Big banks are reporting earnings to kick off the second-quarter earnings season. Russell 2000 futures are trending higher after the small-cap index surged Thursday amid a rotation out of large tech stocks. Shares of electric vehicle maker Tesla (TSLA) are extending losses in premarket trading after reports it plans to postpone its robotaxi launch. The European Union said Elon Musk-owned social media network X violated online content rules. Danish drugmaker Novo Nordisk (NVO) is rising after a University of Oxford study showed its diabetes drug Ozempic is linked to lower rates of dementia and various mental disorders. U.S. stock futures were little changed as slowing inflation readings on Thursday raised hopes of a Fed rate cut, prompting a rotation into small-cap stocks amid sharp declines in the Nasdaq and S&P 500. Here’s what investors need to know today.
1. JPMorgan reports better-than-expected results; Wells Fargo’s net interest income falls
The second-quarter earnings season for the major US banks has arrived, with JPMorgan Chase (JPM) and Wells Fargo (WFC) the first to report their results. JPMorgan beat analyst expectations with managed revenue of $50.99 billion and earnings per share (EPS) of $6.12. Still, the company’s shares were down 1% in premarket trading. Meanwhile, Wells Fargo shares plunged nearly 6% after the bank said net interest income fell 9.4% to $11.9 billion. JPMorgan Chief Executive Jamie Dimon, whose comments investors watch closely, warned that despite progress toward containing inflation, inflation and interest rates “may remain higher than markets expect. We still face multiple inflationary drivers, including large budget deficits, infrastructure needs, trade restructuring and global rearmament.”
2. The Russell 2000 rises as the rotation out of large tech stocks continues
Russell 2000 futures are trending higher after the underlying index rose 3.6% on Thursday, sharply outperforming the S&P 500 and Nasdaq Composite. The small-cap index’s gains came as investors shifted money from large tech stocks to companies seen as a bigger beneficiary of a Federal Reserve interest rate cut, raising the likelihood of a rate cut after the June inflation report showed a surprise drop in consumer prices last month. Both the Nasdaq and S&P 500 futures were little changed.
3. Tesla shares fall further as robotaxi delays drag down EV makers
Tesla ( TSLA ) shares fell 8.4%, the biggest drop among S&P 500 components, on Thursday and were down more than 1% in premarket trading after reports that the electric car maker will delay the unveiling of its robotaxi vehicles by two months. The company had previously hinted that it would hold an event to unveil its self-driving cars on August 8. Bloomberg The launch has reportedly been postponed until October. Tesla shares on Thursday returned to positive territory for the year with an 11th consecutive session of gains after reporting better-than-expected second-quarter deliveries, but yesterday’s selloff put the company back in negative territory for 2024.
4. EU says Elon Musk’s X violates online content rules
The European Union has issued a formal warning to Elon Musk-owned social media network X (formerly Twitter) for breaching online content rules. The European Commission, the EU’s executive body, accused X, which features a blue checkmark that users can purchase to convince others that content can be trusted, of violating the Digital Services Act (DSA). “The fact that anyone can register and obtain such ‘verified’ status has a negative impact on users’ ability to make free and informed decisions about the authenticity of accounts and the content they interact with,” the Commission said.
5. Novo Nordisk shares rise after Ozempic found to reduce dementia rates
Danish drugmaker Novo Nordisk’s (NVO) American Depositary Receipts (ADRs) rose more than 1% in premarket trading after the release of a University of Oxford study showing that the company’s diabetes drug Ozempic is linked to reduced incidence of dementia and various psychiatric disorders. The researchers Lancetof Clinical Medicine According to the paper, patients who took Ozempic for one year had a 48% lower risk of dementia compared to patients who took the older drug sitagliptin. He noted that the study is the latest to show that semaglutide, the active ingredient in both Novo’s Ozempic and obesity drug Wegovy, can treat more than just diabetes and weight loss. Bloomberg.
