Here are the most important news, trends and analysis that investors need to start their trading day:
- Wall Street set to rise after S&P 500 hits lowest level in over a year
- 10-year Treasury yield and U.S. oil prices drop; bitcoin bounces
- Peloton plunges after reporting a big loss and weak guidance
- Migraine drug stock soars; shares of Covid vaccine maker sinks
- Tesla halts Shanghai production; Musk 'aligned' with EU tech law
U.S. stock futures bounced Tuesday, with investors hoping Wall Street can break its three-session losing streak. The S&P 500 on Monday fell to its lowest level in more than a year. The broad market index dropped 3.2%, closing under 4,000. The Nasdaq tumbled nearly 4.3% and the Dow Jones Industrial Average dropped close to 2%. The Nasdaq's bear market approached a 30% decline from its last record high in November. The S&P 500 and the Dow moved deeper into correction territory, defined by a drop of 10% or more from their most recent record highs, which were in early January.
The brutal selling in the stock market of late has been triggered in large part by the rise in the 10-year Treasury yield, as bond traders bet that the Federal Reserve won't be able to get inflation under control in a timely fashion. Ahead of two key inflation reports Wednesday and Thursday, President Joe Biden on Tuesday is set to deliver remarks on inflation.
- The 10-year yield's decline from multiyear highs did not seem to help equities Monday. However, the benchmark yield dipped again Tuesday, going below 3%, and stocks advanced in the premarket.
- One day after sinking nearly 6.1%, U.S. oil prices dropped another roughly 1.5% on Tuesday but remained over $100 per barrel. Elevated crude prices have been reflected at American gas pumps — and on Tuesday, the national average hit an unadjusted-for-inflation record of $4.37 per gallon, according to AAA.
- Bitcoin rose above $31,000 on Tuesday, one day after falling below that level for a more than 50% decline from November's all-time high. The recent price drops come amid a broader, multiday sell-off that has ensnared much of the crypto market and equities.
Peloton on Tuesday reported a wider-than-expected quarterly loss and a steep decline in sales, as inventory piled up in warehouses and ate away at the company's cash. Shares of the connected fitness equipment maker plunged more than 20% in premarket trading. Peloton offered up a weak sales outlook for the current quarter, citing softer demand. The company anticipates that planned subscription price hikes may lead some users to cancel their monthly memberships.
Pfizer said Tuesday it will buy migraine drug maker Biohaven Pharmaceutical for about $11.6 billion in cash. Pfizer will acquire all the outstanding shares of Biohaven that it doesn't already own for $148.50 each in cash. That's 78.6% higher than Biohaven's closing price Monday, a premium largely reflect in Tuesday's premarket. In November, Pfizer acquired overseas marketing rights to two migraine drugs from Biohaven for up to $1.24 billion, with Pfizer taking a 2.6% equity stake.
Novavax shares sank over 20% in premarket trading after the vaccine maker missed both top and bottom line estimates for its latest quarter. The miss comes as Novavax shipped just 31 million Covid doses during the quarter, putting it well off the pace of its projected 2 billion shots for 2022. While reiterating its prior 2022 revenue forecast, the company said it expected vaccine sales to accelerate during the current quarter.
Tesla has stopped most of its production at its Shanghai plant due to problems securing parts, according to Reuters, citing an internal memo. It's the latest in a series of difficulties for the electric vehicle maker's factory in China's biggest city, which has been experiencing various levels of lockdowns for more than a month under that country's zero-Covid policy.
EU industry chief Thierry Breton met Elon Musk in Texas on Monday, and the two signaled agreement on Europe's digital media regulation ahead of the Tesla CEO's purchase of Twitter. In a video with Breton, Musk said the spirit of the Digital Services Act "exactly aligned" with his thinking. The two did not go into detail on the law, which levies hefty fines on platforms if they do not control illegal content.