“Morning Market Insights: Moody’s Rating Changes, UPS Forecast Adjustment, Palantir’s Share Buyback, Disney’s AI Task Force, and Economic Data”
1. Moody’s Alters Bank Ratings and Warns of Downgrades
Moody’s has taken action on the credit ratings of various U.S. banks, with a focus on smaller and mid-sized institutions. The agency has signaled the possibility of downgrades for larger banks due to potential credit strength challenges stemming from weaker profits. Shares of New York Mellon (BK), US Bancorp (USB), Truist Financial (TFC), and State Street (STT) have been affected, with the latter two placed under review for potential downgrades.
2. UPS Revises Forecast Following Labor Contract
United Parcel Service (UPS) has revised its 2023 revenue and operating margin forecast downward. The company’s recently-negotiated labor contract and decreased ecommerce demand have impacted its performance outlook. UPS now expects 2023 revenues of approximately $93 billion, down from the previous forecast of $97 billion. Similarly, the projected operating margin has been adjusted to around 11.8%, down from the prior forecast of 12.8%. Pre-market trading witnessed a 6% drop in UPS shares.
3. Palantir Updates Guidance and Initiates Share Buyback Program
Palantir Technologies (PLTR) has raised its full-year guidance and reported second-quarter revenue of $533 million, surpassing its guidance and meeting analyst expectations. Additionally, the data analytics company has introduced a $1 billion stock repurchase initiative, marking its first buyback program since going public in 2020. Palantir shares remained stable in pre-market trading.
4. Disney Establishes AI Task Force Amid Labor Strikes
The Walt Disney Co. (DIS) has formed a task force dedicated to exploring opportunities for integrating artificial intelligence (AI) across its entertainment businesses. This move comes amid ongoing labor strikes involving Hollywood writers and actors. The task force, initiated prior to the strike, aims to develop in-house AI applications and foster partnerships with startups. Disney shares experienced minimal change in pre-market trading.
5. Anticipated Decrease in U.S. Trade Deficit
The U.S. trade deficit is predicted to decrease from $68.98 billion in the previous month to $65 billion in June, according to data set to be released at 8:30 a.m. ET. Subsequently, at 10 a.m. ET, data on U.S. wholesale inventories is expected to reveal a 0.3% decline for June, following no change in May. Additionally, market participants will gain insights from speeches by Philadelphia Fed President Patrick Harker and Richmond Fed President Thomas Barkin during the morning.
Stay informed with these key developments as you prepare for the day’s trading activities.