Morning Brief

What to watch today: Futures tumble after Fed signals tighter policy ahead

Share

BY THE NUMBERS

Dow futures slumped Thursday, a day after minutes from July's Federal Reserve meeting indicated that the central bank will start to tap the brakes on the policy it has used to juice up the economy and financial markets. Futures contracts tied to the bluechip index tumbled more than 350 points following news that Fed officials think they can start cutting monthly bond purchases by the end of the year. The market also confronted fears that the economy is starting to slow. Goldman Sachs sharply cut its view on third-quarter GDP, reducing its growth expectations to 5.5% from 9%. Investors will be watching the latest reading on weekly jobless claims as well as manufacturing activity in the Philadelphia region.

Bond yields fell Thursday as concerns rose about growth and amid tremors from the situation in Afghanistan. Fed minutes indicated that officials took a mostly optimistic view on the path ahead but worried about the impact the delta variant of Covid-19 would have and said "uncertainty was quite high" about the future. Central bankers also expressed concern about price pressures that could last longer than anticipated, though there appeared to be considerable difference in views on inflation. The benchmark 10-year Treasury note most recently yielded 1.23%, down more than 4 basis points on the session and 13 basis points from a week ago.

Amazon shares nudged lower following news that it is preparing to broaden its presence in the brick-and-mortar retail world. The company plans to open locations that resemble larger department stores, according to a Wall Street Journal report. The online goliath is looking to open locations in California and Ohio, with stores that will occupy about 30,000 square feet. That would be comparable to a typical Kohl's or T.J. Maxx. Elsewhere in retail, Macy's shares got a lift on better-than-expected earnings, while Kohl's shares slipped even though it topped estimates.

IN THE NEWS TODAY

Despite a Taliban promise to respect human rights and ensure a peaceful transition to power, reports of violence around Afghanistan escalated. At least 12 people have been killed in and around Kabul airport alone since Sunday when the Taliban entered the Afghan capital, NATO and Taliban officials said. Beatings by Taliban fighters left some adults and at least one child injured and bleeding, according to reports. The Taliban deny their members' involvement in the violence.

Wells Fargo has backed off a controversial plan to pull the plug on its customers' lines of credit. The bank has decided to keep the credit lines available for those who actively used them or want to reactivate old ones, according to a spokeswoman for the San Francisco-based company. It will not offer the product to new customers, however. Uproar over the cancellation plans occurred following a CNBC report in July. Shares fell 1.7% premarket.

Macy's (M) reported adjusted quarterly earnings of $1.29 per share, well above the 19-cent consensus estimate, with revenue also above forecasts. The retailer reported a better than expected increase in comparable store sales as well, raised its annual sales forecast, and announced a share buyback and the reinstatement of its dividend. Shares jumped 3.7% in the premarket.

Kohl's (KSS) fell 2.6% in premarket action despite quarterly results that beat analyst forecasts. Kohl's reported adjusted quarterly profit of $2.48 per share, well above the $1.21 consensus estimate.

Tapestry (TPR), the company behind the Coach and Kate Spade brands, beat estimates by 5 cents with adjusted quarterly earnings of 74 cents per share, with revenue above estimates as well as a reopening of economies around the world boosted demand for luxury goods. Tapestry also reinstated its dividend, but shares fell 2.3% in premarket trading.

Petco (WOOF) beat estimates by 5 cents with adjusted quarterly earnings of 25 cents per share and revenue that beat analyst forecasts as well. The pet supplies retailer also raised its full-year earnings and revenue outlook.

BJ's Wholesale (BJ) beat estimates on the top and bottom lines for its latest quarter, earning an adjusted 82 cents per share for the second quarter, 17 cents above estimates. The warehouse retailer also reported unexpected growth in same-store sales.

Robinhood (HOOD) slumped 9.9% in the premarket after the company behind the popular app warned of a slowdown in trading activity during the current quarter. In its first report as a public company, Robinhood did note that quarterly revenue surged 131% compared to a year earlier, driven by a surge in cryptocurrency activity.

Cisco Systems (CSCO) beat estimates by 2 cents with adjusted quarterly earnings of 84 cents per share and revenue above estimates as well. The networking equipment and services company did give a current quarter profit forecast that fell shy of analyst forecasts, due to supply chain issues, and shares lost 1.4% in premarket trading.

Bath & Body Works (BBWI) added 2.7% in premarket trading, after beating Street forecasts in its first quarterly report since L Brands spun off Victoria's Secret and renamed itself Bath & Body Works.

Victoria's Secret (VSCO) shares plunged 8.6% in premarket action, after reporting quarterly sales that fell short of analyst expectations. The women's apparel company did see an improvement in profit margins as it kept tight inventories and ran fewer promotions.

Nvidia (NVDA) came in above estimates with adjusted quarterly earnings of $1.04 per share, while revenue also topped estimates. The graphics chipmaker shares gained 1.4% in the premarket after it also forecast better than expected current quarter revenue.

Toyota Motor (TM) dropped 3.1% in premarket trading, following a report by Japan's Nikkei News service that the automaker would slash planned September production by 40% due to the global chip shortage.

Red Robin Gourmet Burgers (RRGB) shares tumbled 9.4% in premarket trading, after posting an unexpected quarterly loss and lower than expected revenue. Red Robin said a worker shortage led to reduced operating hours at certain restaurants during the quarter.