Here are the most important news, trends and analysis that investors need to start their trading day:
1. Dow futures pop after the 30-stock average’s six-session losing streak
The Twitter logo and trading information is displayed as a trader works on the floor of the New York Stock Exchange (NYSE) in New York City, US, May 3, 2022.
Brendan Mcdermid | Reuters
US stock futures bounced Friday, with the S&P 500 trying not to join the Nasdaq in a bear market, which is defined by a drop of 20% or more from a prior high.
- Nasdaq futures led the way higher despite a 12% premarket drop in Twitter shares. The stock dropped as much as 25% after Elon Musk tweeted Friday his deal to buy the social network is “temporarily on hold.” Twitter shares were paring those losses when Musk later tweeted he’s “still committed” to the deal.
- The Dow Jones Industrial Average on Thursday dropped for the sixth straight session, sinking further into a correction, set by a drop of 10% or more from a prior high. The S&P 500 fell slightly. The Nasdaq managed a slight gain.
2. Bond yields rose after Powell says he can’t guarantee a soft landing
The 10-year Treasury yield on Friday ticked higher but remained under 3%, a key level that was breached on May 2 for the first time since late 2018.
- Bond yields have been rapidly rising on the belief that the Federal Reserve will have to act more aggressively on hiking interest rates to fight inflation. There’s concern that inflation will remain high even as the economy slows down.
- Fed Chairman Jerome Powell said in an interview posted Thursday on Marketplace that he can’t promise a so-called soft landing for the economy. He warned that inflation getting under control could cause some economic pain but remains his top priority.
3. Two tweets from Elon Musk about his Twitter deal hit the stock
With two tweets Friday morning, Musk sent Twitter shares on a wild ride. After saying he paused his Twitter offer seeking more information about how many fake accounts there are on the social media platform, he later said he was “still committed to the acquisition.” The first tweet came at 5:44 am ET. The second tweet was posted about two hours later.
The Tesla CEO Musk announced last month that he intends to buy Twitter for $44 billion and he’s previously tweeted that one of his main priorities would be to remove “spam bots” from the platform. Tesla shares, which recently fell on worries about Musk’s Twitter deal being a distraction, rallied more than 5% Friday on the first tweet and held those gains after the second.
4. Some stablecoins get their footing, helping to send the crypto market higher
Tether has long faced questions over whether it has enough assets to justify its peg to the dollar.
Tiffany Hagler | Bloomberg via Getty Images
Tether, the world’s largest stablecoin, regained its peg to the dollar after more than $3 billion worth of tokens left the system in a single day. The cryptocurrency — which is meant to always be worth $1 — sunk as low as 95 cents on Thursday. The controversial stablecoin known as TerraUSD or UST, which is supposed to be pegged 1-to-1 with the dollar, has collapsed in recent days, trading around 8 cents Friday. Luna, a token closely associated with UST, is now worth $0 as a result.
- The stablecoin saga has added a layer of uncertainty that’s contributed to sharp declines across the entire crypto market. Bitcoin on Friday was back above $30,000, rebounding from levels not seen since late 2020. At current levels, bitcoin, the world’s largest cryptocurrency, was down more than 50% from its all-time high of over $68,000 in November.
5. CEO of a major crypto exchange takes a big stake in Robinhood
Sam Bankman-Fried, CEO of FTX US Derivatives, testifies during the House Agriculture Committee hearing titled Changing Market Roles: The FTX Proposal and Trends in New Clearinghouse Models, in Longworth Building on Thursday, May 12, 2022.
Tom Williams | CQ-Roll Call, Inc. | Getty Images
- Shares of Robinhood, the popular stock and crypto trading platform, jumped more than 23% in Friday’s premarket. In regular trading Thursday the stock hit an all-time low. Robinhood ended the session priced at $8.56, about 77% away from its IPO price last July.
- The document said Bankman-Fried does not plan to take “any action toward changing or the influencing control” of the company. The filing also said he may “from time to time engage in discussions” with management.
— CNBC’s Jesse Pound, Vicky McKeever, Jeff Cox, Sam Shead and Tanaya Macheel contributed to this report.
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