Investing.com — U.S. stock futures were moderately stable on Friday as investors weighed a number of company earnings ahead of more quarterly reports. A U.S. judge has blocked the multibillion-dollar merger of luxury goods groups Tapestry (NYSE:) and Capri (NYSE:), a victory for federal regulators who had sued to block the merger.
Elsewhere, Mercedes-Benz (ETR:) pledged to implement cost cuts after reporting a significant drop in profits, mainly due to weak demand in the Chinese market.
1. Medium futures
U.S. stock futures were mostly flat on Friday as benchmark and technology indexes rose in pre-market trading, driven primarily by gains in Tesla (NASDAQ:) stock.
As of 03:37 ET (07:37 GMT), the y contract was virtually unchanged, with the contract reaching 21 points, or 0.1%.
Yesterday, the S&P 500 rose 12 points, or 0.2%, and the Nasdaq rose 139 points, or 0.8%, thanks to better-than-expected earnings and an optimistic outlook for electric car giant Tesla. The company’s stock price rose 21.9%, increasing its market capitalization by more than $140 billion.
The yield on the 10-year U.S. Treasury note has fallen after hitting a three-month high on Wednesday, leading to increased confidence in the stock market, experts say. Yields tend to move in the opposite direction to prices.
“U.S. yields are likely to adjust lower following the recent decline in U.S. Treasuries,” ING (AS:) analysts said in a note.
2. The parade of achievements continues
Investors will have a chance Friday to take a closer look at several companies’ quarterly results, as the reporting season gets underway with notable momentum.
Companies scheduled to report earnings include consumer products group Colgate-Palmolive (NYSE:) and auto retailer AutoNation (NYSE:), as well as owners of Yankee Candle and Rubbermaid.
After Thursday’s close, footwear companies Deckers Outdoor Corporation (NYSE:) and Skechers (NYSE:) surprised the market with strong earnings and sales results. Meanwhile, financial services provider Capital One (NYSE:) strengthened its financial position, not only reporting better-than-expected earnings per share, but also disclosing lower reserves.
The market remains focused on corporate earnings, which could help justify higher valuations for U.S. stocks. This dynamic becomes essential to understanding market evolution in an environment where expectations remain high.
3. Tapestry’s acquisition of Capri is blocked.
A U.S. judge has blocked the $8.5 billion merger agreement between luxury companies Tapestry and Capri, a major victory for federal regulators who filed a lawsuit earlier this year seeking to stop the merger from proceeding.
After seven days of testimony, Judge Jennifer L. Rochon ruled in favor of the Federal Trade Commission’s (FTC) request to suspend the agreement, allowing the companies to pursue formal proceedings on their own.
The FTC argued that the merger could “substantially reduce competition” in the affordable luxury handbag market and that the resulting entity could raise prices for consumers.
Shares in Capri, which owns the Versace brand, fell more than 50% in after-hours trading, while shares in Tapestry, Coach’s parent company, rose 12%.
Analysts at Vital Knowledge said the decision “underscores the tremendous regulatory pressure that U.S. companies face regarding mergers and acquisitions, given the current aggressive antitrust policies of the FTC and Department of Justice.” ”, he emphasized.
4. Mercedes-Benz profit decline
Mercedes-Benz’s third-quarter results highlighted the German luxury car maker’s “tough times”, characterized by declining electric car sales and weak demand in the Chinese market.
Between July and September, net profit plunged by 53.8% to 1.7 billion euros. This was mainly due to a 13% decline in sales in China, the world’s largest automobile market. Group sales also fell by 6.7% to €34 billion.
The company expects sales for the current quarter to remain “approximately” at the same level as the previous third quarter.
Mercedes-Benz, like rivals Volkswagen (ETR:) and BMW (ETR:), lowered its full-year outlook ahead of its earnings release. The company expressed its determination to “intensify all efforts to improve efficiency and optimize costs across the organization.”
The results sent Mercedes-Benz shares down more than 2% in early European trading.
5. Oil rise
Oil prices soared on Friday, nearing a weekly rise on the back of tensions in the oil-rich Middle East, which has kept the market active.
As of 3:37 a.m. ET, crude oil prices were up 0.4% at $74.71 per barrel and WTI futures were up 0.5% at $70.52 per barrel.
Both contracts are expected to rise nearly 2% this week as traders wait for Israel’s response to an Oct. 1 missile attack by Iran that could affect the world’s major oil producers.
U.S. and Israeli officials are expected to resume talks soon to negotiate a ceasefire and hostage release in the Gaza Strip. But hopes are limited given the history of failed attempts to reach a deal.
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