Here are the top news, trends and analysis that investors need to start their trading day:
1. Wall Street braces for a rally after the S&P 500 officially closed in a bear market
Traders on the floor of the New York Stock Exchange, June 13, 2022.
US stock futures rebounded after a cooler inflation report on Tuesday and what could be a further rate hike from the Federal Reserve on Wednesday. On Monday, the S&P 500 officially closed in bear market territory, defined as a drop of 20% or more from its previous high, which was in January. The broad market index also hit a new low for the year.
- Monday’s heavy selling took the S&P 500 down 3.9% and the Nasdaq – already in a bear market since March – fell 4.7%. The Dow Jones fell 876 points, or 2.8%. The average of 30 stocks fell more in the correction, down 17% since their January high. A correction is defined as a decrease of 10% or more from a previous high. All three stock indices declined for four consecutive sessions.
2. The 10-year Treasury yield fell from its 2011 high after cooler inflation data
The 10-year Treasury yield eased on Tuesday from its 2011 highs, trading around 3.3%, after the government’s producer price index for May rose 10.8% year-on-year, a slightly lower-than-expected rise. The producer price index is the flip side of the inflation coin at the wholesale level, after the hotter than expected CPI last week. The Producer Price Index remained near a historic high on a yearly basis as it rose 11.5% in March.
3. The Federal Reserve begins its two-day meeting and the markets are now expecting a rate hike of 0.75%
US Federal Reserve Chairman Jerome Powell discusses raising interest rates at a press conference in Washington, DC on May 4, 2022.
Xinhua News Agency / Getty
Markets expect the Fed to raise rates by 0.75% at the end of its two-day June policy meeting on Wednesday. Only the magnitude of the rate increase is in question, with Fed Chair Jerome Powell repeatedly saying that a 0.5% rise in June and July seemed appropriate.
- After the Fed meeting in May, which saw interest rates rise 0.5%, Powell took 0.75% off the table.
- But a lot has changed since then with the stock market selloff and the surge in bond yields, another recession pointing to a two-year yield and a 10-year yield reversal.
- Markets are concerned that the Fed will have to clamp down further on the economy to fight inflation and that it could lead to a recession.
4. Coinbase to lay off 18% of full-time jobs; Bitcoin is dropping again
Coinbase reported a 27% drop in revenue in the first quarter as usage of the platform declined.
Chesnot | Getty Images
According to an email sent to employees on Tuesday, cryptocurrency exchange Coinbase will cut 18% of full-time jobs. CEO Brian Armstrong cited a potential recession, the need to manage costs, and growth “very quickly” during a bull market. Coinbase shares fell 7% in the pre-market after closing 11.4% on Monday. Before the initial market plunge on Tuesday, the stock was down 79% year-to-date in the form of bitcoin and the entire crypto market sold out in 2022.
- Bitcoin briefly fell below $21,000 overnight in Asia before rebounding a bit. Crypto assets were hit on Monday, as concerns about lending platform Celsius escalated and Binance halted withdrawals for a brief period. Bitcoin, which traded around $22,000 early Tuesday, has fallen nearly 68% of all times in November.
5. Oracle Surges as Database Software Giant Increases Profits and Revenues
A sign is placed in front of Oracle’s headquarters on June 13, 2022 in Redwood Shores, California.
Justin Sullivan | Getty Images
Oracle shares rose 11% on Tuesday, the next morning after the database software company released fourth-quarter financial earnings and revenue that beat estimates. Revenue increased 5% to $11.84 billion from the previous year, driven by growth in the company’s cloud infrastructure business, which competes with Amazon Web Services and Microsoft Azure.
- “We believe this surge in revenue growth indicates that our infrastructure business has now entered a hyper-growth phase,” Oracle CEO Safra Katz said in a statement. Oracle’s earnings are especially important as investors shift their focus to companies that can generate profitability and cash during an economic downturn. Before the jump after hours, Oracle shares are down 27% for the year.
– CNBC channel Sarah MinAnd the Samantha SobinAnd the Fred AmbertAnd the Jeff CoxAnd the Abigail NgAnd the Kate Rooney And the Ari Levy Contribute to this report.
– open an account now For the CNBC Investing Club to follow Jim Cramer’s every arrow move. Follow the actions of the wider market like a pro CNBC PRO.