Stock futures rise slightly ahead of first day of June

Stock futures moved slightly higher on Tuesday evening as Wall Street turned the page to another month.

Futures tied to the Dow Jones Industrial Average added 102 points, or 0.2%. Those for the S&P 500 ticked up about 0.2%. Nasdaq 100 futures gained roughly 0.3%.

The move in futures came after a down day for stocks, with the Dow falling 222.8 points, or 0.7% in a choppy trading session. The S&P 500 and Nasdaq Composite dipped 0.6% and 0.4%, respectively.

For the month of May, the Dow and S&P 500 finished little changed, after last week’s strong rally chipped away at long losing streaks for the indexes. The Nasdaq Composite underperformed, shedding more than 2%.

With the first-quarter earnings season nearly complete and the Federal Reserve having strongly signaled its rate hike intentions for its next two meetings, stocks could struggle for direction over the summer.

“It’s best to wait and see how the next quarter shakes out. When we get into late July, we’ll have a better picture. Until then, I think we’re going to see very much a choppy market with a bias towards falling further into a bear market,” said Max Gokhman, chief investment officer at AlphaTrAI.

One potential source of optimism for markets overnight is Salesforce, whose first-quarter results topped expectations. The stock rose more than 7% in extended trading.

On Wednesday, investors will get an updated look at manufacturing and construction spending data. The first day of June also marks the start of the Fed’s plan to reduce its balance sheet, which ballooned to nearly $9 trillion during the Covid pandemic.

Salesforce (CRM) earnings Q1 2023

Marc Benioff, co-CEO of Inc., speaks on a panel session at the World Economic Forum in Davos, Switzerland, on Tuesday, May 24, 2022.

Hollie Adams | Bloomberg | Getty Images

Salesforce shares rose 8% in extended trading on Tuesday after the enterprise-software maker reported fiscal first-quarter results that surpassed analysts’ expectations and lifted its full-year earnings guidance.

Here’s how the company did:

  • Earnings: 98 cents per share, adjusted, vs. 94 cents per share as expected by analysts, according to Refinitiv.
  • Revenue: $7.41 billion, vs. $7.38 billion as expected by analysts, according to Refinitiv.

Salesforce’s revenue rose 24% year over year in the quarter, which ended April 30, according to a statement. Net income fell 94% to $28 million. The company saw lower gains on investments in the quarter, and sales and marketing expenses mounted.

Salesforce said revenue from its Service Cloud for handling customer-service inquiries generated $1.76 billion in revenue, up almost 17%. Revenue from the core Sales Cloud product for managing business opportunities contributed $1.63 billion, up about 18%.

“We’re just not seeing material impact on the broader economic world that all of you are in,” Marc Benioff, Salesforce’s co-founder and co-CEO, said on a conference call with analysts. Still, the company is aware of macroeconomic uncertainty, including volatility in foreign-exchange rates, said Amy Weaver, the company’s finance chief.

In the quarter Salesforce said its Sales Cloud, Service Cloud and Marketing Cloud integrations for Slack were launching in beta. Salesforce acquired Slack for $27.1 billion in July. The company also announced the launch of Safety Cloud for organizing in-person events during the quarter, and its legal name changed to Salesforce Inc. from Inc. Salesforce was founded in 1999, in the midst of the dot-com craze.

The dot-com bubble burst nearly brought Salesforce to an end, Benioff said.

“In 2001 I think it really impacted us, we almost lost our business, because we were on monthly contracts, we didn’t have the right cash flow structure, investors just wouldn’t give us any money — and so we made a lot of changes then, and it really strengthened our business and made us more durable overtime,” he said.

In early March, after Russia invaded Ukraine, Salesforce said it began to end relationships with customers it has accumulated in Russia through resellers and other channels.

Salesforce said it had $13.64 billion in unearned revenue, which primarily comes from subscription billings. The figure was slightly below the StreetAccount consensus of $13.76 billion.

With respect to guidance, Salesforce said it sees fiscal second-quarter earnings of $1.01 to $1.02 per share on an adjusted basis and revenue from $7.69 billion to $7.70 billion. Analysts polled by Refinitiv had expected $1.14 in adjusted earnings per share on $7.77 billion in revenue.

Salesforce lowered its revenue guidance for the full 2023 fiscal year while boosting its profit view. It now sees $4.74 to $4.76 per share in adjusted earnings and $31.7 billion to $31.8 billion in revenue. Analysts polled by Refinitiv had expected $4.65 in adjusted earnings per share and $32.06 billion in revenue. Previously Salesforce had expected adjusted earnings of $4.62 to $4.64 per share on $32.0 billion to $32.1 billion in revenue for the full year.

The higher earnings guidance is “all driven by continued focus on disciplined decision-making across the organization, and as a company we are committed to continuing to improve profitability over the long-term,” Weaver said on Tuesday’s call.

She said higher adjusted operating-margin guidance is not tied to any single change.

“It’s really driven by disciplined decision-making, and unlock incremental efficiencies across the entire business,” Weaver said. “We’ve asked each leader to step up, to really look across their business and to strategically prioritize their investment, and this is only to make sure that we’re getting the highest-return for every dollar that we invest.”

The company is slowing down hiring, Insider reported earlier this month, citing a memo.

“We are hiring, but we’re doing it at a much more measured pace and focusing the majority of new hires that will support customer success and the execution of our top priorities,” Weaver said.

The company isn’t looking to make another big purchase at this point, Benioff said.

“We can see a rightsizing on a number of valuations I think that we’re all quite suspect of for quite a long time, but for us, you know, we’ve kind of laid our acquisition strategy down and we’re done for a while,” he said.

Notwithstanding the after-hours move, Salesforce stock has moved about 36% lower since the start of the year, while the broader S&P 500 index has declined 13% over the same period.

WATCH: Salesforce was born in the 2001 recession, says chairman and co-CEO Marc Benioff

Taco Bell is running out of Mexican Pizza less than two weeks after its return

Taco Bell’s Mexican Pizza

Source: Taco Bell

Taco Bell is running out of its Mexican Pizza, less than two weeks after the chain brought back the menu item.

The chain, owned by Yum Brands, said in a statement that it’s working with its restaurants and suppliers to get the item back on its menu permanently by the fall.

“We are working as fast as we can to restock Mexican Pizza ingredients,” the chain said on Twitter.

Taco Bell’s take on pizza includes seasoned beef and refried beans between two shells with a pizza sauce, melted cheese and tomatoes. Vegetarians can ask for it without the beef.

Demand for the Mexican Pizza was seven times higher than the last time it was on the menu, in November 2020, according to Taco Bell. The chain had cut Mexican Pizzas, pico de gallo and shredded chicken from its offerings as part of a push to simplify operations and focus on more popular items.

But after fans begged for Mexican Pizza to return, Taco Bell brought the item back, on May 19. One restaurant, in Roseville, California, sold more than 1,000 in one day, the company said.

Taco Bell used its partnership with rapper Doja Cat to drum up excitement for the item’s comeback. The chain had also planned to release a TikTok musical, starring both Doja Cat and country music legend Dolly Parton. The release of the musical has also been delayed.

Taco Bell isn’t the only fast-food chain to face shortages of a menu item thanks to social media buzz. Restaurant Brands International’s Popeyes sold out of its first nationwide chicken sandwich in August 2019, less than a month after its debut. A Twitter feud between Chick-fil-A and Popeyes inspired consumers to want to taste the new sandwich for themselves. But the wait only built more anticipation from customers. The chicken sandwich returned to stores in November, leading to hourslong lines at some locations.

Medicare Part B premium reduction won’t happen this year

Choreograph | iStock | Getty Images

Your Medicare Part B premiums won’t be reduced this year, the government has announced.

After being directed by Health and Human Services Secretary Xavier Becerra in January to reassess this year’s $170.10 standard monthly premium — a bigger-than-expected 14.5% jump from $148.50 in 2021 — the Centers for Medicare & Medicaid Services has released a report determining that a mid-year correction is not feasible. Instead, any savings that result from lower-than-estimated spending this year will be applied to the calculation for the 2023 Part B premium.

About half of the larger-than-expected 2022 premium increase, set last fall, was attributed to the potential cost of covering Aduhelm — a drug that battles Alzheimer’s disease — despite actuaries not yet knowing the particulars of how it would be covered because Medicare officials were still determining that.

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While Medicare Part D provides prescription drug coverage, some medicines are administered in a doctor’s office — as with Aduhelm, which is delivered intravenously — and therefore fall under Part B (which covers outpatient care and medical equipment).

By law, CMS is required to set each year’s Part B premium at 25% of the estimated costs that will be incurred by that part of the program. So in its calculation for 2022, the agency had to account for the possibility of broadly covering Aduhelm.

However, the per-patient price tag that actuaries had used in their calculation subsequently was cut in half by manufacturer Biogen — to $28,200 annually from $56,000. Additionally, CMS officials announced in April that Medicare will only cover Aduhelm for beneficiaries who receive it as part of a clinical trial.

The 2022 premium would have been set at $160.40 if the Aduhelm cost was what it is now and the determination of coverage had already occurred, the CMS report said.

While President Joe Biden’s 2023 budget projections show the Part B premium remaining at $170.10, the CMS report notes that when the amount is set later this year, it will reflect additional information such as actual 2022 claims data and is likely to differ somewhat from what’s shown in the budget.

“It is certain, however, that any additional funding caused by including the uncertainty of potential Aduhelm costs in the 2022 premium will be used to reduce the necessary financing in 2023 and later,” according to the CMS report.

Roughly 6 million Americans suffer from Alzheimer’s, a degenerative neurological disease that slowly destroys memory and thinking skills, and has no known cure. It also can wreck the lives of families and friends of those with the disease.

Most of these patients are age 65 or older and generally enrolled in Medicare, which covers more than 64.2 million individuals.

In 2017, about 2 million beneficiaries used one or more of the then-available Alzheimer’s treatments covered under Part D, according to the Kaiser Family Foundation.

House Democrats aim to pass gun control legislation by early June

Activists listen as Senate Democrats speak during a news conference demanding action on gun control legislation after a gunman killed 19 children and two teachers in a Texas elementary school this week, on Capitol Hill on Thursday, May 26, 2022 in Washington, DC.

Jabin Botsford | The Washington Post | Getty Images

House Democrats will try to advance a raft of gun control bills on Thursday in the wake of two high-profile mass shootings that rocked the nation earlier this month.

House Judiciary Committee Chairman Jerry Nadler, D-N.Y., has called lawmakers back from a break to mark up gun legislation that combines eight separate bills. Nadler intends to bring a suite of new gun safety laws to the House floor “as soon as possible,” a spokesman said, in light of shootings in Texas and New York state.

The more recent and deadlier attack occurred last Tuesday, when an 18-year-old gunman killed 19 children and two teachers at an elementary school in Uvalde, Texas. That massacre came just 10 days after another teenager shot and killed 10 shoppers at a supermarket in a racist rampage in a predominantly Black neighborhood in Buffalo, New York.

The Democratic-led package will likely fail in the face of Republican opposition in the Senate. However, Democrats have acknowledged a hope — however slim — that bipartisan talks in the senate can lead to lawmakers passing a more limited bill with support from both parties.

Nadler’s spokesman confirmed the list of bills the House Judiciary Committee will consider under the broader “Protecting Our Kids Act.” Those bills include:

  • The Raise the Age Act
  • Prevent Gun Trafficking Act
  • The Untraceable Firearms Act
  • Ethan’s Law
  • The Safe Guns, Safe Kids Act
  • The Kimberly Vaughan Firearm Safety Storage Act
  • Closing the Bump Stock Loophole Act
  • The Keep Americans Safe Act

The combined bill would introduce a range of regulations on the sale or use of firearms and associated equipment.

The Raise the Age Act would increase the purchasing age for semiautomatic rifles from 18 to 21 years, while the Keep Americans Safe Act would outlaw the import, sale, manufacture, transfer or possession of a large-capacity magazine.

Ethan’s Law would create new requirements for storing guns at homes, especially those with children, and provide tax credits for secure storage devices.

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While it’s unclear when the omnibus will arrive on the House floor, Nadler’s move to reconvene the committee early signals that House leadership wants to vote on the legislation soon after lawmakers return from break next week, while Democrats still have momentum behind them.

Also unclear is whether House Speaker Nancy Pelosi, D-Calif., and her deputy, Majority Leader Steny Hoyer, D-Md., want to vote on a single massive bill or break it into its several components and attempt to pass parts piecemeal.

Republican opposition to the package is more certain.

Senate Republicans have for years blocked progress on any gun-safety legislation. They opposed efforts to tighten gun regulations both when they held the majority and, as now, when they can threaten an indefinite filibuster if Democrats can’t come up with the 60 votes required to circumvent the stalling tactic.

Sen. Ted Cruz, a Republican representing Texas, took to Twitter four days after the massacre in his state to say that “taking guns away from responsible, law-abiding Americans will not make our nation more secure.”

“It’s much easier to scream about guns than it is to demand answer about where our culture is failing,” Cruz added in a separate social media post on Saturday.

Anti-gun demonstrators protest outside the National Rifle Association Annual Meeting at the George R. Brown Convention Center, on May 27, 2022, in Houston, Texas.

Cecile Clocheret | AFP | Getty Images

Disapproval from Cruz and other Senate Republicans will likely doom any legislation Nadler and other House Democrats manage to pass. But that isn’t likely to deter Pelosi, who on Wednesday acknowledged the long odds any gun-control legislation faces in the Senate.

“We pray that the bipartisan conversations unfolding in the Senate right now will reach agreement on legislation that can save lives and can be acted upon soon,” she wrote in a letter to fellow Democrats.

“On multiple occasions, the Democratic House has passed strong, commonsense gun violence prevention legislation,” she added. “As we have promised again and again to the courageous survivors of gun violence, we will never stop until the job is done.”

For his part, Senate Majority Leader Chuck Schumer, D-N.Y., has said he wants the nation to watch as Senate Republicans vote down gun control legislation. He said he is open to holding votes on bills even if they are virtually guaranteed to fail.

Schumer has also encouraged bipartisan backdoor gun legislation talks led by Sen. Chris Murphy, D-Conn. He is working with Republicans like Sens. Pat Toomey, Susan Collins and Rob Portman, who are open to more modest firearm regulations.

Workers equally hate both options

Morsa Images | Digitalvision | Getty Images

Employees who work remotely don’t look favorably on the notion of returning to the office.

To that point, 45% of people who work from home said they’d be at least somewhat likely to look for a new job if required to return to work in person, according to a recent Federal Reserve survey. Meanwhile, a similar share (42%) said they’d look for another job if their employer instituted a pay freeze, according to the survey.

This parity demonstrates both workers’ antipathy to reverting to pre-pandemic work policies and the benefits they see in flexible work arrangements.

Many companies were forced to shift to remote-work models in early 2020 to limit the spread of Covid-19. Employees continued to be productive, though, changing how employees and businesses view work, according to Julia Pollak, chief economist at ZipRecruiter.

“That’s opened the floodgates for people to be able to reevaluate the things they do,” Pollak said. “Norms have shifted.”

In 2021, 22% of employees worked entirely from home, according to the Federal Reserve survey, published last week, which polled 11,000 adults in late October and early November. Another 17% worked from home part-time in 2021.

The share of full-time remote workers is up from 7% pre-pandemic (in 2019), though down from 29% in 2020.

Hybrid work is here to stay.

Bhushan Sethi

joint global leader of PwC’s People & Organization practice

Less time commuting, better work-life balance and more productivity working remotely were the top reasons employees prefer to work from home, according to the Federal Reserve.

“That time savings alone is enormous,” according to Pollak, who said people use that extra time to socialize, sleep and exercise more, for example. “It gives people more of what they want.”

The typical worker equates the value of working from home to a pay raise of about 8%, according to a 2021 paper published by researchers at Stanford University, the University of Chicago and Instituto Tecnologico Autonomo de México.

The relative value skews higher for employees younger than 50 years old, those with more education and higher incomes, and households with kids, according to the study.

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A recent PwC survey found 41% of workers would prefer to be working remotely full-time a year from now; another 49% want some sort of hybrid arrangement, with some time at home and some in the office.

The finding coincides with a hot labor market for job seekers. Job openings in March were at record highs, as was the number of people voluntarily quitting their job. Wage growth is at its highest level in decades as businesses compete for workers amid high demand for their labor.

“In today’s talent market, employees want to have choice: choice of location and schedules,” said Bhushan Sethi, joint global leader of PwC’s People and Organization practice. “The top talent … can walk anywhere and vote with their feet, virtually or physically.

“Hybrid work is here to stay,” he added.

However, there seems to be a disconnect between worker preferences and employer action: Just 10% of online job ads across the U.S. offer remote work, according to Pollak. (Of course, there are jobs, like many in the service sector, that can’t be done from home.)

But employers have also cited benefits to hybrid work arrangements, including a reduction in employee absenteeism, more predictable staffing, cost savings on real estate and overhead, and recruitment, Pollak said.

For example, employers that advertise jobs online as “remote” get 2.6 times as many clicks on their ads and get a much larger share of high-quality applications (as measured by employer feedback), she added.

Apple’s iPhone assembler says supply chain outlook better than feared

Customers walk past a digital display of the new green color Apple iPhone 13 pro inside the Apple Store on 5th Avenue in Manhattan, in New York, March 18, 2022.

Mike Segar | Reuters

Foxconn, a major supplier of Apple’s iPhones, said the impact of China’s Covid lockdowns on its operations wasn’t as bad as expected, Nikkei Asia reported Tuesday.

In late March, China ordered a series of lockdowns in some major cities after it saw a surge in coronavirus cases. Not long after, Foxconn said it would pause its operations in Shenzhen, a Chinese manufacturing hub where the company produces some iPhones, iPads and Macs.

Apple spooked investors last month when it warned that third-quarter sales could be hit by as much as $8 billion as a result of several challenges, including supply-chain constraints.

“Covid is difficult to predict,” Apple CEO Tim Cook said on a conference call with analysts after the company reported its second-quarter results.

Foxconn Chairman Liu Young-way said the company has seen a more limited impact from the lockdowns than it anticipated, and it raised its outlook for the current quarter and the full year as a result, Nikkei said. Key manufacturing facilities have been operating at normal levels and product development is ongoing, the company said, according to Nikkei.

The comments don’t necessarily mean Apple is totally in the clear from supply-chain constraints caused by Covid-19 lockdowns, or chip shortages, but it suggests the situation is at least improving for iPhone manufacturing. Apple’s iPhone business generated $50.57 billion in revenue during Q2, a bulk of its $97.28 billion total revenue.

“The overall lockdown impact on Foxconn is rather limited,” Young-way said, according to the report. “You can tell from our revenues in April, and May’s performance is also better than we estimated.”

Read more from Nikkei Asia.

WATCH: Apple says supply chain issues will continue

Israel signs trade deal with UAE, its biggest with any Arab country

Israeli national flags fly alongside United Arab Emirates national flags on the side of a road in Netanya, Israel, on Monday, Aug. 17, 2020.

Kobi Wolf | Bloomberg | Getty Images

DUBAI, United Arab Emirates — Israel and the United Arab Emirates on Tuesday penned a multi-billion dollar free trade agreement, the latest product of the two countries’ historic normalization deal in 2020 known as the Abraham Accords.

With a stated target of increasing annual bilateral trade to more than $10 billion over the next five years, the trade agreement is the largest ever between Israel and any Arab country. It covers 96% of the trade between the two Middle Eastern countries, which last year reached $885 million, according to Israel’s economy minister.

To illustrate the sheer speed and scope of trade between the UAE and Israel that’s taken place since the two established official relations in August of 2020, that bilateral figure is more than twice the volume of Israel’s trade with Egypt in 2021, which was $330 million — and Israel and Egypt have had a peace agreement in place since 1979.

Israel’s Minister of Economy and Industry Orna Barbivai and her counterpart, UAE Minister of Economy Abdulla bin Touq Al Marri, signed the deal in Dubai following months of negotiations.

The signing opened “a new chapter in the history of the Middle East,” Emirati Trade Minister Thani Al Zeyoudi wrote on Twitter. “Our agreement will accelerate growth, create jobs and lead to a new era of peace, stability, and prosperity across the region.”

For Jon Medved, CEO of the crowdfunding platform OurCrowd and venture capitalist in Israel’s tech scene, trust between the two countries is key to seeing more investment.

“Trust is not something you can build in a month or two, but I think there is enormous goodwill,” Medved told CNBC’s Dan Murphy ahead of the deal’s signing. His firm has already invested in the UAE, hired employees in the Gulf and received a regulatory status from Abu Dhabi Global Market, a UAE free zone.

“While I think trust isn’t something that you snap your fingers and it instantly happens, I think the steps are being taken on a political level and a human level that are creating trust and this is going to lead to extraordinary business opportunities,” Medved said.

The signing of the deal came amid renewed violence between Israelis and Palestinians.

On Monday, thousands of Israeli nationalists surrounded the Al-Aqsa compound in Jerusalem, the third-holiest site in Islam, chanting anti-Muslim slurs, with some physically attacking Palestinians and a few arrested for spraying a Palestinian journalist with tear gas. The demonstrators had gathered for the commemoration of Israel’s capture of Jerusalem’s Old City in the Six Day War of 1967.

The UAE’s foreign ministry in a statement Monday condemned what it described as the “storming” of the Al-Aqsa compound by “extremist settlers under the protection of Israeli forces.” It also asked that Israeli authorities “take responsibility for reducing escalation and ending all attacks and practices that lead to the continuation of tensions.”

Other cities and towns in the West Bank also saw violence and attacks on homes in Palestinian neighborhoods by groups of Israelis. More than 160 Palestinians were injured, with some of those hit by live bullets after staging a counter-protest, according to the Palestinian Red Crescent.

Israeli Prime Minister Naftali Bennett condemned extremist behavior and vowed that anyone involved would be arrested.

On Monday, media who had been invited to the signing of the trade deal were told they could no longer attend, Reuters reported, noting that no reason had been given for the sudden change.

Al Aqsa is located the Old City of majority-Arab East Jerusalem, which has been annexed by Israel since 1967 but is not recognized internationally. Israel’s occupation of the Palestinian territories is classified by the United Nations as a violation of international law.

The growing economic relationship between Israel and the UAE, a Muslim country officially supportive of Palestinian statehood, has so far remained largely untouched by the countries’ political differences over the Israeli-Palestinian conflict.

Yamana Gold, Credit Suisse, Unilever and more

Check out the companies making headlines before the bell:

Yamana Gold (AUY) – The Canadian gold producer agreed to be acquired by Gold Fields (GFI) in an all-stock deal valued at $6.7 billion. Yamana Gold shareholders will receive 0.6 Gold Field shares for each share they now hold. Yamana surged 14.9% in the premarket while Gold Fields tumbled 11.8%.

Credit Suisse (CS) – Credit Suisse denied a Reuters report that it is mulling various options to raise capital after a series of losses. Two people with knowledge of the matter told Reuters the bank was in the early stages of weighing options, such as a share sale or selling a business unit. Credit Suisse lost 3.8% in premarket action.

Unilever (UL) – Unilever jumped 6.4% in premarket trading after the consumer products company named activist investor Nelson Peltz to its board. Peltz’s Trian Fund Management holds a roughly 1.5% stake in Unilever.

Sanofi (SNY) – The drug maker’s shares slipped 3.7% in the premarket after the FDA put a trial related to its erectile dysfunction drug Cialis on hold. The trial was to evaluate the conversion of the prescription treatment to “over the counter” status, with Sanofi saying the halt was related to how the trial had been designed.

Nio (NIO) – Nio shares jumped 5.1% in the premarket after Morgan Stanley added the China-based electric vehicle maker’s stock to its “tactical idea” list. Morgan Stanley thinks the shares are set to rise as Covid restrictions are eased in the Shanghai region, and as the company benefits from new subsidies for electric car buyers.

Zoom Video Communications (ZM) – The videoconferencing company’s stock received a double upgrade at Daiwa Securities, which raised its rating to “outperform” from “underperform”. Daiwa said the recent tech pullback presents upside opportunity, and that growth expectations for Zoom now seem more realistic. Zoom added 1.6% in premarket trading.

American Eagle Outfitters (AEO) – The apparel retailer’s stock slid another 5.7% in the premarket after a post-earnings tumble of 6.6% Friday. The stock was downgraded to “underweight” from “equal-weight” at Morgan Stanley, which feels reduced guidance from American Eagle management may still be too optimistic.

Sherwin-Williams (SHW) – The paint company’s shares slipped 2.3% in premarket trading after Credit Suisse initiated coverage with an “underperform” rating. The firm said rising interest rates could impact residential and commercial paint demand.