Here are the most important news, trends, and analysis investors need to start their trading day:
1. Futures are falling, with the S&P 500 ready to fall back into a bear market
Traders are trading on the New York Stock Exchange (NYSE) on June 10, 2022 in New York City.
Spencer Platt | Getty Images
U.S. stock futures plummeted on Monday after the worst week on Wall Street since January. Bond yields soared as investors prepared for the Federal Reserve to raise interest rates later this week following higher-than-expected consumer inflation data on Friday. The Dow Jones Industrial Average is expected to open lower at 500 points, or 1.7%, on Monday, and plunge further into a correction. The S&P 500 and Nasdaq are expected to open 2% and 2.7%, respectively, with previous follow-up to re-enter bearish territory and test this year’s low of 3,810.32 last month. The Nasdaq has been in a bear market since March.
2. Rising bond yields cause stocks to plummet due to recession concerns
The 2-year Treasury yield reached its highest level since 2007 on Monday, trading at around 3.16%. At one point, the 2-year yield was briefly reversed and surpassed its 10-year counterpart for the first time since April. The so-called reversal of the yield curve is seen as an indicator of a recession. The benchmark yield 10 years later rose to 3.26%. The 5-year yield was around 3.4% higher than the 10-year yield and the 30-year yield was around 3.3%. Short-term yields have moved higher in recent days due to their increased sensitivity to Fed rate hikes.
3. The Fed is expected to raise rates by 0.5% this week, but markets want more
The Fed will hold its June meeting on Tuesday and Wednesday, with a projected rate hike of 0.5%. Anything more than that would come as a surprise, but there has been a belief in the markets that central banks will have to be even more aggressive in stifling inflation. The Fed is in a difficult spot, trying to cool things down with tighter monetary policy while trying not to bring the economy down in a recession. Ahead of the Fed’s policy decision, Wall Street will look for Tuesday’s producer price index release and Wednesday’s retail sales data to put last week’s consumer inflation report in context.
4. Bitcoin falls below $ 24,000 as the entire crypto market sells
Bitcoin fell 14%, below $ 24,000 on Monday, and reached its lowest level since December 2020, as investors pour crypto into a wider sale of risky assets. It also sparked fears that a cryptocurrency lending company called Celsius has paused withdrawals from its customers. Over the weekend and Monday morning, the value of the entire cryptocurrency market fell below $ 1 trillion for the first time since February 2021, according to CoinMarketCap data. The cryptocurrency market has also been on the brink since mid-May, when the so-called stable algorithmic currency terraUSD and its sister moon Luna collapsed.
5. The first manufacturer of post-SPAC electric vehicles goes bankrupt
EV Electric start-up Last Mile Solutions said on Sunday afternoon that it plans to file for Chapter 7 bankruptcy protection less than a year after it went public through a merger of acquisition companies for purposes specials. ELMS’s public offering, in late June 2021, came amid a wave of SPAC agreements made public by electric vehicle manufacturers. The company is the first of those post-SPAC electric vehicle manufacturers to say it will go bankrupt. In February, President and Founder Jason Luo and then-CEO Jim Taylor left after an internal investigation found that the company’s previous financial statements were unreliable.
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