Earnings wave, Credit Suisse outflows, BBBY bankruptcy - what's moving markets

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Earnings wave, Credit Suisse outflows, BBBY bankruptcy - what's moving markets
Credit: © Reuters.

By Scott Kanowsky

Investing.com -- U.S. futures point lower as investors look ahead to a wave of massive corporate earnings this week. Credit Suisse suffers significant first quarter outflows, underlining the challenges surrounding its shotgun marriage with rival UBS, while NBCUniversal's CEO resigns and Bed Bath & Beyond files for bankruptcy.

1. Futures drop as earnings season kicks into full gear

High-profile corporate names, including some of the world's biggest technology groups, will unveil their latest results this week as concerns persist over a possible slowdown in the U.S. economy.

Companies faced a tumultuous quarter highlighted by stubbornly elevated (but easing) inflation, widespread tech sector layoffs, and the banking crisis.

Google-parent Alphabet Inc. Class C (NASDAQ: GOOG ), Amazon.com, Inc. (NASDAQ: AMZN ), and Facebook-owned Meta Platforms, Inc. (NASDAQ: META ) are all slated to report, along with chip-making giant Intel (NASDAQ: INTC ). Consumer goods firm Mondelez International, Inc. (NASDAQ: MDLZ ), oil major ExxonMobil Corp. (NYSE: XOM ), payments processor Mastercard Inc. (NYSE: MA ), drinks maker Coca-Cola Company (NYSE: KO ) and drugmaker Eli Lilly and Company (NYSE: LLY ) are also among the hundreds of businesses due to release their earnings in the coming days.

Last week, JPMorgan (NYSE: JPM ) chief Jamie Dimon flagged looming economic "storm clouds" on the horizon, adding that the banking industry's recent issues have only exacerbated these fears. However, these worries were somewhat tempered by separate data on Friday which showed that business activity in the U.S. touched an 11-month high in April.

On Monday, U.S. stocks were seen opening lower. By 04:41 ET (08:41 GMT), the Dow futures contract was down 109 points or 0.32%, S&P 500 futures traded 16 points or 0.40% lower, and Nasdaq 100 futures dropped by 57 points or 0.44%.

2. Credit Suisse's 'alarming' results

Credit Suisse (SIX: CSGN ) saw CHF 61.2 billion in asset outflows in the first quarter in what is likely to be the final earnings report from the Swiss lender after its merger with rival UBS Group AG (SIX: UBSG ).

The bank called the outflows "significant," adding that they have moderated but not yet reversed.

It said that withdrawals of cash deposits and non-renewal of maturing time deposits were most acute in the days preceding and following the announcement of the tie-up last month. Swiss officials brokered the deal to bolster confidence in the country's banking system in the wake of turmoil across the global financial services sector sparked by the collapse of Silicon Valley Bank.

Customer deposits also declined by CHF 67B in the opening three months of its 2023 fiscal year.

The results, which analysts at KBW called "alarming," set the stage for quarterly figures from UBS due out tomorrow, with investors keen to find out more about how it plans to fold Credit Suisse into its operations.

"UBS undoubtedly faces a major (and urgent) task in deeply restructuring its former competitor," analysts at Vontobel said in a note on Monday.

3. NBCUniversal CEO to step down

NBCUniversal chief Jeff Shell will leave following an investigation reportedly led by an outside counsel into a complaint over inappropriate behavior, the media giant's parent Comcast Corp. (NASDAQ: CMCSA ) announced in a note to staff.

In a statement, Shell said he had had an "inappropriate relationship" with a female employee. The woman is believed to be a long-time journalist for the company, according to multiple media reports.

"Today is my last day as CEO of NBCUniversal," Shell said on Sunday. The executive, who is married, added that he deeply regretted the relationship.

Shell's departure comes as a precarious time for NBCUniversal. He had been leading a charge to refocus on the firm's operations as it faced increased competition from streaming rivals.

Senior leaders who had been working under Shell will now report to Comcast president Mike Cavanagh, the note said.

4. Bed Bath & Beyond files for bankruptcy

U.S. home goods retailer Bed Bath & Beyond Inc. (NASDAQ: BBBY ) has filed for Chapter 11 bankruptcy in a New Jersey court after it failed to secure funds needed to continue as a going concern.

The embattled business had attempted to stay afloat through a complex sale of preferred stock and warrants that aimed to raise $1B. However, that deal was scrapped last month, leading the company to announce a last-ditch effort to garner $300 million from investors.

But neither this fundraising drive nor a series of store closures have proven to be enough. Bed Bath & Beyond is now expected to use the bankruptcy proceedings to give it time to conduct a liquidation of some or most of its assets. Individual shareholders will likely be wiped out in the process.

Should a bidder for the business come forward, Bed Bath & Beyond said it would pursue a sale and move away from liquidation.

The retail chain, which was once a hugely popular staple of suburban American life, had previously tried to overhaul its operations to combat flagging demand for its privately branded products. This push ultimately proved unfruitful with Bed Bath & Beyond posting a loss of about $393M and a 33% fall in sales in the quarter ended on November 26.

5. Oil slips amid broader economic fears

Oil prices dropped, extending their recent decline into this week, as traders eyed a darkening outlook for global demand.

Concerns remain that rising interest rates will lead to a broader economic slowdown, particularly in the U.S. economy, the world's biggest consumer of crude.

By 04:17 EST (08:17 GMT), U.S. crude futures traded 0.51% lower at $77.47 a barrel, while the Brent contract fell by 0.56% to $81.00 per barrel.

Last week, crude markets slumped to their first weekly loss in five, after data showed that the U.S. implied gasoline demand dropped by 3.9% compared to the same period last year.

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