Here are five things you must know for Thursday, May 12:
1. -- Stock Futures Slide, Dollar Leaps As Tech Rout Continues
U.S. equity futures extended declines Thursday, potentially pulling the Dow into its sixth consecutive slump, as investors continue to shed risk assets in markets around the world amid renewed concerns that central bank tightening, as well as surging inflation, will blunt growth prospects for the global economy.
Mega-cap tech stocks lead declines on Wall Street yesterday, with Apple (AAPL) falling another 5.25% and into bear market territory, as a faster-than-expected reading for core inflation in April revived sharper Fed rate bets and hammered risk assets.
Bitcoin's ongoing slump only added to the malaise, with prices for the world's biggest cryptocurrency falling again in overnight trading to a one-year low of $27,225.90 each amid the collapse of the TerraUSD stablecoin.
Tech isn't the only concern for the market at present, however, as the CBOE's key volatility gauge, the VIX, climbs back to early March levels, rising 3.6% to 34.18 points in European hours trading, ensuring another session of wild swings on Wall Street Thursday.
Slowing growth in Europe, where Britain's economy contracted in March and looks likely to slip into recession over the coming months, added to investor woes, pushing investors into the arms of safe-haven assets such as U.S. Treasury bonds, which drove yields down to 2.839% on benchmark 10-year notes - a near 26 basis point rally from levels seen earlier this week.
In other markets, the U.S. dollar index, which tracks the greenback against a basket of its global currency peers, rose 0.41% to a new 20-year high of 104.286.
On Wall Street, futures contacts tied to the Dow Jones Industrial Average indicating a 190 point opening bell decline ahead of factory gate inflation data at 8:30 am Eastern time, while those linked the S&P 500, which is down 17.44% for the year, are priced for a 27 point move to the downside Futures linked to the Nasdaq are looking at a 120 point opening bell slump, extending the tech-focused benchmark's year-to-date decline to around 28%.
2. -- Disney Shares Slide As Muted Outlook Clouds Impressive Streaming Gains
Walt Disney (DIS) shares slumped lower in pre-market trading after the media and entertainment giant cautioned that surging inflation and supply-chain snarls could blunt near-term profits, casting a cloud over a better-than-expected tally of subscriber addition to its Disney+ streaming service.
Disney added 7.9 million subscribers over the whole of the quarter, taking ESPN+ to 22.3 million paid subscribers and Hulu to 45.6 million, while overall subscriber totals for its Disney+ streaming services hit 137.7 million, topping well ahead analysts' estimates by around 2 million.
However, Disney's adjusted bottom line of $1.08 per share firmly missed forecasts, and CFO Christine McCarthy told investors that "it's very difficult to accurately forecast the potential financial impact due to the fluidity of the situation" in terms of inflation and supply disruptions.
Disney shares were marked 4.9% lower in pre-market trading to indicate an opening bell price of $100.07 each, a move that would extend the stock's year-to-date decline to around 35.4%.
3. -- Apple Shares Extend Bear Slump As Foxconn Cautions On Smartphone Demand
Apple shares extended declines in pre-market trading as its key Taiwan-based assembler, Foxconn, cautioned that chip shortages and slumping demand would hit current quarter revenues.
Foxconn, the world's biggest electronics manufacturer that is formally known as Hon Hai Precision Industry Co Ltd., posted a 5% rise in March quarter profits of around $985 billion, but said June quarter revenues, as well as those into the end of the year, would largely stagnate as a result of supply chain disruptions, China's Covid lockdowns and slowing smartphone demand.
"There are many uncertainties in the market at the moment," said Foxconn chairman Liu Young-way. "They are presenting quite some challenges to demand and supply."
Apple CEO Tim Cook said late last month that supply chain disruptions, particularly around what he called the "Shanghai corridor", as well as Russia's war on Ukraine, would clip between $4 billion and $8 billion from current quarter revenues.
Apple shares were marked 1.37% lower to indicate an opening bell price of $144.49 each, a move that extends the stock's decline from its all-time high of 182.01 on January 3 to around 20.8%.
4. -- Beyond Meat Shares Plunge As Marketing, Inflation Costs Eat Into Profits
Beyond Meat (BYND) shares plunged in pre-market trading after the plant-based food producer posted a wider-than-expected first quarter loss as marketing and new product launch costs hollowed-out the impact of impressive volume growth.
Beyond Meat recorded a loss of $1.58 per share for the three months ending in March, well outside the Street forecast and down from a loss of 43 cents per share last year, even as revenues rose 1.2% to $109.5 million. Inflation and supply chain snarls ate into profit margins, which narrowed to just 0.2%, as did the "expensive and inefficient" costs linked to marketing a new plant-based jerky with PepsiCo PEP, according to CFO Philip Hardin.
"The high cost of Beyond Meat Jerky will continue to be a headwind in Q2, but we expect substantial improvement in Jerky unit economics in Q3 and Q4," said CEO Ethan Brown. "We expect Q1 2022 margins were the low point in '22, with continued progress in Q2, albeit still well below historical levels, accelerated back into higher margins later in the year."
Beyond Meat shares were marked 23.6%% lower in pre-market trading to indicate an opening bell price of $20.00 each, a move that would extend the stock's six-month decline to around 76.5%.
5. -- Bitcoin Crashes Below $26,000 As Stablecoins Wobble
Bitcoin prices fell to the lowest levels in more than a year Thursday, briefly falling below the $26,000 mark, as the collapse of TerraUSD continues to rattle global cryptocurrency markets.
TerraUSD, which is more commonly known as UST, broke its one-to-one peg against the U.S. dollar over the weekend an continues to trade firmly south of parity to the greenback -- at around 66 cents -- despite assurances that its algorithm and capital base will be stabilized by its founders. Tether, another dollar-pegged stable coin, is also trading at only 98 cents.
The $100 billion stablecoin market, a way station for investors moving in and out of major cryptocurrencies such as bitcoin and ether, has seen a mass exodus in cash since the UST slump began, with losses triggering forced selling in other digital coins in order to recoup significant losses.
Bitcoin was last seen trading around 5.6% lower on the session at $27,505.50 each after hitting $25,845.00 each earlier in the session, a move that would extend its year-to-date decline to around 42%.
The world's largest cryptocurrency has fallen nearly 60% since reaching an all-time high of $67,802.30 in November of last year.
