Here are five things you must know for Monday, May 16:
1. -- Stock Futures Edge Lower As Growth Worries Snuff Out Friday Rally
U.S. equity futures edged lower Monday, while Treasury bonds yields nudged higher and the dollar held near a two-decade high against its global peers, as stocks struggle to extend the momentum from Friday's late-session rally into a new trading week.
That may prove difficult, however, as investors continue to worry that the twin impact of surging inflation and aggressive central bank rate hikes will collectively blunt growth both in the U.S. and elsewhere, while China's 'Zerod Covid' health policies are already threatening recession in the world's second largest economy.
Official data from Beijing today, in fact, revealed an 11.1% slump in April retail sales as well as a near 3% pullback in industrial output as lockdowns hammered demand and shuttered factories up and down the country.
Here in the U.S., the weakest reading for consumer confidence in more than a decade, record high gasoline prices and surging food bills are combing to blunt spending and slow growth, with former Goldman Sachs Group GS CEO Lloyd Blankfein warning Sunday on CBS's 'Face the Nation' that " “If I were running a big company, I would be very prepared for it ... if I was a consumer, I’d be prepared for it.”
The Fed's inflation fight, however, could offer what Blankfein called a "narrow path" towards the soft landing the Chairman Jerome Powell has guided, which could be why benchmark 10-year note yields are moving optimistically higher Monday, at 2.933%, although stocks are still looking towards at least modest opening bell declines.
Futures contacts tied to the Dow Jones Industrial Average indicating a 55 point opening bell dip while those linked the S&P 500, which is down 15.6% for the year, are priced for a 15 point move to the downside Futures linked to the Nasdaq are looking at an 80 point decline.
2. -- Week Ahead: Consumer Strength in Focus Ahead Of Retail Sales Data, Big Store Earnings
The strength of the U.S. consumer will be in focus on Wall Street this week amid a host of data releases and corporate earnings focused on the biggest and most important sub-section of the U.S. economy.
Tuesday's April retail sales data release will provide perhaps the starkest assessment to data on the impact of surging inflation and record high gas prices on the domestic consumer, with economists looking for a notable slowdown in core sales bump a bump higher in the headline reading thanks to the higher dollar value of gasoline sales.
Fed Chair Powell will also speak at the Wall Street Journal's 'Future of Everything' event at 2:00 pm Eastern time on Tuesday.
Retail bellwethers Walmart (WMT), Home Depot (HD), Target (TGT) and Lowe's Companies (LOW) will also publish March quarter earnings this week as the first quarter reporting season rounds to a close with collective S&P 500 profits expected to rise 11.1% from last year to $407.5 billion.
Housing market data will also provide a glimpse into both consumer strength and home affordability this week, with housing starts data and the MBA's weekly mortgage report on Wednesay and existing home sales data set for Thursday.
3. -- Tesla Slips Amid Report of More Delays At Shanghai Factory
Tesla (TSLA) shares slipped lower in pre-market trading following reports that the carmaker will delay plans to return its Shanghai factory to full capacity amid the city's ongoing Covid lockdown.
Tesla is operating a so-called 'closed loop' at its Shanghai factory, meaning workers are essentially living, sleeping and working within the facility's walls in order to comply with government regulations and Covid restrictions.
The plant, which normally produces around 2,600 cars per week, has been turning out a pace of only 1,200 since it was reopened after a 22-day closure late last month.
Reuters reported Monday that internal memos suggest the factory won't return to full capacity until at least next week, adding further concerns for the health of its second quarter earnings and deliveries.
Tesla shares 0.1% lower in premarket trading to indicate an opening bell price of $768.87 each.
4. -- Twitter Extends Slump As Musk Reveals Spat With Legal Team
Twitter (TWTR) shares extended declines in pre-market trading after Tesla CEO Elon Musk said the social media group's legal team told him he had violated a non-disclosure agreement that could further delay his $44 billion takeover bid.
Musk, who last week said his Twitter pursuit was 'on hold' pending an investigation into the number of fake and spam accounts on the micro-blogging website, said Saturday that "Twitter legal just called to complain that I violated their NDA by revealing the bot check sample size is 100!".
The Tesla CEO also said that there is "some chance" the number of fake and bot accounts "might be over 90% of daily active users", although Twitter told the SEC last month that the total was under 5% of its 229 million month active users.
Twitter shares were marked 3.85% lower in premarket trading to indicate an opening bell price of $39.16 each.
5. -- Spirit Soars As JetBlue Goes Hostile With $30 Per Share Offer
Spirit Airlines (SAVE) soared higher in pre-market trading after JetBlue Airways (JBLU) launched a hostile takeover for the low-cost airline valued at around $3 billion.
Spirit, which had been planning a $6.6 billion tie-up with low-cost rival Frontier Group Holdings (ULCC), had earlier said JetBlue's offer of $33 per share could be a "superior proposal" that shareholders may need to consider.
JetBlue is now offering $30 a share, in cash , for the Miramar, Florida-based carrier and has urged shareholders to reject what its calls an "inferior, high risk, and low value Spirit/Frontier transaction"
“JetBlue offers more value – a significant premium in cash – more certainty, and more benefits for all stakeholders," the company said. "Frontier offers less value, more risk, no divestiture commitments, and no reverse break-up fee, despite more overlap on non-stop routes and their own regulatory challenges."
Spirit Airlines shares were marked 22.2% higher in pre-market trading to indicate an opening bell price of $20.75 each. Frontier jumped 4.5% to $9.11 each while JetBlue rose 2.7% to $10.33 each.
