Before the stock market starts on Monday, here are five things to keep in mind.
1. Futures are plummeting, with the S&P 500 poised to revert to a bear market.
After the worst week on Wall Street since January, U.S. Stock market futures fell on Monday. Following Friday’s hotter-than-expected consumer inflation statistics, bond yields rose as investors braced for a rate hike by the Federal Reserve later this week. On Monday, the Dow Jones Industrial Average is expected to begin down 500 points, or 1.7 percent, deepening a downturn. The S&P 500 and Nasdaq are expected to begin down 2% and 2.7 percent, respectively, with the former projected to re-enter bear market territory and challenge last month’s low of 3,810.32. Since March, the Nasdaq has been in a bear market.
2. Stock market are being slammed by rising bond rates as fears of a recession grow.
On Monday, the 2-year Treasury yield climbed to 3.16 percent, its highest level since 2007. For the first time since April, the 2-year yield momentarily flipped and climbed above its 10-year equivalent. A so-called yield curve inversion is said to be a sign of impending recession. After that, the benchmark 10-year yield jumped to 3.26 percent. The 5-year yield, which was at 3.4 percent, was higher than the 10-year and 30-year yields, which were both around 3.3 percent. Because short-term rates are more sensitive to Fed rate rises, they have moved more in recent days.
3. The Federal Reserve is likely to raise interest rates by 0.5 percent this week, but Stock market are expecting more.
On Tuesday and Wednesday, the Fed will convene its June meeting, with a 0.5 percent rate hike forecast. Anything more would be surprising, but there has been a growing perception in the Stock market that central bankers will have to become even more active in order to keep inflation under control. The Fed is in a difficult position, attempting to calm things down with tighter monetary policy while avoiding a recession. To put last week’s sizzling consumer inflation news in context, Wall Street will turn to Tuesday’s producer price index release and Wednesday’s retail sales data ahead of the Fed’s policy meeting.
4. Bitcoin falls below $24,000 as the crypto market as a whole sells down.
On Monday, bitcoin fell 14% to around $24,000, its lowest level since December 2020, as investors dumped the cryptocurrency amid a larger sell-off in risk assets. A crypto lending firm named Celsius has also suspended withdrawals for its customers, causing concern. According to CoinMarketCap statistics, the total value of the cryptocurrency market fell below $1 trillion for the first time since February 2021 throughout the weekend and into Monday morning. Since the fall of the so-called algorithmic stablecoin terraUSD and its sister coin luna in mid-May, the crypto market has been on edge.
5. The first electric car manufacturer in the post-SPAC era declares bankruptcy
Start-up for electric vehicles Less than a year after coming public through a special purpose acquisition company merger, Electric Last Mile Solutions announced late Sunday that it intended to apply for Chapter 7 bankruptcy protection. The ELMS IPO, which took place in late June 2021, was part of a wave of SPAC transactions that brought EV manufacturers public. The firm is the first of the post-SPAC electric car manufacturers to announce bankruptcy. After an internal inquiry discovered that the company’s earlier financial statements were incorrect, Chairman and founder Jason Luo and then-CEO Jim Taylor quit in February.