North American Morning Briefing: Stock Futures Rise as Hopes of Rate Cut Return

OPENING CALL

Stock futures rose modestly on Monday in the afterglow of a not-too-hot jobs report, which brought back hopes of an interest-rate cut this year.

Focus will turn this week to more key earnings, including from Walt Disney on Tuesday, and Uber and Airbnb on Wednesday.

Overseas Markets

Overseas stocks rose, with Hong Kong's Hang Seng closing higher. Europe's Stoxx 600 edged up, while it was a holiday in the U.K. and Japan.

Stocks to Watch

Boeing 's new spacecraft is set to carry astronauts for the first time when it launches Monday, a major test of whether the much-delayed project is ready to handle NASA missions.

Starbucks 's former boss, Howard Schultz, said in a LinkedIn post the company needs to renew its focus and own its shortcomings after disappointing results.

Premarket Movers

Berkshire Hathaway sold shares in Apple in the first quarter, but Warren Buffett praised the company and said it is "extremely likely" that Apple will remain Berkshire's largest stock position at the end of the year. Apple was falling 1.2%, while Berkshire's class B shares rose 1% premarket.

Li Auto posted strong orders for its cheaper model. Its ADRs rose 7%.

Luminar Technologies is cutting 20% of its workforce. The stock was down 14%.

Perficient was rising 53% after it reached a deal to be acquired by EQT for about $3 billion including debt.

Vistra will join the S&P 500 before the start of trading on Wednesday, replacing Pioneer Natural Resources. Vistra was rising 4.2%.

Post Close Movers

Meta Materials said it would cut about 80% of its workforce in a push to conserve cash. Shares dropped 31%.

Watch For:

Employment Trends Index; Global Services PMI; speech by Fed's Barkin; Earnings from Palantir Technologies, Vertex Pharmaceuticals, Microchip Technology, Lucid Group, Simon Property Group, Tyson Foods, International Flavors & Fragrances, BioNTech

Today's Top Headlines/Must Reads:

- Why the Fed Is Right to Bide Its Time on Rate Moves

- U.S. Applies Private-Equity Fund Model to National Security Supply Chain

- Stock Funds Fell 5% in April

MARKET WRAPS

Forex:

The dollar rose in early trade, having recovered most of the losses suffered after Friday's weaker-than-expected jobs data and weak ISM purchasing managers' survey for the services sector which revealed a contraction in April.

The recovery was helped by the fact that the prices paid component of the ISM survey jumped to nearly 60, suggesting that inflation pressures remain, UniCredit said.

"This probably prevented a more-intense retreat by the U.S. unit and triggered some profit-taking," it said, adding that the DXY dollar index rose back above 105, having dropped close to 104.50 after the jobs data.

Energy:

Oil was higher as ceasefire talks between Israel and Hamas showed little progress and Saudi Arabia lifted its official selling prices for June loadings for most regions.

Ceasefire talks hit a standstill once again, reigniting fears of further escalation in the region amid Israel's planned invasion of Rafah. Meanwhile, Aramco's flagship Arab Light crude to Asia was raised by $0.90 a barrel compared to the previous month, signaling expectations of stronger demand and tightening supplies this quarter, according to analysts.

Metals:

Gold futures rose 1% on improved hopes for interest rate cuts after promising economic data on Friday.

Additionally, central banks, led by China, are still increasing their reserve gold allocation, potentially to divest away from the dollar, Bank of America said.

TODAY'S TOP HEADLINES

ABC News President Kim Godwin Is Stepping Down

ABC News President Kim Godwin stepped down Sunday night, months after a corporate restructuring that effectively stripped away much of her management autonomy.

"I have decided to retire from broadcast journalism," Godwin said in the email sent to staff Sunday night. "Anyone who's passionate about what we do knows there's no other business like it, so this was not an easy or quick decision. But after considerable reflection, I'm certain it's the right one for me as I look to the future and prioritize what's most important for me and my family."

Steward Health, Nation's Largest Physician-Owned Hospital Operator Health Network, Files for Bankruptcy

Steward Health Care System, the largest U.S. physician-owned hospital operator, on Monday morning filed for chapter 11 protection, marking one of the biggest hospital bankruptcies in decades.

Steward, also the largest tenant of hospital landlord Medical Properties Trust, filed its chapter 11 petition in the U.S. Bankruptcy Court in the Southern District of Texas. The company said in a press release Monday that it is finalizing the terms for bankruptcy financing of up to $300 million from MPT.

The Google Antitrust Verdict Looms. Here's What to Look For.

WASHINGTON-U.S. District Judge Amit Mehta heard two days of closing arguments last week in the government's landmark antitrust case against Google. Mehta lobbed skeptical questions toward lawyers for both sides, along the way dropping hints about how he'll rule when he hands down his long-awaited written decision.

Here's what we learned during the hearings:

How Online Shopping Is Saving the Bricks-and-Mortar Store

Store owners once viewed e-commerce as a mounting threat to their survival. Now, more bricks-and-mortar stores are thriving after integrating their properties with the online shopping experience.

Shoppers browse in person to see, touch or try on items before ordering them online. They are picking up or returning purchases in stores. And retailers are increasingly relying on their shops as fulfillment hubs, shipping items ordered online from store stockrooms in addition to warehouses.

Property's Waiting Game Is Getting Harder

Higher-for-longer rates are forcing commercial property owners to rethink their options.

"Restrictive monetary policy needs more time to do its job." It was the last thing real-estate borrowers wanted to hear from Federal Reserve Chairman Jerome Powell when the central bank held interest rates steady last week.

Largest U.S. Pension Sold Verizon, Disney, and Peloton Stock. It Bought Moderna.

America's largest public pension recently pulled back on some media and telecom investments, exited a fitness stock, and doubled down on a biotech.

California Public Employees' Retirement System slashed investments in Verizon Communications and Walt Disney stock, sold all of its Peloton Interactive shares, and bought up Moderna shares in the first quarter. Calpers, as the pension is known, disclosed the stock trades, among others, in a form the pension filed with the Securities and Exchange Commission.

India's Boom Faces a Pitfall: Sharing the Wealth

The world's biggest election will decide who runs one of its hottest economies, but messages aimed at the masses are usually different from what investors want to hear.

In India's case, though, allowing more of the bounty to trickle down to its poor would be in both groups' best interests. Hot topics include inheritance taxes and wealth redistribution, with both ruling and opposition parties portraying themselves as champions of the common man. The slugfest has drawn much needed attention to rising income inequality amid fast-paced economic growth in the country.

Biden Races to Trump-Proof His Agenda

WASHINGTON-Less than four weeks after taking office, President Trump, his senior White House aides and a group of Republican lawmakers gathered in the Oval Office to sign a resolution that killed an obscure Obama-era energy regulation.

"This is a big signing-very important signing," Trump said during the 2017 event.

Israel Tells Gazans to Evacuate Rafah Neighborhoods Ahead of Planned Offensive

TEL AVIV-The Israeli military on Monday told Palestinians sheltering in some areas of eastern Rafah to move to a designated area further north, warning them of a much-anticipated offensive to rout Hamas in the southern Gazan city.

The evacuation notice, which was delivered via text messages, phone calls, fliers and media broadcasts in Arabic, came after talks over a cease-fire to free hostages held in Gaza faltered in Cairo over the weekend, amid disagreement over whether there should be a permanent end to the fighting or just a temporary pause.

Write to ina.kreutz@wsj.com

TODAY IN CANADA

Earnings [Q1 Unless Stated Otherwise]:

5N Plus

DRI Hlthcare Trst

Ensign Energy

Finning Intl

K-Bro Linen

MEG Energy

Economic Indicators (ET):

Nothing scheduled

Stocks to Watch:

Toronto-Dominion Bank CEO: There Were Serious Instances Where Bank's AML Program Fell Short; Comprehensive Overhaul of U.S., Global AML Program Well Underway; Continue to Cooperate Closely With Regulators to Accelerate Progress, Meet Obligations

Expected Major Events for Monday

06:00/RUS: Apr Russian Services PMI

07:45/ITA: Apr Italy Services PMI

07:50/FRA: Apr France Services PMI

07:55/GER: Apr Germany Services PMI

10:00/FRA: Mar OECD CPI

13:00/RUS: Weekly International Reserves

14:00/US: Apr Employment Trends Index

15:00/US: Apr Global Services PMI

23:01/UK: Apr BRC-KPMG Retail Sales Monitor

23:01/UK: Apr Scottish Retail Sales Monitor

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

Expected Earnings for Monday

Accord Financial (ACD.T) is expected to report for 1Q.

Affiliated Managers Group Inc (AMG) is expected to report $4.01 for 1Q.

Akoustis Technologies Inc (AKTS) is expected to report $-0.31 for 3Q.

Alexander's Inc (ALX) is expected to report for 1Q.

Alpha Metallurgical Resources Inc (AMR) is expected to report $12.04 for 1Q.

Atlas Energy Solutions Inc (AESI) is expected to report $0.38 for 1Q.

Axsome Therapeutics Inc (AXSM) is expected to report $-1.17 for 1Q.

BioCryst Pharmaceuticals (BCRX) is expected to report $-0.21 for 1Q.

CNA Financial Corp (CNA) is expected to report $1.38 for 1Q.

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May 06, 2024 06:16 ET (10:16 GMT)

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