The convertible senior notes maturing in seven years will carry a coupon of 0.5%, Alibaba said in a filing to Hong Kong's stock exchange Friday. The deal size could reach $5.0 billion if the option to purchase additional notes is exercised in full.

Why a Shabby Luxury Brand Is Hard to Fix

Mending luxury brands is harder than ever in a slowing industry dominated by Parisian giant LVMH.

Fancy labels fray easily. Gucci hit the skids around 2022 when shoppers, particularly from China, became tired of the over-the-top designs the brand had become known for. Sales at the Italian label fell 18% in the first three months of this year.

U.K. Shoppers Spent Less in April as Inflation, Rain Damped Sales

U.K. shoppers held back on spending last month as consumers on both sides of the Atlantic prove reluctant to spend in stores amid still-high price inflation.

Retail sales slipped 2.3% in April compared with a month earlier, more sharply than forecast, Office for National Statistics figures showed Friday. Consumer-price inflation was higher than expected over the month, limiting spending power among U.K. shoppers.

Ether ETFs near debut as crypto's Washington win streak continues. Here's what it means for markets.

U.S. regulators took a major step forward Thursday toward green-lighting spot ether exchange-traded funds that could potentially lead to mainstream adoption of the world's second-most popular cryptocurrency.

The Securities and Exchange Commission approved filings from the New York Stock Exchange, Nasdaq and a subsidiary exchange of Cboe requesting rule changes that would enable them to list spot ether ETHUSD ETFs.

Senate Democrats Press Border-Security Vote as Republicans Cry Foul

WASHINGTON-Democrats sought to neutralize one of their biggest vulnerabilities headed into the fall election by forcing Republicans on the record opposing a bipartisan deal on border security, as President Biden prepares to move unilaterally to tighten asylum rules.

The vote failed as expected Thursday afternoon in the Senate, with 43 in favor and 50 opposed. The tally was well short of the 60-vote threshold required for most bills to advance under the chamber's longstanding filibuster rule.

Supreme Court Allows South Carolina's GOP-Drawn Congressional Map, Rejecting Racial Discrimination Claim

WASHINGTON-A 6-3 Supreme Court approved a white-dominated congressional district enacted by South Carolina's Republican-controlled legislature, overruling a lower court that found the map divided Charleston County into different districts to reduce Black voters' political power.

Because white voters heavily favor Republicans in South Carolina, the decision is a boon to the GOP incumbent, Rep. Nancy Mace, and good news for her party's fight to retain its narrow House majority in the November election.

Write to ina.kreutz@wsj.com

TODAY IN CANADA

Earnings:

Nothing Scheduled

Economic Indicators (ET):

0830 Mar Retail trade

0830 Q1 Quarterly financial statistics for enterprises

Stocks to Watch:

Gildan Bd of Directors Resigns; Vince Tyra Has Stepped Dn as Pres and CEO; Says Sale Process Has Ceased; Outgoing Bd Has Appointed Browning West Nominees to the Bd of Directors

Browning West: Eight-Member Slate of Directors to Constitute Entirety of Gildan Activewear Board; Enhancing Shareholder Value Begins With Reinstating Glenn Chamandy as Gildan CEO; New Gildan Board Intends to Name Michael Kneeland as Chair

Expected Major Events for Friday

05:30/JPN: Apr Tokyo area department store sales

05:30/JPN: Apr Nationwide department store sales

06:00/GER: 1Q GDP - Detailed breakdown

06:00/UK: Apr UK monthly retail sales figures

06:45/FRA: May Monthly business survey (goods-producing industries)

12:30/CAN: Mar Retail trade

12:30/CAN: 1Q Quarterly financial statistics for enterprises

12:30/US: Apr Advance Report on Durable Goods

14:00/US: May University of Michigan Survey of Consumers - final

All times in GMT. Powered by Kantar Media and Dow Jones.

Expected Earnings for Friday

Ampio Pharmaceuticals Inc (AMPE) is expected to report for 1Q.

Avalon GloboCare Corp (ALBT) is expected to report for 1Q.

Big Lots (BIG) is expected to report $-3.97 for 1Q.

Booz Allen Hamilton Holding Corp (BAH) is expected to report $1.18 for 4Q.

Buckle Inc (BKE) is expected to report $0.74 for 1Q.

ClearOne Inc (CLRO) is expected to report for 1Q.

Coffee Holding Co Inc (JVA) is expected to report $0.03 for 1Q.

ContraFect Corp (CFRXQ) is expected to report for 4Q.

Excellon Resources (EXN.T) is expected to report for 1Q.

Greenwich LifeSciences Inc (GLSI) is expected to report for 1Q.

Hibbett Inc (HIBB) is expected to report $2.61 for 1Q.

MGT Capital Investments (MGTI) is expected to report for 1Q.

(MORE TO FOLLOW) Dow Jones Newswires

May 24, 2024 06:26 ET (10:26 GMT)

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