Here are five things you must know for Friday, April 22:
1. -- Stock Futures Extend Slide As Hawkish Powel Ignites Rate Rally
U.S. equity futures extended declines Friday, while the dollar hit a fresh two-year peak against a basket of its global peers and Treasury bond yields marched further higher, as traders reacted to hawkish remarks from central bank officials amid slowing economic growth signals.
Federal Reserve Chairman Jerome Powell told a panel at the International Monetary Fund's spring meetings in Washington that there was a case for "front loading" rate hikes, adding that a 50 basis point move would be on the table for the May meeting."
The CME Group's FedWatch tool now suggests a near 100% chance of that size of a move early next month, that would take the base Fed Funds rate to a range of 0.75% to 1%, with a 90% chance of a similar move in June.
His remarks reversed gains for U.S. stocks in Thursday afternoon trading, with the Dow swinging to a 370 point loss and the S&P 500 closing 66 points lower to extend its April decline to 3.02%.
European Central Bank President Christine Lagarde also suggested her colleagues could begin rate hikes in July -- far sooner than expected -- in order to tame the highest rates of inflation on record in the euro area.
Her comments came just prior to data showing a slowdown in manufacturing activity around the region, based on S&P Global's PMI readings, although solid service sector data is still providing support. PMI data for the U.S. will be published at 9:45 a, Eastern time.
European stocks were marked 1.1% lower in early Frankfurt trading, while the region-wide MSCI ex-Japan index fell 1.07% as worlds stocks tumbled to the lowest levels in five weeks.
Benchmark 10-year note yields jumped to 2.95% in overnight trading, while 2-year notes hit 2.762%, the highest since December 2018, as traders re-set interest rate sensitive assets following Powell's comments in Washington.
On Wall Street, futures contacts tied to the Dow Jones Industrial Average are indicating a 115 point opening bell decline while those linked the S&P 500 are priced for a 2 point move to the downside. Futures linked to the tech-focused Nasdaq are looking at a 15 point opening bell dip.
2. -- Twitter Shares Higher On Report Musk May Team-Up With Thoma Bravo
Twitter (TWTR) shares moved higher in pre-market trading following a report from the New York Post that suggests billionaire Tesla (TSLA) CEO Elon Musk could team up with private-equity firm Thoma Bravo in his $46.6 billion takeover bid for the social media group.
Musk, who secured billions in financing earlier this week-- on top of his own commitment of around $33.5 billion -- may need the buyout group to fill in the funding gaps of the deal, the Post reported, but Bravo management has concerns over his so-called 'erratic' behavior.
Musk's financing is tied to conditions that are linked to Musk's 'unencumbered' shares in Tesla, the filing noted. Musk owns around 173 million Tesla shares, around 88 million of which have been used to secure various personal loans.
Twitter said Thursday that it's received what it called a "non-binding" proposal from Musk, adding that the board is "committed to conducting a careful, comprehensive and deliberate review" in order to determine the company's next steps.
Twitter shares were marked 1% higher in pre-market trading to indicate an opening bell price of $47.50 each.
3. -- Gap Shares Plunge As Group Loses Old Navy Exec, Slashes Sales Forecast
Gap Inc. (GPS) shares plunged lower in pre-market trading after the clothing retailer slashed its first quarter sales forecast amid the twin pressures of rising input costs and supply chain disruptions.
The group also said Nancy Green, who heads the Old Navy brand division, would be leaving the company this week, with CEO Sonia Syngal assuming control until a permanent replacement is found.
Gap said it now sees first quarter sales growing by "low to mid-teens year-over-year declines", in percentage terms,, down from a March forecast of mid- to high-single-digit declines.
"As we look to seize Old Navy’s potential, particularly amidst the macro-economic dynamics facing our industry, we believe now is the right time to bring in a new leader with the operational rigor and creative vision to execute on the brand’s unique value proposition," Syngal said.
Gap shares were marked 12.4% lower in pre-market trading to indicate an opening bell price of $12.52 each.
4. -- Snap Sees Inflation, Supply Chains Hitting Q2 Ad Revenues
Snap (SNAP) shares moved lower in pre-market trading after the instant messaging app maker cautioned that ad sales could be hit by the surge in inflation, as well as the supply chain challenges facing companies around the world, even as it forecast solid user growth.
Snap, which makes the Snapchat messaging app, said it should have between 343 million and 345 million daily active users on its platform in the three months ending in June, firmly ahead of Street forecasts, but noted that revenue growth -- almost exclusively from ad sales -- would fall to between 20% and 25% as major clients pullback on spending.
For the three months ending in March, Snap said revenues rose 38% from last year to $1.06 billion, largely in-line with Street forecasts, with daily active users of 332 million.
While Snap's revenue has grown ~30% QTD, the operating environment remains challenging as supply chain disruptions, labor shortages, inflation, and rising rates, along with heightened geopolitical tensions, have all persisted, and management guided to revenue growth in Q2 slightly below consensus," said Canaccord Genuity analyst Maria Ripps. "Despite results that were better than some investors feared, a cautious forward outlook and premium valuation keep us 'hold' rated.
Snap shares were marked 1.4% lower in pre-market trading to indicate an opening bell price of $29.00 each.
5. -- Disney Set to Lose Self-Governing Status in Florida After LGBTQ Law Dispute
Walt Disney (DIS) faces the loss of its 'special tax district' status Friday after lawmakers in Florida voted to eliminate exemptions for the 25,000 acre Reedy Creek Improvement District near the city of Orlando.
The move follows Disney public criticism of the Florida Parental Rights in Education legislation, also known as the 'don't say gay' bill, which some have said infringes on the rights of LGBTQ students.
Florida Governor Ron DeStantis is expected to sign the bill, which would strip Disney's rights to self-government, low-tax financing and and infrastructure building in the sprawling 38.5 mile zone that was first established in 1967.
Disney shares were marked 0.05% higher in pre-market trading to indicate an opening bell price of $121.70 each.
