Here are the most important news, trends and analysis that investors need to start their trading day:
- Stock futures sink in what would add to Tuesday's drop on Fed worries
- Bond yields rise, pushing up mortgage rates, driving down home loan demand
- Oil CEOs, Yellen to testify at separate hearings on Russia-Ukraine war
- JetBlue tops Frontier with $3.6 billion all-cash offer for Spirit Airlines
- Musk spent $2.64 billion on Twitter shares so far this year, filing shows
U.S. stock futures dropped Wednesday as investors await more insight into what appears to be a Federal Reserve shifting to an even more aggressive monetary policy tightening path. Minutes from the Fed's March meeting, which featured the first interest rate hike in more than three years, are out at 2 p.m. ET. The market sees at least 0.25% rate increases at all six of the remaining Fed meetings of the year, with bigger 0.5% rises possible in May and June. Fed Governor Lael Brainard, who normally favors loose policy and low rates, said Tuesday the central bank needs to act quickly and aggressively to drive down inflation. Those comments sent Wall Street lower and bond yields to near three-year highs again.
The 10-year Treasury yield on Wednesday topped 2.63%, climbing above the 2-year yield and out of an inversion. However, the 5-year yield remained inverted and higher then the 30-year yield. The spike higher in bond yields drove mortgage rates up.
In fact, 30-year fixed-rate mortgages topped 5% on Tuesday. The rising rate environment sent total home loan application volume down another 6% last week, according to the Mortgage Bankers Association. That's down 41% from the same week a year ago.
Oil prices remained elevated Wednesday on supply concerns as the U.S. and its European allies consider more sanctions against Moscow as allegations emerge about wartime atrocities by Russian troops in Ukraine. The head of the European Council said Russia oil and gas sanctions needed sooner or later. Higher crude prices have, in turn, pushed gasoline prices higher. The CEOs of oil companies, including Chevron and Exxon, are set to testify Wednesday before a House panel about what they're doing to control energy costs. At another House hearing, Treasury Secretary Janet Yellen is set to talk about the global impact of Russia's invasion of Ukraine on the global economy.
JetBlue Airways made an unsolicited $3.6 billion all-cash offer for Spirit Airlines, raising questions about Spirit's deal to combine with rival discount carrier Frontier Airlines. Spirit said its board was evaluating JetBlue's proposal, which is 33% higher than Frontier's stock-and-cash offer. Trading in Spirit shares was halted before Tuesday's market close after the stock spiked more than 22%. Spirit's shares were lower in Wednesday's premarket. Frontier was also lower in the premarket.
Tesla CEO Elon Musk has been buying Twitter shares on almost a daily basis since the end of January, spending $2.64 billion for his current stake in the company, according to a regulatory filing Tuesday. The disclosure came in a 13D, which confirms Musk's intentions to be more active in Twitter's business. He was announced as a new board member earlier Tuesday. Twitter also confirmed it's testing an edit button, which was the subject of a Musk Twitter poll Monday, hours after a filing revealed he had acquired an over 9% stake in the social network.