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Pre-market futures are down this hour, to start a new trading week. Anywhere between half a point and a full percentage point have rolled off the major indexes, with no major economic reports released ahead of today’s open. The Dow is -225 points at this hour, the S&P 500 is -40 and the Nasdaq is -185 points.
Warren Buffett Announces End of an Era
The biggest investment news over the weekend came in the rather abrupt announcement by Berkshire Hathaway (BRK.B) that its long-time CEO, legendary investor Warren Buffett, will be stepping down from his post as of the beginning of next year. After 60 years at the helm of the $1.6 trillion conglomerate, Buffett plans to hand the reins to Vice Chair Charles Abel, while staying on as Chairman of the Board. Shares are down -2.5% in pre-market trading this Monday.
The stock market world seemed surprised by this announcement, even though Buffett turns 95 this coming summer. The announcement itself came rather suddenly: in the final moments of Buffett’s Saturday address, he gave his news, which will be a true “end of an era.” Perhaps once investors become used to Greg Abel’s manner and executive style, Berkshire shares may find their equilibrium.
Berkshire currently has around $350 billion in cash; lots of speculation about whether the company turns this into windfall dividends or share buybacks — or perhaps investing in new companies — once Buffett’s hands are off the controls. The company has outperformed the S&P 500 over the past year: roughly +33% versus +18%.
Quarterly Earnings This Morning: Tyson Foods, Cummins
Chicken-producing giant Tyson Foods TSN posted fiscal Q2 results ahead of today’s opening bell, posting mixed results. Earnings of 92 cent per share outpaced the Zacks consensus of 85 cents, although in-line revenues with the year-ago quarter, $13.07 billion, missed estimates by -0.18%. The company reaffirmed its earnings outlook, but shares are down -2% in today’s early trading.
Midwestern engine maker Cummins Inc. CMI posted a strong Q1 earnings numbers this morning: $5.96 per share far surpassed the $4.82 consensus, by more than +23%. Revenues were slightly ahead of expectations: $8.17 billion versus $8.07 billion anticipated. The company withdrew future earnings guidance based on still-unforeseen tariff implications, and the stock is flat this morning, despite the big earnings beat.
What to Expect from Today’s Stock Market
After the opening bell this morning, we’ll see the final print on S&P Services PMI and ISM Services. Both are expected to come down a tad from the initial reports, but remain above the 50 threshold which determines growth from retraction. In last week’s jobs numbers, particularly in the private-sector ADP ADP report, the Services sector has shown some signs of relative weakness. Any downward surprise to these numbers today may remind investors of this.