Here are the top news, trends and analysis that investors need to start their trading day:
1. Futures are basically flat after Wednesday’s dips
Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, June 3, 2022.
Brendan McDermid | Reuters
US stock futures were mainly flat on Thursday, as the major release of inflation data for May, scheduled for Friday, became more focused. Traders are also watching the European Central Bank’s latest rate decision on Thursday. Wall Street closed generally 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 in the S&P 500 that ended Wednesday was the energy sector, closing at its highest point in nearly eight years.
All three major US stock indexes broke their two-day winning streak on Wednesday, as investors continued to monitor the bond market and look for new information about the path of economic growth. The Dow is now basically flat for the week and about 11% below its record high. The S&P 500 is up 0.18% in the week so far and 14.6% from its peak in early January. The Nasdaq is trading strongly in the green for the week, up 0.61%. However, the tech-heavy index is still entrenched in a bear market, having fallen more than 25% from its all-time high in November.
2. 10 year yield deals above 3%; The oil is basically flat
The yield on the benchmark 10-year Treasury remained above 3% Thursday morning, after jumping above that psychological level on Wednesday. US government bond prices, which move inversely to yields, trended lower this week. The yield on the 10-year Treasury ended last week at 2.941% and as recently as 2.71% in May. Equity investors have been keeping a close eye on the rise in bond yields in 2022, as higher interest rates typically pressure growth-oriented technology stocks that have significant cash flows expected in the coming years.
Oil prices were basically flat on Thursday. The US benchmark West Texas Intermediate crude was down about 0.2% to around $121.90 a barrel. Brent crude, the international benchmark, was trading at $123.48 a barrel, close to where it finished on Wednesday when both WTI and Brent crude settled at their highest levels in two months. The recent rise in oil prices came as the reopening of Covid in China is expected to stimulate more demand while supply concerns persist elsewhere.
3. Tesla shares jump after UBS upgrade
A Tesla store is seen in Shanghai, China, February 1, 2022.
Costphoto | Future Publishing | Getty Images
Tesla shares rose 3.5% in premarket trading Thursday, as UBS upgraded the electric car maker to a buy. Tesla stock has struggled this year, down more than 30% to date as of Wednesday’s close. Despite this sharp decline, UBS wrote to clients that it was time to get bold with the stock, adding that the company’s future remained very bright. Tesla’s pre-market gain comes after shares rose 1.25% on Wednesday in another low day for the S&P 500 Index. Tesla has the sixth largest weight in the S&P 500.
4. Target raises quarterly profits
A person walks past a Target store in Washington, D.C., on May 18, 2022.
Stephanie Reynolds | Agence France-Presse | Getty Images
Target said Thursday that its board of directors approved a dividend increase. Quarterly payments will increase 20% to $1.08 per common share, up from their previous level of 90 cents. The Minneapolis retailer is a member of the S&P 500 Dividend Aristocrats Index, which consists of companies that have increased their annual dividends over the past 25 years; Target said 2022 will now be the 51st consecutive year that this has been done. Thursday’s announcement from Target comes two days after the company warned that its second-quarter financial profit would shrink as it took aggressive steps to get rid of excess inventory. Target stocks, which are down more than 30% year-to-date, are up 0.76% in pre-market trading.
5. Apple subsidiary will grant Pay Later loans
The Apple website is displayed on a laptop screen and the Apple logo is displayed on the phone in this illustration.
Jacob Borzeki | Norfoto | Getty Images
Apple intends to use a wholly owned subsidiary to check credit and extend short-term installment loans to users of its new Buy Now, Pay Later service. The iPhone maker announced the new offering on Monday as its developer conference kicks off; It will be called Apple Pay Later and will be available later this year, when the new iOS 16 iPhone program rolls out.
Additional details about Apple Pay Later reflect the tech giant’s ambitions in the fintech space. While Goldman Sachs is involved as the technology source for loans provided through Apple Pay Later, it’s worth noting that Apple actively maintains credit decisions within the company and uses its balance sheet to issue loans. Buy now, pay later has grown in popularity in recent years. Startups like Affirm have made waves big enough to found fintech companies like parent Block Square have struck deals to buy existing players, while PayPal has launched its own offering.
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