Here are the most important news, trends, and analysis investors need to start their trading day:
1. Essentially flat futures after Wednesday’s falls
Traders are working on the New York Stock Exchange (NYSE) floor in New York City on June 3, 2022.
Brendan McDermid | Reuters
US equities futures were essentially flat on Thursday, as the key release of the May inflation data, set for Friday, is even more focused. Traders are also monitoring the European Central Bank’s latest interest rate decision on Thursday. Wall Street closed lower the day before. The S&P 500 fell 1.08% on Wednesday, while the Dow Jones Industrial Average and Nasdaq Composite lost 0.81% and 0.73%, respectively. The only sector of the S&P 500 that ended Wednesday was energy, which closed at its highest point in nearly eight years.
The top three U.S. stock indices broke the two-day high on Wednesday, as investors continued to look at the bond market and look for new information on the trajectory of economic growth. The Dow is now essentially flat during the week and almost 11% below its all-time high. The S&P 500 has risen 0.18% a week so far and a 14.6% discount on its peak in early January. The Nasdaq is solidly green during the week, up 0.61%. However, the technology index is still rooted in a bearish market, more than 25% below its all-time high in November.
2. 10-year performance quotes above 3%; basically flat oil
The yield on the 10-year Treasury benchmark remained above 3% on Thursday morning, after jumping above that psychological level on Wednesday. U.S. government bond prices, which are reversing yields, have been on a downward trend this week. The 10-year Treasury yield ended last week at 2.941% and so recently at the end of May it stood at around 2.71%. Equity investors have been closely watching the rise in bond yields in 2022 as higher interest rates tend to put pressure on growth-oriented technology stocks that have projected significant cash flows in the coming years.
Oil prices were basically flat on Thursday. US benchmark West Texas Intermediate crude fell 0.2% to $ 121.90 a barrel. Brent crude, the international benchmark, was trading at $ 123.48 a barrel, just where it ended on Wednesday, when WTI and Brent set their highest levels in two months. The recent rise in oil prices has come as Covid’s reopening in China is expected to stimulate more demand while supply concerns elsewhere persist.
3. Tesla shares jump after UBS upgrade
A Tesla store is seen in Shanghai, China, on February 1, 2022.
Costfoto | Future Publishing | Getty Images
Shares of Tesla rose 3.5% in pre-market trading on Thursday as UBS upgraded the electric vehicle maker to a buyout. Shares of Tesla have been in trouble this year, with a drop of more than 30% so far until the close on Wednesday. Despite this sharp setback, UBS wrote to customers that it was “time to be bold” with the shares, adding that the future of the company is still very bright. Tesla’s pre-market gains come after shares rose 1.25% on Wednesday on a day that was otherwise unattainable for the S&P 500. Tesla has the sixth-highest S&P 500 .
4. Target increases the quarterly dividend
One person enters a Target store in Washington, DC, on May 18, 2022.
Stefani Reynolds | AFP | Getty Images
Target said on Thursday that its board of directors approved an increase in its dividend. The quarterly payment will increase by 20% to $ 1.08 per common share, more than 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 for the past 25 years; Target said 2022 will now be the 51st year in a row to do so. Thursday’s Target announcement comes two days after the company warned that its second-quarter tax benefits would be compressed as it took aggressive steps to get rid of excess inventory. Target shares, which have fallen by more than 30% so far, rose 0.76% in pre-market trading.
5. The Apple subsidiary will grant loans for its Pay Later service
The Apple website is shown on a laptop screen, and the Apple logo is shown on a phone in this illustration photo.
Jakub Porzycki | Nurfoto | Getty Images
Apple intends to use a wholly owned subsidiary to verify credit and extend short-term loans to users of its purchase service now and pay later. The iPhone maker announced the new offering on Monday when it began its developer conference; will be called Apple Pay Later and will be available later this year, when the new iOS 16 software for iPhone will be deployed.
Additional details about Apple Pay Later reflect the ambitions of the tech giant in the fintech industry. While Goldman Sachs is involved as the technical issuer of the loans made through Apple Pay Later, it should be noted that Apple effectively keeps credit decisions at home and uses its balance sheet to issue loans. Buy now, pay after it has become more and more popular in recent years. Start-ups like Affirm made waves big enough that established fintech companies like Square Parent Block reached deals to buy existing players, while PayPal launched its own offering.
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