Futures point lower, WeWork files for bankruptcy - what's moving markets

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Futures point lower, WeWork files for bankruptcy - what's moving markets
Credit: © Reuters.

Investing.com -- U.S. futures drop as traders attempt to gauge the staying power of a recent rally on Wall Street. WeWork files for bankruptcy following a post-COVID downturn in demand for office space , while UBS reports its first quarterly loss since 2017 on expenses tied to its shotgun marriage with rival Credit Suisse.

1. Futures slip

U.S. stock futures dipped on Tuesday, pointing to some pullback from recent gains, as investors weighed the relative strength of the rally.

By 04:58 ET (09:58 GMT), the Dow futures contract had shed 88 points or 0.3%, S&P 500 futures lost 11 points or 0.3%, and Nasdaq 100 futures slid by 32 points or 0.2%.

The main indices on Wall Street ended the prior session in the green, with both the benchmark S&P 500 and 30-stock Dow Jones Industrial Average posting their first six-day winning streak since the summer. The tech-heavy Nasdaq Composite also rose to its seventh-consecutive positive session.

Stock markets reopened on Monday after finishing up their best week of the year so far on Friday, boosted by hopes that the Federal Reserve may soon move to cut interest rates. However, traders are still eyeing a relatively uncertain outlook for both growth and inflation as they attempt to assess the U.S. central bank's policy path.

2. WeWork files for bankruptcy

WeWork (NYSE: WE ) has filed for bankruptcy in a New Jersey court, as the flexible co-working space provider founded by Adam Neumann and backed by SoftBank (TYO: 9984 ) grapples with a post-pandemic downturn in office occupancy and expensive leases.

In a statement on Monday, WeWork said it was moving to reorganize its operations to strengthen its capital structure and financial performance, adding that it has the backing of its stakeholders to "drastically reduce its existing funded debt." WeWork previously flagged in August that its $2.9 billion in net long-term debt and over $13B in long-term leases raised "substantial doubt" around its ability to operate.

The firm noted that its locations outside of the U.S. and Canada, as well as its franchisees around the world, would not be impacted by the bankruptcy process.

Once celebrated as the possible future of global office spaces, WeWork's occupancy rate in its latest quarter remained well under its projections, while first-half cash operating profits were negative. Its market capitalization has now slipped to around $40 million -- far below the $47B valuation previously attached to the business by private equity in 2019.

3. UBS posts quarterly loss, dragged down by Credit Suisse takeover costs

UBS (SIX: UBSG ) has reported a wider-than-anticipated $785 million loss in the third quarter, as the Swiss lender was hit by costs related to the ongoing integration of former peer Credit Suisse.

The merger -- the first tie-up of two systemically-crucial banks -- was overseen by the Swiss government earlier this year to prevent Credit Suisse from collapsing. Credit Suisse is now a subsidiary of UBS and is expected to become legally merged with its traditional rival next year.

UBS Chief Executive Sergio Ermotti stressed in a statement that the bank is folding Credit Suisse into its operations at pace, adding that "strong inflows" were booked at its key wealth management division. The unit raked in net new money of $22 billion thanks in large part to an influx of fresh clients.

Elsewhere on Tuesday, ride-sharing platform Uber Technologies (NYSE: UBER ) and energy group Occidental Petroleum (NYSE: OXY ) are also due to unveil their latest quarterly earnings.

4. Chinese imports grow

China's imports unexpectedly expanded in October, fueling cautious optimism for a rebound in domestic demand, although a deeper-than-projected fall in exports highlighted potential risks to the world's second-largest economy.

Imports into the country grew 3%, topping expectations for a decline of 4.8%, and improving from a 6.2% drop in September, in a sign that a slew of support measures from Beijing may be supporting a tentative comeback. However, China still faces pressures from a protracted real estate crisis and relatively soft global economic conditions.

Meanwhile, Chinese exports slid by 6.4% year-on-year in October, missing expectations for a decline of 5.4% and accelerating from a 6.2% drop in the prior month.

Business activity data for October released last week had shown that local firms -- particularly in the manufacturing sector -- were suffering from weakening overseas demand, as foreign importers dealt with increased pressure from elevated interest rates and sticky inflation.

5. Saudi Aramco profit slumps

Saudi Aramco 's (TADAWUL: 2222 ) third-quarter income dropped by 23% in the third quarter, reflecting a downturn in oil prices and volumes that was only partially offset by a reduction in production royalties.

Net profit during the three months ended on Sept. 30 dipped to $32.6B, although this was still above the $31.8B estimated in a company-compiled forecasts. Shares in the company were flat on Tuesday.

The results echo similar year-on-year declines in earnings at other energy groups like Exxon Mobil (NYSE: XOM ) and Chevron (NYSE: CVX ). Worries over the global economy have weighed on crude prices this year, denting results at these firms.

Oil prices slipped on Tuesday, with the mixed Chinese trade data adding to concerns over sluggish demand in the world's top crude importer.

By 04:58 ET, the U.S. crude futures traded 2.0% lower at $79.20 a barrel, while the Brent contract dropped 1.9% to $83.53 per barrel. Both contracts were nursing steep losses over the past week, amid growing expectation that the Israel-Hamas war will not disrupt supply in this oil-rich region.

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