5 Things to Know Before the Stock Market Opens

Gold (GOLD) prices are edging higher after hitting a record Tuesday; shares of Dutch semiconductor company ASML Holding (ASML) and other chip firms are sinking in premarket trading as the Biden administration reportedly considers imposing stricter trade restrictions on foreign chip firms’ China businesses; Elon Musk says that he is moving the headquarters of social media platform X and SpaceX to Texas from California; Johnson & Johnson (JNJ) is edging lower after reporting a profit miss; and shares of Five Below (FIVE) are plunging after the struggling discount retailer says Chief Executive Officer (CEO) Joel Anderson had quit and second-quarter sales would drop. U.S. stock futures are falling after the Dow Jones Industrial Average and S&P 500 both finished at record highs Tuesday. Here’s what investors need to know today.

1. Gold Gains After Setting Record High

Gold (GOLD) prices are edging higher in early trading Wednesday after hitting a new record high yesterday as investors move into the precious metal amid rising expectations that the Federal Reserve will lower its benchmark interest rate in September. The prospect of lower interest rates is sometimes seen as bullish for gold since the precious metal can appear more attractive relative to other assets, like Treasurys, in such an environment. Investors may also be turning to gold as a hedge against economic and geopolitical uncertainty. Market participants’ view of a September rate cut comes as a slew of data shows inflation is moderating and economic activity is slowing—an indication that the Fed’s two-year campaign of high interest rates is having its intended effect.

2. ASML Slumps as U.S. Considers Stricter Restrictions on Foreign Chip Firms in China

Shares of Dutch semiconductor company ASML Holding (ASML) are sinking 8% in premarket trading on a report that the Biden administration is considering imposing stricter trade restrictions on foreign semiconductor companies that it sees as giving China access to advanced chip technology. According to Bloomberg, the White House is considering whether to impose the foreign direct product rule, or FDPR, which allows the U.S. to impose controls on goods made overseas that use even a little American technology. The rule would be used to crack down on the business in China of ASML, whose lithography technology is essential in producing semiconductor chips en masse, as well as Japanese chip maker Tokyo Electron, the report said. The report is also hitting share prices of others in the sector, including Nvidia (NVDA) and Taiwan Semiconductor Manufacturing Company (TSM), which are down 4% and 5%, respectively.

3. Musk Announces Plans to Move X, SpaceX HQs to Texas From California

Elon Musk said that he is moving the headquarters of social media platform X Corp. and rocket company SpaceX to Texas from California. The Tesla (TSLA) CEO’s announcement comes days after he endorsed Donald Trump for president. He attributed the decision to leave California to the move by Gov. Gavin Newsom to sign into law a rule preventing schools from telling families if their children identify as gay or transgender. “This is the final straw. Because of this law and the many others that preceded it, attacking both families and companies, SpaceX will now move its HQ from Hawthorne, California, to Starbase, Texas,” he said in a post on X, adding that “X HQ will move to Austin.” 

4. Johnson & Johnson Posts Q2 EPS Miss, Lowers Adjusted EPS Outlook

Johnson & Johnson (JNJ) shares are edging lower after the healthcare giant posted lower-than-forecast second-quarter profit. Earnings per share (EPS) of $1.93 was 5.9% lower than a year earlier and below analysts’ estimate of $2.33, according to consensus expectations compiled by Visible Alpha. Revenue of $22.45 billion was slightly above estimates. The company lowered its full-year 2024 adjusted operational EPS guidance to $10.05 from the $10.68 outlook issued in April, to reflect the impact of acquisitions like cardiovascular catheter maker Shockwave Medical.

5. Five Below Plunges as Discount Retailer Replaces CEO, Projects Sales Drop

Shares of Five Below (FIVE) are plunging 15% in premarket trading after it said its chief executive had quit and second-quarter comparable sales would fall by as much as 7%. The discount retailer has been grappling with weak results as inflation hurts its low-income customers. Joel Anderson, who has been with the company for a decade, has stepped down as CEO and president, as well as from the board, “to pursue other interests.” He will be replaced on an interim basis as CEO and president by Chief Operating Officer (COO) Kenneth Bull.

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