My top 10 things to watch Thursday, May 4
1. In a widely expected move, the Federal Reserve on Wednesday raised interest rates by 25 basis points — the 10th rate increase in just over a year. Fed Chair Jerome Powell indicated the central bank may pause rate hikes going forward, but did not suggest it would begin cutting anytime soon. The Fed must see weakness in wages to consider pulling back.
2. Regional bank stocks are under pressure, with PacWest Bancorp (PACWP) in focus. Shares of the California lender are down 39% in premarket trading, at just under $4 apiece, and it is reportedly considering a sale. “Leaving rates this high is going to continue this stress,” DoubleLine CEO Jeffrey Gundlach told CNBC. “I believe with a very high degree of probability there’s going to be further regional bank failures.”
3. The debt-ceiling debacle continues, with the U.S. hurtling towards a June 1 deadline by which it could default on its debt obligations. The 2011 debt standoff offers some lessons for investors.
4. Oil prices fell to their lowest level since Dec. 2021 on concerns over demand and an uneven economic recovery in China, before edging up Thursday. West Texas Intermediate crude — the U.S. oil benchmark — slid nearly 11% over the past three sessions and was flat in morning trading, at around $68 a barrel.
5. Club holding Apple (AAPL) is set to report quarterly results after the closing bell Thursday, with analysts predicting the iPhone maker will announce $90 billion in share buybacks and dividends. We also got a potential readthrough from Club name Qualcomm (QCOM) Wednesday when the chipmaker announced a weaker-than-expected forecast for handsets on the back of slower demand in China.
6. A slate of banks on Thursday lower their price targets on Estee Lauder (EL) after shares of the Club holding plunged more than 20% Wednesday on weak forward guidance. Wells Fargo reduces its price target on the prestige beauty name to $225 per share, from $290, while Citi drops its target to $240 a share, from $295.
7. Mizuho lowers its price target on Club stock Emerson Electric (EMR) to $90 a share, from $103, and maintains a neutral rating, noting moderating demand in the discrete manufacturing market. Emerson on Wednesday delivered a solid fiscal second quarter, while raising its full-year outlook.
8. Citi says Yum! Brands‘ (YUM) post-earnings selloff is a buying opportunity, with the stock closing down nearly 4% on Wednesday. The firm raises its price target on YUM to $172 a share, from $170, while reiterating a buy rating on the stock.
9. Club holding Costco Wholesale‘s (COST) same-store sales for April rose 1.4%, compared with a 1.1% decline in March, the retailer reported Wednesday. Truist on Thursday lowers its price target on COST to $568 a share, from $571, but maintains a buy rating on the stock for its “extreme value proposition.”
10. Kellogg (K) delivers better-than expected first-quarter results Thursday, with adjusted earnings-per-share coming in at $1.10, compared with analysts’ forecasts for $1 a share. The food manufacturing company also raises its adjusted-basis operating profit growth to be in a range of more than 8% to more than 10%.
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