Here are the top news, trends and analysis that investors need to start their trading day:
1. Stock futures fall after Wall Street extends its multi-day losing streak
Traders on the floor of the New York Stock Exchange, May 11, 2022.
US stock futures fell on Thursday as the massive selling continued and risky assets revalued with nowhere to hide. Emphasis on moderately moderate inflation did not move the needle.
- The morning after the earnings, the Dow Disney component was down nearly 5% to $100 per share in the primary market.
- Apple, which had recently fallen behind with the rest of the market, was ousted as the world’s most valuable company by oil giant Saudi Aramco.
- Both Ford and General Motors fell sharply in the primary market. Wells Fargo lowered both stocks’ ratings by two notches to underweight from overweight, saying 2022 could be a “peak earnings” for legacy automakers.
- Bitcoin and the recent downturn in the entire cryptocurrency market intensified on Thursday.
- Treasury prices, which move inversely to yields, jumped as investors sought the perceived safety in bonds.
- On Wednesday, the Dow Jones Industrial Average, S&P 500 and Nasdaq were down 1%, more than 1.6% and about 3.2%, respectively, as multi-day losses mounted.
2. Wholesale inflation rose 11% in April as producer prices continue to rise
People work at the Rivian Electric Vehicle plant in Normal, Illinois, April 11, 2022.
Camille Krzaczynski | Reuters
The Producer Price Index, the second major inflation report for the week, rose 0.5% in April, as expected. The core rate, which does not include food and energy prices, rose less-than-expected 0.4%. On a yearly basis, the PPI for April rose 11% and the core rose 8.8%. On Wednesday, April consumer prices posted another strong advance, albeit at a slightly slower rate.
- The second pillar reading of the Fed’s dual mandate to promote price stability and maximize employment was also out ahead of Thursday’s opening bell. Initial jobless claims for the week ending May 7 rose slightly to 203,000. Estimates called for fewer first-time claims than last week.
- While falling early Thursday, bond yields rose to multi-year highs, with the 10-year Treasury yield rising to 3%, as traders revolted against the Federal Reserve, worried that inflation would remain high even as the economy slows.
3. Bitcoin drops to 16-month lows while the entire cryptocurrency market plummets
Bitcoin at one point fell below $27,000 Thursday for the first time in more than 16 months, as the cryptocurrency market extended its losses, in part, on fears of rising inflation. Bitcoin, which has been promoted as a store of value like gold by supporters, has been trading alongside technology stocks and Nasdaq recently. The world’s largest cryptocurrency is down 60% from its all-time high in November.
- Tether, the world’s largest stablecoin, breached below its one-dollar peg on Thursday, adding to market fears after the collapse of the Terra stablecoin protocol. TerraUSD, or UST, is also supposed to reflect the value of the dollar, but it fell below 30 cents on Wednesday, further denting investor confidence in decentralized finance. TerraUSD was trading about 45 cents on Thursday.
4. Disney sinks as CFO warns streaming won’t be strong later this year
In this photo illustration, a hand is holding a TV remote in front of the Disney Plus logo on the TV screen.
Rafael Henrique | soba pictures | Light Rocket | Getty Images
Disney shares initially rose in after-hours trading on Wednesday. But they quickly turned lower after the company’s chief financial officer acknowledged that the second half of the year may not be as strong as the first when it comes to live broadcasts. Disney+ ended its fiscal second quarter with 137.7 million subscribers, 7.9 million more than a year ago and better than estimates. Investors were eager to see those Disney+ numbers after Netflix last month reported a drop in paying subscribers for the first time in more than 10 years.
- Disney’s fiscal second-quarter revenue rose 23% to $19.25 billion, buoyed by strong sales at theme parks. Revenue would have been $1 billion higher, had it not been for the early termination of some licensing agreements to make more content available for streaming. Disney reported adjusted earnings of $1.08 per share.
5. After meat prices fell after a wider-than-expected quarterly loss, revenue slumped
Ethan Brown, Founder, President and CEO of Beyond Meat.
Adam Jeffrey | CNBC
Shares of Beyond Meat fell 25% Thursday, the next morning after the maker of plant-based meat alternatives reported larger-than-expected quarterly losses and lower-than-expected revenue. The company cited a number of areas that were a drag on the results, including steep discounts, cheaper prices for international consumers and the launch of the vegan jerky, which significantly impacted margins.
- In an effort to calm investors, management said the first quarter just reported is expected to be a low point for margins in 2022, and jerky production should be more efficient by the second half of this year. Beyond Meat reiterated its full-year revenue forecast of $560 million to $620 million.
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