Target’s earnings warning weighed on the retail sector, while Australia’s central bank surprised investors by raising interest rates by a larger amount than anticipated.
S&P 500 futures fell by 0.9%, erasing the previous day’s gains of 0.3% for the broad market index. A 1.3 percent drop in Nasdaq-100 futures suggests that technology companies may suffer after the opening bell.
Recently, the stock market has been tossed and turned by shifting views about the economy and how central banks and interest rates would behave in the future. Many fear that central banks might be overly active in their fight against inflation, leading to a halt in economic development or possibly a recession.
According to Kleinwort Hambros’s chief investment officer, Fahad Kamal, “we’re still in this continual push and pull over where inflation is, where growth is, and whether or not we’re going to be in a recession or not.”
Shares of Target sank 7% in premarket trade after the retailer issued a profit warning, citing the need to cancel orders or provide discounts to get rid of undesirable products as a possible symptom of sluggish customer demand. Three percent drops in stock prices for retail giants Walmart (NYSE: WMT) and Costco were also reported.
After hitting a record-high deficit in March, the U.S. trade deficit shrank to $87.1 billion in April, a smaller decrease than experts had predicted. Friday’s report of the consumer price index will be extensively scrutinized for any indications that inflation is slowing down.
More than predicted, the Reserve Bank of Australia increased its benchmark interest rate by 0.5 percentage points on Tuesday.
To paraphrase: “The action by the Australian central bank serves as a reminder that central banks may surprise on the upside. According to Mr. Kamal, “What does this tell us about how the Fed will act, how the ECB will act?” As a result of more aggressive monetary policy, a recession is more likely.
For the first time in almost a month, the yield on the benchmark 10-year Treasury note increased to 3.060 percent, the highest level in nearly a month. When a stock’s price falls, its yield rises.
Barclays Private Bank’s Julien Lafargue, the chief market strategist, said that rates near 3% signal that the market hasn’t determined whether or to what extent we’ll have a recession. In the event of an economic downturn, “that’s what you should possess.”
The Wall Street Journal claimed that Kohl’s is in exclusive discussions to be sold to retail holding group Franchise Group, which sent shares of Kohl’s soaring by more than 10% premarket. The firm might be worth as much as $8 billion as a result of the transaction.
An increase in revenue growth was reported by arcade firm, Dave & Buster’s Entertainment, and shares of the company jumped by 5%.
Recovering some ground after a prohibition on executives and big investors selling shares was relaxed, BuzzFeed’s premarket share price rose by 16 percent.
Following Elon Musk’s promise to abandon his takeover of the social media site, Twitter’s share price fell 1.4 percent, extending Monday’s fall.
After the markets close, Casey’s General Stores will release its earnings report.
Overseas, the Stoxx Europe 600 index fell by 0.8%.
Asian benchmarks were a little erratic. Hong Kong’s Hang Seng Index fell 0.6 percent, while Shanghai’s composite index rose 0.2 percent. A 0.1 percent gain in Japan’s Nikkei 225 index was reported.
The yen lost 0.7% of its value versus the dollar, falling to its lowest level since April 2002. Despite the Bank of Japan’s commitment to ultra-easy monetary policy, the yen has fallen this year as other central banks have begun raising interest rates to battle rising inflation.
Bitcoin declined by 6% and went below $30,000 as a result of the decline in cryptocurrency prices. Cryptocurrency Ether has dropped by five percent since the beginning of 2018.
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