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Eli Lilly, UPS ahead, SoftBank's surprise loss - what's moving markets

Published 08/08/2023, 05:56 PM
© Reuters

Investing.com -- U.S. stock futures point lower ahead of a raft of new corporate earnings that include results from Eli Lilly and UPS. Elsewhere, SoftBank slips to a surprise quarterly loss, although its flagship Vision Fund is boosted by a rebound in tech valuations, while Tesla shares fall after the electric car maker unexpectedly announces the departure of its finance chief.

1. Futures edge lower

U.S. stock futures edged lower Tuesday, suggesting a pullback from gains made in the prior session, as investors awaited the release of a fresh batch of corporate earnings.

At 05:10 ET (09:10 GMT), the Dow futures contract dipped by 80 points or 0.23%, S&P 500 futures slipped by 13 points or 0.29%, and Nasdaq 100 futures lost 53 points or 0.35%.

The main indices on Wall Street rose on Monday, with the benchmark S&P 500 and Nasdaq Composite rebounding from four consecutive days of declines. The 30-stock Dow Jones Industrial Average also jumped to its best day since mid-June.

In individual stocks, big data firm Palantir (NYSE:PLTR) lifted its revenue target, thanks to increasing demand for its artificial intelligence service, while educational tech company Chegg (NYSE:CHGG) quarterly sales beat estimates as concerns eased that ChatGPT would eat into its customer growth.

2. Eli Lilly, UPS on tap

Drugmaker Eli Lilly (NYSE:LLY) and logistics firm United Parcel Service (NYSE:UPS) are among the biggest brands reporting their latest earnings Tuesday.

For Eli Lilly, investors will likely be keen to receive any updates around the regulatory approval process for its treatment for Alzheimer's disease.

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Last month, the company announced that a Phase III study had shown that the drug, donanemab, had significantly slowed cognitive decline in patients suffering from mild forms of the disease. Eli Lilly subsequently said it would start filing regulatory approval applications, including with the U.S. Food and Drug Administration.

Earnings from UPS will come after the package deliverer reached a tentative deal with 340,000 Teamsters-backed workers to avert a strike that had the potential to disrupt shipments of around a fourth of all U.S. parcel shipments.

The Teamsters union said the UPS employees had called for better pay and working conditions, including air conditioning in new models of the group's famous brown trucks.

The quarterly rush of corporate returns is entering its final stages, with about 85% of S&P 500-listed companies having now unveiled three-month earnings, according to FactSet data cited by CNBC.

3. SoftBank posts quarterly loss despite Vision Fund recovery

Japan's SoftBank (TYO:9984) unexpectedly reported its third straight quarterly loss, even though its Vision Fund investment arm improved from a string of declines thanks to a rebound in tech valuations.

SoftBank Group, helmed by billionaire investor Masayoshi Son, fell to a loss of ¥477.6 billion, or roughly $3.3B, during the April to June period. Analysts had been expecting a profit of ¥75B. Dropping valuations in big stakes in companies like Alibaba Group (NYSE:BABA) and T-Mobile US (NASDAQ:TMUS) weighed on SoftBank's overall performance.

But its flagship Vision Fund unit, the world's biggest tech-focused investment fund, returned to the black after five straight quarters of losses following a jump in the valuation of Arm ahead of the chip designer's planned initial public offering later this year. In the prior quarter, the division, which has previously backed high-profile tech players like ride-hailing firm Uber (NYSE:UBER) and fintech Revolut, slipped to a loss of ¥237B.

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Investors remain curious to see if hype over AI -- a partial source of fuel for this year's drive higher in Big Tech shares -- will also support SoftBank's returns.

4. Tesla shares slip after CFO departure

Shares in Tesla (NASDAQ:TSLA) inched lower on Monday after Elon Musk's electric car maker announced that Chief Financial Officer Zachary Kirkhorn would be departing.

According to a regulatory filing, Kirkhorn, a 13-year veteran of Tesla and a regular fixture on the company's earnings call, officially stepped down on Friday. However, he will stay with the business until the end of the year to help assure a "seamless transition," Texas-based Tesla said.

Kirkhorn will be replaced by current Chief Accounting Officer Vaibhav Taneja.

The dip in Tesla shares came as part of a broader electric vehicle sector sell-off, with Rivian Automotive (NASDAQ:RIVN) and Lucid Group (NASDAQ:LCID) both declining by more than 3%.

Elsewhere on Monday, Musk revealed on X -- his social media platform formerly known as Twitter -- that he is "getting an MRI of my neck [and] upper back" this week. He noted that he may "require surgery," potentially taking him away from his multiple corporate responsibilities. Musk added that the operation may also need to happen before his proposed sparring match with Meta Platforms (NASDAQ:META) CEO Mark Zuckerberg.

5. Oil falls after weak Chinese data

Oil prices slipped on Tuesday, following the release of weak Chinese trade figures ahead of fresh U.S. stockpile numbers.

In particular, oil imports in July to China, the top crude importer, were down 18.8% on a monthly basis. Total imports also dropped 12.4% year-on-year, a more severe drop than the 5% forecast, while exports contracted 14.5%, steeper than an expected 12.5% decline.

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Meanwhile, the American Petroleum Institute, an industry body, is scheduled to release its estimate of U.S. crude inventories later in the session and is projected to show another drawdown after last week’s hefty fall.

By 05:10 ET, the U.S. crude futures traded 1.1% lower at $81.02 a barrel, while the Brent contract dropped 1.2% to $84.36.

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