Before the Bell: Nike, FedEx, Tesla Are Big Movers; Federal Spending Bill Going to a Vote

Premarket action Wednesday had all three major U.S. indexes trading slightly higher. The Dow Jones industrials were up 0.76%, the S&P 500 up 0.64% and the Nasdaq 0.61% higher.

Seven of 11 market sectors closed higher Tuesday, with energy (1.52%) and communications services (0.72%) gaining the most. The real estate sector (−0.27%) posted the day’s largest dip.

Monday’s trading action was a lot more exciting than the final score indicates. Shares opened higher, fell to their intraday lows within 15 minutes, then bounced around the break-even line for most of the rest of the session. Advancing shares outnumbered decliners by about 11 to 10 on both the New York Stock Exchange and the Nasdaq. Single-family housing unit starts fell by more than 4% month over month, and new building permits issued fell by more than 11%. The first was better than expected, the second, much worse.

The National Association of Realtors reports November’s existing home sales later in the morning. Economists expect a dip in the seasonally adjusted annual rate from 4.43 million in October to 4.2 million.

The U.S. Energy Information Administration is set to issue its weekly report on petroleum inventories. After markets closed Tuesday, the American Petroleum Institute reported that crude inventories fell by nearly 3.1 million barrels. Last week, the EIA reported an inventory build of more than 10 million barrels of crude.

In other oil news, the U.S. Department of Energy has offered to pay between $67 and $72 per barrel for 3 million barrels that would begin replacing the barrels sold earlier this year from the Strategic Petroleum Reserve. The department sold 180 million barrels for an average of $96 a barrel this year. Crude traded at around $77 a barrel early Tuesday morning.

Finally, the Conference Board reports its consumer confidence index for December after markets open, and analysts expect the index to rise slightly from 100.2 in November to 101.0 this month.

Nike Inc. (NYSE: NKE) and FedEx Corp. (NYSE: FDX) reported quarterly results after markets closed on Tuesday. Nike beat on both the top and bottom lines and raised revenue guidance for fiscal 2023 from a low- to mid-single-digit gain to a new forecast for an increase in the low teens. Gross margin declined by 2.0% to 2.5%, underlining the company’s continuing inventory headaches. That is not so good but is much better than the company’s own forecast for a gross margin decline of 3.5% to 4.0%. Shares traded up about 13% in Wednesday’s premarket.

FedEx reported better-than-expected earnings per share (EPS) but missed the revenue estimate by 3.8%. The company blamed demand weakness, especially in the FedEx Express segment, where revenue declined by 64% year over year. Volume is low, but higher prices and better cost controls have offset the lower volume. The company expects volume to continue declining into the second half of its fiscal year ending in June. FedEx lowered EPS guidance for the fiscal year to a range of $13 to $14, below the consensus estimate of $14.12, and said that it expects to accelerate its cost control measures. Shares were up more than 4% in Wednesday’s premarket trading.

Tesla Inc. (NASDAQ: TSLA) saw its stock fall to a new 52-week low on Monday. True to form, CEO Elon Musk is pointing his finger at rising interest rates as the problem. Future Fund Managing Director Gary Black, a long-time Tesla bull, takes Musk to school.

For the first time since July of 2020, Tesla’s market cap has fallen below Exxon Mobil’s. There are buyers, however. ARK Invest’s Cathie Wood has acquired more than 445,000 shares since early October.

The fiscal 2023 $1.7 trillion federal spending bill is headed for a vote this week. Half the money ($858 billion) goes to national defense. The bill includes a significant overhaul of the 1887 Electoral Count Act. Other major features include reducing the vice president’s role to a ceremonial one and raising the threshold for objecting to a state’s electoral votes from a single Congressperson or Senator to 20% of both chambers. The bill is expected to pass the lame-duck Congress.

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