5 Things to Know Before Tuesday’s Stock Market Opens

Here are five key things investors need to know to start the trading day:

The tech sector remained in focus yesterday, with Palantir Technologies delivering a robust Q3 performance, exceeding analysts’ expectations for both revenue and earnings per share. The company also issued an optimistic outlook for the current quarter.

Key takeaways:

• Palantir, a data analytics firm servicing both commercial and government clients, attributed its strong performance to the increasing demand for its artificial intelligence-powered solutions. The company’s ability to translate complex data into actionable insights remains a key differentiator.
• The company projects Q4 revenue of $1.33 billion, surpassing the LSEG consensus estimate of $1.19 billion. This forecast is particularly noteworthy given the ongoing government shutdown, which presents potential risks to Palantir’s government contracts. It signals a strong underlying demand for their software solutions despite macroeconomic headwinds.
• Despite initially surging after the earnings release, Palantir’s stock experienced a pullback in extended trading, declining more than 7%. This suggests that investors may be taking profits after the stock’s impressive run, with a 25-fold increase over the past three years and a year-to-date gain of 170%.
• CEO Alex Karp’s post-earnings call remarks drew attention, as he dismissed critics with a provocative, “Enjoy, get some popcorn, they’re crying.” Karp also addressed pressing issues like fentanyl overdoses and Palantir’s software development for U.S. Immigration and Customs Enforcement (ICE), showcasing the company’s involvement in critical, yet controversial, areas.
• In other tech news, Amazon closed at a record high following the announcement of a $38 billion cloud services deal with OpenAI, reinforcing the ongoing AI arms race and the rising integration of large language models into cloud infrastructure.
• Uber shares are trading down 4% pre-market despite solid third-quarter revenue figures, highlighting the challenges ride-sharing companies face in achieving sustained profitability amid regulatory scrutiny and rising operational costs.

Yum Brands, the parent company of Pizza Hut, KFC, and Taco Bell, announced it’s exploring strategic alternatives for Pizza Hut, potentially including a sale. This decision comes after Pizza Hut experienced a slump in sales after a peak during the pandemic.

Yum Brands CEO Chris Turner said, “Pizza Hut’s performance indicates the need to take additional action to help the brand realize its full value, which may be better executed outside of Yum! Brands.” The move suggests Yum Brands wants to streamline its operations and focus on higher-growth brands.

The announcement coincides with Yum Brands’ Q3 earnings, which narrowly surpassed revenue expectations. Analysts point to these earnings reports reflecting a broader trend in the consumer market, suggesting a “K-shaped” economic recovery, with certain sectors thriving while others struggle.

Kimberly-Clark, the company behind brands like Huggies and Kleenex, is set to acquire Kenvue, the maker of Tylenol and Band-Aid, in a substantial $48.7 billion deal. The potential combination of these consumer giants could create a dominant player in the personal care and household products market.

The acquisition triggered a mixed market reaction, with Kimberly-Clark shares falling 14% and Kenvue shares rising 12%. This divergence suggests investor concern about the financial implications for Kimberly-Clark, balanced by the perceived value realization for Kenvue shareholders.

The deal comes on the heels of President Trump making controversial and unfounded claims about acetaminophen (Tylenol) use during pregnancy and potential links to autism. Despite the controversy, Kimberly-Clark CEO Mike Hsu reported limited impact on Tylenol sales, describing the brand as “resilient,” showcasing the enduring consumer trust in established brands amidst public debates.

The Trump administration announced it will tap into contingency funds to cover 50% of SNAP (Supplemental Nutrition Assistance Program) benefits for November. This decision comes after a Rhode Island judge blocked the administration from halting benefits during the ongoing government shutdown, which is poised to become the longest in history.

In related legal news, state attorneys general filed a lawsuit in Boston challenging the administration’s tightened eligibility rules for the Public Service Loan Forgiveness (PSLF) program. The challenge centers on the rule’s definition of “qualifying employer,” specifically the exclusion of organizations “that engage in unlawful activities,” a move seen as unfairly restricting access to loan forgiveness for public service workers.

Starbucks is restructuring its China operations through a $4 billion joint venture with Boyu Capital, an alternative asset management firm. Boyu Capital will assume the management of Starbucks’ China business, aiming to revitalize sales in a highly competitive market.

The agreement will see Boyu Capital holding up to a 60% stake of the entity while Starbucks will retain 40%. This new strategic partnership aims to boost performance in Starbucks’ China business, valued at over $13 billion, which has faced challenges due to the pandemic and competition from local players like Luckin Coffee. Discount strategies implemented to attract customers have impacted the company’s average ticket price and overall profitability.

Stellantis is making a significant $13 billion investment in its U.S. operations, signalling a commitment to the American market. The investment aims to drive a turnaround for the automaker, known for its Jeep and Ram brands potentially through the expansion of electric vehicle production and advanced technology integration.