Stocks Tumble Amid Inflation Worries; Dollar Gains

Global stocks and US equity-index futures tumbled as stubborn inflation in the world’s biggest economy bolstered the case for more aggressive monetary tightening by the Federal Reserve.

Contracts on the S&P 500 Index slid 0.5% after the equity gauge slumped Wednesday to the lowest level since March 2021. Nasdaq 100 futures lost 0.9%. Equity benchmarks from Hong Kong to Europe and emerging markets dropped more than 2%. The dollar rallied for a sixth day and Treasuries gained amid haven demand. Walt Disney Co. declined in New York premarket trading after tempering its growth outlook. A selloff in cryptocurrencies added to risk-off sentiment.

The hotter-than-expected inflation reading for April raised concern the Fed’s hikes aren’t bringing down prices fast enough and policy makers may have to resort to a three-quarter point move, rather than the half-point pace markets have come to grips with.

Musk shelves $44-billion Twitter deal 'temporarily'

Elon Musk put his $44-billion deal for Twitter Inc "temporarily on hold" on Friday while he awaits data on the proportion of its fake accounts, sending the shares in the social media platform plunging.

Twitter shares fell 17.7% to $37.10 in premarket trading, their lowest level since Musk disclosed his stake in the company in early April and subsequently made a "best and final" offer to take it private for $54.20 per share.

Meanwhile, Tesla shares, against which Musk has secured $6.25 billion in funding for the acquisition, were up about 5%.

"Twitter deal temporarily on hold pending details supporting calculation that spam/fake accounts do indeed represent less than 5% of users," Musk told his more than 92 million Twitter followers on Friday.

Range Rover Sport to go electric as Jaguar Land Rover grapples with chip crisis

Land Rover revealed the newest addition to its lineup, an all-new Range Rover Sport. It's a cult favorite among the brand’s fans, with the mid-size SUV known more for its street prowess than its performance off pavement. But since it is a Range Rover, it can go off-road if needed with its advanced all-wheel drive system.

But the even bigger news is that the new Range Rover Sport, in addition to being offered with mild hybrid, plug-hybrid, and traditional V8 power, will have an all-electric version coming in 2024.

Range Rover Sport joins its big brother Range Rover in offering an electric vehicle (EV) version by 2024, as the brand pursues its mission of offering 6 EVs on sale by 2026, and having 60% of its sales coming from EVs by 2030.

'Has the stock market bottomed yet?'

So I am carrying my inflationary bag of groceries up the stairs on Sunday, trying to decompress for at least seven minutes, when I suddenly hear a neighbor call out: “Hey Sozzi, saw you on TV again. Has the stock market bottomed yet?”

My first thought: “I just can’t escape this sh*t, even for seven minutes."

I'm used to getting questions like this from a core group of neighbors (and others). This is partially because this particular person noticed, while flipping through Verizon FIOS (where Yahoo Finance lives 24/7 on channel 604), that I was doing live TV out of my kitchen (which happens to be above his kitchen) during the COVID-19 pandemic.

I concocted a quick reply in my head, then shouted back: “No idea bro, but I do know the stock market will open for business on Monday morning. Let me know when the co-op BBQ is happening.”

Target earnings miss as supply chain inflation bites

The scary arm of inflation has found its way to the financials of consistently top performing Target.

Target reported a wide first quarter earnings miss on Wednesday as cost increases in areas such as freight and inventory surged, not unlike what rival Walmart shared on Tuesday. The profit shortfall marked the first miss for Target versus analyst estimates since the third quarter of 2018, according to Bloomberg data.

"We never expected the kind of cost increases in freight and transportation that we're seeing right now," Target chairman and CEO Brian Cornell told.

Biden Administration Wants Crypto Exchanges to Separate Customer and Corporate Funds

U.S. President Joe Biden’s administration will press Congress to demand cryptocurrency exchanges keep their customers’ money separate from their own corporate funds, according to a person familiar with the plan that could constrain the way the industry does business.

Spurred by Coinbase’s (COIN) recent disclosure that customers’ money would be jammed up if the company declared bankruptcy, federal officials intend to push U.S. lawmakers to fix the problem by insisting that a future legal framework require crypto firms keep customer assets walled off. That type of custodial rule is standard for financial firms such as futures platforms, but crypto exchanges routinely mingle their funds with customers’ holdings in the same pot – a situation the administration wants to see ended by legislation. The securities industry commonly commingles funds, but the investments are also more heavily regulated.

Hyundai Motor Group to invest more than $10 billion in U.S. up to 2025

EOUL (Reuters) -Hyundai Motor Group said on Sunday it would invest an additional $5 billion in the United States by 2025 to strengthen collaboration with U.S. firms in advanced technology.

The investments, announced during a visit to Seoul by President Joe Biden, are for robotics, urban air mobility, autonomous driving and artificial intelligence, the group said.

Hyundai Motor Group, which houses Hyundai Motor Co and Kia Corp, on Friday announced plans to invest $5.5 billion in Georgia to build electric vehicle (EV) and battery facilities.

Hyundai's new EV and battery manufacturing facilities will be based in the southern “right to work” state, where labour unions are less prevalent and cannot require workers to join.

Biden, a Democrat, has described himself as the most pro-union president in history.

A major shift in the economic narrative could be underway

The overarching narrative of the markets and economy has been one of strong demand meeting lagging supply, a dynamic that has caused inflation to surge.

While most signs suggest these trends continue to persist, a handful of anecdotes from the past week suggest this narrative could be changing.

Signs that inventories are no longer depleted
Supply chain disruptions have been reflected by depressed inventory/sales ratios. In fact, many businesses have been complaining that sales would be stronger if only they could keep their shelves stocked.

According to a Census Bureau report published Tuesday, business inventories grew 2.0% in March from the prior month. The inventory/sales ratio improved marginally to 1.27, but remained lean relative to historic levels.

In earnings calls last week, however, retail behemoths Walmart and Target suggested this problem could be a thing of the past for them.

A major shift in the economic narrative could be underway

The overarching narrative of the markets and economy has been one of strong demand meeting lagging supply, a dynamic that has caused inflation to surge.

While most signs suggest these trends continue to persist, a handful of anecdotes from the past week suggest this narrative could be changing.

Signs that inventories are no longer depleted
Supply chain disruptions have been reflected by depressed inventory/sales ratios. In fact, many businesses have been complaining that sales would be stronger if only they could keep their shelves stocked.

According to a Census Bureau report published Tuesday, business inventories grew 2.0% in March from the prior month. The inventory/sales ratio improved marginally to 1.27, but remained lean relative to historic levels.

In earnings calls last week, however, retail behemoths Walmart and Target suggested this problem could be a thing of the past for them.

Stocks drift higher as traders await Fed meeting minutes

U.S. stocks rose slightly on Wednesday, steadying after recent selling sparked amid growing concerns about the impact of inflation on company profits and the broader economy. Traders also awaited the Federal Reserve's meeting minutes later in the day, which may help further clarify the path of monetary policy in the near-term.

The S&P 500 edged up after Tuesday's renewed rout. The Dow and Nasdaq also ticked higher. Treasury yields declined on the long end of the curve, and the benchmark 10-year yield fell to hold just above 2.7%.

Investors this week have eyed a growing list of companies citing the effects that inflation have had and will have on results going forward. Retailers including from Walmart and Target last week to Dick's Sporting Goods (DKS) and Abercrombie & Fitch (ANF) this week slashed their earnings forecasts for the year as the companies absorbed rising goods and transportation costs.

Nvidia falls short on guidance, stock down 9% after hours

Nvidia (NVDA) reported its Q1 earnings after the bell Wednesday, beating analysts' expectations on revenue and earnings per share, but falling short on Q2 estimates.

Here are the most important numbers from the report compared to what Wall Street was expecting from the graphics card giant in the quarter.

Revenue: $8.29 billion versus $8.10 billion expected
Adjusted EPS: $1.36 versus $1.29 expected
Data Center: $3.75 billion versus $3.63 billion expected
Gaming: $3.62 billion versus $3.53 billion expected

Nvidia, however, missed on its Q2 revenue expectations. The company says it will see $8.1 billion in the upcoming quarter, while Wall Street was expecting $8.44 billion. Nvidia says it will miss out on some $500 million in revenue in the quarter due to the war in Ukraine and the impact of COVID lockdowns in China.

Shares of Nvidia were down more than 9%.

Smaller NFTs are getting ‘obliterated’ amid crypto crash

As NFT sales have plunged overall this year, smaller, lesser known NFTs are getting crushed, while bigger brand names are holding up a bit better.

“What we're seeing in this market right now with NFTs is all of these small projects, ones that don't have a very strong roadmap, and I would say direction, just completely get obliterated,” Gannon Breslin, founder and chief executive of The Drop, an NFT newsletter, told Yahoo Finance Live. “And we're seeing a consolidation into the really well-known big brand names, like Bored Ape Yacht Club, Doodles, et cetera.”

Breslin said there is also a “bathtub effect” happening, when a large NFT is put on sale in the market, other large projects fall in price because investors are selling those NFT positions to free up currency to buy the new NFT.

“It is real,” he said, “but it's not as bad as it looks because some of these floors are still holding strong.”

What to watch in markets this week

A bounce in U.S. stocks last week snapped a seven-week losing streak for the S&P 500 and Nasdaq, while the Dow logged gains for the first time in eight weeks.

These gains ended the longest weekly losing streak in over a decade for the S&P 500 after the index tip-toed into bear market territory. All three major indexes logged weekly gains of at least 5%, buoyed by a batch of upbeat economic data and more positively received earnings reports from the retail sector.

The S&P 500 has snapped a losing streak of this length only three other times in history — 1970, 1980, and 2001 — and twice the index rose 33% over the next 12 months, according to data from LPL Financial.

“Of course, to keep things honest, [performance after] the [decline] in 2001 was rough sledding,” LPL’s Ryan Detrick pointed out; over the next 6 months the S&P 500 fell another 14%.

China in Danger of Exporting Fresh Inflation

China’s Covid-zero strategy is set to stay in place for the rest of the year, intensifying the world’s supply-chain woes and challenging efforts by central bankers to rein in inflation that’s running at multi-decade highs.

While there are signs that China’s Covid outbreak is waning and some of the strictest controls are being rolled back, the takeaway from the latest MLIV Pulse survey was that a majority of 540 participants projecting Beijing will stand firm on the severe lockdown polices. The measures have disrupted the supply of everything from Adidas sneakers and Rolls-Royce cars to Nvidia computer chips.

With millions of Chinese residents holed up in their homes, the world’s second-largest economy is at risk like never before. It’s no wonder the lion’s share of respondents in the weekly poll reckon stocks in the around $17 trillion economy will keep underperforming, with readers in Asia and the US notably more bearish than those in Europe.

Bonds Fall, Stocks Slide as Inflation Fears Mount.

Stocks and US equity futures dropped, while bonds fell Tuesday as euro-zone inflation accelerated to a fresh all-time high, intensifying the debate at the European Central Bank about how rapidly to raise interest rates.

S&P 500 and Nasdaq 100 contracts slipped at least 0.3%. Europe’s Stoxx 600 Index was set to snap four days of gains, retreating from a one-month high. Treasury yields climbed across the curve, joining Monday’s selloff in German bunds and European bonds. The dollar advanced.

Brent crude oil rose above $120 a barrel after the European Union agreed to pursue a partial ban on Russian oil. Higher energy and food costs are keeping upward pressure on prices globally and squeezing consumers. Euro-zone consumer prices jumped 8.1% from a year earlier in May, exceeding the 7.8% median estimate in a Bloomberg survey. The acceleration was driven by food and energy after Russia’s invasion of Ukraine.

We 'have reached peak bearishness' amid recession and Fed fears

After a couple of days of strength in stocks, one Wall Street investment bank thinks the worst is behind investors — for now.

"Over the near term, our high level takeaway is that the equity markets have reached a peak bearishness related to Fed expectations and recession risk," Citi Strategist Scott Chronert wrote in a new note to clients. "From here, we suspect that volatility will move more down the single stock path. With the Q2 reporting period approaching, we expect to see more evidence of this."

Chronert listed several factors behind his call, mostly related to market sentiment hitting extreme pessimism.

"CFTC futures and options positioning data shows that asset manager net length is near 10-year lows when we normalize notionals by aggregate market cap or gross exposure," the note stated. "Leveraged fund positioning contrasts this as the group appears to have taken profits on shorts in recent weeks. Retail speculation has declined.

GameStop quarterly revenue beats estimates on higher demand for video games

GameStop Corp reported first-quarter revenue that exceeded market expectations on Wednesday, as the video game retailer pivots toward a more online-focused model amid increasing competition from large retailers such as Walmart Inc and Amazon.com Inc.

Store closures during the COVID-19 pandemic affected GameStop's physical retail business, for which it is primarily known. The company has been bolstering its online sales capabilities as shopping trends towards e-commerce accelerated during the pandemic.

GamStop had in May launched its digital asset wallet to store, send, receive and use cryptocurrencies and non-fungible tokens (NFTs). The wallet could also be use for transactions on GameStop's NFT marketplace, expected to go live later this year.

Wedbush analyst Michael Pachter called Gamestop's NFT marketplace announcement "nonsense", saying it will "have no NFTs for sale and no customers.

Social Security's surplus will last a little longer, new report predicts

The reserve funds for Social Security and Medicare programs will last longer than previously thought — thanks to a faster and stronger-than-expected recovery from the 2020 pandemic-induced recession.

The main Social Security trust fund will continue paying out full benefits through 2034, according to the annual report released Thursday from the trustees of the programs. That’s one year later than what was stated in the 2021 report.

Meantime, a key Medicare trust fund could run low on funds by 2028, two years later than reported last year.

Despite the modest improvement, Social Security and Medicare both face long-term financing shortfalls under currently scheduled benefits and financing.

“The robust economic recovery from the pandemic has avoided some of the worst-case scenarios that some of us had feared,” Shai Akabas, director of economic policy at the Bipartisan Policy Center told.