HIGHLIGHTS
Equities climb as the final week of August begins.
Technology initial public offerings (IPOs) regain momentum.
China Evergrande Group experiences a sharp drop in its share price upon resuming trading.
Here are the critical news pieces that investors require to commence their trading day:
1. New week, new data
To initiate the final week of August, stock futures saw a slight uptick on Monday. Dow Jones Industrial Average futures showed an increase of 83 points, equivalent to approximately 0.2%, while S&P 500 futures and Nasdaq-100 futures exhibited gains of 0.2% and 0.3%, respectively. Coming after a session of gains, major indexes rose on Friday following Federal Reserve Chair Jerome Powell’s speech in Jackson Hole, Wyoming. Powell’s speech noted that the central bank has observed signs of progress, yet he cautioned about persistent “too high” inflation and the Fed’s readiness to implement further rate increases if deemed necessary. Throughout this week, investors will closely monitor upcoming economic data that could provide insights into the Fed’s upcoming actions, with the monthly jobs report scheduled for release on Friday. Stay updated with real-time market information.
2. Earnings ahead
As earnings season draws to a close, a handful of companies are yet to report. While a majority of companies have already disclosed their quarterly earnings, investors are still awaiting reports from the final group of significant retailers and a few tech entities. The upcoming week is highlighted by earnings releases from Salesforce, Broadcom, Best Buy, and Lululemon.
Here’s a rundown of the notable earnings announcements:
Tuesday: Best Buy and NIO (before the market opens); HP (after the market closes)
Wednesday: Brown-Forman (before the market opens); Salesforce, Crowdstrike, Okta (after the market closes)
Thursday: Dollar General (before the market opens); Broadcom, Lululemon Athletica (after the market closes)
3. Going public
Tech investors have reason to celebrate as the hiatus on initial public offerings (IPOs) in the sector comes to an end. The absence of major IPOs for venture-backed tech firms has spanned 20 months, leaving many speculating about which prominent name would take the plunge into the public market first. The long-awaited answer arrived on Friday with grocery delivery startup Instacart and data and marketing automation company Klaviyo both submitting filings for their stock market debuts. Notably, earlier in the previous week, Arm, the chip designer under the ownership of Japan’s SoftBank, made a filing for a listing on the Nasdaq. According to CNBC’s Ari Levy, the success of these three IPOs will serve as a litmus test for investor sentiment. Should these launches prove fruitful, they might pave the way for an influx of companies to follow suit by going public.
4. Not so grand
China Evergrande Group, recognized as the most heavily indebted property developer globally, experienced a substantial decline in its share price on Monday, marking its return to trading after a hiatus that spanned from March 21, 2022. The stock’s opening saw a plunge of up to 87%. The beleaguered company initiated a Chapter 15 bankruptcy filing in the United States in July, which grants protection to its U.S. assets from creditors as it navigates a process of restructuring. This strategic step followed Evergrande’s default in 2021 and its announcement of an offshore debt restructuring initiative in March. As the developer grapples with challenges in completing projects and meeting obligations to suppliers and lenders, its struggles have become pronounced.
5. The meme goes on
Meme stocks continue to follow their expected pattern. In this particular scenario, the widely recognized meme stock Bed Bath & Beyond has garnered significant trading activity for its shares, even though the value of the stock is likely to dwindle to insignificance within the next few weeks. The retailer specializing in home goods initiated a Chapter 11 bankruptcy filing in late April and has embarked on a process of closing its physical stores. While Overstock acquired its intellectual property through an auction, the company cautioned investors via an SEC filing that participating in the trading of its stock during the ongoing Chapter 11 proceedings carries “highly speculative” elements and presents substantial risks. To put it differently, stockholders are improbable to experience notable gains, if any at all. In the absence of a turnaround, the company’s market capitalization of $152.25 million essentially translates to negligible value for common shareholders. Precedence is given to several tiers of bondholders in the hierarchy of reimbursements, while shareholders do not possess the authority to vote on the restructuring plan.
