Here are the most important news, trends and analysis that investors need to start their trading day:
- Wall Street heads for its first weekly advance in the past four
- Powell vows 'unconditional' measures to fight decades-high inflation
- FedEx reports mixed quarter results as ground unit margin improved
- Zendesk surges on a deal to sell itself to a private equity group
- Bill designed to prevent gun violence is headed for House, then Biden
U.S. stock futures pointed to a higher Friday open on Wall Street, as the Dow Jones Industrial Average, the S&P 500 and the Nasdaq all tracked for their first positive week in the past four, getting support from the recent decline in bond yields.
- The benchmark 10-year Treasury yield, while slightly higher Friday to around 3.1%, has been trending lower since last week's surge to 2011 highs near 3.5% after the Federal Reserve's biggest interest rate increase since 1994.
- The Fed's stepped-up efforts to slow the economy to fight inflation have raised concerns about a recession. The latest indicators of U.S. economic health are out at 10 a.m. ET, with the release of May new home sales and the University of Michigan's final June consumer sentiment index.
In Day 2 of his semiannual economic testimony on Capitol Hill, Fed Chairman Jerome Powell told the U.S. House of Representatives Financial Services Committee that the central bank's commitment to reining in 40-year-high inflation is "unconditional." A day earlier, on Wednesday, Powell told the U.S. Senate Banking Committee that the Fed was not trying to provoke a recession but that one was "certainly a possibility." Last week, monetary policymakers hiked rates by 75 basis points and signaled another increase of 50 to 75 basis points at their July meeting.
FedEx shares turned lower in Friday's premarket, the morning after the delivery giant reported better-than-expected fiscal fourth-quarter profit but missed on revenue. Adjusted earnings of $6.87 per share beat estimates by a penny. Revenue grew 8% to $24.4 billion, lower than expectations of $24.56 billion. Shipment volumes declined, but that was offset by increased shipping rates and fuel surcharges. FedEx's closely watched ground unit margin improved, but it has lagged United Parcel Service, whose new CEO adopted a "better not bigger" mantra two years ago. FedEx issued upbeat guidance for fiscal 2023.
Zendesk shares jumped 30% in the premarket after a group of private equity firms led by Hellman & Friedman and Permira agreed to buy the customer service software vendor in a $10.2 billion deal. Zendesk stock had been up more than 50% early Friday on a Wall Street Journal report that a deal was coming. The investor group buying Zendesk includes a wholly owned subsidiary of the Abu Dhabi Investment Authority and GIC. Zendesk will go private when the transaction closes, which is expected to happen in the fourth quarter of this year.
A bipartisan bill designed to prevent gun violence that passed the Senate on Thursday night goes to the House. Speaker Nancy Pelosi promised a vote Friday to send the most sweeping firearms measure in decades to President Joe Biden for his signature. The legislation, which seemed unimaginable a month ago, got 15 Republican votes in the Senate, including Minority Leader Mitch McConnell. The May 24 massacre at a Uvalde, Texas, elementary school galvanized both sides of the aisle to try to prevent this from happening again.