U.S. stock futures are little changed after the broad-based rally seen in the last couple of weeks halted yesterday. The markets benchmark — the S&P 500 Index — has rallied nearly 20% from its recent trough in October 2022. The tech-heavy Nasdaq Composite has seen an impressive bull run so far this year.
However, the rally halted yesterday following an unexpected decision by the Bank of America to raise interest rate by 25 basis points. On Jun 6, the central bank of Australia also hiked interest rate in two successive meetings. In the United States, market participants remained highly concerned that the Fed is yet to terminate its ongoing rate hike regime. The CME FedWatch shows that the probability of a 25-basis point rate hike in next week’s FOMC meeting is increasing gradually.
Meanwhile, good news has appeared from Asia. Japan’s GDP grew 2.7% in the first quarter of 2023, exceeding last month’s projection of 1.6%. Capital spending in the form of private non-residential investment rose 1.4% — higher than initial government estimates of 0.9%. Private demand increased 1.2% and domestic demand grew 1%. Moreover, factory activities in May increased for the first time since October 2022.
In China, six state-owned commercial banks reduced deposit rates. The banks reduced the interest rate for five-year time deposits to 2.5% from 2.65% in order to boost growth in the economy. A section of financial analysts said that the move would raise the profitability of these banks and may finally lead the: People’s Bank of China to lower the benchmark interest rate.
Weekly jobless claims increased by 28,000 to 261,000 for the week ended Jun 3, beating the consensus estimate of 236,000. This was the highest level of initial claims since the week ended Oct 30, 2021. The previous week’s data was revised upward by 1,000 to 233,000 from 232,000 reported earlier. The 4-week moving average was 37,250, an increase of 7,500 from the previous week’s revised average.
Continuing claims — people who already received government unemployment benefit and run a week behind the headline number — came in at 1.757 million for the week ended May 27. This compares to a revised 1.794 million in the prior week. The 4-week moving average was 1,784,750, a decrease of 12,500 from the previous week’s revised average.
Yesterday, after the closing bell, the games and entertainment products developer GameStop Corp. GME reported first-quarter fiscal 2023 earnings results. Quarterly loss per share of $0.14 was narrower-than-the Zacks Consensus Estimate of a loss per share of $0.17. Total revenues came in at $1.24 billion, missing the Zacks Consensus Estimate by 7.78%.
However, before the announcement of the earnings results, the company fired its CEO Matt Furlong and named Ryan Cohen as executive chairman. Furlong was the fifth CEO to be fired in the past five years. The company also canceled its earnings conference call. As a result, the price of the meme stock plunged more than 20% in today’s pre-market trading. For a detailed discussion on GME’s earnings, click here.
Before the opening bell today, jewelry bigwig Signet Jewelers Ltd. SIG reported first-quarter fiscal 2024 earnings results. Adjusted earnings per share of $1.78, outpaced the Zacks Consensus Estimate of $1.44 per share. The company posted revenues of $1.67 billion, surpassing the Zacks Consensus Estimate by 2.27%. For a detailed analysis of SIG’s earnings, click here.
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