Top 5 Market Insights for August 22, 2023: Microsoft Activision Deal, Zoom Earnings & More

Market Highlights for August 22, 2023

As financial markets prepare to open, here are five critical updates investors should know today. Microsoft has advanced its $69 billion bid to acquire Activision Blizzard with a new proposal to UK regulators, while Zoom's stock surged following stronger-than-expected quarterly earnings driven by enterprise growth. Additionally, Kenvue joins the S&P 500 index, Lowe’s reports robust spring sales, and economists anticipate a slight dip in July’s existing home sales.

1. Microsoft Presents Updated $69 Billion Activision Blizzard Acquisition Plan to UK Regulators

Microsoft Corporation (MSFT) has submitted an enhanced proposal to UK regulatory authorities aiming to finalize its $69 billion acquisition of gaming giant Activision Blizzard (ATVI). This new plan includes a commitment to transfer rights for existing and upcoming Activision titles to Ubisoft Entertainment SA, a French game developer. The merger has already cleared EU approvals in May and June, and Microsoft recently won a favorable court ruling against the Federal Trade Commission’s opposition. Pre-market trading saw Microsoft shares rise by 0.5%, while Activision's stock gained 1%.

2. Zoom’s Shares Climb 4% Following Earnings That Surpass Expectations

Zoom Video Communications (ZM) experienced a 4% increase in pre-market trading after reporting quarterly earnings that outperformed analyst forecasts. The company’s enterprise segment showed strong momentum, complemented by extended sales cycles and cost reductions in cloud services, sales, and marketing. Zoom posted earnings per share of $1.34 for Q2, exceeding the anticipated $1.05, alongside revenues of $1.14 billion, surpassing the $1.12 billion estimate.

3. Kenvue Joins S&P 500, Replacing Advance Auto Parts

Kenvue (KVUE), the newly independent consumer health brand spun off from Johnson & Johnson (JNJ), will officially enter the S&P 500 index starting this Friday. This inclusion may positively influence Kenvue’s stock due to index fund purchases. Kenvue replaces Advance Auto Parts (AAP) on the index. Pre-market activity showed Kenvue shares up 1.3%, Advance Auto Parts down 0.5%, and Johnson & Johnson shares remaining steady.

4. Lowe’s Reports Earnings Beat Driven by Strong Spring Sales

Home improvement retailer Lowe’s Companies, Inc. (LOW) reported a modest 1.6% decline in comparable quarterly sales, outperforming analyst expectations of a 2.6% drop. The company credited a robust spring season and growth in its professional and online sales segments for offsetting challenges such as lumber price deflation and reduced DIY demand. Lowe’s posted earnings of $4.56 per share, beating the forecast of $4.47, with revenues hitting $25 billion, in line with estimates. Shares rose 2.5% in pre-market trading.

5. July Existing Home Sales Forecasted to Slightly Decline

Economists predict a minor decrease in existing home sales for July, estimating 4.15 million units sold compared to 4.16 million in June. The official data release is scheduled for 10 a.m. ET. Additionally, Federal Reserve officials will deliver speeches throughout the day, including Richmond Fed President Tom Barkin at 7:30 a.m. ET, and Chicago Fed President Austan Goolsbee along with Fed Governor Michelle Bowman at 2:30 p.m. ET.

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