ECONOMIC SILUET: 5 things to know before the stock market opens Thursday

Kamis, 04 Mei 2023

5 things to know before the stock market opens Thursday

THU, MAY 04, 2023

MORNING SQUAWK

1. Not enough

The Federal Reserve on Wednesday raised its benchmark rate for the tenth time since last year and signaled that it may be done with hikes for now. But that simply wasn't dovish enough, especially considering the fear rumbling through the banking sector. (More on that below.) Stocks fell for the day as Fed Chair Jerome Powell said the central bank's policy makers aren't prepared to start cutting rates yet. "Leaving rates this high is going to continue this stress," DoubleLine CEO Jeffrey Gundlach said on CNBC's "Closing Bell." "I believe with a very high degree of probability there's going to be further regional bank failures." Follow live market updates.

2. PacWest explores its options

Yet another California-based regional bank is in dire straits. Shares of PacWest, already down about 72% this year through Wednesday's close, tumbled further in premarket trading Thursday after bank said it was weighing all strategic options. Among those potential pathways is a possible sale, CNBC's Leslie Picker reported. While PacWest said it hadn't seen unusual deposit flows in the wake of First Republic's failure earlier this week, clearly it sees that some kind of writing is on the wall as it talks about a potential deal. "Recently, the Company has been approached by several potential partners and investors – discussions are ongoing," PacWest said in a news release posted just after midnight ET Thursday.

3. Hey, look, an IPO

Kenvue, the consumer health business being spun out of Johnson & Johnson, priced its initial public offering at $22 a share Wednesday night. The IPO, expected this will, is something of a rarity these days. It's the biggest since EV maker Rivian went public in late 2021 as IPO activity largely paused last year while markets fell and the Federal Reserve raised rates to fight inflation. It also represents the biggest corporate restructuring in the history of J&J, which will control about 91% shares of Kenvue after the offering. The new company includes several prominent brands, including Tylenol, Band-Aid and Listerine.

4. Ready for Apple earnings?

It's another big day for quarterly earnings reports, but Apple is the big dog on the block Thursday. The tech giant is set to post results after the bell. Analysts expect a rather drab report from Apple, with the consensus seeing a 5% decline in sales from a year ago. But the company is also expected to say it's authorized to spend $90 billion on share buybacks and dividends, continuing a decade-long trend. Apple spent $572 billion on buybacks from 2012 through the end of 2022, far outpacing rivals. But, as CNBC's Kif Leswing reports, some wonder whether Apple can keep up this pace as its net cash position is at its lowest point in years.

5. Google gripes

Sundar Pichai, CEO of Google parent Alphabet, made $226 million for 2022, even as the the tech behemoth saw its stock price slide about 40%. Now, the company is aggressively cutting costs, including through the elimination of about 12,000 jobs. This hasn't gone over too well with Google employees, who have slammed Pichai and other executives in internal communications and memes, according to CNBC's Jennifer Elias. "Ruth's cost savings applied to everyone… except our hardworking VPS and CEO," one meme said, referring to Chief Financial Officer Ruth Porat.

— CNBC's Mike Calia wrote this newsletter. Darla Mercado, Sarah Min, Leslie Picker, Annika Kim Constantino, Kif Leswing and Jennifer Elias contributed.

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