Here are the top news, trends and analysis investors need to start their trading day:
1. Dow futures burst after the 30-stock average’s six-day losing streak
The Twitter logo and trade information is displayed as a trader works on the floor of the New York Stock Exchange (NYSE) on May 3, 2022 in New York City, United States.
Brendan McDermid | Reuters
US stock futures rallied on Friday, with the S&P 500 trying not to join the Nasdaq in a bear market defined by a 20% or more decline from a previous high.
- Nasdaq futures led despite a 12% premarket drop in Twitter stock. The stock fell as much as 25% after Elon Musk tweeted on Friday that his deal to buy the social network was “temporarily on hold.” Twitter stocks recouped those losses as Musk later tweeted that he was “still committed” to the deal.
- The Dow Jones Industrial Average fell for the sixth consecutive day on Thursday, continuing into a correction defined as a 10% or more decline from a previous high. The S&P 500 fell slightly. The Nasdaq gained slightly.
2. Bond yields rose after Powell said he couldn’t guarantee a soft landing
The 10-year Treasury yield trended higher on Friday but remained below 3%, a key level that was broken for the first time since late 2018 on May 2.
- Bond yields have risen rapidly on expectations that the US Federal Reserve will need to raise interest rates more aggressively to fight inflation. There is concern that inflation will remain high even as the economy slows.
- Fed Chair Jerome Powell said in an interview published on Marketplace on Thursday that he could not promise a so-called soft landing for the economy. He warned that controlling inflation could cause economic problems but remains his top priority.
3. Two tweets from Elon Musk about his Twitter deal hit the stock
Musk sent Twitter stocks on a wild ride with two tweets on Friday morning. After saying he paused his Twitter bid to get more information about how many fake accounts there are on the social media platform, he later said he was “still involved in the acquisition.” The first tweet came at 5:44 am ET. The second tweet was posted about two hours later.
Tesla CEO Musk announced last month that he intends to buy Twitter for $44 billion, and he previously tweeted that one of his top priorities would be removing “spam bots” from the platform. Tesla shares, which recently fell on worries that Musk’s Twitter deal could be a distraction, rose more than 5% on Friday’s first tweet and held those gains after the second.
4. Some stablecoins are gaining traction and are helping to boost the crypto market
Tether has long faced questions about whether it has enough assets to justify its peg to the dollar.
Tiffany Hagler | Bloomberg via Getty Images
Tether, the world’s largest stablecoin, has 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 said to always be worth $1 – fell to 95 cents on Thursday. A controversial stablecoin dubbed TerraUSD, or UST, which is said to be pegged 1:1 to the dollar, has collapsed in recent days, trading as low as 8 cents on Friday. Luna, a token closely associated with UST, is therefore now worth $0.
- The stablecoin saga has added a layer of uncertainty that has contributed to sharp declines across the crypto market. Bitcoin was back above $30,000 on Friday, recovering from levels not seen since late 2020. At current levels, Bitcoin, the world’s largest cryptocurrency, is down more than 50% from its all-time high of over $68,000 in November.
5. The CEO of a major crypto exchange takes a large stake in Robinhood
Sam Bankman-Fried, CEO of FTX US Derivatives, will testify during the House Agriculture Committee hearing entitled Changing Market Roles: The FTX Proposal and Trends in New Clearinghouse Models on Thursday, May 12, 2022 at the Longworth Building.
Tom Williams | CQ Roll Call, Inc. | Getty Images
- Shares of Robinhood, a popular stock and crypto trading platform, surged more than 23% in Friday’s pre-market. In regular trading on Thursday, the stock hit an all-time low. Robinhood ended the session priced at $8.56, about 77% off its IPO price last July.
- The document said Bankman-Fried does not plan to take “any action to alter or affect control” of the company. The filing also said he “may have discussions with management from time to time.”
– CNBC’s Jesse Pound, Vicky McKeever, Jeff Cox, Sam Shead and Tanaya Macheel contributed to this report.
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