5 things to know before the stock market opens Tuesday, May 24


Here are the most important news, trends and analysis that investors need to start their trading day:

1. Dow set to gave back some of Monday’s snapback rally

A screen displays the Fed rate announcement as a trader works inside a post on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., May 4, 2022. REUTERS/Brendan McDermid

Brendan Mcdermid | Reuters

Dow futures fell more than 150 points Tuesday, poised to give back a chunk of Monday’s nearly 2% advance. The S&P 500 also closed up roughly 2% to start the week after dipping into bear market territory at one stage on Friday before a late-session comeback saved the day. The Nasdaq on Monday rose 1.6%, but it remained in a bear market, down 20% or more from a prior high. The Dow Jones Industrial Average and S&P 500 both stayed in sharp corrections, down 10% or more from a prior high.

Wall Street just can’t seem to sustain a rally as declines in multiweek losing streaks for the major stock benchmarks mount as investors worry about rising inflation and whether the Federal Reserve’s tightening approach can stop it. Bond prices were the beneficiaries of Tuesday’s premarket selling in stocks. With prices moving in the opposite direction of yields, the 10-year Treasury yield dropped to 2.8%.

2. Abercrombie & Fitch plunges, Best Buy dips after earnings

The Abercrombie & Fitch store at South Park mall in Charlotte, North Carolina.

Chris Keane | Reuters

Abercrombie & Fitch lost more than 30% in premarket trading, set to become the latest retail stock disaster. The specialty retailer on Tuesday reported an unexpected quarterly loss, despite better-than-expected revenue. Analysts had expected a profit. Freight and product costs weighed on results. Abercrombie also cut its sales outlook for fiscal 2022, anticipating that the current economic headwinds will remain at least through the end of the year.

Black Friday shoppers leave a Best Buy store in Washington, DC, on November 26, 20221.

Nicholas Kamm | AFP | Getty Images

After initially rising, Best Buy shares turned negative — down roughly 2% — in the premarket after the electronics chain on Tuesday reported better-than-expected quarterly revenue. While same-store sales for the quarter fell 8%, that was a smaller drop than expected. Best Buy, however, did miss estimates on per-share profit as customers faced high levels of inflation and the company lapped a year-ago period fueled by Covid stimulus. The company also cut its outlook.

3. Snap sinks after issuing profit warning, citing difficult economy

Evan Spiegel, co-founder and chief executive officer of Snap Inc., speaks during the virtual Google Pixel Fall Launch event in New York, on Tuesday, Oct. 19, 2021.

Michael Nagle | Bloomberg | Getty Images

Snap shares plunged more than 30% in Tuesday’s premarket, the morning after the social media company issued a warning about its upcoming second-quarter results and said it would slow hiring. The Snapchat parent said it’s dealing with a number of issues, including inflation, an uncertain economic environment and Apple‘s privacy policy changes.

  • “We believe it is now likely that we will report revenue and adjusted EBITDA below the low end of the guidance range we provided for this quarter,” CEO Evan Spiegel wrote in Monday’s update. In April, Snap reported a first-quarter per-share loss and revenue that missed expectations.

4. Zoom Video jumps after it shows an ability to reduce costs

Eric Yuan, founder and CEO of Zoom Video Communications, stands before the opening bell during the company’s initial public offering at the Nasdaq MarketSite in New York on April 18, 2019.

Victor J. Blue | Bloomberg | Getty Images

Zoom Video shares’ after-hours surge cooled a bit for a gain of 4.5% ahead of Tuesday’s opening bell. Zoom late Monday reported better-than-expected quarterly earnings and matched on revenue. The company also raised its profit outlook, showing an ability to reduce costs as explosive Covid pandemic-fueled growth decelerates.

  • Demand for Zoom’s flagship videoconferencing services has been waning as people return to offices. But the company has been shifting its emphasis to products aimed at the hybrid workplace.

5. SpaceX president defends Musk over sexual misconduct claims

SpaceX CEO Elon Musk participates in a postlaunch news conference inside the Press Site auditorium at NASA’s Kennedy Space Center in Florida on May 30, 2020, following the launch of the agency’s SpaceX Demo-2 mission to the International Space Station.

NASA/Kim Shiflett

SpaceX President and COO Gwynne Shotwell defended Elon Musk in a companywide message last week, responding to sexual misconduct allegations directed at the billionaire entrepreneur. “Personally, I believe the allegations to be false; not because I work for Elon, but because I have worked closely with him for 20 years and never seen nor heard anything resembling these allegations,” Shotwell wrote to employees in an email sent Friday and seen by CNBC. Musk has denied the allegations, which claim he propositioned a flight attendant on one of SpaceX’s private jets in 2016, calling them “wild accusations.”

— CNBC’s Melissa Repko, Peter Schacknow, Kif Leswing, Ari Levy, Lauren Feiner and Michael Sheetz contributed to this report.

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