Here are the most important news, trends and analysis that investors need to start their trading day:
- Dow is set to extend sell-off with futures falling again
- Another inflation gauge comes in hotter than expected
- Cryptocurrency market tumbles after Tesla stops car purchases with bitcoin
- Colonial Pipeline restarts after ransomware attack
- SoftBank’s Son says he expects even more massive returns after blowout earnings
The blue-chip Dow Jones Industrial Average is slated to extend Wednesday's steep losses after higher-than-forecast consumer prices prompted investors to dump risk assets. Dow Jones Industrial Average futures fell about 90 points Thursday. Nasdaq futures and those tied to the S&P 500 erased earlier losses and traded in the green. In the previous session, the 30-stock Dow fell more than 600 points, clinching its worst day since January. The S&P 500 lost 2.1%, its biggest one-day drop since February, while the tech-heavy Nasdaq Composite slid 2.6%. The major indexes registered big losses by midweek with the S&P 500 falling 4% through Wednesday's close. The Dow has fallen 3.4%, while the Nasdaq underperformed with a 5.2% loss as tech shares got hit particularly hard in the face of higher inflation and interest rates.
Companies paid much higher prices to producers in April for everything from steel to meat in another sign of inflation in an economy rapidly recovering from the pandemic. The new data comes a day after a sharp gain in consumer prices sent the stock market reeling. The Producer Price Index rose 0.6% last month, according to the U.S. Bureau of Labor Statistics. The gauge spiked 6.2% for the 12 months ended in April, marking the largest increase since the agency started tracking the data in 2010. Economists polled by FactSet were expecting a 0.3% increase in April for the PPI over the previous month. Year over year, the index was forecast to rise by 3.8%, according to FactSet.
Bitcoin and other digital token prices fell sharply, wiping hundreds of billions of dollars off the entire cryptocurrency market after Tesla CEO Elon Musk tweeted that the electric vehicle maker would suspend car purchases using bitcoin. Bitcoin dropped more than 10% after Musk's surprising reversal. The world's largest cryptocurrency dipped below the $50,000 mark for the first time since Apr. 24, according to CoinDesk data. Other cryptocurrencies ether and XRP were also sharply lower.
Coinbase, which just went public on the promise of crypto-trading becoming mainstream, dropped 5% in premarket trading following Musk's comments. Along with Tesla, shares of other companies that own sizable bitcoin stakes declined with MicroStrategy off by 6% in the premarket.
Colonial Pipeline restarted operations five days after a ransomware attack forced the entire system offline. The company warned, however, that its pipeline would not be fully functional immediately. "Following this restart it will take several days for the product delivery supply chain to return to normal," Colonial said Wednesday evening. "Some markets served by Colonial Pipeline may experience, or continue to experience, intermittent service interruptions during the start-up period. Colonial will move as much gasoline, diesel, and jet fuel as is safely possible and will continue to do so until markets return to normal."
Most the 5,500-mile pipeline, which supplies around half of the East Coast's fuel, had been offline since Friday. The shutdown sparked fears of a gasoline shortage, and pushed the national average for a gallon of gas above $3 for the first time since 2014.
SoftBank CEO Masayoshi Son told CNBC he expects to see even more exits from companies in the Vision Fund's portfolio to go public. "I want to create an ecosystem ... where we would have multiple companies going for IPOs," Masa Son said in the interview with Andrew Ross Sorkin recorded Wednesday night. He said 14 of SoftBank's Vision Fund companies had an IPO or other exit over the last 12 months, up from eight the year before.
His comments followed a blowout quarterly report from SoftBank. SoftBank on Wednesday reported $45.88 billion in net profit for the last quarter, largely thanks to the IPO of one of the crown jewels in its Vision Fund portfolio, the South Korean e-commerce company Coupang. Son also spoke about his regrets with the botched WeWork IPO and investments he missed, such as Airbnb.
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