Here are the top news, trends and analysis that investors need to start their trading day:
1. Nasdaq futures slip, a day after tech-heavy index fell more than 2%
Traders on the floor of the New York Stock Exchange, May 23, 2022.
US stock futures fell on Wednesday, a day after the Nasdaq fell 2.4% as Snap’s 43% drop on an earnings warning sent several other technology stocks lower. The Nasdaq bear market on Tuesday was just shy of a 30% drop from its recent high. The S&P 500 fell 0.8%, breaking a winning streak for two consecutive sessions, but remained above the bear market level of 20% or more from its previous high. The Dow index managed to post minor gains for the third positive session in a row. But the average of 30 stocks remained in a sharp correction as defined by a drop of 10% or more from their recent high.
2. Investors seek safety in bonds ahead of May Fed minutes
Federal Reserve Chairman Jerome Powell speaks at a press conference following the May 4, 2022 Federal Open Market Committee meeting in Washington, DC. Powell announced that the Federal Reserve will raise interest rates by half a percentage point to combat record high inflation.
Wayne McNamee | Getty Images
Bond prices have recently been the takers of stock selloffs. The 10-year Treasury yield, which moves inversely with price, fell to around 2.7% on Wednesday, ahead of the release of the minutes of the Federal Reserve’s meeting in May this afternoon. Investors are hoping to gain more insight into the central bank’s thinking on inflation and the economy. Earlier this month, the Federal Reserve raised interest rates by 50 basis points, twice its hike in March.
3. High mortgage rates continue to reduce the demand for housing loans
A picture of a home for sale in the Alhambra, California, on May 4, 2022.
Frederick J. Brown | AFP | Getty Images
Even as the 10-year yield recently eased from its late 2018 highs above 3%, it’s still more than double its December low, driving up mortgage rates and denting demand for home loans. Home purchase orders have been flat week to week, down 16% from a year ago. Mortgage demand from home buyers is now approaching the lows seen in the spring of 2020, at the start of the Covid pandemic shortly before frenetic demand drove prices up at an astonishing rate over the past two years. Last week, home loan refinancing requests were down 2% and down 75% from the same week one year ago.
4. Dick landing, Nordstrom rising after very different seasons, outlook
Cars are seen parked in front of Dick’s Sporting Goods store at Monroe Marketplace in Pennsylvania.
Paul Weaver | SOPA photos | Light Rocket | Getty Images
Shares of Dick’s Sporting Goods plunged more than 11% in the primary market on Wednesday, shortly after it lowered its full-year financial forecast, citing rising inflation and ongoing supply chain challenges. Dick’s decision to lower its guidance follows similar adjustments from Walmart, Target and Kohl’s. The sporting goods chain beat expectations in terms of quarterly earnings and revenue as shoppers spent money on golf clubs, soccer equipment and sportswear.
A shopper leaves a Nordstrom store on May 26, 2021 in Chicago, Illinois.
Scott Olson | Getty Images
In contrast to the problems caused by inflation at other retailers, Nordstrom gained nearly 6% in pre-market trading, although it surged overnight. After the closing bell on Tuesday, the supermarket chain raised its annual sales and earnings forecast. While Nordstrom posted a slightly larger-than-expected loss in the first quarter of the fiscal year, it saw sales increase 18.7% and exceed pre-pandemic levels as shoppers sought to update their wardrobes with branded and designer shoes.
5. Wendy’s largest shareholder pushes a deal to the fast food chain
Wendy’s restaurant logo appears in Plano, Texas, on July 2, 2020.
Dan Tian | Xinhua via Getty Images
Wendy’s shares gained nearly 9% in the primary market after it became known late Tuesday in a filing that the fast-food chain’s largest shareholder, Trian Partners, is exploring a potential deal for the company. Trian, founded and managed by Nelson Peltz, first invested in Wendy’s in 2005. The hedge fund currently owns a 19.4% stake in Wendy’s. Traian holds three seats on the fast food company’s board of directors, including one held by Peltz, the chairman. Trian said she had previously urged Wendy’s to reduce restaurant overheads, improve operations and build its brand.
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