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GameStop's Bullish Miss, Suez Woes, Intel's Grand Designs - What's up in Markets

EconomyMar 24, 2021 10:19
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By Geoffrey Smith -- GameStop (NYSE:GME) serves up a quarterly report with something for everyone, Intel (NASDAQ:INTC) lays out its new strategy, and Disney hedges its bets on consumers' willingness to return to movie theatres. PMIs in Europe and Japan are surprisingly strong. The Federal Reserve's Jerome Powell returns to Congress, while three of his colleagues will speak elsewhere later. Durable goods orders for February are due. Oil prices are bouncing sharply after a container ship blocks the Suez Canal. And Elon Musk gives Bitcoin another pump. Here's what you need to know in financial markets on Wednesday, March 24th. 

1. GameStop's bullish miss

GameStop, the company at the centre of the most volatile trading of 2021, disappointed with its quarterly results. Overall sales fell 3.3%, while earnings per share were some 8% shy of expectations.

However, GameStop said its comparable store sales rose 6.5% in the three months through January, while e-commerce sales were up 175%, a development that will support hopes of a successful reinvention as a principally online retailer.

The reinvention will continue with new management at the helm. Amazon (NASDAQ:AMZN) and Google (NASDAQ:GOOGL) veteran Jenna Owens will join at the end of the month as chief operating officer, while Neda Pacifico, formerly of Chewy (NYSE:CHWY), will take responsibility for e-commerce. Zulily’s Ken Suzuki will take over as head of supply-chain systems.

The news was enough, on the whole, to persuade at least one former bear to change its mind. Jefferies (NYSE:JEF) reportedly raised its price target to $175 from $15 in response. GameStop stock was down 11% at $161.90 in premarket trade

2. Intel CEO lays out his new strategy

Intel mapped out its plans to re-establish itself as the world’s leading chipmaker with a new $20 billion strategic plan that envisages the construction of two new fabrication plants in Arizona.

The plan signals a reaffirmation of Intel’s commitment to making its own chips, even as it signalled its openness to more outsourcing and to contract manufacturing on behalf of others. The plan comes at an opportune time, when the shortcomings of extended supply chains spanning continents are painfully apparent.

New CEO Pat Gelsinger also said the company’s sales will fall less than feared this year, after revenue and profit both exceeded internal expectations in the first quarter. Intel stock rose 5.6% in premarket trading.

3. Stocks set to open higher; Disney eyed; Musk's latest Bitcoin pump

U.S. stock markets are set to open higher after falling Tuesday in response to fears that the latest wave of Covid-19 sweeping Europe, India and South America could set back the global economic recovery.

By 6:20 AM ET (1020 GMT), Dow Jones Futures were up 75 points, or 0.2%, while S&P 500 futures were up 0.3% and Nasdaq 100 futures were up 0.9%.

Stocks likely to be in focus later include Tesla (NASDAQ:TSLA), whose CEO Elon Musk announced via Twitter that the car maker is now accepting Bitcoin as payments (he didn’t say anything about pricing policy). The news sent Bitcoin up 5%.

Also in focus could be Disney and AMC Entertainment (NYSE:AMC), after the movie giant said it will launch two big movie releases on its streaming channel and theatres at the same time – hedging its bets on consumers’ willingness to venture back into cinemas. 

4. Strong PMIs in Europe, Japan; U.S. durable goods and Fed speakers due

The latest round of business surveys across the world showed economic activity accelerated more in March, with IHS Markit’s purchasing managers indices coming in sharply above expectations in both Japan and the Eurozone as well as the U.K.

The surveys predate latest tightening of restrictions in Germany (which has reportedly dropped its plans for a five-day national shutdown at Easter) and weren’t enough to reverse broad stock market losses in early trading.

In the U.S. later, Federal Reserve Chairman Jerome Powell and Treasury Secretary Janet Yellen reprise their testimony in front of the Senate Banking Committee, a day after Yellen flagged the possibility of tax increases to plug the budget deficit.  There will also be durable goods orders data for February and weekly mortgage refinancing numbers. The Federal Reserve’s John Williams, Mary Daly and Charles Evans all speak later.

5. Suez blockage lifts oil prices

Crude oil prices rose sharply after a large container ship ran aground in the Suez Canal, blocking one of the world’s most important trade routes. Reports suggest that unblocking the canal may take as much as three days.

By 10:20 AM ET, U.S. crude futures were up 2.9% at $59.43 a barrel, while Brent crude futures were up 2.8% at $62.50 a barrel.

The U.S. government will release its weekly inventories data at 10:30 AM ET as usual. Analysts expect a draw of 270,000 barrels from the previous week, although the risk of a build seems considerable, given that the American Petroleum Institute reported a build of 2.9 million barrels on Tuesday.

GameStop's Bullish Miss, Suez Woes, Intel's Grand Designs - What's up in Markets

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