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Investing.com — Wall Street looks set to continue the rebound from Monday’s sharp selloff, helped by the Bank of Japan ruling out further rate hikes during this period of turbulence. The global earnings season has continued, and the focus Wednesday is likely to be on numbers from entertainment giant Walt Disney .
1. Futures continue to rebound after rout
U.S. stock futures rose Wednesday, continuing the gains of the previous session after Wall Street snapped three days of declines.
By 04:15 ET (08:15 GMT), the contract was 242 points, or 0.6%, higher, climbed 40 points, or 0.8%, and rose by 180 points, or 1%.
The Wall Street indices rebounded on Tuesday after a brutal start to the new week, with the blue chip closing just under 300 points, or 0.8%, higher, while both the broad-based and the tech-heavy gained 1%.
On Monday, the DJIA and the S&P 500 posted their worst session since 2022, fueled by worries that the U.S. economy was heading into recession.
There are more earnings to digest Wednesday, including entertainment giant Walt Disney (NYSE:) [see below], CVS Health (NYSE:) and Shopify (NYSE:).
Additionally, Super Micro Computer (NASDAQ:) traded sharply lower premarket after the information technology company announced disappointing fiscal fourth-quarter earnings, as well as a 10-for-1 stock split, set to begin trading on a split-adjusted basis at the start of October.
Airbnb (NASDAQ:) also slumped premarket after the house rental company forecast third-quarter revenue below estimates and warned of shorter booking windows, suggesting travelers were waiting until the last minute to book due to economic uncertainty.
2. Disney’s Q3 earnings due
Walt Disney is set to release its fiscal third-quarter earnings before the open Wednesday, the latest corporate giant to offer up evidence of how financially-strapped consumers are coping.
Disney has been grappling with challenges that include a declining linear TV business, slower growth in its parks business, and profitability hurdles in streaming.
CEO Bob Iger was brought back in 2022 to turn the company around, and has adjusted its reporting structure into three core business segments: Disney Entertainment, which includes its entire media and streaming portfolio; Experiences, which encompasses the parks business; and Sports, which includes ESPN networks and ESPN+.
Revenue from the Experiences division is expected to continue to show robust momentum, particularly in the international segments, but its media and entertainment segment could face significant challenges.
3. BOJ attempts to soothe market nerves
It was the to the rescue Wednesday, helping soothe global market nerves in the wake of Monday’s equities rout.
BOJ’s deputy governor, Shinichi Uchida, said on Wednesday the central bank won’t hike interest rates when markets are unstable, playing down the chance of a near-term hike in borrowing costs.
“As we’re seeing sharp volatility in domestic and overseas financial markets, it’s necessary to maintain current levels of monetary easing for the time being,” Uchida said in a speech to business leaders in Japan.
The BOJ hiked rates by 15 basis points last week and flagged more tightening ahead. This, as well as weak U.S. labor data that stoked fears of recession in the world’s largest economy, helped the unravelling of the yen carry trade which contributed to a global market rout.
Citi analysts said that U.S. markets were at the “epicenter” of this market rout, especially after disappointing readings on the jobs market, but the BOJ also remained a key point of uncertainty, especially over whether the central bank will hike rates further beyond its July hike.
Any more hikes are likely to negatively impact the market, Citi analysts said, “affirming the view of a rapid hawkish pivot by the BOJ.”
4. Harris chooses Walz as her running mate
Democratic U.S. presidential candidate Kamala Harris has chosen Minnesota Governor Tim Walz as her 2024 vice presidential running mate, picking a former member of the military and teacher from the American heartland to help win over rural, white voters.
Walz was elected to a Republican-leaning district in the U.S. House of Representatives in 2006 and served 12 years before being elected governor of Minnesota in 2018 and again in 2022.
He has pushed a progressive agenda that includes free school meals, goals for tackling climate change, tax cuts for the middle class and expanded paid leave for workers.
Walz beat out Pennsylvania’s popular governor, Josh Shapiro, for the role, who subsequently offered a strong endorsement of Walz at a rally in his home state on Tuesday evening.
5. Global corporate earnings continue to roll in
There have also been some significant corporate results away from Wall Street as the global earnings season continues.
Novo Nordisk (NYSE:) stock fell 5% after the Danish pharmaceutical company reported a smaller than expected net profit for the second quarter and revised its operating profit forecast downward.
This disappointment came despite sales of its popular weight loss drug Wegovy jumping 55% in the second quarter of 2024, compared with the same period in 2023.
Novo Nordisk is facing increasing competition in the weight loss space, both from smaller companies and from pharmaceutical giants such as Roche, which last month shared promising early-stage trial data from its own obesity drug candidate.
Puma (ETR:) stock slumped over 10% after the German sportswear giant narrowed its outlook for full-year core profit, citing currency headwinds, higher freight costs and continued muted consumer sentiment.
Puma has been grappling with weaker consumer demand and excess stocks at the sportswear retailers through which it makes most of its sales, on top of severe competition from bigger rivals like Adidas (OTC:) and Nike (NYSE:).
In Asia, Sony (NYSE:) posted a 10% rise in operating profit in the April-June quarter, and hiked its full-year profit forecast by 3%, boosted by its industry-leading image sensor business.
The impact from foreign exchange and higher sales helped profit at the image sensor business, a major supplier for smartphone makers, roughly triple.
SoftBank Group (TYO:) reported an unexpected loss in the June quarter despite increased technology valuations on optimism over artificial intelligence, although the tech investment giant still announced a 500 billion yen ($3.4 billion) share buyback.
The buyback comes amid growing investor pressure on the tech giant to create value for shareholders, with its shares trading at a significant discount to the total value of the firm’s holdings.
