Here are five things you must know for Tuesday, Dec. 1:
1. — Stock Futures Point to a Wall Street Bounceback
Stock futures suggested Wall Street would bounce back Tuesday as investors await testimony from Federal Reserve Chairman Jerome Powell and look back at the best monthly performance for equities since April.
Contracts linked to the Dow Jones Industrial Average rose 339 points, S&P 500 futures gained 36 points and Nasdaq futures jumped 95 points.
Stocks declined Monday but only after the S&P 500 recorded a gain of 10.8% in November, its biggest monthly gain since April. The Dow posted its best month since 1987, up 11.8%, and the Nasdaq also soared 11.8% during November.
Powell, in testimony released ahead of his appearance Tuesday before the Senate Banking Committee, said that economic prospects are “extraordinarily uncertain” after the pace of improvement moderated.
While calling progress made on the development of coronavirus vaccine “very positive,” the central bank chairman also said a resurgence of the virus in the U.S. and globally was “concerning and could prove challenging for the next few months. A full economic recovery is unlikely until people are confident that it is safe to reengage in a broad range of activities.”
Asian stocks finished Tuesday’s session higher following an improvement in Chinese manufacturing activity.
For more on Asian markets read:
Hong Kong and China Markets Rise on Strong Manufacturing Data From World’s Second-Largest Economy
2. — Tesla to Be Added to S&P 500 Index in One Tranche
Tesla (TSLA) – Get Report will be added to the S&P 500 index in a single tranche on Dec. 21, despite concerns over the potential for trading volatility as funds shuffle their holdings to add shares of the electric vehicle company to their portfolios.
S&P Dow Jones Indices said Tesla will be added to the index on the date of the index’s quarterly rebalancing.
The decision from S&P followed consultations with the investment community.
Tesla “will be one of the largest weight additions to the S&P 500 in the last decade, and consequently will generate one of the largest funding trades in S&P 500 history,” S&P Dow Jones Indices said in a statement last month announcing the addition.
Tesla, with a market cap of more than $555 billion, joins the index as its seventh largest component, between Berkshire Hathaway (BRK.A) – Get Report and Visa (V) – Get Report.
Shares of the electric automaker founded by Elon Musk have soared in the two weeks since it was announced that Tesla would be added to the index. Shares have risen about 40% since Nov. 16.
The stock was rising 3.9% in premarket trading Tuesday to $589.81.
3. — Tuesday’s Calendar: Powell Testimony, Salesforce Earnings
The economic calendar Tuesday includes testimony from Federal Reserve Chairman Jerome Powell and Treasury Secretary Steven Mnuchin before the Senate Banking Committee on economic relief spending. The hearing begins at 10 a.m. ET.
The calendar also includes PMI Manufacturing (final) for November at 9:45 a.m., the ISM Manufacturing Index for November at 10 a.m. and Construction Spending for October at 10 a.m.
Earnings reports are expected Tuesday from Salesforce.com (CRM) – Get Report, Hewlett-Packard Enterprise (HPE) – Get Report, Box Inc. (BOX) – Get Report, NetApp (NTAP) – Get Report and Momo MOMO.
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4. — Salesforce’s Acquisition of Slack Could Be Announced Tuesday
Speaking of Salesforce, the company’s reported deal to acquire Slack Technologies (WORK) – Get Report could be announced Tuesday after the stock markets close.
The deal is expected to be half cash and half stock, according to CNBC, and will price Slack at a premium to its current price.
Shares of Slack, the work messaging service, were down 1.31% in premarket trading to $42.32. The stock closed Monday at $42.88, up 5.43%.
Talks between Salesforce and Slack were first reported last week by The Wall Street Journal.
5. — Zoom Video Slips on Indications Growth Might Slow
Zoom Video Communications (ZM) – Get Report was falling in premarket trading Tuesday after third-quarter earnings and sales topped analysts’ forecasts but the company indicated growth could be slowing.
Zoom Video, whose videoconferencing software has been a hit during the coronavirus pandemic, reported adjusted earnings of 99 cents a share on revenue of $777.2 million. Analysts were expecting Zoom Video to report earnings of 76 cents on revenue of $693.95 million.
“We remain focused on the communication needs of our customers and communities as they navigate the current environment and adapt to a new world of work from anywhere using Zoom,” said founder and CEO Eric Yuan in a statement. “Strong demand and execution led to revenue growth of 367% year over year with solid growth in non-GAAP operating income and cash flow in our third fiscal quarter.”
For the fiscal fourth quarter, Zoom Video said it expects earnings of between 77 cents and 79 cents a share on revenue of $806 million and $811 million, well above Wall Street forecasts. But the company’s sales guidance at the high end, Bloomberg noted, estimates a 330% increase from a year earlier, a slight decline in the year-over-year growth from the previous two quarters.
Zoom Video shares fell 5.3% to $453 in premarket trading Tuesday.