Here are the most important news, trends and analysis that investors need to start their trading day:
Traders on the floor of the NYSE, May 11, 2022.
U.S. stock futures dropped Thursday as the broad sell-off and revaluation of risk assets continued with little place to hide.
- The morning after earnings, Dow component Disney dropped more than 4.5% to around $100 per share in the premarket.
- Apple, recently slumping with the rest of the market, has been dethroned as the world’s most valuable company by oil giant Saudi Aramco.
- Ford and General Motors both fell sharply in the premarket. Wells Fargo downgraded both stocks two notches to underweight from overweight, saying 2022 could be “peak profits” for legacy automakers.
- Bitcoin and the entire crypto market’s recent downturn intensified Thursday.
- Treasury prices, which move inversely to yields, jumped as investors sought the perceived safety of bonds.
Whether yields stay lower likely depends on Thursday’s before-the-bell release of April wholesale inflation data, one day after consumer prices logged another strong advance, albeit at a slightly slower rate. The Dow Jones Industrial Average, the S&P 500 and the Nasdaq on Wednesday fell 1%, more than 1.6% and nearly 3.2%, respectively, as multiday losses mounted.
People work at the Rivian Automotive electric vehicle factory in Normal, Illinois, April 11, 2022.
Kamil Krzaczynski | Reuters
April’s producer price index, this week’s second major inflation report, is set for release by the government at 8:30 a.m. ET. Economists expect a 0.5% April headline increase and a 0.6% advance in the core rate, which excludes food and energy prices. In March, headline PPI jumped 1.4% and the core rate rose 1%.
A read on the second pillar of the Federal Reserve‘s dual mandate of fostering price stability and maximum employment is also out at 8:30 a.m. ET. Initial jobless claims for the week ended May 7 are seen dropping to 194,000. While lower early Thursday, bond yields have been rising to multiyear highs, with the 10-year Treasury yield topping 3%, as traders revolt against the Fed, worrying that inflation will remain high even as the economy slows.
Bitcoin slipped at one stage to below $27,000 on Thursday for the first time in more than 16 months, as the cryptocurrency market extended its losses, in part, on fears over rising inflation. Bitcoin, touted as a store of value like gold by proponents, has been trading in tandem with tech stocks and the Nasdaq recently. The world’s largest crypto has fallen 60% from its all-time high in November.
- Tether, the world’s largest stablecoin, broke below its $1 peg Thursday, adding to market concern after the downfall of stablecoin protocol Terra. TerraUSD, or UST, is also supposed to mirror the value of the dollar, but it plummeted to less than 30 cents Wednesday, shaking investor confidence in decentralized finance. TerraUSD was trading around 45 cents Thursday.
In this photo illustration, a hand holding a TV remote control in front of the Disney Plus logo on a TV screen.
Rafael Henrique | Sopa Images | Lightrocket | Getty Images
Shares of Disney initially rose in after-hours trading Wednesday. But they quickly turned lower after the company’s CFO acknowledged that the second half of the year may not be quite as strong relative to the first half when it comes to streaming. Disney+ ended its fiscal second quarter with 137.7 million subscribers, up 7.9 million from a year ago and better than estimates. Investors were keen to see those Disney+ numbers after Netflix last month reported a decline in paid subscribers for the first time in more than 10 years.
- Disney’s fiscal second-quarter revenue rose 23% to to $19.25 billion, helped by strong theme park sales. Revenue would have been $1 billion higher, if not for the early termination of some licensing agreements to make more content available for streaming. Disney reported adjusted earnings of $1.08 per share.
Ethan Brown, founder, president and CEO of Beyond Meat.
Adam Jeffery | CNBC
Beyond Meat shares tumbled 25% in Thursday’s premarket, the morning after the maker of plant-based meat alternatives reported a wider-than-expected quarterly loss and lower-than-expected revenue. The company cited a number of areas that were a drag on results, including steeper discounts and cheaper prices for international consumers and the launch of the company’s plant-based jerky, which weighed heavily on margins.
- Looking to soothe investors, management said the just-reported first quarter is expected to be the low point for margins in 2022, and jerky production should be much more efficient by the second half of this year. Beyond Meat did reiterate its full-year revenue forecast of $560 million to $620 million.