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Skyworks, Paypal drop on downbeat forecasts
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U.S. debt-ceiling talks due later in the day
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Futures down: Dow 0.24%, S&P 0.37%, Nasdaq 0.55%
By Shreyashi Sanyal and Shristi Achar A
May 9 (Reuters) - U.S. stock index futures were set to
open lower on Tuesday, with a slew of dour earnings forecasts
from companies such as Apple supplier Skyworks weighing on
sentiment, while investors focused on a debt-ceiling deadlock.
Regional bank shares, which had failed to hold on to their
short-lived bounce a day earlier, extended declines, with
Pacwest Bancorp falling 10.1% and Western Alliance dropping 3.2% in premarket trading.
Markets are waiting for an update on the debt ceiling from a
meeting between U.S. President Joe Biden, Republican House
Speaker Kevin McCarthy and other congressional leaders at the
White House later in the day.
Worries of a potential government default loom over
Washington as early as June 1, if Congress does not act to
resolve the deadlock.
Yields on U.S. short-dated Treasury bills jumped sharply as investors sold off bonds, which mature as early as June. That weighed on shares of high-growth companies, including Apple Inc and Microsoft Corp , which fell about 0.5% each.
The action-packed week will see the release of the much-awaited inflation data on Wednesday. The Labor Department's consumer price index (CPI) is expected to climb 0.4% in April after gaining 0.1% in March.
Reports on producer prices, weekly jobless claims and
consumer sentiment are all lined up for the week.
"What you're seeing is a market trying to understand
where we are economically, with the Federal Reserve raising
interest rates to up to 5% in a very short amount of time," said
Robert Pavlik, senior portfolio manager at Dakota Wealth.
"It would behove the Fed to pause and see what kind of impact their moves have on the overall economy."
At 8:50 a.m. ET, Dow e-minis were down 82 points, or 0.24%, S&P 500 e-minis were down 15.25 points, or 0.37%, and Nasdaq 100 e-minis were down 73.25 points, or 0.55%. Chip-gear maker Skyworks Solutions Inc's shares tumbled 11.7% after forecasting current-quarter revenue and earnings below estimates.
Investors were optimistic about Skyworks after Apple's strong quarterly showing on Thursday. Shares of other Apple suppliers including Qualcomm and Qorvo fell 0.9% and 2.3%, respectively.
PayPal Holdings dropped 7% after a cut to its margin forecast.
Novavax added 8.3% as the drugmaker plans a 25% cut to its global workforce.
Shares of
Lucid Group slid 9.2% as the EV maker reported lower-than-expected first-quarter revenue. Tesla Inc also fell 1.1%
Wall Street's three main indexes ended the previous
session flat, but the growth-oriented Nasdaq 100 index touched a more than eight-month high, while the NYSE FANG+TM
index jumped to its highest since April 2022.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ LPL's Debt ceiling sell-off graphic: April-Oct 2011 ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Reporting by Shreyashi Sanyal and Shristi Achar A in Bengaluru; Editing by Sonia Cheema and Anil D'Silva)
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