Here are five things you must know for Thursday, October 21:
1. -- Stocks Futures Slip Lower As Investors Pause October Rally
U.S. equity futures slipped lower Thursday, potentially snapping a six-day winning streak for the S&P 500, as investors paused from an earnings-driven rally that lifted the Dow to a fresh intra-day higher during yesterday's session.
A series of stronger-than-expected September quarter earnings reports, including record profits from Tesla (TSLA) - Get Tesla Inc Report after the close of trading on Wednesday, have pushed U.S. stocks out of their October torpor and to within touching distance of all time highs.
Evergrande's debt woes, however, as well as another warning on inflation from consumer brands giant Unilever, looks to test the market's momentum Thursday as investors look to weekly jobless claims and Atlantic-region factory activity data at 8:30 am Eastern time.
Futures contracts tied to the Dow Jones Industrial Average are indicating a 100 point opening bell decline, while those linked to the S&P 500 are priced for 10 point pullback. Futures tied to the tech-focused Nasdaq Composite are indicating a 30 point move to the downside at the start of trading as benchmark 10-year Treasury note yields edge higher, to 1.642%, in overnight trading.
2. -- Evergrande Edges Closer to Collapse
China Evergrande Group said late Wednesday that it had scrapped a planned sale of a majority stake in its property services subsidiary that was expected to raise $2.6 billion for the indebted developer.
News of the deal collapse came not only on the first day of trading in more than two weeks for Evergrande's shares on the Hong Kong market, but also just days ahead of the expiry of a 30-day grace period on a missed coupon payment of $83.5 million to foreign investors.
Failure to make that payment by Monday could put China's biggest property developer into technical default, a move which could ultimately trigger the collapse of a group with $300 billion in debts and ownership stakes in real estate and financial services groups throughout the world's second-largest economy.
Evergrande shares closed 12.5% lower on the Hong Kong Stock Exchange Thursday, extending their year-to-date decline to around 83%.
3. -- Tesla Posts Record Profits, Cautions on Margins
Tesla shares edged lower Thursday after the clean-energy carmaker cautioned that ramping-up production at new plants in Texas and Germany, as well as surging input costs, would pressure profit margins over the final months of the year.
The cautious outlook somewhat clouded a record third quarter for the group, which posted record net income of $2.093 billion, revenues of $13.76 billion and a 30.5% profit margin over the three months ending in September.
"There is quite an execution journey ahead of us," CFO Zach Kirkhorn told investors on a conference call late Wednesday. "We've talked about this a bit, you know, the unknown unknowns, new factories, new vehicle designs, new technologies, new locations, new teams ... (but) ... it remains our target in both Austin and Berlin to be able to build our first production cars before the end of the year."
Tesla shares were marked 0.8% lower in pre-market trading to indicate an opening bell price of $858.80 each.
4. -- IBM Falls Light on Revenues Ahead of Legacy Spin-Off
IBM (IBM) - Get International Business Machines (IBM) Report shares slumped lower Thursday after another earnings report was marred by softer-than-expected revenues ahead of the planned separation of its legacy infrastructure business.
The move, first make public in October of last year, will help concentrate IBM's focus on hybrid cloud growth, the company said, which have been driving group earnings under new CEO Arvind Krishna.
IBM said non-GAAP earnings for the three months ending in September fell 2.3% to $2.52 per share, while revenues nudged 0.3% higher to $17.62 billion, a figure that fell shy of the Street consensus forecast of $17.72 billion. Global business services was this bright spot, with revenues rising 11%
"Following a positive analyst day in early October, 3Q results were a setback as it underscores “core” IBM’s need to earn its post-spin multiple," said Credit Suisse analyst Matthew Cabral. "That said, we liked the GBS + Red Hat momentum and continue to believe IBM’s opportunity in a hybrid-first world is meaningfully underappreciated and undervalued at these levels; execution remains key."
IBM shares were marked 4.7% lower in pre-market trading Thursday to indicate an opening bell price of $135.25 each.
5. -- Trump Plans Launch of Spac-Lead 'Truth Social' App
Former President Donald Trump unveiled plans for a return to social media late Wednesday through the launch of a new app dubbed "Truth Social".
The app will form part of a platform created by the merger of the rump Media and Technology Group and a Nasdaq-listed special acquisition company, or SPAC, known as Digital World Acquisition Corp DWAC.
"Trump Media & Technology Group's mission is to create a rival to the liberal media consortium and fight back against the "Big Tech” companies of Silicon Valley, which have used their unilateral power to silence opposing voices in America," according to press release announcing the deal.
Trump was banned from many of the major social media platforms -- including Twitter and Facebook -- for his role in igniting the rioters that stormed the Capitol building on January 6 in a failed effort to overturn his election defeat to President Joe Biden.