Here are the most important news, trends and analysis that investors need to start their trading day:
1. Futures decline after consumer prices hold at four-decade high
Traders on the floor of the NYSE, May 10, 2022.
U.S. stock futures fell on Wednesday after the first of two key April inflation reports this week showed consumer prices were still at 40-year highs. The data further raise concerns that inflation will remain elevated as the economy slows. April’s producer price index is released on Thursday.
- Wall Street had a volatile session on Tuesday, with the Dow Jones Industrial Average wiping out a 500-point gain, hitting a low of around 350 points before closing 84 points lower, a fourth straight day.
- The S&P 500 and Nasdaq were able to close higher, snapping three-game losing streaks. Dow stock Disney is expected to report earnings after Wednesday’s closing bell.
2. 10-Year Treasury Yield Rebounds Above 3% on Strong Inflation Data
Customers pushing shopping carts shop at a supermarket on April 12, 2022 in San Mateo County, California.
Liu Guanguan | China Information Service | Getty Images
The 10-year Treasury yield rose back above 3% on Wednesday after the government’s consumer price index in April rose 8.3% stronger than expected year-on-year. Stripping out volatile food and energy prices, the so-called core CPI still rose 6.2%, which was more than expected.
- Inflation has been the biggest threat to a recovery that began at the start of the pandemic and saw the economy in 2021 reach its highest level of single-year growth since 1984.
- The recent large swings in financial markets reflect growing fears that the Federal Reserve continues to move too slowly to stop soaring inflation.
3. US oil prices rise after two days of steep supply losses
A customer fills up at a Chevron gas station with prices above $4 a gallon in Seattle, Washington, U.S., Monday, March 7, 2022.
david ryder | Bloomberg | Getty Images
A source of inflation in the economy has been oil prices and, in turn, record gasoline prices. West Texas Intermediate crude, the U.S. benchmark, rose about 3% to $103 a barrel on Wednesday after sharp declines in a row.
- The drop in the previous two sessions was driven by supply issues as the European Union scrambles to gain support for a Russian oil embargo. A vote on the proposal, which must be unanimously approved, has been delayed as Hungary has sunk into opposition.
4. Coinbase Crashes After Crypto Exchange Turns into Weak Quarter
Coinbase signage in Times Square in New York during the company’s IPO on the Nasdaq on April 14, 2021.
Robert Nickelberg | Getty Images
Shares of Coinbase fell 20% in Wednesday’s premarket, the morning after the crypto exchange reported quarterly revenue fell 27% to $1.17 billion, below estimates. It also announced a quarterly loss of $1.98 per share. Coinbase noted a drop in user numbers as the digital currency market recently experienced a major downturn. Bitcoin has lost over 50% since its all-time high of over $68,000 in November. It was even lower on Wednesday morning, trading below $30,000.
5. Stablecoin UST, supposedly pegged to the dollar, drops below 50 cents
The two main tokens of the embattled Terra crypto project are now in freefall. UST, a so-called stablecoin designed to maintain a 1-to-1 parity with the US dollar, plunged to 31 cents on Wednesday. Sister token Luna plunged over 80% to $3.78.
- Stablecoins are akin to bank accounts for the crypto economy, providing a solid store of value to avoid the kind of volatility that cryptocurrencies like bitcoin have become notorious for — in theory, at least. Although still new, UST has become a major player in the crypto economy, with a circulating supply of 16 billion tokens.
—TBEN Hannah Miao, Jeff Cox, Samantha Subin, Sarah Min, Patti Domm, MacKenzie Sigalos and ryan browne as well as Reuters contributed to this report.
— Register now for the TBEN Investing Club to follow Jim Cramer’s every stock market move. Follow the evolution of the market like a pro on TBEN Pro.