A closely watched inflation indicator is due to be released today by the Federal Reserve, which could show price pressures are gradually easing and trigger the central bank to cut interest rates this year. Dell Technologies (DELL) shares are falling in premarket trading as lower margins and operating income offset profits that beat Wall Street expectations. Clothing and accessories retailer Gap (GPS) shares are surging after it raised its outlook and reported better-than-expected quarterly earnings. Skydance Media reportedly submitted an attractive proposal to merge with Paramount Global (PARA). MongoDB (MDB) shares are tumbling after it cut its full-year adjusted earnings and revenue outlook. U.S. stock futures are falling, extending Thursday’s decline. Here’s what investors need to know today.
1. The Fed’s preferred inflation measure is likely to show slowing growth
The Federal Reserve’s favorite inflation gauge, due to be released this morning, will show that upward price pressures are gradually easing and could signal the central bank may cut its key interest rate later this year. Consumer prices, as measured by the Bureau of Economic Analysis’ personal consumption expenditures (PCE) index, are expected to have risen 0.3% in April from March, bringing the year-over-year increase to 2.7%, according to a survey of forecasters. Dow Jones Newswires and The Wall Street Journal. The more important “core” inflation measure (which excludes volatile food and energy prices) is forecast to rise 0.2%, slowing from 0.3% in March. Since last July, Fed officials have kept the federal funds rate at its highest level since 2001 as a measure to keep inflation in check. They are waiting for signs that price growth is settling at an annual rate of 2% before lowering the federal funds rate.
2. Dell slumps despite better-than-expected first-quarter profits
Dell Technologies (DELL) shares fell about 15% in premarket trading after the PC maker’s double-digit drop in operating profit and tighter margins offset first-quarter sales and profits that beat analysts’ expectations due to surging demand for artificial intelligence (AI) servers. Dell’s chief operating officer, Jeff Clark, said the backlog of AI servers is “largely from Nvidia.” Supply of the AI ​​darling Nvidia (NVDA) has not kept up with surging demand in the AI ​​era. Dell’s AI server revenue more than doubled from the previous quarter to $1.7 billion, Clark said.
3. Gap surges as retailers’ brightening outlook signals successful recovery
Shares of Gap (GPS) soared more than 23% in premarket trading after the clothing and accessories retailer reported a better-than-expected quarterly profit and raised its full-year outlook in a sign that its turnaround plan is working. The turnaround, which saw same-store sales increase 3% year over year, was driven by positive growth from each of its four brands: Old Navy, Gap, Banana Republic and Athleta. Looking ahead, the company raised its full-year outlook and said it now expects net sales to increase slightly after previously expecting full-year sales to be roughly flat.
4. Skydance Media reportedly steps up bid for Paramount Global
Skydance Media has submitted an attractive proposal to merge with Paramount Global (PARA), which Paramount Global’s directors are expected to consider in the near future. The Wall Street Journal It’s reportedly the latest development in a months-long battle over the entertainment conglomerate. Skydance’s previous bid drew backlash from shareholders who said it favored Paramount’s controlling shareholder Shari Redstone over the broader investor base, leading to the resignation of CEO Bob Bakish. Another bidder is in the wings as Paramount struggles to make money from streaming after the collapse of the cable TV industry. Sony Pictures and private equity firm Apollo Global Management said earlier this month they would buy Paramount for $26 billion in cash. Paramount shares were up about 1% in premarket trading.
5. MongoDB falls sharply as software maker cuts full-year outlook
Shares of database software maker MongoDB (MDB) plummeted more than 24% in premarket trading after the company lowered its full-year outlook and CEO Dev Iticheria said the year is “off to a slower than expected start.” MongoDB now expects adjusted EPS to be between $2.15 and $2.30 on revenue of $1.88 billion to $1.9 billion in 2025. Three months ago, the company forecast adjusted EPS of $2.27 to $2.49 on revenue of $1.9 billion to $1.93 billion in 2025.
