Here are five things you must know for Thursday, May 19:
1. -- Stock Futures Extend Slide As Global Market Rout Intensifies
U.S. equity futures moved sharply lower Thursday, following on from Wall Street's biggest single-day decline in nearly two years, as global markets wilt under the pressure of surging inflation, slowing growth and aggressive central bank rate hikes signaling.
Stocks have also been jolted by a series of warnings from blue-chip retailers, including Target (TGT) and Walmart (WMT), that rising fuel and labor costs, as well as mis-timed inventory builds, will pressure near-term profit margins. Each of the country's two largest retailers suffered their biggest single-day declines since 1987 this week, with Target losing around a quarter of its value in yesterday's carnage.
The moves, as well as bets on faster rate hikes from the Fed, have the S&P 500 on pace for the biggest weekly slump in more than a decade and, 95 trading days in, its second-worst start to any trading year since 1932.
The Fed, for its part, has said it won't deter from rate hike path until there is "clear and convincing" evidence that inflation is slowing, according to comments earlier this week from Chairman Jerome Powell.
Rate traders are still pricing in a 85% chance of a 50 basis point hike next month, according to the CME Group's FedWatch tool, as well as an 84.7% chance of a similar move in July, even as benchmark 10-year Treasury bond yields slump to 2.832% in the overnight session -- down from around 3.19% early last week -- and the dollar index fell 0.24% against a basket of six global currencies to 103.55 in early European trading.
On Wall Street, futures tied to the Dow Jones Industrial Average indicating a 400 point opening bell decline while those linked the S&P 500, which is down 18.2% for the year, are priced for a 55 point move to the downside Futures linked to the Nasdaq are looking at 200 point opening bell slump, pulling the tech-focused benchmark into a year-to-date decline of around 30%.
2. -- Cisco Shares Tumble After Weak Outlook Rattles Tech Equipment Sector
Cisco Systems (CSCO) shares plunged lower in pre-market trading after the world's biggest computer network equipment maker posted weaker-than-expected third quarter sales, and forecast softer near-term profits, thanks in part to supply chain disruptions that are holding back deliveries of key components.
CEO Chuck Robbins said the group needed to be "practical about the current environment" while "erring on the side of caution in terms of our outlook" as both the war in Ukraine and China's ongoing Covid lockdown continue to snarl business paths and investments around the world.
The group said adjusted fourth quarter profits would come in between 6 cents to 84 cents per share, well shy of the Street consensus forecast, and a year-on-year revenue decline of between 1% and 5.5%.
"These lockdowns resulted in an even more severe shortage of certain critical components. This in turn prevented us from shipping products to customers at the levels we originally anticipated heading into Q3,
Robbins told investors on a conference call late Wednesday. "Our Q4 guidance incorporates a wider than usual range, taking into account the revenue impact of the war in Ukraine and the continuing uncertainty related to the China COVID lockdowns."
Cisco shares were marked 14.12% lower in pre-market trading to indicate an opening bell price of $41.53 each.
3. -- Under Armour Shares Slide After Surprise Departure of CEO Patrick Frisk
Under Armour (UAA) shares moved lower in pre-market trading after the sports apparel group said CEO Patrick Frisk will step down from his role at the end of the month.
COO Colin Browne will act as interim CEO from June 1, the company said, but did not give explain any reasons behind Frisk's departure. The former Aldo Group CEO took over from outgoing Under Armour boss Kevin Plank in 2020.
Plank stepped aside as CEO of Under Armour -- a business he founded in 1996 -- in October of 2019, just weeks before the group revealed that it was co-operating with investigations from both the Securities and Exchange Commission and the U.S. Department of Justice.
The probes followed a Wall Street Journal report that the two agencies were looking into the company's revenue recognition accounting, which it said was used to flatter sales from quarter to quarter.
Under Armour shares were marked 2.7% lower in premarket trading to indicate an opening bell price of $9.45 each.
4. -- Tesla Shares Looking At Sub $700 Open As Headline Risk Accelerates
Tesla (TSLA) shares extended declines in pre-market trading, and look set to open under the $700 mark for the first time since last October, as the clean-energy carmaker continues to find itself embroiled in headline risk linked to CEO Elon Musk's $44 billion takeover of Twitter TWTR.
Musk, who has pledged billion in Tesla shares to fund part of the cash-and-stock offer for the social media group, has sought external sources for the equity portion of the deal to ease the pressure on Tesla stock, which has lost more than 38% of its market value since his stake in the micro-blogging website was made public in early April.
Shutdowns in Shanghai has impeded output in its key Asia factory, a tech stock rout has dragged its shares lower and Musk's diverted attention has raised questions as to his near-term focus for the group's myriad challenges.
Tesla shares were marked 2.3% lower in premarket trading to indicate an opening bell price of $693.50 each.
5. -- Boeing Sells 50 737-Max Jets to British Airways Parent IAG
Boeing (BA) shares moved lower in pre-market trading, but found support from news of a major aircraft order from British Airways parent IAG.
The carrier, which also owns Spain's Iberia Airlines and well as Ireland's Aer Lingus, agreed to buy around 50 of the planemaker's troubled 737-Max jets that would be worth around $6.25 billion at list prices. IAG also has options to purchase another 100 aircraft, subject to shareholder approvals.
"The addition of new Boeing 737s is an important part of IAG's short-haul fleet renewal," said IAG CEO Luis Gallego. "These latest-generation aircraft are more fuel-efficient than those they will replace and in line with our commitment to achieving net zero carbon emissions by 2050."
Production of the 737 MAX, the group's workhorse jet that was only recently approved for return to service following fatal crashes in 2018 and 2019, should rise to 31 aircraft per month this year, Boeing said when it published its first quarter earnings in late April.
Boeing shares were marked 1.2% lower in pre-market trading to indicate an opening bell price of $123.98 each.
