5 things to know before the stock market opens Wednesday, May 18

Here are the top news, trends and analysis that investors need to start their trading day:

1. Stock futures fall as inflation demands another retailer

Traders on the floor of the New York Stock Exchange, May 17, 2022.

Source: NYSE

US stock futures fell on Wednesday as rising inflation hit another retailer. Target sank 24% in the primary market, shortly after losing a large profit. A similar profit picture was revealed at Walmart on Tuesday. Dow Jones closed nearly 11.4% down in its worst one-session drop since 1987. Walmart shares lost another 1.7% on Wednesday. Energy costs are one of the drivers behind the high rates of inflation. US oil prices jumped 2.5% on Wednesday, to cross $115 a barrel again.

Despite Walmart’s troubles, the Dow Jones Industrial Average rose 431 points, or 1.3%, on Tuesday. The S&P 500 and Nasdaq are up 2% and about 2.8%, respectively, in Wall Street’s latest attempt to recover after weeks of steep losses. The Nasdaq was still in a bear market as defined by a fall of 20% or more from its previous high. The Dow and S&P 500 were still corrective, marked down by 10% or more from previous highs.

2. The target is the one being criticized on Wednesday for losing big profits

Employees help customers at the checkout area of ​​a supermarket on May 11, 2022 in New York City.

Liao Pan | China News Service | Getty Images

Target’s drop in premarket stock came after the retailer Wednesday morning reported revised first-quarter earnings that came in well below estimates. The company’s profits have been hampered by exorbitant shipping costs, higher lower callouts and lower-than-expected sales of discretionary items from televisions to bikes. Like Walmart on Tuesday, which also cited rising inflationary inventory pressures, Target’s revenue beat estimates. Target reiterated its forecast for sales, which calls for average single-digit percentage growth this year and beyond.

3. Lowe’s is also under pressure after weaker-than-expected sales

Pallets of garden supplies are stacked in the parking lot of a Lowe’s store in San Bruno, California.

David Paul Morris | Bloomberg | Getty Images

Contrary to Home Depot’s strong quarter and guidance the day before, competitor Lowe’s Wednesday morning delivered first-quarter revenue that beat expectations. Lowe’s shares were down 4% in the pre-market. The company saw that cold spring weather was hurting demand for supplies for outdoor “do-it-yourself” projects. Home Depot has held out as sales professionals outpace DIYers. Lowe’s, which gets about 75% to 80% of its total sales from DIY clients, beat the profits. The company reiterated its full-year forecast for sales between $97 billion and $99 billion.

4. Housing data slows as Fed Chair Powell talks hard about interest rates

Wood at the site of a home under construction in Silo in Sand Creek by Century Communities Residential Development in Antakya, California, U.S., on Thursday, March 31, 2022.

David Paul Morris | Bloomberg | Getty Images

The Housing Starts and Government Building Permits report for April showed a decline in construction activity. Housing starts came last month at a seasonally adjusted annual rate of 1.72 million. That was below estimates. Building permits in April matched expectations at a 1.82 million annual rate.

  • Weekly mortgage demand from homebuyers is down 12% as higher rates lead to huge losses. This was the first weekly drop in about a month. Inflation doesn’t help consumers feel the flow either. Refinancing requests continued to drop by 10% during the week.

After the data, the 10-year Treasury yield rose on Wednesday, close to 3%. The continued strength in the benchmark yield can be attributed to the comments of Federal Reserve Chairman Jerome Powell. In an interview with the Wall Street Journal on Tuesday, Powell said the central bank would not hesitate to keep raising interest rates until inflation drops.

5. JPMorgan investors send a letter to CEO Jamie Dimon about payment

JP Morgan CEO Jamie Dimon speaks at the CEO Club luncheon at Boston College in Boston, Massachusetts, US, November 23, 2021.

Brian Snyder | Reuters

JPMorgan Chase’s Jamie Dimon received a rare reprimand late Tuesday as shareholders expressed their disapproval of his $52.6 million retention bonus. Only 31% of investors attending JPMorgan’s annual shareholder meeting backed the award, which was part of a 2021 Chairman and CEO compensation package designed to keep him at the helm of the company for another five years. While the vote was non-binding, JPMorgan’s board said it takes investor feedback “seriously” and intends Dimon’s bonus to be a one-time event.

– CNBC channel Sarah MinAnd Peppa StevensAnd Melissa Rybko And Hyo Soon Contribute to this report.

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