General Electric, Lululemon, Adobe, Boeing and China Trade - 5 Things You Must Know Thursday

U.S. stock futures rise modestly after the Federal Reserve leaves interest rates unchanged, and as investors await results from the U.K. election and stalled U.S.-China trade negotiations; Adobe, Oracle and Broadcom report earnings; Lululemon slumps on soft fourth-quarter guidance; General Electric is rated a buy at UBS.
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1. -- Stock Futures Rise as Attention Turns to Trade Talks, U.K. Election

U.S. stock futures rose modestly Thursday after the Federal Reserve left interest rates unchanged and signaled it likely would hold steady on rates throughout 2020, and as investors awaited results from the U.K. election and stalled U.S.-China trade negotiations.

The U.S. central bank voted unanimously Wednesday to keep the country's benchmark interest rate unchanged while signalling little chance of a near-term move as the economy - and most importantly, jobs and inflation - continues to perform.

"Our economic outlook remains a favorable one, despite global developments and ongoing risks," Powell said . "As the year progressed we adjusted the stance of monetary policy to cushion the economy and provide some insurance. This shift has helped support the economy and has kept the outlook on track."

With the Fed decision out of the way, investors will now turn to U.S.-China trade talks as Donald Trump meets with his most senior trade advisers and mulls whether to apply or delay tariffs on around $160 billion worth of China-made goods that are set to kick in on Dec. 15.

Reports suggested the president could opt to apply the levies, which are largely focused on consumer goods, given that he is unhappy with China's lack of cooperation on agricultural purchases, but hasn't fully made up his mind on what could be the most contentious of moves in the 18-month trade war.

Contracts linked to the Dow Jones Industrial Average gained 21 points, S&P 500 futures were up 3.40 points and Nasdaq futures rose 11 points.

U.K. voters, meanwhile, were heading to the polls for their third general election in four years, hoping to unlock the nation's ongoing Brexit stalemate by election a government that is either committed to leave the European Union or promising to offer a second referendum on its membership in the world's biggest economic bloc.

2. -- Oracle, Adobe, Broadcom and Costco to Report Earnings

Earnings reports are expected Thursday from Oracle (ORCL) - Get Report, Broadcom (AVGO) - Get Report, Adobe ADBE, Ciena CIEN and Costco Wholesale COST.

The economic calendar in the U.S. Thursday includes weekly Jobless Claims at 8:30 a.m. ET and the Producer Price Index for November at 8:30 a.m.

3. -- Lululemon Tumbles on Soft Fourth-Quarter Guidance

Lululemon Athletica (LULU) - Get Report tumbled in premarket trading Thursday after the company issued guidance for the fourth quarter that disappointed Wall Street.

Lululemon posted third-quarter earnings of 96 cents a share, 3 cents ahead of Wall Street forecasts. Revenue of $916 million also topped forecasts. Same-store sales in the period surged 16% and profit margins topped 55%.

However, Lululemon said it sees fiscal fourth-quarter earnings of $2.10 to $2.13 a share on revenue of $1.32 billion to $1.33 billion. Analysts had been calling for profit of $2.13 and revenue of $1.33 billion. The company said it expects a same-store sales growth rate in the "mid-teens." 

"I'm super excited with the start of Q4," Lululemon CEO Calvin McDonald told investors on a conference call. "This momentum has extended into the quarter. We had record performance over the Thanksgiving weekend and we're happy the way that the holiday season has begun."

"We've always given guidance that we believe is realistic and appropriate, and our guidance for the full year has always contemplated the comps in this range and our view hasn't changed," he added. "Obviously, what I'd want to draw everyone's attention to is the majority of the quarter is still ahead. There are six fewer shopping days between Thanksgiving and Christmas this year, which is a unique calendar shift and is reflected in our Q4 comp guidance."

The stock fell 3.95% in premarket trading to $233.98.

4. -- General Electric Gets Buy Rating From UBS

General Electric (GE) - Get Report rose in premarket trading Thursday after analysts at UBS predicted a 2020 "inflection point" for the company and its ongoing turnaround under CEO Larry Culp.

UBS analyst Markus Mittermaier boosted his price target on GE to $14, one of the highest on Wall Street and a $1.50 increase from his previous estimate. He also lifted his rating on the shares to buy from hold, citing improvements to the industrial company's balance sheet that will lead to stronger cash flows in the coming year.

“We expect the stock narrative to change from significant cash drag to successful transformation and see ~26% upside,” Mittermaier said in a note to clients.

“We question the depth of which consensus captures the ongoing GE evolution,” Mittermaier said. “Analyzing GE is not trivial and requires a detailed segment level analysis. This is what we have done. Our view is based on a multitude of proprietary data.”

GE shares rose 1.64% to $11.15 in premarket trading.

5. -- China's Aviation Regulator Raises 737 MAX Concerns With Boeing

China’s aviation regulator said it raised “important concerns” with Boeing (BA) - Get Report on the reliability and security of design changes to the grounded 737 MAX but declined to comment on when the plane might fly again in China, Reuters reported.

China, which was the first country to ground the 737 MAX following two fatal crashes of the jet, is reviewing the airworthiness of the plane based on proposed changes to software and flight control systems according to a bilateral agreement with the United States, a spokesman for the Civil Aviation Administration of China told reporters.

He reiterated that for the plane to resume flights in China, it needed to be re-certified, pilots needed comprehensive and effective training to restore confidence in the model and the causes of two crashes that killed 346 people needed to be investigated with effective measures put in place to prevent another one, Reuters reported.