Futures rise after stocks retreat, Micron’s upbeat outlook – what’s moving markets

Investing.com — U.S. stock markets slump as a December rally pauses, while Treasury yields dip as traders stick to bets that the Federal Reserve will roll out interest rate cuts early next year. Elsewhere, Micron (NASDAQ:) delivers a stronger-than-anticipated current-quarter revenue outlook, fueling a premarket jump in shares in the closely-watched memory chipmaker.

1. Futures higher after stocks slip

U.S. stock futures were higher on Thursday, pointing to a rebound in equities following a day of losses on Wall Street in the previous session.

By 04:57 ET (09:57 GMT), the contract had added 192 points or 0.5%, had risen by 27 points or 0.6%, and had gained 124 points or 0.7%.

The main averages retreated in an afternoon sell-off on Wednesday, with the tech-heavy snapping a nine-day winning streak and the benchmark slipping to its biggest one-day fall in three months. Analysts said a recent rally in stocks, which had been charged by investor hopes for Federal Reserve interest rate reductions early next year, hit resistance levels.

“This could be due to an overbought market as rate cuts optimism ran out of steam,” said Tina Teng, market analysts at CMC Markets, in a note.

Adding to the downbeat sentiment was a disappointing annual forecast from logistics group FedEx (NYSE:). Shares in the parcel deliverer, which is often seen as a bellwether for the state of the U.S. economy, slumped by more than 12%.

2. U.S. Treasury yields fall

The nose-dive on Wall Street came despite a drop in U.S. Treasury yields, which touched five-month lows on Wednesday on enthusiasm for Fed rate cuts.

Bets that the Fed will move to slash rates from over two-decade highs in the spring have grown since last week, when the central bank hinted that it may soon embark on a dovish policy pivot. According to Investing.com’s Fed Rate Monitor Tool, there is a more than 68% chance that the Fed will lower borrowing costs by 25 basis points as early as March.

These expectations were bolstered by Philadelphia Fed President Patrick Harker, who told a local radio station that officials “don’t need to raise rates anymore.” Harker added that the outlook for inflation was improving after a post-pandemic period of red-hot price growth.

His statements suggested that loosening in policy may be coming in 2024, although some members of the rate-setting Federal Open Market Committee have attempted to temper such predictions in recent days.

3. Micron’s upbeat forecast

Shares in Micron climbed in premarket trading in New York on Thursday after the memory chipmaker unveiled a better-than-expected second-quarter revenue forecast.

Idaho-based Micron said that now sees revenue at $5.3 billion, plus or minus $200 million, during the period, topping Bloomberg consensus estimates of $4.99B.

In prepared remarks, Chief Executive Sanjay Mehrotra said the outlook was boosted by “a strong inflection in industry pricing” that will allow the company “to benefit from higher prices” next year and into 2025.

Aiding Micron has been soaring hype around generative artificial intelligence. The trend has boosted corporate demand for the firm’s high-bandwidth memory chips that help power the large language models underpinning AI technology.

“We are in the very early stages of a multi-year growth phase catalyzed and driven by generative AI, and this disruptive technology will eventually transform every aspect of business and society,” Mehrotra noted.

4. Paramount, Warner Bros Discovery in early merger talks – reports

Warner Bros Discovery (NASDAQ:) and Paramount Global have discussed a potential tie-up that would bring two of the world’s largest media companies, according to multiple media reports.

Citing people familiar with the matter, reports said that Warner Chief Executive David Zaslav and his counterpart Bob Bakish at Paramount held talks at a lunch in New York this week. The sources warned news outlets that these were early stage discussions and may never materialize.

Axios, which first reported on the talks, said that the companies were considering a deal that would see Warner Bros buy either Paramount Global or its parent National Amusements Inc.

A possible merger was widely viewed as a move by Warner and Paramount to shore up profitability and lower costs during a time of fierce competition from streaming rival Netflix (NASDAQ:).

5. Oil rises amid trade disruption fears

Oil prices edged up on Thursday as concerns remained over global trade disruptions due to tensions in the Middle East.

By 04:58 ET, the futures traded 0.4% higher at $74.50 a barrel, while the contract climbed 0.4% to $79.97 per barrel.

Gains were limited, however, after the Energy Information Administration announced on Wednesday that U.S. crude inventories rose by 2.9 million barrels last week, compared with expectations for a 2.3 million barrel drop. The figures served to exacerbate worries over demand in the world’s largest consumer.

The EIA also said U.S. crude output increased to a record 13.3 million barrels per day last week, up from the prior all-time high of 13.2 million barrels.

Crude prices have surged this week after shipping operators announced plans to avoid the Suez Canal following attacks by the Iran-backed Houthi group on vessels in the Red Sea, potentially impacting oil supplies to the important Asian market.

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