May 18, 2022

News of the Trade

Latest trading, investing, and financial news

U.S. stocks futures swing higher as S&P 500 fights off bear market territory

U.S. stock futures were pointing to a higher start for Wall Street at the end of a volatile week, after Federal Reserve Chairman Jerome Powell cooled speculation over the potential for 75-basis point rate hikes.

How are stock-index futures trading?
  • S&P 500 futures
    rose 1.1% to 3,971

  • Dow Jones Industrial Average futures
    231 points, or 0.7%, to 31,883.

  • Nasdaq-100 futures
    climbed 1.7% to 12,148

On Thursday, the Dow industrials
dropped 103.81 points, or 0.3%, to end at 31,730.30, about 500 points off the session’s low, but notching a sixth day of losses. The S&P 500 
slipped 0.1% to 3,930.08. The Nasdaq Composite 
rose 0.1% to 11,370.96.

What’s driving the markets?

The Fed is not “actively considering” a 75-basis point interest rate increase, Fed Chairman Powell repeated to Marketplace after the market close on Thursday, while also saying the central bank may not be able to engineer a “soft landing” for the economy.

Stocks pared losses on Thursday after the Senate confirmed Powell him to a second term.

But even if equities can manage a win on Friday, all three indexes are headed for sizable weekly losses, led by the Nasdaq, down 6.3% as of Thursday. That would mark the battered tech index’s sixth straight weekly loss, with the Dow industrials set to mark its seventh consecutive weekly loss, off 3.5%.

Down 4.6%, the S&P 500 is also poised to mark a sixth-straight weekly fall, as it also skirts bear market territory, defined as a drop of 20% from a recent peak. Off 18.1% from a Jan. 3 record high, the S&P would only need to close at or below 3,837.24 to enter a bear market.

Read: The S&P 500 is on the brink of a bear market. Here’s the threshold.

It would also mark the first time in over a decade that the index has seen six straight weeks of declines, pointed out a team of Deutsche Bank strategists led by Henry Hill.

“Unlike in April, when the equity declines were triggered by the prospect of a more aggressive Fed tightening cycle and went hand-in-hand with sovereign bond losses, this week’s declines have much more obviously surrounded global growth risks, which you can see in the way that Fed Funds futures are now beginning to take out some of the tightening they’d been pricing in over the year ahead,” said Hill.

The market has endured higher-than-forecast consumer prices this week, as well as continued high producer prices.

Read: Fed tightening comes ‘fraught with volatility’ in the stock market, but this JPMorgan portfolio manager says he isn’t betting on a U.S. recession

Economic data ahead includes April import prices at 8:30 a.m. Eastern, followed by the University of Michigan consumer sentiment index for May at 10 a.m. Eastern and comments by Minneapolis Fed President Neel Kashkari at 11 a.m. Eastern.

Some recovery in battered cryptocurrency markets opn Friday may also be helping sentiment overall, said analysts.

was trading at $30,360, after staging a slight recovery from a roughly 16-month low hit Thursday of $25,400, amid a collapse of some stablecoins, which are supposed to be pegged to the dollar.

Read: Why is UST, LUNA crashing? Collapse of a once $40 billion cryptocurrency, explained

Twitter Inc.
shares fell 19% in premarket trade after Elon Musk tweeted that the deal to buy the social-media company was “temporarily on hold.” Musk, the chief executive of electric vehicle maker Tesla Inc.
said the hold on the deal is “pending details supporting calculation that spam/fake accounts do indeed represent less than 5% of users.” Tesla shares rose 5.5%.

How are other assets trading?
  • Treasury yields were on the rise. The yield on the 10-year note
    rose 6 basis points to 2.875%, while that of the 2-year
    gained 6 basis points to 2.760%.

  • Oil futures rose modestly, with the U.S. benchmark
    up 1.9% above $108 a barrel. Gold futures 
    fell 0.5% toward $1,815 an ounce.

  • The Stoxx Europe 600 
    rose 1.4%, while London’s FTSE 100 UK:UKX gained 1.6%.

  • The Shanghai Composite CN:SHCOMP rose 0.9%, while the Hang Seng Index HK:HSI jumped 2.3% and Japan’s Nikkei 225 JP:NIK surged 2.6%.