Intel reports surprise profit; ExxonMobil, Chevron ahead – what’s moving markets

Investing.com — U.S. stock futures climb after the Dow snaps its nearly two-week win streak. Elsewhere, U.S. chipmaker Intel returns to a profit in the second quarter as an inventory glut eases, while investors also await earnings from big-name brands like ExxonMobil and Procter & Gamble.

1. Futures point higher

U.S. stock futures edged higher on Friday as investors looked ahead to the release of the Federal Reserve’s preferred inflation gauge and awaited a fresh round of corporate results.

At 05:25 ET (09:25 GMT), the contract rose by 48 points or 0.13%, added 14 points or 0.31%, and climbed by 93 points or 0.60%. All the major indices closed in the red on Thursday, with the , in particular, ending a 13-day winning streak.

The June reading of the personal consumption expenditures () index, a measure of inflation that is closely watched by Fed policymakers, is due out later in the session. Economists predict that the so-called core figure, which removes more volatile items like food and energy, slowed to and .

Corralling inflation has been a central focus of the ‘s recent campaign of interest rate hikes. The central bank resumed the tightening earlier this week, lifting borrowing costs by a further 25 basis points, and signaled that future rate decisions would likely be dependent on the evolution of economic data like core PCE.

On the earnings front, Intel (NASDAQ:) shares jumped in premarket trading after the U.S. semiconductor group said a decline in sales of its key personal computer chips in the second quarter was not as steep as analysts had anticipated (see below).

2. Intel PC chip sales improve

Intel’s inventory glut showed signs of easing in the second quarter, as the U.S. chipmaking giant was boosted by a resurgence of demand in the PC market.

Sales of its key PC chips dropped by 12% in the three months ended July 1 to $6.8 billion, although this still topped expectations for a fall of 21%, suggesting that a nascent recovery in demand for the general-purpose processors made by Intel could be underway.

The market had slumped in recent months, pulling back from a clamor for at-home computing products during the COVID-19 pandemic. The decline led manufacturers to leave chips on their shelves, a trend that weighed heavily on Intel. The Santa Clara, California-based group slipped to two straight quarters of losses, including a worst-ever $2.76B shortfall in the first three months of 2023.

Analysts had estimated that Intel would report another loss in the second quarter, but the firm bounced back, posting a profit of $1.5B.

Yet, headwinds remain for the company. The inventory overhang is still anticipated to impact Intel for the rest of the year, while many of its data center customers are projected to shift their spending into graphics processing units, or chips needed to power artificial intelligence calculations — a space currently dominated by Intel rival Nvidia (NASDAQ:).

3. Oil majors at the forefront of earnings day

A busy week of corporate results is set to be capped off today by oil groups ExxonMobil (NYSE:) and Chevron (NYSE:), as well as consumer goods giant Procter & Gamble (NYSE:).

For Exxon and Chevron, investors will be keen to see if they were impacted by a recent drop in oil prices that dented quarterly profits at European peers Shell (LON:) and TotalEnergies (EPA:).

Crude prices had surged, following the outbreak of the war in Ukraine, fueling bumper returns for oil and gas majors. But that era may be coming to an end, with prices slipping amid higher U.S. interest rates and a sputtering post-pandemic recovery for China.

shed about 13% year-to-date as of June 30, according to Reuters, although the global benchmark could receive support in the coming months from planned output cuts by Saudi Arabia and Russia.

Elsewhere, Procter & Gamble, the world’s largest maker of household goods, will deliver its fiscal fourth quarter earnings. Traders will likely be eager to find out how consumer spending, which has buckled under inflationary pressures and elevated borrowing costs, has shaped the company’s returns.

4. U.S. prosecutors expand Trump indictment

Former U.S. President Donald Trump now faces more criminal counts in a case brought against him by federal prosecutors over his handling of sensitive documents after leaving the White House.

The new charges from the Justice Department (DoJ) allege that Trump, his personal aide, and a property manager at his Mar-a-Lago estate in Florida, attempted to have surveillance video footage erased in order to prevent it from being turned over to a grand jury.

The move broadens the scope of an indictment brought by a Florida grand jury against Trump last month that claimed that he held on to confidential documents that he should not have, attempted to share them with others and tried to obstruct efforts by authorities to reclaim them.

Trump also faces federal charges linked to his role in efforts to prevent the certification of Joe Biden’s victory in the 2020 U.S. presidential election.

In a social media post on Thursday, Trump, who is also campaigning to be elected president again in 2024, said his lawyers had told the DoJ that he had done “nothing wrong.”

5. Bank of Japan loosens yield curve control

The Bank of Japan (BoJ) said on Friday that it will adopt a more flexible approach to controlling bond yields by allowing them to fluctuate beyond its target range.

While the central bank maintained its negative interest rates, Friday’s move sparked uncertainty over whether the BoJ was taking a potential step toward ending its ultra-dovish stance, especially as it struggles to tame elevated . Headline price growth in the country outpaced the U.S. for the first time in eight years last month.

Japan’s benchmark bond yields subsequently spiked to their highest level in almost a decade.

The ‘s decision rounds out a week of major central bank policy announcements, including separate rate hikes by the Fed on Wednesday and the a day later.

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