Stock Futures Move Higher Even as More Join Chorus for June Rate Hike
Stock futures were higher on Tuesday morning even as more Federal Reserve members joined the chorus of supporters for another rate hike sooner than later.
S&P 500 futures were up 0.54%, Dow Jones Industrial Average futures gained 0.51%, and Nasdaq futures climbed 0.6%.
The central bank could raise rate two or three times this year, Philadelphia Fed President Patrick Harker said on Tuesday, backing up recent calls suggesting a rate hike could come as soon as June.
"Although I cannot give you a definitive path for how policy will evolve, I can easily see the possibility of two or three rate hikes over the remainder of the year," Harker told an audience in Philadelphia on Monday. "If the data comes in and it's not that consistent with my view of the strength in the economy, then I would pause, but otherwise, I think a June rate increase is appropriate."
A rate hike in June now has a roughly 30% probability, according to CME Group, after starting the month with odds of less than 10%. The Federal Open Market Committee's next meeting is June 14-15.
Best Buy (BBY) - Get Report fell 6% after forecasting a weaker-than-expected second quarter and announcing the departure of Chief Financial Officer Sharon McCollam, effective June 14. The electronics retailer expects second-quarter earnings between 38 cents and 42 cents a share, short consensus of 50 cents. Best Buy also expects full-year sales and earnings to come in flat for the year.
AutoZone (AZO) - Get Report was slightly lower after a disappointing third quarter tied to rough weather in Midwestern, Middle Atlantic, and Northeastern states. The auto-parts retailer reported a 4% sales increase to $2.59 billion, though revenue fell short of consensus of $2.65 billion. Same-store sales rose 2% in the third quarter, compared to 2.3% in the year-ago period.
Toll Brothers (TOL) - Get Report gained 3% in premarket trading after posting a better-than-expected second quarter. Profit-per-share rose to 51 cents from 37 cents in the year-ago quarter, topping estimates of 46 cents. Revenue surged 31% to $1.12 billion. Toll Brothers has benefited from a robust housing sector which has seen resilient construction growth despite a downturn elsewhere in the economy.
Western Digital (WDC) - Get Report was upgraded to outperform from market perform with a $50 price target, Cowen analysts said on Tuesday. The firm said expectations are low and the company is expanding its total addressable market.
Deere & Co. (DE) - Get Report was upgraded to outperform from market perform with a $96 price target at BMO Capital. Analysts said the company is underowned and is attractively valued.
Johnson Controls (JCI) - Get Report was upgraded to outperform from neutral with a $50 price target at Credit Suisse. The firm said the move was a valuation call as the market is giving little value to an Adient spin and Tyco synergies.
