What to watch today: Dow set to open lower after its worst day since 2020 on inflation worries
BY THE NUMBERS
Dow futures fell sharply Thursday after the 30-stock average posted its biggest daily loss since June 2020. It plunged 1,164 points, or nearly 3.6%, and sank deeper into a correction, well below the threshold for a decline of 10% or more from prior highs. The Nasdaq and the S&P 500 both plummeted more than 4% on Wednesday, with the latter closing on the brink of joining the former in bear market territory, defined as a decline of 20% or more from previous highs. (CNBC)
As investors fled stocks, they sought the perceived safety of bonds, pushing the price on the 10-year Treasury higher and its yield lower Thursday. Bond prices and yields move inversely. The benchmark 10-year yield dipped under 3% after topping that level again a day earlier. (CNBC)
Weekly initial jobless claims rose to 218,000, a bigger-than-expected increase. After hitting more than 50-year lows earlier this spring, first-time filings for unemployment benefits have gradually been creeping higher. The Philadelphia Fed's manufacturing index for May showed much lower-than-expected growth, hitting its lowest level in two years.
The national average for a gallon of gasoline hit a new high of nearly $4.59, according to AAA. Every state is over $4 per gallon, with California topping $6. Yardeni Research projects households are spending the equivalent of $5,000 a year on gasoline, a 78% increase compared with a year ago. The reason behind the sharp rise in gas prices is elevated oil prices due to disruptions from Russia's war in Ukraine. (CNBC)
IN THE NEWS TODAY
The retail wreck continued in Thursday's premarket as shares of Kohl's (KSS) dropped nearly 8.5%, the morning after closing 11% lower. The department store chain before the bell posted a massive earnings miss for its fiscal first quarter and cut full-year profit and sales guidance. Kohl's said Thursday that final and fully financed bids from potential buyers are expected in the coming weeks, as the retailer faces heightened pressure from activists to sell. (CNBC)
Wednesday's sell-off accelerated throughout the session as Target's (TGT) inflation-driven earnings miss confirmed the same story from Walmart (WMT) a day earlier. Walmart and Target were modestly lower again in Thursday's premarket. They both tanked in their worst days since 1987 after their respective earnings reports Tuesday and Wednesday.
Pressuring stock futures Thursday morning, Dow stock Cisco Systems (CSCO) stumbled 11% in the premarket after the networking equipment and software maker missed on quarterly revenue and cut its full-year guidance. Cisco saw sales hit by Covid lockdowns in China as well as Russia's war in Ukraine. The company, after the closing bell Wednesday, did report better-than-expected earnings. (CNBC)
Spirit Airlines' (SAVE) board on Thursday unanimously recommended that shareholders reject JetBlue's (JBLU) $30 per share tender offer. Spirit said a JetBlue transaction would have little chance of clearing regulatory hurdles. The ultra-discount carrier said it's moving ahead with its plan to merge with rival Frontier Airlines (ULCC). Spirit fell 2% to under $19 per share in premarket trading, while JetBlue dropped less than 1% and Frontier fell more than 3%. (CNBC)
* McDonald’s to sell Russian business to existing Siberian licensee (CNBC)
STOCKS TO WATCH
BJ's Wholesale (BJ) jumped 5.8% in the premarket after an upbeat earnings report. The warehouse retailer beat estimates by 15 cents with adjusted quarterly earnings of 87 cents per share. Quarterly revenue and same-store sales were also better than expected.
Bath & Body Works (BBWI) reported better-than-expected profit and revenue for its latest quarter, but the personal care products retailer cut its full-year earnings forecast due to inflationary factors and increased investments. The stock slumped 6.8% in the premarket.
Canada Goose (GOOS) rallied 8.9% in premarket action after the company reported an unexpected profit as well as better-than-expected revenue. Canada Goose also raised its full-year forecast.
Under Armour (UAA) CEO Patrik Frisk is stepping down, as of June 1, to be replaced on an interim basis by Chief Operating Officer Colin Browne. Frisk became CEO of the athletic apparel maker at the beginning of 2020, just before the Covid pandemic hit. Sales have fallen nearly 50% since then. Under Armour slid 5.3% in premarket trading.
WATERCOOLER
The PGA Championship begins Thursday, without defending champion Phil Mickelson. He's extending his self-imposed break from the tour after his comments about an alternative Super Golf League in Saudi Arabia. Tiger Woods, Rory McIlroy, and Jordan Spieth are grouped together for the first two rounds. (USA Today)