Here are the most important news, trends and analysis that investors need to start their trading day:
1. Stock futures are lower after Monday’s intraday reversal
Stock futures were slightly lower in premarket trading Tuesday, as Wall Street follows a roller-coaster session a day earlier that ended with the major U.S. equity indexes in the green. On Monday, the Nasdaq Composite had a late-session turnaround to finish higher by 1.63%; at its lows, the tech-heavy index had been down about 1%. The S&P 500, which fell to a fresh 2022 intraday low, ultimately advanced 0.57%. The Dow Jones Industrial Average added 84 points, or 0.26%, after being down more than 500 points Monday.
April was a dismal month for Wall Street, and now the market is entering a seasonally weak period for stocks while facing multiple headwinds. They include tighter Federal Reserve policy, high inflation, recession worries and the ongoing Russian-Ukraine war. The Fed is set to announce Wednesday a key decision on interest rates.
2. 10-year Treasury yield holds just below 3%
The yield on the benchmark 10-year Treasury note sat just shy of 3% on Tuesday, after topping that level Monday for the first time since late 2018. Some strategists say a yield of 3% is mostly a psychological marker and there’s a more important technical level slightly higher. Nevertheless, the yields on U.S. government debt have risen at a rapid pace this year, with Monday’s milestone marking a continuation of the trend. The 10-year Treasury note yielded about 1.5% at the start of 2022, meaning it’s now roughly doubled.
The bond market is reacting to the Federal Reserve adopting a more hawkish policy approach, in an attempt to weaken inflationary pressures across the U.S. economy. The yield on the 2-year Treasury note, which tends to be more sensitive to central bank policy, rose about 4 basis points Tuesday morning to 2.776%. A basis point equals 0.01%. Yields move inversely to prices.
3. Pfizer and Burger King parent deliver earnings beats
Pfizer beat Wall Street’s estimates on the top and bottom lines Tuesday; its shares were slightly higher in premarket trading. The company reported first-quarter earnings of $1.62 per share, excluding items, surpassing consensus estimates by 15 cents per share, according to Refinitiv. Pfizer’s quarterly revenue of $25.66 billion topped analyst forecasts of $23.86 billion. The company’s Covid vaccine contributed $13.2 billion in sales in the quarter.
Restaurant Brands International also surpassed sales and profit expectations. The parent of Burger King and Tim Hortons earned 64 cents per share, excluding items, on $1.45 billion in first-quarter revenue. Analysts had estimated earnings of 63 cents per share on $1.41 billion in sales, according to Refinitiv. Burger King saw strong same-store sales growth at its overseas restaurants.
4. Wall Street’s top regulator nearly doubles its crypto unit staff
The number of Securities and Exchange Commission staffers dedicated to cryptocurrency markets will nearly double, Wall Street’s top regulator announced Tuesday. The agency will add 20 positions to its “Crypto Assets and Cyber Unit,” bringing its total to 50. The SEC’s new hires will include fraud analysts, staff attorneys and trial lawyers, which Chair Gary Gensler said will make the regulator “better equipped to police wrongdoing in the crypto markets” and keep handling duties related to cybersecurity.
Cryptocurrencies have surged in popularity in recent years. There’s been a flood of retail investors who started trading the digital assets, while institutional players such as venture capitalists have backed blockchain-based start-ups in the nascent industry. However, Gensler has raised concerns about potential fraud in crypto markets and sought to expand protections for retail investors, in particular.
5. Politico reports leaked draft Supreme Court decision would overturn Roe v. Wade
The Supreme Court is poised to overturn the landmark Roe v. Wade ruling, which legalized abortion across the U.S. nearly 50 years ago, according to a leaked draft decision obtained by Politico. Justice Samuel Alito wrote the draft opinion, with at least four other conservative Supreme Court members concurring with him. “Roe was egregiously wrong from the start,” Alito wrote in the draft published by Politico. CNBC has been unable to independently verify the draft decision, which Politico said was first circulated among the justices in February. Draft decisions are not final. A Supreme Court spokeswoman declined to comment to CNBC on the Politico report.