5 things to know before the stock market opens on Thursday
Here are the most important news, trends and analysis that investors need to start their trading day:
1. Futures mostly flat after Wednesday’s declines
Traders work on the floor of the New York Stock Exchange (NYSE) in New York City on June 3, 2022.
Brendan McDermid | Reuters
U.S. stock futures were mostly flat on Thursday as the key release of May inflation data, scheduled for Friday, becomes more focused. Traders are also watching the European Central Bank’s latest interest rate decision on Thursday. Wall Street closed lower across the board a day earlier. The S&P 500 fell 1.08% on Wednesday, while the Dow Jones Industrial Average and the Nasdaq Composite lost 0.81% and 0.73% respectively. The only S&P 500 sector that ended Wednesday was energy, closing at its highest level in nearly eight years.
The three major U.S. stock indexes snapped two-day winning streaks on Wednesday as investors continued to monitor the bond market and seek new information on the trajectory of economic growth. The Dow is now essentially flat for the week and nearly 11% below its all-time high. The S&P 500 is up 0.18% since the start of the week and 14.6% from its peak in early January. The Nasdaq is solidly in the green for the week, up 0.61%. However, the tech-heavy index is still entrenched in a bear market, sitting more than 25% below its all-time high in November.
2. The 10-year yield is trading above 3%; basically flat oil
The return of the benchmark index The 10-year Treasury remained above 3% on Thursday morning, after jumping above that psychological level on Wednesday. US government bond prices, which move inversely to yields, have trended lower this week. The 10-year Treasury yield ended last week at 2.941% and as recently as the end of May was around 2.71%. Equity investors have been watching rising bond yields closely in 2022, as rising interest rates generally put pressure on growth-oriented tech stocks that have strong projected cash flows in the years ahead.
Oil prices were virtually flat on Thursday. Benchmark U.S. West Texas Intermediate crude fell about 0.2% to settle at around $121.90 a barrel. Brent crude, the international benchmark, traded at $123.48 a barrel, just where it ended on Wednesday when WTI and Brent both settled at two-month highs . The recent rise in oil prices came as the Covid reopening in China is expected to boost demand as supply issues elsewhere persist.
3. Tesla shares jump after UBS upgrade
A Tesla store is seen in Shanghai, China on February 1, 2022.
Cost photo | Edition of the future | Getty Images
Shares of Tesla rose 3.5% in premarket trading on Thursday as UBS upgraded the electric vehicle maker for a buy. Tesla’s stock has struggled this year, down more than 30% year-to-date to Wednesday’s close. Despite the sharp setback, UBS wrote to clients that it was “time to be bold” with the stock, adding that the company’s future still looked very bright. The premarket gains for Tesla come after shares rose 1.25% on Wednesday in an otherwise down day for the S&P 500. Tesla has the sixth-largest weighting in the S&P 500.
4. Target increases its quarterly dividend
A person walks into a Target store in Washington, DC on May 18, 2022.
Stefani Reynolds | AFP | Getty Images
Target said Thursday that its board of directors had approved an increase in its dividend. The quarterly payout will rise 20% to $1.08 per common share, up from its previous level of 90 cents. The Minneapolis-based retailer is a member of the S&P 500 Dividend Aristocrats Index, made up of companies that have increased their dividends annually over the past 25 years; Target said 2022 will now be the 51st consecutive year. Target’s Thursday announcement comes two days after the company warned that its fiscal second-quarter profit would be squeezed as it moved aggressively to shed excess inventory. Target stocks, which are down more than 30% year-to-date, rose 0.76% in premarket trading.
5. Apple subsidiary will provide loans for its Pay Later service
Apple website displayed on a laptop screen and Apple logo displayed on a phone in this photo illustration.
Jakub Porzycki | Nurphoto | Getty Images
Apple intends to use a wholly-owned subsidiary to check credit and provide short-term installment loans to users of its new buy now, pay later service. The iPhone maker announced the new offering on Monday during the launch of its developer conference. it will be called Apple Pay Later and will be available later this year when new iPhone iOS 16 software rolls out.
The additional details on Apple Pay Later reflect the tech giant’s ambitions in the fintech industry. Although Goldman Sachs is involved as the technical issuer of loans made through Apple Pay Later, it should be noted that Apple effectively keeps credit decisions in-house and uses its balance sheet to originate the loans. Buy now, pay later has become increasingly popular in recent years. Startups like Affirm made waves big enough that established fintech companies like Square parent Block struck deals to buy existing players, while PayPal launched its own offering.
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