Here are five things you must know for Friday, March 11:
1. — Stock Futures Bounce; Russia Ukraine Risk, Rates Keep Gains in Check
U.S. equity futures traded higher Friday, alongside upside moves for oil prices and Treasury bond yields, as Wall Street looks to close out anther volatile week on a high note amid renewed headline risk from Russia’s war on Ukraine and signals of central bank tightening.
Satellite photos suggest Russian troops are re-grouping on the outskirts of Kyiv, the Ukrainian capital, as fighting in the region enters is seventeenth day. U.K. officials have warned that an assault on Kyiv could come as early as next week, even as European Union leaders meeting in France’s Versailles Palace to agree their next move on sanctioning Russia and providing support for the Ukraine government.
President Joe Biden, meanwhile, is reportedly ready to ask G-7 leaders to strip Russia of its ‘most favored nation’ trading status, a move that would allow for even deeper economic sanctions on Moscow and pressure President Vladimir Putin to end the three week offensive.
On Wall Street, bets on central bank tightening are starting to creep higher following yesterday’s reading of February inflation, the highest in 40 years, and a move by the European Central Bank to end its emergency bond-buying program in the coming months.
The CME Group’s FedWatch tool suggests a 40.8% chance of two Fed rate hikes over the next two months, up from 37.5% earlier this week, while benchmark 2-year note yields rose to 1.713%, the highest since 2019, in overnight trading.
Futures contracts linked to the Dow Jones Industrial Average are indicating a 120 point opening bell gain while those linked to the S&P 500, which is down 10.6% for the year, are priced for a 18 point bump.
Nasdaq Composite futures are indicating a 65 point gain as benchmark 10-year Treasury note yields hold at $1.992% in overnight trading.
2. — Oracle Shares Slide After Softer Q3 Earnings, Solid Forecast
Oracle (ORCL) – Get Oracle Corporation Report shares moved lower in pre-market trading after the cloud-focused software group posted weaker-than-expected third quarter earnings that were offset by a solid near-term outlook.
Oracle, which earns the bulk of its revenues from its cloud services and license support unit, missed Street earnings forecasts by 5 cents with an adjusted second bottom line of $1.13 per share, thanks in part to an 8% jump in operating expenses as it invested in new cloud and hybrid offerings.
The group will spend another $4 billion this year as it rolls out new data centers to meet customer demand, but sees sales growing at 6% to 8% clip and forecasts a fourth quarter bottom line of between $1.40 and $1.44 per share.
“The standout this quarter was management’s guidance for revenue growth accelerating into the double digits next year (excluding its $28 billion purchase of medical software group Cerner earlier this year),” said Credit Suisse analyst Phil Winslow. “We believe 2022 will be defined by businesses moving forward on multi-year, strategic cloud-first transformation roadmaps and expect Oracle to be a key beneficiary of this accelerating trend given its leadership in the database market.”
Oracle shares were marked 2.2% lower in pre-market trading to indicate an opening bell price of $75..00 each.
3. — Docusign Shares Plunge On Disappointing 2022 Outlook
Docusign (DOCU) – Get DocuSign, Inc. Report shares slumped lower in pre-market trading after the online signature vending group forecast weaker-than-expected full year revenues that offset solid fuorth quarter earnings.
Docusign, which has been struggling to hold investor interest as pandemic-era restrictions bring more and more professionals back to the office, topped Street forecasts by a penny with a fourth quarter bottom line of 48 cents per share on sales of $580.8 million.
For the current financial year, however, the group sees revenues in the region of $2.47 billion to $2.48 billion, with flat sales in the first quarter,
“During the peak of the pandemic, urgent need drove dramatic acceleration of purchases, and our sales focus was squarely set on meeting that elevated demand,” CEO Dan Springer told investors on a conference call late Thursday. “This motion carried through the first half of fiscal year ’22. In the second half of the year, there were more challenging macro conditions impacting our customers’ priorities. We saw a diminished level of urgency in their buying patterns.”
Docusign shares were marked 18.7% lower in pre-market trading to indicate a Friday opening bell price of $76.36 each, a move that would mark a 75% decline from its June 2021 peak.
4. — Google, Facebook Face EU Antitrust Probe Into ‘Jedi Blue’ Ad Deal
Google (GOOGL) – Get Alphabet Inc. Class A Report shares slipped lower in pre-market trading after antitrust officials in Europe opened a probe into ad services deal between its parent company Alphabet and Facebook parent Meta Platforms (FB) – Get Meta Platforms Inc. Class A Report.
The investigation, which will also included the U.K.’s Competition and Markets Authority, will focus on whether a 2018 agreement between the two groups, known as ‘Jedi Blue’, was designed to crowd out competition in digitals ads for apps and websites.
“Via the so-called ‘Jedi Blue’ agreement between Google and Meta, a competing technology to Google’s Open Bidding may have been targeted with the aim to weaken it and exclude it from the market for displaying ads on publisher websites and apps,” said EU competition watchdog Margrethe Vestager.
Google shares were marked 0.06% lower in pre-market trading to indicate an opening bell price of $2,647.00 each. Meta was marked 0.1% lower at $195.02 each.
5. — Rivian Shares Tank As Production Takes Hit From Supply Chain Snarls
Rivian Automotive (RIVN) – Get Rivian Automotive, Inc. Class A Report shares fell sharply in pre-market trading after the upstart EV maker warned that supply chain issues would halve its 2022 production forecasts following a wider-than-expected fourth quarter loss of $2.5 billion.
Rivian, which is hoping to ramp-up production in the coming years to challenge established rivals such as Tesla in the global EV market, has only produced 2,425 cars since it began production, and will roll out 25,000 units this year. Amazon (AMZN) – Get Amazon.com, Inc. Report-backed Rivian will also remain deeply in the red for the whole of 2022, the company said, even as it works to fulfill 83,000 pre-orders from customers in the U.S. and Canada.
“As we continue to ramp up our manufacturing facility, manage supply chain challenges, face continued inflationary pressures and minimize price increases to customers in the near term, we expect to recognize negative gross margins throughout 2022,”
Rivian shares were marked 11.3% lower in pre-market trading to indicate an opening bell price of $36.50 each. The stock has shed more than $78.6 billion in market value since its November 2021 peak.
