Here are the most important news, trends and analysis that investors need to start their trading day:
1. Wall Street set to plunge as stocks’ post-Fed rate hike rally vanishes
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, June 15, 2022.
Brendan McDermid | Reuters
U.S. stock futures sank Thursday as the post-Federal Reserve meeting rally proved to be short-lived as bond yields resumed their upward swing and other central banks around the globe adopted more aggressive policy stances. One day after the Fed’s 75 basis point interest rate hike, the Swiss National Bank overnight raised rates for the first time in 15 years. The Bank of England on Thursday voted to raise rates for the fifth time since December. On Wednesday, the Dow Jones Industrial Average and the S&P 500 broke five-session losing streaks, and the Nasdaq logged its second straight day of gains after the Fed’s move. However, the S&P 500 and the Nasdaq both still closed in bear market territory, and the Dow remained in a sharp correction.
2. Investors, central bankers get 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 dropped to 229,000 for the week ended June 11, slightly more claims than expected.
- May housing starts and building permits plunged 14.4% and 7%, respectively, much bigger declines than economists had expected.
- The Philadelphia Fed’s manufacturing index came in at a minus 3.3 for June. Estimates had called for a positive 4.8 reading.
Thursday’s economic snapshot follows a series of reports this week and last week showing that inflation remains persistently hot and consumers are slowing down their spending as a result.
3. Fed’s Powell sees a 50 or 75 basis point increase at next meeting
US Federal Reserve Chair Jerome Powell speaks at a news conference on interest rates, the economy and monetary policy actions, at the Federal Reserve Building in Washington, DC, June 15, 2022.
Olivier Douliery | AFP | Getty Images
Fed Chairman Jerome Powell said at his post-meeting news conference that “either a 50 basis point or a 75 basis point” rate increase at July’s policy meeting seems most likely. Wednesday’s 75 basis point move was the biggest hike since 1994. Central bankers moved more aggressively at this week’s meeting than Powell’s telegraphed 50 basis point rise, stepping up their fight against climbing prices. Sinking risk assets reflect investor concern that the Fed won’t be able to arrest roaring inflation without tipping the economy into a recession. According to the “dot plot” of policymakers’ expectations, the Fed’s benchmark fed funds rate will end the year at 3.4%, an upward revision of 1.5 percentage points from the March estimate.
4. Bitcoin briefly drops below $20,000 in a further sell-off of risk assets
Bitcoin and other cryptocurrencies fell sharply as investors dump risk assets. A crypto lending company called Celsius is pausing withdrawals for its customers, sparking fears of contagion into the broader market.
Nurphoto | Nurphoto | Getty Images
Bitcoin dropped below $20,000 overnight, before trimming some of those losses, as the entire cryptocurrency market endured another day of selling. Bitcoin was trading at levels not seen since December 2020, down about 27% in the last week and down nearly 70% from its November all-time high above $68,000. The cryptocurrency has been closely correlated with stocks, particularly the Nasdaq, which was tracking for a 2.8% drop at Thursday’s open on Wall Street after a 2.5% rise in the prior 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 across EV lineup
Musk’s plan to buy Twitter has worried policymakers around the world.
Joe Skipper | Reuters
Elon Musk on Thursday was scheduled to address Twitter’s employees at a virtual town hall meeting. 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 might walk away from his $44 billion offer, if the company failed to provide more data on spam and fake accounts.
- At Musk’s Tesla, the electric-auto maker has raised prices across its entire lineup, according to the EV news site Electrek. Some of the increases were as much as $6,000 as raw materials costs jumped and disruptions in supply chains continued. Electrek noted the last major price rise at Tesla was in March 2022, followed by a smaller one on long-range vehicles in April. The rapid increase in prices of EVs seen last year had slowed down in early 2022.
— CNBC’s Pippa Stevens, Samantha Subin, Yun Li, Jeff Cox and Arjun Kharpal as well as Reuters contributed to this report.
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