U.S. equity futures slid on Wednesday as the number of COVID-19 cases continues to rise and hopes of a new stimulus deal before the November 3 election fade. Indicating a 400-point loss at the opening bell, Dow Jones Industrial Average futures sunk 1.5%. The S&P 500 and Nasdaq-100 futures fell by 1.3% and 1%, respectively.
Shares of Microsoft are down 2% in pre-market trading despite its impressive earnings beat. For fiscal Q1, GAAP EPS of $1.82 came in $0.28 above the consensus estimate. Quarterly revenue reached $37.2 billion, exceeding the Street’s call by $1.42 billion and reflecting a 12.4% year-over-year gain. According to RBC Capital’s Alex Zukin, shares slipped after the earnings release due to “a combination of conservative revenue guidance (two of the segments were guided below consensus), deceleration in the implied Azure guide (~6pp by our estimates) and conservative FY21 commentary driven by MPC segment volatility.”
On the other hand, Crocs is extending its gains in pre-market trading on Wednesday after the shoe maker reported that its Q3 EPS increased 65% year-over-year, with the figure coming in at $0.94. Revenue of $361.7 million beat the $344 million consensus estimate, driven by 35.5% growth in digital sales. In response to the print, Susquehanna analyst Sam Poser noted, “the improving positioning of the Crocs brand, evident by strong Q3 2020 results, will continue for the foreseeable future.”
In other earnings news, JetBlue Airways shares are currently ticking down as better-than-expected Q3 results failed to offset fears related to a spike in COVID-19 cases. Q3 revenue fell 76.4% year-over-year to $492 million, well above the Street’s $466 million forecast. Going forward, management estimates Q4 revenue will decline by 65% year-over-year, factoring in the holiday season demand.
Meanwhile, Apple acquired Barcelona-based startup Vilynx, a company that offers advanced artificial intelligence (AI) technology, for $50 million. According to a Bloomberg report, Vilynx’s technology will enable Apple to upgrade its AI across multiple apps and services. As per the terms of the agreement, 50 engineers and data scientists will move over to Apple, including Vilynx’s co-founder and Chief Technology Officer, Elisenda Bou-Balust.
Another update on the deal front, Shopify has inked an agreement with TikTok to allow its merchants to sell products on the Chinese video-sharing app. As part of the collaboration, merchants will be able to create and connect their TikTok for business purposes and deploy in-feed shoppable video ads directly within the Shopify e-commerce platform. In response, shares popped 4.4%.
In healthcare news, Merck bumped up its 2020 adjusted profit outlook thanks to robust demand for its cancer drug Keytruda and its hospital acute care products. Keytruda sales rose 21% in Q3 to $3.7 billion, surpassing the $3.66 billion consensus estimate. Following the results, Mizuho Securities analyst Mara Goldstein commented, “The Organon spin-off is anticipated in Q2 2021, at which time the power of MRK’s growth, largely driven by KEYTRUDA, should be more readily visible.”
As for COVID-19 headlines, Sanofi and GlaxoSmithKline plan to provide the COVAX Facility with 200 million doses of their adjuvanted recombinant protein-based COVID-19 vaccine, if it’s approved. A Phase 1/2 study began on September 3 with a total of 440 participants enrolled, and the first results are expected in early December 2020, to support the initiation of a pivotal Phase 3 study before the end of the year.
