Coffee With Greta: Stocks Drop As Tensions Ramp Up With China

DJIA Futures: -181 (-0.6%)

SPX Futures: -29 (-0.7%)

NASDAQ Futures: -123 (-1%)

Good morning friends!

Futures are slipping as tensions rise between the U.S. and China.

Let’s get right to it!

China Tensions Boil Ahead of Pelosi’s Taiwan Trip 

Tensions are rising between the U.S. and China as House Speaker Nancy Pelosi is expected to visit Taiwan. 

Reuters reported Pelosi will travel to Taiwan today and stay overnight.

Chinese officials reportedly threatened to take action if she went through with the trip. 

The Chinese foreign ministry spokesman said, “We would like to tell the United States once again that China is standing by, the Chinese People’s Liberation Army will never sit idly by, and China will take resolute responses and strong countermeasures to defend its sovereignty and territorial integrity.”

Pelosi would be the first House Speaker to visit Taiwan since Newt Gingrich in 1977.

Pinterest Pops On Strong User Numbers

Pinterest (PINS) shares are surging 18.8% ahead of the open after reporting better than expected Q2 user numbers.

The social media site reported adjusted earnings of $0.11 per share on $666 million in revenue. 

That missed analysts’ expectations for adjusted EPS of $0.18 on $667 million in revenue. 

Pinterest’s global monthly active users fell 5% year over year to 433 million. 

That beat analysts’ estimates for a decline to 431 million. 

The company attributed the financial miss to the weakening advertising market. 

Pinterest’s outlook was also weak. 

The company said it expects Q3 revenue growth in the mid-single digits” annually vs analysts’ expectations for 12.7% growth.

The company said, “The macroeconomic environment has created meaningful uncertainty for our advertiser partners.”

Separately, activist investment group Elliott Management confirmed it is Pinterest’s largest shareholder and expressed confidence in the business.

The group said, “As the market-leading platform at the intersection of social media, search and commerce, Pinterest occupies a unique position in the advertising and shopping ecosystems, and CEO Bill Ready is the right leader to oversee Pinterest's next phase of growth.” 

Uber Jumps On Revenue Beat

Uber (UBER) shares are rallying 13.8% in premarket trade after reporting mixed Q2 results. 

The ride-share giant reported a loss of $1.33 per share on $8.07 billion in revenue. 

That was worse than analysts’ expectations for a loss of $0.27 per share but topped estimates for $7.4 billion in revenue. 

The quarter included a $1.7 billion headwind due to equity investments.

Uber had $382 million in free cash flow during the quarter, becoming cash flow positive for the first time ever. 

The CFO said, “We became a free cash flow generator in Q2, as we continued to scale our asset-light platform, and we will continue to build on that momentum.”

Uber forecast Q3 adjusted EBITDA between $440 million and $470 million, crushing analysts’ estimates for $383.2 million. 

JetBlue Slips As Costs Surge

JetBlue (JBLU) shares are falling 4.1% ahead of the open after missing Q2 expectations as costs surged. 

The airline reported an adjusted loss of $0.47 per share on $2.44 billion in revenue. 

That was worse than analysts’ estimates for an adjusted loss of $0.11 on $2.45 billion in revenue. 

That miss came as cost per available seat mile surged nearly 35% compared to 2019.

JetBlue forecast it will return to profitability in the third quarter but capacity will still be 3% lower than Q3 2019.

The CEO said, “We reported a record-breaking revenue result for the second quarter, and we’re on pace to top it again here in the third quarter and drive our first quarterly profit since the start of the pandemic.”

The company forecast cost per available seat mile, excluding fuel, will rise 15% to 17% in the current quarter. 

Avis Budget Crushes Q2 Expectations

Avis Budget (CAR) shares are up 4.6% in premarket trade after sharply beating Q2 expectations. 

The rental car company reported adjusted earnings of $15.94 per share on $3.24 billion in revenue. 

That smashed analysts’ expectations for adjusted EPS of $11.48 on $3.17 billion in revenue. 

Profits surged more than 170% year over year, while revenue jumped 36.7% annually.

Avis executives said it was a record-breaking quarter for revenue. 

The CEO said those results were driven by “enhanced revenue generation, diligent fleet management, and stringent cost control.”

Oil Prices Flat 

Oil prices are flat today as the back and forth between demand concerns and supply worries continues. 

West Texas Intermediate crude futures are up 0.7% to $94.50 bbl while Brent crude futures are up 0.5% to $100.50 bbl. 

Concern over lower demand mounted on Monday after new data showed a manufacturing downturn across the U.S., Europe, and Asia. 

But Wednesday’s OPEC+ meeting is still in focus as the group is set to decide on September output levels. 

The American Petroleum Institute releases its data on U.S. crude and gasoline inventories later today.

Gas Prices Are Still Falling

U.S. gas prices fell for the 47th day in a row today.

AAA shows the national average for regular gas fell to $4.189/gal.

The national average for diesel is down to $5.257/gal.

Coming Up: JOLTS

The Labor Department releases its June Job Openings and Labor Turnover Survey (JOLTS) at 10:00 a.m. ET. 

That survey is expected to show there were 11 million job openings in June. 

Although that would be a decline from 11.3 million in May, it would still show a major labor gap in the U.S. economy. 

There were 5.9 million unemployed workers in June.

In Case You Missed It

• The Commerce Department reported Monday that construction spending tumbled 1.1% in June, sharply missing expectations for a 0.4% gain. Spending on private residential construction projects fell 1.6% while residential public construction spending rose 0.5%. Private nonresidential spending and public nonresidential spending both fell 0.5%.