Here are the most important news, trends and analysis that investors need to start their trading day:
1. Wall Street set to bounce but still tracking for a terrible week
Traders on the floor of the NYSE, June 16, 2022.
U.S. stock futures on Friday pointed to a strong open on Wall Street. But if those gains hold, they’ll do little to make a dent in this week’s avalanche of selling. On Thursday, the Dow sank 741 points or 2.4%, falling below 30,000 for the first time since January 2021. The 30-stock average closed roughly 1% above the bear market threshold of a decline of 20% or more from a prior high, which was a record in early January. The S&P 500 and the Nasdaq plunged 3.3% and 4%, respectively, both sinking further in bear markets. Markets had rallied on Wednesday after the Federal Reserve announced its largest rate hike since 1994 but reversed those gains and then some on Thursday.
- On Friday, Fed Chairman Jerome Powell reiterated the central bank’s commitment to bringing down inflation. In remarks to a conference on the U.S. dollar, Powell stressed the Fed is “acutely focused on returning inflation to our 2 percent objective.”
2. S&P 500 on course for worst week since month pandemic was declared
Heading into Friday’s open, the Dow was down 4.7% for the week, on track for its worst weekly loss since October 2020. The S&P 500 has fallen 6% for the week, on course for its worst week since March 2020, the month the World Health Organization declared Covid a pandemic. The Nasdaq was down more than 6% for the week — but the tech-heavy index has been performing so badly of late that such a decline would only be its worst week since late January 2022. The magnitude of this week’s losses so far are even more stark, because Wednesday’s session was so strong after the Fed stepped up its fight against inflation with an interest rate hike of 75 basis points.
3. The 10-year Treasury yield backs away from this week’s 2011 highs
Bond yield declines provided support to stocks in Friday’s premarket, with the 10-year Treasury yield dropping to 3.2%. Yields and stocks have largely been going in opposite directions in this year’s rout. But not even Thursday’s sizeable drop in the 10-year yield from 2011 highs earlier in the week was able to stop selling in equities. Investors are becoming more concerned that the Fed has fallen so far behind in its policy tightening to stamp out inflation that its more robust efforts to catch up will tip the economy into a recession.
4. Another sign of slowing manufacturing activity is expected
One day after the latest Philadelphia Fed manufacturing index registered an unexpectedly negative reading, another major indicator of factory activity is out at 9:15 a.m. ET. Industrial production figures for May are expected to rise 0.4% following April’s 1.1% increase. Capacity utilization, a measure of how fully firms are using their resources, is expected to rise slightly to 79.2%. Manufacturing, which accounts for 12% of the economy, faces challenges from supply chain bottlenecks due to Russia’s invasion of Ukraine and China’s zero-tolerance Covid policy that’s resulted in rolling virus mitigation measures and lockdowns in that country’s biggest cities.
5. Musk addresses Twitter employees about his bid to buy company
Elon Musk addressed Twitter employees for the first time Thursday, suggesting the company would need to reduce head count but offering few other new details about his $44 billion buyout offer. Musk appeared via a video call in what turned out to be a freewheeling question-and-answer session moderated by a Twitter executive. The CEO of Tesla and SpaceX, Musk mused about the existence of aliens and other space civilizations. He also expressed his view that Twitter should help “civilization and consciousness.” Last week, Musk warned Twitter he might walk away from his bid, if the company failed to provide more data on spam and fake accounts.
— CNBC’s Samantha Subin, Jesse Pound, Jeff Cox and Pippa Stevens as well as Reuters contributed to this report.
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