MARKET WRAPS

Watch For:

Durable Goods for April; EIA Weekly Petroleum Status Report; Bank of Montreal results

Opening Call:

Stock futures were largely flat Wednesday, as investors awaited the release of the minutes from the latest Federal Reserve meeting for a deeper look at the central bank's plans for tightening monetary policy.

The minutes will be out at 2 p.m. ET and are expected to provide more signals for investors about the outlooks of policy makers on the economy and inflation. Durable goods orders for April will be available at 8:30 a.m. ET.

"Given recent commentary from various Fed officials it could be argued that these minutes are probably a little bit stale, especially given the recent deterioration in some of the recent economic data, and the fact that we look set to get two more 50bps rate moves between now and September," said Michael Hewson, an analyst at broker CMC Markets.

Hewson said the discussion from the Fed over balance sheet reduction likely will be more interesting, especially since the central bank decided to allow $47.5 billion of Treasury securities and mortgage-backed securities to run off every month between June and August, and not a more aggressive $95 billion, which it will do starting in September.

In premarket trading, Snap shares rose 0.6% after plunging 43% Tuesday after the company issued a profit warning.

"Clearly there's been a revaluation of tech valuations. It's impossible to know how far it goes, but some of these are quality businesses and significantly cheaper than they have been trading recently," said Fahad Kamal, chief investment officer at Kleinwort Hambros.

"If you're a long-term investor, that's going to be something of interest."

Nordstrom jumped more than 10% premarket after raising its guidance for full-year revenue growth, while Toll Brothers rose nearly 7% after reporting revenue and profit that beat analysts' expectations.

Nvidia and Williams-Sonoma and Express are scheduled to report earnings on Wednesday.

Overseas, the pan-continental Stoxx Europe 600 declined 0.8% while major benchmarks in Asia ended mixed.

Read: Dow, S&P 500 Head for Worst Start to a Year Since 1970

Read: 'Markets are imploding' Because Fed Isn't Doing its Job, Says Bill Ackman

Economic Insight:

There is a confluence of shocks hitting the global economy that are set to continue to weigh on growth in the short term, said Gita Gopinath, first deputy managing director at the International Monetary Fund.

"The world continues to face headwinds because we have a cost of living crisis...central banks are raising interest rates very sharply...and China is also slowing because of the new waves of Covid-19 and the lockdowns that go along with them," she said during a panel discussion at the World Economic Forum.

This multiple hit to growth is happening at a time when the world is seeing divergent recoveries from the Covid-19 pandemic, with advanced economies seen reaching prepandemic growth trends by 2024 while emerging and developing economies lag behind, she added.

Read more from the IMF's Gita Gopinath at Davos here.

Forex:

The dollar edged higher in Europe after the DXY Dollar Index fell to a four-week low Tuesday, and ING said the potential for further falls is shrinking due to prospects of aggressive Fed rate rises.

"The dollar has found some stabilization after a negative start to the week and should--for now--continue to trade primarily in line with swings in global risk sentiment," said ING. It said focus centers on the Fed minutes for indications on the level of support for multiple 50 basis-point rate rises.

Bonds:

The yield on the benchmark 10-year Treasury note was down to 2.729% from 2.758% Tuesday. It has declined for four of the past five trading sessions.

"The market is pricing the slowdown that will eventually come from the Fed tightening. It also forecasts that inflation in 2023 will slow to much more reasonable levels," said Antonio Cavarero, head of investments at Generali Insurance Asset Management.

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Some investment-grade nonfinancial companies in North America and Europe, Middle East, and Africa could be downgraded to junk status if the economy slows and inflation remains elevated, said Fitch.

It estimates that around 2.5% of such companies in these regions could lose their investment-grade rating, which is however largely consistent with the annual average since 1990.

Also, the amount of debt falling into junk territory would be around 1.2% on a debt-weighted basis, well below the roughly 9% and 11% observed during the pandemic and the global financial crisis of 2008 respectively.

Energy:

Oil and especially gas prices were higher in Europe, as the prospect of tighter supply from Russia continues to dominate sentiment in the energy markets.

The possibility of European sanctions on Russian oil still remains, although whether this occurs in the near term is likely to be debated.

Meantime, Saudi Arabia's foreign minister on Tuesday indicated it was unlikely to step up oil production in the near term. Speaking at the World Economic Forum he said: "As far as we are aware, there is no shortfall of oil."

Metals:

Metals were lower in Europe with demand for industrial metals still weak, especially in Asia with a new wave of Covid-19 in Wuxi--one of China's steel hubs--further dampening consumption, while the bleaker economic outlook hit gold, as investors moved back into the dollar and Treasurys.

TODAY'S TOP HEADLINES

Pfizer to Sell Vaccines, Drugs at Low Prices to Poorer Countries

Pfizer Inc. will sell nearly two dozen of its patent-protected drugs and vaccines at not-for-profit prices to some of the world's poorest countries.

Under the program, Pfizer will begin shipping the medicines first to Ghana, Malawi, Rwanda, Senegal and Uganda before the end of this year, Chief Executive Albert Bourla said in an interview.

CVS Will Stop Filling Controlled-Substance Prescriptions for Cerebral, Done

CVS Health Corp. will stop filling prescriptions for controlled substances ordered by clinicians working for Cerebral Inc. and Done Health starting Thursday, a move that will impact thousands of patients.

Cerebral disclosed the change in a statement to The Wall Street Journal. The pharmacy plans to block Done prescriptions for controlled substances as well, according to a person familiar with the matter.

McDonald's Poised to Retain Both Seats in Proxy Fight With Carl Icahn

McDonald's Corp. is poised to prevail in a proxy fight with activist Carl Icahn, who challenged the fast-food chain over its suppliers' treatment of pregnant pigs, people familiar with the matter said.

Early vote tallies show McDonald's far ahead of Mr. Icahn, who had nominated two directors to the company's board, the people said. Votes will continue coming in until the end of McDonald's shareholder meeting Thursday morning and could still move around, though it is unlikely to change the result, they said.

Wendy's Largest Shareholder Trian Explores Burger-Chain Deal

Trian Fund Management LP, Wendy's Co.'s largest shareholder, said it is exploring an acquisition or another potential deal for the fast-food restaurant, as it works to improve sales and deals with rising costs.

The activist hedge fund said it advised the fast-food restaurant chain's board that it intends to explore and evaluate a potential transaction, alone or with third parties, to enhance shareholder value, according to a securities filing late Tuesday. A potential transaction could include an acquisition, merger or other deal that would result in control of Wendy's, according to the filing.

Starbucks to Sell Juice Brand as Coffee Chain Focuses On Its Stores

Starbucks Corp. is selling its cold-pressed juice brand, as the company focuses on its coffee-drink business and improving its stores and relations with its cafe workers under interim Chief Executive Howard Schultz.

Fresh-food maker Bolthouse Farms Inc. said it agreed to acquire Starbucks's Evolution Fresh line of juices, which currently are sold in Starbucks cafes and supermarkets. Terms of the deal, which Bolthouse said is expected to close later this year, weren't disclosed. Starbucks said the financial impacts of the deal weren't expected to be material.

Intuit Shares Gain as Earnings and Outlook Top Street Estimates

Intuit shares are trading higher after the tax and accounting software company posted better-than-expected results for its fiscal third quarter and raised its financial forecasts for the year ending in July.

The strong results for the three months ended April 30 come despite a range of economic pressures weighing on the company's millions of small business customers. Intuit (ticker: INTU) posted revenue of $5.6 billion, up 35%, and ahead of the company's guidance range of 32% to 33% growth. Wall Street consensus estimates had called for $5.5 billion in revenue.

Lyft to Pause Some Hiring and Trim Budgets, Citing Economic Slowdown

Lyft Inc. will slow hiring, reduce the budgets of some of its departments and grant new stock options to some employees to make up for its eroding share price, joining rival Uber Technologies Inc. in outlining cuts as investor optimism cools on tech stocks.

President John Zimmer announced the measures Tuesday in a memo to staff.

KKR Closes New $1.1 Billion Asia Credit Fund

KKR & Co. said Wednesday that it has closed a new credit fund focused on the Asia market, as the New York-listed investment firm continues to grow in the region, where economic growth has proved particularly resilient since the pandemic started.

The new fund, called KKR Asia Credit Opportunities Fund, received financing from new and existing investors, including public and corporate pensions, sovereign-wealth funds, commercial banks, insurance companies, asset managers and private investment groups, and family offices, KKR said in a statement.

Treasury to Block U.S. Investors From Receiving Russian Debt Payments

WASHINGTON-The Treasury Department moved to cut off Russia's ability to make payments on its dollar-denominated sovereign debt, putting Russia on a path toward defaulting on its foreign debts this summer and deepening the country's economic isolation after its invasion of Ukraine.

Since imposing a raft of sanctions on Russia this year, the U.S. had maintained an exemption allowing U.S. banks and investors to process and receive payments on existing Russian bonds. The Treasury said Tuesday it would allow the exemption to expire on Wednesday.

German Consumer Sentiment Expected to Improve Slightly in June, But at Low Level

Consumer confidence in Germany is set for a small rise in June, although remaining depressed after falling to a historic low in the previous month, as inflation and Russia's war in Ukraine weigh heavily on households' sentiment.

Market research group GfK's forward-looking consumer sentiment index forecasts confidence rising to minus 26.0 in June from minus 26.6 in May. This figure is in line with the forecast of economists polled by The Wall Street Journal.

RBNZ Raises Cash Rate, Forecasts Higher Peak

WELLINGTON, New Zealand-The Reserve Bank of New Zealand raised its benchmark interest rate by 50 basis points for a second consecutive meeting and forecast a higher peak for interest rates as central banks globally try to stifle inflation.

The RBNZ's rate increase Wednesday lifted the cash rate to 2.0% from 1.5% and followed an increase of the same size in April.

North Korea Fires Three Missiles After Biden Ends Asia Trip

TOKYO-North Korea fired a suspected intercontinental ballistic missile early Wednesday that flew only briefly before landing in the sea east of the Korean Peninsula, South Korea's military said.

The missile was one of three fired by North Korea hours after President Biden flew home from Asia following talks with the leaders of Japan and South Korea on deterring Pyongyang's missile and nuclear threat.

Gov. Brian Kemp Defeats Trump-Backed David Perdue in Georgia Primary

ATLANTA-Incumbent Brian Kemp won Georgia's Republican primary for governor by a wide margin Tuesday, easily dispatching a challenge by former Sen. David Perdue.

Texas Shooter Kills at Least 19 Children and Two Adults in Elementary School

UVALDE, Texas-An 18-year old man opened fire in an elementary school here Tuesday, killing at least 19 students and two adults, including a teacher, before he was killed by law enforcement, according to the Texas Department of Public Safety.

Police identified the gunman as Salvador Ramos, a resident of Uvalde, where the school is located. Uvalde, a city of around 16,000, is about 80 miles west of San Antonio.

Write to paul.larkins@dowjones.com TODAY IN CANADA

Earnings:

Bank of Montreal 2Q

Bank of Nova Scotia 2Q

Champion Iron 4Q

Economic Indicators (ET):

0830 1Q Quarterly financial statistics for enterprises

Stocks to Watch:

Enthusiast Gaming Issues Statement Addressing 'Misleading, Baseless' Letter From Activist Greywood Investments

Enthusiast Gaming: Well Positioned to Continue Delivering Rapid Top Line Growth, While Increasing Gross Profit at a Significantly Faster Rate Following Strong 1Q Results That Beat Consensus Estimates

Enthusiast Gaming: Greywood Is an Investment Vehicle That Lacks Transparency and Seeks to Take Full Control of Enthusiast Gaming's Bd Without Paying Hldrs a Control Premium

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Karora Resources Announces Agreement to Acquire the Lakewood Gold Mill and 'Significantly De-Risk Growth Plan'; Karora Resources to Buy Facility for A$70M Cash and A$10M of Stock

Expected Major Events for Wednesday

05:00/JPN: Mar Indexes of Business Conditions - Revision

06:00/GER: 1Q GDP - Detailed breakdown

06:00/GER: Jun GfK consumer climate survey

06:45/FRA: May Consumer confidence survey

08:59/JPN: May Monthly Economic Report

11:00/US: 05/20 MBA Weekly Mortgage Applications Survey

12:30/CAN: 1Q Quarterly financial statistics for enterprises

12:30/US: Apr Advance Report on Durable Goods

14:30/US: 05/20 EIA Weekly Petroleum Status Report

23:01/UK: CBI Service Sector Survey

23:01/UK: Apr UK monthly automotive manufacturing figures

23:50/JPN: Apr Services Producer Price Index

All times in GMT. Powered by Kantar Media and Dow Jones.

Expected Earnings for Wednesday

Amerco Inc (UHAL) is expected to report for 4Q.

Bank of Montreal (BMO,BMO.T) is expected to report $3.14 for 2Q.

Box Inc (BOX) is expected to report $-0.05 for 1Q.

Bristow Group Inc (VTOL) is expected to report for 4Q.

Change Healthcare Inc (CHNG) is expected to report for 4Q.

Columbus McKinnon Corp (CMCO) is expected to report $0.55 for 4Q.

DXC Technology Co (DXC) is expected to report $0.36 for 4Q.

Dick's Sporting Goods Inc (DKS) is expected to report $2.46 for 1Q.

Dycom Industries Inc (DY) is expected to report $0.11 for 1Q.

Encision (ECIA) is expected to report for 4Q.

EnerSys (ENS) is expected to report $1.16 for 4Q.

Express Inc (EXPR) is expected to report $-0.10 for 1Q.

Exscientia PLC - ADR (EXAI) is expected to report for 1Q.

Guess Inc (GES) is expected to report $0.28 for 1Q.

Jack In The Box (JACK) is expected to report $1.39 for 2Q.

Modine Manufacturing Co (MOD) is expected to report $0.50 for 4Q.

NVIDIA Corp (NVDA) is expected to report $0.62 for 1Q.

Nutanix Inc (NTNX) is expected to report $-0.81 for 3Q.

Photronics (PLAB) is expected to report $0.35 for 2Q.

Portage Biotech Inc (PBT.U-L,PRTG) is expected to report for 1Q.

Raymond James Financial (RJF) is expected to report.

Rex American (REX) is expected to report for 1Q.

SOPerior Fertilizer Corp (SOP.H.V) is expected to report for 1Q.

Smart Share Global Ltd - ADR (EM) is expected to report for 1Q.

Snowflake Inc (SNOW) is expected to report for 1Q.

Splunk Inc (SPLK) is expected to report $-2.39 for 1Q.

TVI Pacific Inc (TVI.V,TVIPF) is expected to report for 1Q.

Torrid Holdings Inc (CURV) is expected to report for 1Q.

Universal Corp (UVV) is expected to report for 4Q.

ViaSat Inc (VSAT) is expected to report $-0.07 for 4Q.

Williams-Sonoma Inc (WSM) is expected to report $3.00 for 1Q.

Zuora Inc (ZUO) is expected to report $-0.16 for 1Q.

e.l.f. Beauty Inc (ELF) is expected to report $0.01 for 4Q.

ePlus Inc (PLUS) is expected to report $0.69 for 4Q.

Powered by Kantar Media and Dow Jones.

ANALYST RATINGS ACTIONS

CynergisTek Cut to Hold From Buy by Craig-Hallum

INmune Bio Cut to Neutral From Buy by B. Riley Securities

Lattice Semiconductor Raised to Positive From Neutral by Susquehanna

Marqeta Raised to Overweight From Equal-Weight by Morgan Stanley

Nautilus Cut to Hold From Buy by Craig-Hallum

Northwest Natural Raised to Neutral From Underperform by B of A Securities

Otis Worldwide Raised to Overweight From Equal-Weight by Barclays

Roblox Cut to Neutral From Overweight by Atlantic Equities

Snowflake Raised to Buy From Neutral by Rosenblatt

Switch Cut to Hold From Buy by Berenberg

This article is a text version of a Wall Street Journal newsletter published earlier today.

(END) Dow Jones Newswires

May 25, 2022 05:40 ET (09:40 GMT)

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