Before the Bell: Markets Await Inflation Data; More Lord of the Rings Coming

Premarket action Friday had the three major U.S. indexes trading lower. The Dow Jones industrials were down 0.53%, the S&P 500 0.65% lower and the Nasdaq down 1.00%. Economic data due out in the morning is not expected to boost demand for equities.

Seven of 11 market sectors closed higher Thursday. Technology (1.63%) and energy (1.27%) added the most. Communications services (−0.66%) and utilities (−0.48%) posted the largest losses. The Dow closed up 0.33%, the S&P 500 up 0.53% and the Nasdaq 0.42% higher.

Two-year Treasuries closed unchanged at 4.66% on Thursday, and 10-year notes slipped by five basis points to close at 3.88%. In Friday’s premarket, two-year notes were trading at around 4.72% and 10-year notes near 3.91%.

Oil traded up by 1.9% Thursday, and it traded up by 1.12% early Friday morning at $76.22.

Thursday’s trading volume was slightly below the five-day average. New York Stock Exchange winners outpaced losers by 2,023 to 1,027, while Nasdaq advancers led decliners by about 4 to 3.

Two closely watched economic reports will be released Friday morning. The Federal Reserve’s favorite inflation measure is part of the monthly report on personal consumption expenditures (PCE), due before markets open. January personal income is expected to rise by 0.9% and spending is forecast to rise by 1.3%. PCE prices and core prices are expected to rise by 0.4% month over month.

The Census Bureau’s monthly report on new home sales is due out after markets open. Sales are forecast to rise by 4,000 to 620,000.

Among S&P 500 stocks, Nvidia Corp. (NASDAQ: NVDA) added 14.02% Thursday after reporting better-than-expected earnings and sales late Wednesday, and tossing traders and analysts some red meat about the company’s AI-as-a-service offering. Nvidia also raised first-quarter revenue guidance.

Domino’s Pizza Inc. (NYSE: DPZ) dropped 11.65% after missing the consensus revenue estimate when it reported quarterly results Thursday morning. Profits beat expectations, but the company was hit by higher delivery expenses and is worried that its delivery business may continue to suffer as consumers’ disposable income remains strained.

When Warner Bros. Discovery Inc. (NASDAQ: WBD) reported fourth-quarter results late Thursday, the company with the worst CEO of 2022 missed both profit and revenue estimates and said it did not know when its business would improve. David Zaslav, that chief executive, said that 2023 will be a rebuilding year, not a restructuring year, as was 2022. Shares traded down about 5% in Friday’s premarket.

Warner paid off $7 billion in debt and only has another $43 billion or so to go before it wipes out the cost of acquiring Warner Media. To make its nut, the company is going to replow the fertile fields Superman, Batman, Harry Potter and J.R.R. Tolkien.

No more trying to do anything new and different. Sticking to the same old, same old is what will keep Zaslav’s pay at the top of the CEO pay scale. If the plan works, Zaslav may not be a genius, but he will be handsomely rewarded. If the plan fails, well, it should have worked because all the studio’s big brains said it should.

The company’s studio heads, Mike De Luca and Pam Abdy, have signed a deal to make “multiple” films based on Tolkien’s books. The original Lord of the Rings trilogy of movies scored some $3 billion at the box office, as did the Hobbit trilogy that followed. The films will be developed under the studio’s New Line Cinema brand. So far, there are few details, although director Peter Jackson, who led the original trilogies, told Variety that Warner has kept him in the loop “every step of the way.”

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While Warner owns theater rights to Lord of the Rings, the TV rights belong to Amazon.com Inc. (NASDAQ: AMZN). The e-commerce behemoth spent a reported $465 million to make a single season of a prequel to Lord of the Rings, for which it also paid a reported $1 billion in 2017 to get the rights. A second season is due next year.