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What to Watch Today: Wall Street Set to Drop After a Strong Fed-Driven Relief Rally

Brendan McDermid | Reuters

BY THE NUMBERS

U.S. stock futures dropped Thursday, one day after a strong Fed-driven relief rally pushed Wall Street higher for a third straight session. The Dow rose 932 points, or 2.8%, as Fed Chairman Jerome Powell took a future 75 basis point interest rate increase off the table. The S&P 500 gained nearly 3%. The Nasdaq added about 3.2%. (CNBC)

Investors on Wednesday took the Fed's widely expected 50 basis point rate hike in stride, suggesting that they, at least for now, were more convinced the central bank can tame inflation without causing an economic recession. (CNBC)

The 10-year Treasury yield on Thursday ticked higher, trading around 2.95%. The benchmark yield crossed 3% on Monday, its highest level since late 2018. It also traded above that mark again on Wednesday morning ahead of the conclusion of the Fed's two-day May meeting. (CNBC)

* Bitcoin jumps to $40,000 after Powell remarks, trades below that today (CNBC)
* OPEC+ agrees to modest production increase, oil prices rise (CNBC)

The government on Thursday reported first-time jobless claims rose more than expected to 200,000. Friday brings the government's April employment report, and traders will see whether Powell's assertion that "the labor market has continued to strengthen and is extremely tight" holds up. (CNBC)

Labor productivity fell 7.5% in the first quarter, more than expected and the biggest decline since 1947, according to the latest reading from the government. Unit labor costs at nonfarm businesses increased a greater than expected 11.6% in the first quarter. (CNBC)

IN THE NEWS TODAY

Following March's 25 basis point rate rise, the first increase in more than three years, the Fed doubled that Wednesday to fight what Powell later called at his post-meeting news conference "much too high" inflation. The 50 basis point increase was the Fed's biggest rate hike since 2000. Powell said 50 basis point increases were under consideration at the next two meetings in June and July. (CNBC)

* Here’s what the Fed’s half-point rate hike means for your money (CNBC)

Elon Musk has locked down $7.14 billion in funding from a group of investors that includes Oracle (ORCL) co-founder Larry Ellison and Sequoia Capital to fund his $44 billion deal to take Twitter (TWTR) private, according to a filing Thursday. Saudi investor Prince Alwaleed bin Talal, who had initially opposed the buyout, also agreed to roll his $1.89 billion stake into the deal rather than cashing out, the filing showed. (Reuters)

* Crypto exchange Binance also to back Musk’s Twitter bid (CNBC)
* Bill Gates questions Musk’s goals with Twitter: ‘He could make it worse’ (CNBC)

Etsy (ETSY) shares sank more than 12% in Thursday's premarket and eBay (EBAY) shares fell 7%, the morning after each online marketplace issued weaker-than-expected forward guidance. Inflation and a return to pre-Covid pandemic shopping habits were among the factors weighing on Etsy and eBay's outlooks. Etsy matched on earnings and beat on revenue. Ebay beat on earnings and revenue. (CNBC)

Shopify (SHOP) plummeted 14% in premarket trading after it reported adjusted quarterly earnings of 20 cents per share, well below the 64-cent consensus estimate. The e-commerce platform also gave a cautious outlook as lockdown-inspired growth slows amid the absence of new consumer stimulus money. (Reuters)

* Shopify to buy logistics firm Deliverr in $2.1 billion deal (Reuters)

Bath & Body Works (BBWI) CEO Officer Andrew Meslow is resigning from his role due to unspecified health reasons, the retailer announced Thursday in a securities filing. Meslow will also be leaving his position as a member of Bath & Body Works' board. The changes will be effective May 12. (CNBC)

STOCKS TO WATCH

Booking Holdings (BKNG) surged 10% in premarket trading after reporting better-than-expected quarterly profit and revenue driven by a jump in demand for the travel services company. The parent of Priceline and other services earned an adjusted $3.90 per share, well above the 90-cent consensus estimate.

Sunrun (RUN) rallied 12.8% in premarket trading after the solar company reported first-quarter revenue that was much better than expected, even though its quarterly loss was wider than expected. Sunrun said it had implemented hikes to offset higher costs and that demand for solar equipment remained strong.

Wayfair (W) tumbled 6.4% in the premarket after it reported an adjusted quarterly loss of $1.96 per share, 40 cents wider than expected, although revenue matched forecasts. Active customer numbers were down 23.4% compared to a year earlier.

Kontoor Brands (KTB) beat estimates by 20 cents with adjusted quarterly earnings of $1.43 per share, and revenue also above estimates. The company behind the Wrangler and Lee apparel brands raised its full-year forecast, although it cut its current-quarter outlook due to Covid lockdowns in China.

Spirit Airlines (SAVE) reported an adjusted quarterly loss of $1.60 per share, wider than the 58-cent loss Wall Street had anticipated, with revenue also below forecasts. Spirit shares lost 1.4% in premarket trading.

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