Federal Reserve chair Jerome Powell is set to give investors clues on the future path of interest rates and his views on the state of the economy; Chipotle Mexican Grill (CMG) shares are rising on the restaurant chain’s plan for a 50-1 stock split to make shares more accessible to everyday investors; Intel (INTC) shares are gaining after the chipmaker was awarded up to $8.5 billion in CHIPS Act grants; Micron Technology (MU) is due to report after the closing bell, with investors looking for details about chips it’s producing for Nvidia (NVDA); and French luxury giant Kering (PPRUY) warned about declining sales for its Gucci business. Stock futures are little changed ahead of the Fed meeting and bitcoin (BTCUSD) is higher, trading above $63,000. Here’s what investors need to know today.
1. Fed Chair Powell to Provide Latest Views on Economy and Interest Rates
The Federal Reserve ends its two-day policy meeting today, after which Chair Jerome Powell will hold a press conference in which he’ll discuss the Fed’s view on the economy and interest rates. The Fed is unlikely to announce a benchmark interest rate cut today, given how stubborn inflation has been; Powell and other Fed officials have consistently said they want to see clear evidence that inflation is heading toward 2% before easing rates. The Fed’s closely watched “dot plot” will also be released today, showing how FOMC members view the economic outlook and where officials think the fed funds rate will be for the next few years. Markets are pricing in three quarter-point rate cuts this year, with a 60% chance they will begin in June, according to the CME Group’s FedWatch tool, which forecasts rate movements based on fed funds futures trading data.
2. Intel Shares Gain on $8.5B CHIPS Act Grant
Intel Corp. (INTC) shares were up more than 3% in premarket trading after the White House announced that the chipmaker has been awarded up to $8.5 billion in CHIPS Act funding to expand production in the U.S. Intel could also receive an additional $11 billion in loans from the CHIPS and Science Act, which was passed in 2022 and is meant to grow U.S. manufacturing of key industries like chipmaking amid growing geopolitical tensions with China. “The announcement will support the construction and expansion of Intel facilities in Arizona, Ohio, New Mexico, and Oregon, creating nearly 30,000 jobs and supporting tens of thousands of indirect jobs,” the White House statement said.
3. Chipotle Jumps on Plan to Split Stock
Chipotle Mexican Grill Inc. (CMG) shares were up more than 5% in premarket trading after its board approved a 50-to-1 split of its stock. The Newport Beach, Calif.-based company said late Tuesday it will seek shareholder approval for the split, the first in the Mexican restaurant chain’s 30-year history, at its annual meeting slated for June 6. If successful, shareholders will receive an additional 49 shares for each Chipotle share held as of record date June 18, with the extra shares distributed after the closing bell on June 25. “(T)his will make our stock more accessible to employees as well as a broader range of investors,” Chipotle Chief Financial Officer (CFO) Jack Hartung said in a press release.
4. Micron Set to Post Narrower Q2 Loss; AI Chips for Nvidia in Focus
Micron Technology (MU) is set to post second-quarter earnings for the 2024 fiscal year after the bell, with analysts expecting more details about the chips it’s producing for Nvidia’s (NVDA) artificial intelligence graphic processing units (GPUs). Analysts also expect an increase in dynamic random access memory (DRAM) revenue to help the company narrow its losses. The memory-chip maker is projected to report a loss of $275.8 million or 26 cents per share, narrowing from a loss of $2.08 billion or $1.91 per share in the same period a year earlier. Both figures would be consistent with the company’s guidance for the quarter. Micron shares were up 0.5% before the bell.
5. Kering Slumps on Warning of Falling Gucci Sales in Asia
French luxury giant Kering (PPRUY) forecast a 10% decline in revenue for the for first quarter of 2024 compared with the year-earlier period, amid a slowdown in sales for its Gucci brand. The Paris-based group expects Gucci revenue to be down 20% in the year-on-year comparison, mainly owing to a slump in Asia. “In a first half that Kering expected to be challenging, current trends lead the group to estimate that its consolidated revenue in the first quarter of 2024 should decline by approximately 10% on a comparable basis, from last year’s first quarter,” Kering said in a statement. Apart from Gucci, Kering’s other brands include Bottega Veneta and Balenciaga.
