By Investing.com — US stock futures were muted on Friday as investors assessed a string of corporate earnings and looked ahead to more quarterly results. A US judge blocks a multi-billion dollar merger between luxury groups Tapestry (NYSE:TPR) and Capri (NYSE:CPRI), handing a victory to federal regulators who had sued to keep the deal from moving ahead. Mercedes Benz (ETR:MBGn) pledges to cut costs after the luxury carmaker reported a steep drop in profits due largely to soft demand in China.
1. Futures muted
US stock futures hovered around the flatline on Friday after the benchmark S&P 500 and tech-heavy Nasdaq Composite both gained in prior session thanks in large part to a spike in shares in Tesla (NASDAQ:TSLA).
By 03:37 ET (07:37 GMT), the Dow futures contract and S&P 500 futures were mostly unchanged, while Nasdaq 100 futures had inched up by 21 points or 0.1%.
On Thursday, the S&P 500 rose by 12 points or 0.2% and the Nasdaq advanced by 139 points or 0.8%, propelled higher by better-than-expected earnings and an upbeat outlook from electric vehicle giant Tesla. The company’s stock price surged by 21.9%, heaping more than $140 billion on to its market capitalization.
The 10-year US Treasury yield also retreated from a three-month high touched on Wednesday, further bolstering sentiment in equities, analysts said. Yields typically move inversely to prices.
“US yields were probably due an adjustment lower after the recent Treasury selloff,” analysts at ING said in a note.
2. Earnings parade marches on
Investors will have the chance to parse through corporate quarterly results on Friday as earnings season marches on.
Consumer products group Colgate-Palmolive (NYSE:CL) and automotive retailer AutoNation (NYSE:AN) are both due to report, as well as Yankee Candle and Rubbermaid owner Newell Brands.
Following the close of trading on Thursday, footwear firms Deckers Outdoor Corporation (NYSE:DECK) and Skechers (NYSE:SKX) both posted solid earnings and sales, while financial services provider Capital One (NYSE:COF) topped per-share income expectations and unveiled lower provisions.
Markets have been closely monitoring companies’ returns, which could provide some justification for increasingly rich valuations in US stocks.
3. Tapestry blocked from acquiring Capri
The $8.5 billion merger deal between US luxury players Tapestry and Capri has been blocked by a US judge, in a win for federal regulators who have sued to keep the tie-up from moving forward earlier this year.
Following an eight-day trial in New York, Judge Jennifer Rochon ruled in favor of the Federal Trade Commission’s call to pause the deal so it can run its own official proceedings.
The FTC has argued that the merger likely will “substantially lessen competition” in the market for accessible-luxury handbags and allow the combined entity to raise prices for consumers.
Shares in Versace-owner Capri shed more than half of their value in after-hours trading, while Coach-parent Tapestry rose 12%.
The decision “underscores the huge regulatory pressures facing Corporate America when it comes to M&A with the aggressive antitrust policies at the current FTC/[Department of Justice],” analysts at Vital Knowledge said.
4. Mercedes-Benz profit slides
Third-quarter income at Mercedes-Benz more than halved, with the German luxury carmaker highlighting “challenging times” marked by a slumping electric vehicle sales and weak demand in China.
For the July to September period, net profits plunged by 53.8% to 1.7 billion euros, weighed down in particular by a 13% drop in sales in China — the world’s largest automotive market. Group-wide revenue slipped by 6.7% to 34 billion euros.
Sales in the current quarter are tipped to be “in the vicinity” of its third quarter figure, the firm said.
Mercedes-Benz, which joined rivals Volkswagen (ETR:VOWG_p) and BMW (ETR:BMWG) in slashing its annual outlook prior to the earnings, added it would “step up all efforts on further efficiency increases and cost improvements across the business.”
Shares in Mercedes-Benz dipped by more than 2% in early European trading.
5. Oil rises
Oil prices edged higher Friday, on track for a weekly gain as tensions in the crude-rich Middle East ensured a risk premium remained within the market.
By 03:37 ET, the Brent contract climbed 0.4% to $74.71 per barrel, while U.S. crude futures (WTI) traded 0.5% higher at $70.52 per barrel.
Both contracts are on course to register gains of around 2% this week as traders await Israel’s response to a missile attack by Iran on Oct. 1 that could disrupt from the world’s top oil-producing region.
US and Israeli officials are set to restart talks for a ceasefire and the release of hostages in Gaza in the coming days, but hopes are not high as a number of previous attempts to reach a deal have failed.