Here are five things you must know for Friday, May 20:
1. -- Stock Futures Bounce On China Rate Cut, Bargain Hunting
U.S. equity futures moved firmly higher Friday, although are still well on pace for another weekly decline that would keep stocks amid their start to any year in nearly a century, as investors look for bargains in a beat-down market shrouded by central bank rate threats of higher interest rates.
As Kansas City Fed president Esther George said yesterday, central banks may not be gunning for stock markets, but they aren't going to be deterred by their recent slump in pushing rate hikes to fight the fastest inflation in four decades.
"What we are looking for is the transmission of our policy through markets understanding that tightening should be expected," George told CNBC. "It is not aimed at the equity markets in particular but it is one of the avenues through which tighter financial conditions would emerge."
Rate traders are pricing in a 91.1% chance of a 50 basis point hike next month, according to the CME Group's FedWatch tool, as well as an 13% chance of a 75 basis point move in July, despite Jerome Powell's assertion that a rate hike of that magnitude isn't being "actively considered" by he and his colleagues.
Curiously, global stocks got an overnight boost from the opposite tack -- a rate cut from China's central bank aimed at easing borrowing costs in the housing market -- as the world's second largest economy appears at risk of recession as a result of its Covid resurgence and draconian lockdown orders.
The region-wide MSCI ex-Japan index was marked 2.2% higher heading into the close of trading, while Europe's Stoxx 600 rose 1.2% for its first gain in three days.
Benchmark 10-year Treasury bond yields held at 2.868% while and the dollar index rose 0.1% against a basket of six global currencies to 102.926 in early European trading.
The market's key volatility gauge, the VIX, fell 7.7% in overnight trading and was last seen firmly south of the 30 point mark that normally triggers big intra-day moves on Wall Street, although the expiration of around $1.9 trillion in equity options tomorrow -- which must be closed out today -- will likely keep stocks active throughout the session.
On Wall Street, futures tied to the Dow Jones Industrial Average indicating a 285 point opening bell advance while those linked the S&P 500, which is down 18.2% for the year, are priced for a 42 point move to the upside. Futures linked to the Nasdaq are looking at 180 point opening bell gain.
2. -- Tesla Shares Gain As Musk Vows '24/7 Focus' Amid Lurid Headlines
Tesla (TSLA) shares move higher Friday, rising just ahead of the broader Nasdaq benchmark, as CEO Elon Musk said the clean-energy carmaker's fortunes were on his mind '24/7' as headlines continue to dog the world's richest man.
Musk said he was only spending around 5% of his time on his planned $44 billion takeover of Twitter, and noted that the bulk of his focus was on hits SpaceX and Tesla responsibilities as he looked to ease investor concerns that he's become too distracted.
He also dismissed reports, which surfaced last night that he had sexually harassed a flight attendant on a private jet in 2016 as "utterly untrue", saying it was a "politically motivated hit piece" and adding there was "a lot more to this story."
Irrespective of its merits, the headlines themselves reminded investors that Tesla, which has lost more than $450 million in value since Musk began pursing Twitter early last month, remains firmly connected to the actions of its highly-visible CEO.
Tesla shares were marked 2.75% higher in premarket trading to indicate an opening bell price of $728.90 each.
3. -- Applied Materials Shares Slide As Chip Sector Disruptions Clip Q2 Earnings
Applied Materials (AMAT) shares moved lower in pre-market trading after the semiconductor equipment maker posted softer-than-expected second quarter earnings a muted near-term outlook.
A global shortage in semiconductor parts has gummed-up chipmaking supply chains and hampered Applied Material's ability to meet customer demand, CEO Gary Dickerson told investors late Thursday. The group earned an adjusted profit of $1.85 per share on revenues of $6.25 billion, missing Street forecasts, and said current-quarter profits would only come in between 1.59 to $1.95 per share, well shy of Refinitiv estimates.
Demand for semiconductors has never been stronger or broader while the industry's ability to fulfill this growing demand remains constrained by ongoing supply chain issues," Dickerson told investors on a conference call.
"We anticipate our ability to fulfill this demand will remain constrained by ongoing supply chain challenges in the near-term with incremental improvements beginning in our fourth quarter," he added. "We are making progress in key areas, although it is not yet visible in our results. Longer term, we see incredibly exciting opportunities as secular trends create opportunities for Applied to outgrow the semiconductor market."
Applied Materials shares were marked 2.1% lower in premarket trading to indicate an opening bell price of $108.45 each.
4. -- Ross Stores Shares Tank After Softer Q1 Earnings, Gloomy Outlook
Ross Stores (ROST) shares collapsed in pre-market trading as the budget retailer became the last victim of sector sentiment after a weaker-than-expected April quarter
Ross Stores, which operates the 'Dress for Less' and "dd's Discounts' brands, posted first quarter sales of $4.3 billion, missing Street forecasts, and cautioned that same-store sales for the three months ending in July would likely decline by as much as 6% when compared to last year's tally, which was supported by post-pandemic stimulus.
Full-year sales are also likely to decline, the company said, and rising input costs will likely add to the margin pressures retailers around the country are facing, clipping fiscal 2023 profits.
"We knew 2022 would be a difficult year to predict, especially the first half when we were facing last year's record levels of government stimulus and significant customer pent-up demand as COVID restrictions eased," CEO Barbara Rentler told investors on a conference call late Thursday. "The external environment has also proven extremely challenging as the Russia-Ukraine conflict has exacerbated inflationary pressures on the consumer not seen in 40 years. As a result of these factors, our first quarter results underperformed our expectations."
Ross Stores shares were marked 28.2% lower in premarket trading to indicate an opening bell price of $66.56 each.
5. -- Monkeypox Infections Spread, With New Cases in Quebec, Spain and Germany
Monkeypox, a rare viral infection that carries similar but milder symptoms to that of smallpox, is starting to spread through various countries in western Europe and north America, heath officials cautioned Thursday.
Canada's public health agency confirmed the first two cases of the infection, which is normally found in central Africa, in the province of Quebec, just days after it was identified in Massachusetts. Public Health Agency of Canada has connected the two cases to the infection found in Massachusetts.
Spain, meanwhile, reported 14 confirmed cases on Friday, taking that country's total to 21, while Belgium identified new infections earlier in the day.
