Stock futures fall as Treasury yields rise; Adidas counts the cost of Kanye West’s split, shares plummet; PayPal Rise After Solid Q4 Earnings, CEO Schulman Retires; Lyft shares collapse after a gloomy forecast widens the gap with declines in Uber and Expedia as severe December weather reduces travel and bookings.
Five things to know before the market opens on Friday, February 10:
1. — Stock futures fall as Treasury yields rise
US stock futures fell lower on Friday as stocks continued to closely track moves in the bond market amid growing indecision over growth and inflation bets and their impact on the path of the Fed interest rate.
Bond yields have been showing signs of recession for several months now, with corporate layoffs and broader economic indicators suggesting the chances of a near-term contraction are rising.
Meanwhile, the inflation outlook continues to be hotly debated ahead of next week’s CPI reading on Tuesday, as last week’s January jobs report came in better than expected.
The indecision was reflected in very different results for Treasury auctions this week, with historically strong demand for the sale of $35 billion in 10-year bonds on Wednesday and weak acceptance in the sale of 30-year bonds for $ 21 billion yesterday.
Bond yields were marked slightly lower in overnight trading, with benchmark 10-year notes trading at 3.687% and 2-year notes pegged at 4.501%. The US dollar index, which tracks the dollar against a basket of its global peers, rose 0.07% to 103.297.
He CME Group FedWatch suggests a 93.7% probability of another 25 basis point rate hike by the Federal Reserve next month in Washington, and bets on a follow-through move in May remain around 69%.
Oil prices were also on the move, with Brent crude rising $1.90 to $86.37 a barrel, after Russia said it would cut its daily output by around 500,000 barrels, a figure that represents about 5% of its total production, in response to Western sanctions.
Stocks, meanwhile, have been riding a mixed string of gains for most of the week, with tech stocks hurtling on headlines signaling weakness in AI-focused investments, declining demand and pending job cuts.
On Wall Street, futures linked to the S&P 500 were set for a 16-point opening bell drop, while those linked to the Dow Jones Industrial Average are set for a 55-point drop. The technology-focused Nasdaq scored 95 points in the red.
In foreign markets, Europe’s Stoxx 600 was down 0.88% in early Frankfurt trading, while Britain’s FTSE 100 fell 0.3.5%.
Overnight in Asia, the MSCI ex-Japan index of the entire region was down 1.07% at the close of trading, while the Nikkei 225 gained 0.31%.
2. — Adidas counts the cost of Kanye West’s split, shares fall
Shares of Adidas AG fell lower in German trading on Friday after the sportswear group said full-year sales were likely to decline sharply from 2022 levels thanks in part to its decision to cut ties with American artist Kanye West.
Adidas, which severed its relationship with West late last year after a series of anti-Semitic comments made through his verified social media accounts, said listing the Yeezy brand shares could cut up to 500 million euros from its profits. operations, with a further 200 million euros fixed as costs linked to its restructuring plans.
Not selling Yeezy products, which were designed by West under his previous partnership, could cost around €1.2. billion in full-year sales, said new chief executive Bjorn Gulden, who replaced Kasper Rorsted earlier this year.
Overall sales, Adidas said, will likely decline by a “high single digit” rate this year, compared with a consensus forecast of a 4% gain.
Adidas shares fell 9% in Frankfurt trading and changed hands at 75.16 euros each.
3. — PayPal rises after solid Q4 earnings, CEO Schulman retires
PayPal (PPPL) – Get a free reportThe shares rose in premarket trading after the online payments group posted better-than-expected fourth-quarter earnings that were partly marred by the retirement of chief executive Daniel Schulman.
Schulman, who has led the group since 2014, said he will step down as chief executive at the end of the year, saying in a statement that he wants to “devote more time to my passions outside of the workplace.” However, he will continue to serve on the group’s board of directors.
PayPal posted earnings figures for the December quarter that greatly exceeded Street’s forecasts, as revenue rose 9% to $7.4 billion, yielding an adjusted bottom line of $1.24 per share, a figure which was 4 cents above the consensus estimate.
However, looking ahead to the first three months of the year, PayPal said revenue would likely decline to around $6.97 billion, with earnings in the region of $1.08 to $1.10 per share.
PayPal shares rose 1.1% in premarket trading to signal an opening bell price of $79.25 apiece.
4. — Lyft shares collapse after Grim Forecast widens gap with Uber
Lyft (LYFT) – Get a free reportThe shares collapsed in premarket trading on Friday after the ride-sharing group forecast lower-than-expected near-term revenue and a plan to cut prices and regain market share lost to its biggest rival, Uber. Technologies.
Lyft said revenue for the March quarter would likely fall to around $975 million, well below analyst estimates, with adjusted earnings in the region of $5 million to $15 million.
For the three months ending in December, Lyft reported adjusted earnings of $126.7 million, beating Street’s forecasts, as revenue rose 21% to $1.2 billion.
Lower prices, Lyft said, would make up for a slower post-pandemic turnaround in its key West Coast markets.
Lyft shares were marked 32.3% lower in premarket trading to indicate an opening bell price of $10.98 apiece.
5. — Expedia slides as severe December weather dulls travel, bookings
Expedia Group (EXP.) – Get a free reportShares were lower in premarket trading after the travel and experience booking website posted weaker-than-expected fourth-quarter earnings thanks in part to severe December weather that dampened booking growth.
Expedia said adjusted earnings for the quarter rose 19% from a year ago to $1.26 a share, but missed Street’s forecast of $1.67. Group revenue increased 15% to $2.62 billion, while gross bookings increased 17% to $20.51 billion.
“While our fourth-quarter results were negatively impacted by severe weather, demand was strong and accelerating, and has been notably stronger since the start of the year,” Chief Executive Officer Peter Kern said.
Shares of Expedia Group were down 1.9% in premarket trading to indicate an opening bell price of $115.79 apiece.
