Here are the key news, trends and analyzes that investors need to start their trading day:
Futures mainly flat after Wednesday’s fall
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 largely flat on Thursday, as the key release of May inflation data, set for Friday, moves further into focus. Traders are also monitoring the European Central Bank̵[ads1]7;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 Nasdaq Composite lost 0.81% and 0.73%, respectively. The only sector in the S&P 500 that closed on Wednesday was energy, closing at its highest point in almost eight years.
All three major US stock indices broke a two-day winning streak on Wednesday, as investors continued to look at the bond market and look for new information on the path to economic growth. The Dow index is now largely flat for the week and almost 11% below the record high. The S&P 500 is up 0.18% in the week to date and 14.6% lower than the peak at the beginning of January. Nasdaq is solid in green for the week, up 0.61%. However, the technology-heavy index is still rooted in a bear market, and is more than 25% below the highest record in November.
2. 10-year return trades above 3%; oil basically flat
The yield on the benchmark index for the 10-year treasury remained above 3% on Thursday morning, after skipping the psychological level on Wednesday. US government bond prices, which are reversing relative to interest rates, have had a lower trend this week. The yield on the 10-year treasury ended last week at 2.941% and as recently as the end of May it was around 2.71%. Equity investors have been closely following the rise in bond yields in 2022, as higher yields typically push growth-oriented technology stocks that have significant cash flows projected in the years ahead.
Oil prices were largely flat on Thursday. US benchmark West Texas Intermediate oil fell by around 0.2% to around $ 121.90 per barrel. Brent oil, the international benchmark index, traded at 123.48 dollars per barrel, exactly where it ended on Wednesday when WTI and Brent both settled at their highest level in two months. The recent rise in oil prices has come as China’s Covid reopening 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.
Cost photo | Future Publishing | Getty pictures
Shares in Tesla rose 3.5% in pre-market trading on Thursday, when UBS upgraded the electric car manufacturer to a purchase. Tesla’s share has struggled this year, down more than 30% so far this year from Wednesday’s closing. Despite the sharp setback, UBS wrote to customers that it was “time to be bold” with the stock, adding that the company’s future is still very bright. The premarket gains for Tesla come after shares rose 1.25% on Wednesday in an otherwise declining day for the S&P 500. Tesla has the sixth largest weighting in the S&P 500.
4. Target raises quarterly dividends
A person walks into a Target store in Washington, DC, May 18, 2022.
Stefani Reynolds | AFP | Getty pictures
Target said on Thursday that the board approved an increase in the dividend. The quarterly payout will increase by 20% to $ 1.08 per share, up from the previous level of 90 cents. The Minneapolis-based retailer is a member of the S&P 500 Dividend Aristocrats Index, which consists of companies that have increased dividends annually for the past 25 years; Target said that 2022 will now be the 51st year in a row that it will be done. Thursday’s announcement from Target comes two days after the company warned that its taxable profits in the second quarter would be squeezed as it took aggressive steps to get rid of excess inventory. Target shares, which are down over 30% so far this year, rose by 0.76% in pre-market trading.
5. Apple’s subsidiary will extend loans for its Pay Later service
The Apple website appears on a laptop and the Apple logo appears on a phone in this illustration image.
Jakub Porzycki | Nurphoto | Getty pictures
Apple intends to use a wholly owned subsidiary to check credit and extend short-term installment loans to users of its new purchase now, pay later service. The iPhone maker announced the new offer on Monday when it launched its developer conference; it will be called Apple Pay Later and will be available later this year, when new iOS 16 iPhone software is rolled out.
The additional details of Apple Pay Later reflect the technology giant’s ambitions in the fintech industry. While Goldman Sachs is involved as the technical issuer of loans granted through Apple Pay Later, it is noteworthy that Apple actually keeps credit decisions in-house and uses the balance sheet to issue the loans. Buy now, pay later has become increasingly popular in recent years. Start-ups such as Affirm made big enough waves that established fintech companies such as Square parent Block entered into agreements to buy existing players, while PayPal launched its own offer.
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