Here are the most important news, trends and analysis that investors need to start their trading day:
1. Wall Street poised to plunge as stocks rally after Fed rate hike fades
A screen displays the Fed’s rate announcement as a trader works (inside a post) on the floor of the New York Stock Exchange (NYSE) in New York City, June 15, 2022.
Brendan McDermid | Reuters
U.S. stock futures fell on Thursday as the Federal Reserve’s post-meeting rally proved to be short-lived as bond yields resumed their ascent and other central banks around the world adopted more aggressive political positions. A day after the Fed raised interest rates by 75 basis points, the Swiss National Bank raised rates overnight for the first time in 15 years. The Bank of England on Thursday voted to hike rates for the fifth time since December. The Dow Jones Industrial Average and S&P 500 snapped five-game losing streaks on Wednesday, and the Nasdaq recorded its second straight day of gains following the Fed’s decision. However, the S&P 500 and Nasdaq still closed in bearish territory, and the Dow Jones remained in a strong correction.
2. Investors and central bankers receive a triple dose of economic data before the bell
Three economic reports were released Thursday morning at 8:30 a.m. ET, covering a wide swath of the U.S. economy, from the labor market to housing to manufacturing.
- Initial jobless claims fell to 229,000 for the week ended June 11, slightly more claims than expected.
- Housing starts and building permits in May plunged 14.4% and 7%, respectively, declines far larger than economists had expected.
- The Philadelphia Fed’s manufacturing index came in at minus 3.3 in June. Estimates had called for a positive reading of 4.8.
Thursday’s economic snapshot follows a series of reports this week and last week showing that inflation remains consistently high and consumers are slowing spending as a result.
3. Fed’s Powell sees a 50 or 75 basis point increase at next meeting
U.S. Federal Reserve Chairman Jerome Powell speaks during a news conference on interest rates, the economy, and monetary policy measures, at the Federal Reserve Building in Washington, DC, June 15 2022.
Olivier Douliery | UKTN | Getty Images
Fed Chairman Jerome Powell said in his post-meeting press conference that a rate hike “either 50 basis points or 75 basis points” at the July policy meeting seems the way to go. more likely. Wednesday’s 75 basis point move was the biggest hike since 1994. Central bankers acted more aggressively at this week’s meeting than Powell’s telegraphed 50 basis point hike, stepping up their fight against rising prices. The drop in risky assets reflects investors’ fears that the Fed may not be able to stop runaway inflation without tipping the economy into a recession. According to the “dot plot” of policymakers’ expectations, the Fed’s benchmark federal funds rate will end the year at 3.4%, an upward revision of 1.5 percentage points from the estimate Of March.
4. Bitcoin Briefly Falls Below $20,000 in Another Risk Asset Selloff
Bitcoin and other cryptocurrencies have fallen sharply as investors dump risky assets. A crypto credit company called Celsius is suspending withdrawals for its customers, sparking fears of contagion in the wider market.
Nurphoto | Nurphoto | Getty Images
Bitcoin fell below $20,000 overnight, before paring some of those losses, as the broader cryptocurrency market endured another day of selling. Bitcoin was trading at levels not seen since December 2020, down around 27% in the past week and down almost 70% from its November all-time high above $68,000. The cryptocurrency has been closely correlated with stocks, particularly the Nasdaq, which forecast a 2.8% drop at Thursday’s open on Wall Street after rising 2.5% in the previous session. There are also a number of crypto-specific concerns weighing on the digital currency market, including the collapse of some so-called stablecoins and the risk of insolvency at Celsius, a crypto lending platform.
5. Musk to address Twitter employees; Tesla raises prices for its line of electric vehicles
Musk’s plan to buy Twitter has policymakers around the world worried.
Joe Skipper | Reuters
Elon Musk was scheduled to address Twitter employees at a virtual town hall on Thursday. The billionaire CEO of Tesla and SpaceX is expected to confirm his intention to buy Twitter, a person familiar with the matter told The Wall Street Journal. Last week, Musk warned Twitter that he could back out of his $44 billion offer if the company didn’t provide more spam and fake account data.
- At Musk’s Tesla, the electric carmaker has raised prices across its lineup, according to news site EV Electrek. Some of the increases reached $6,000 as raw material costs surged and supply chain disruptions continued. Electrek noted that the last major price hike at Tesla was in March 2022, followed by a smaller one on long-range vehicles in April. The rapid increase in electric vehicle prices seen last year had slowed by the start of 2022.
—UKTN pippa stevens, Samantha Subin, Yun Li, Jeff Cox and Arjun Kharpal as well as Reuters contributed to this report.
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