5 things to know before the stock market opens on Monday May 9

Here are the most important news, trends and analysis that investors need to start their trading day:

1. Nasdaq futures fall 2% as stocks continue to sell

Traders on the floor of the NYSE, May 6, 2022.

Source: NYSE

The Nasdaq was poised to drive Wall Street lower again on Monday, with futures tied to the tech-heavy index dropping 2%. Rising bond yields continued to pressure equities as traders maintained their revolt against the Federal Reserve, doubting that it could bring inflation under control. Two key inflation reports are released on Wednesday and Thursday. Futures trading indicated a decline of 400 points, or 1.3%, at the open for the Dow Jones Industrial Average and a decline of 1.7% for the S&P 500.

  • The first trading week of May marked the sixth consecutive weekly decline for the Dow and five consecutive weekly declines for the S&P 500 and the Nasdaq. The Dow Jones and S&P 500 remained in correction, defined by a decline of 10% or more from their recent highs. The Nasdaq fell further into a bear market, defined by a decline of 20% or more from its most recent high.

2. Bond yields rise as traders doubt the Fed on inflation

  • After the central bank raised interest rates as expected by 50 basis points on Wednesday, Chairman Jerome Powell took a more aggressive 75 basis point hike off the table for future meetings. He also said he expects rate hikes of 50 basis points at the June and July Fed meetings.
  • Last Wednesday’s rally in equities, accompanied by a drop in bond yields, was short-lived. Thursday’s boost wiped out, then some of the advance in stocks from the previous session as bond yields soared.
  • This momentum continued on Friday and into Monday’s premarket. The Fed raised rates by 25 basis points in March and is expected to rise at least as much at its meetings in September, November and December.

3. Bitcoin falls below $33,000, still pegged to tech stocks

Bitcoin plunged over the weekend and fell another 5% on Monday to below $33,000 as the world’s largest cryptocurrency remains correlated to tech stocks and the Nasdaq.

  • The pattern of recent times goes against bitcoin’s argument as an inflation hedge. But to be fair, gold, which has long been an investment to hedge against inflation, has also suffered from the recent tough times on Wall Street.
  • Bitcoin has fallen 50% from its all-time high of over $68,000 in November, caught up in this year’s decline in risk assets due to rising inflation and tighter monetary policy. Fed as well as Russia’s war in Ukraine. Bitcoin has seen many boom and bust cycles over the years.

4. Oil slips but prices remain high in a tug of war between supply and demand

The Permian Basin rigs in 2020, when US crude oil production fell by 3 million a day as pressure from Wall Street forced cuts.

Paul Ratje | AFP | Getty Images

US oil prices fell alongside stocks on Monday, weighed down by a strong dollar and worries over demand as Covid lockdowns continued in China, the world’s biggest oil importer. Demand concerns appear to be prevailing at the start of the week after supply concerns over Europe’s proposed ban on Russian oil drove crude prices up nearly 5% last week. last week, their second straight weekly advance. That’s why Monday’s roughly 2.5% drop only brings West Texas Intermediate crude, the US benchmark, down to around $107 a barrel.

5. Putin tries to defend Russia’s war against Ukraine in his “Victory Day” speech

Russian President Vladimir Putin and Defense Minister Sergei Shoigu walk after a military parade on Victory Day, which marks the 77th anniversary of the victory over Nazi Germany in World War II, in Red Square in the center of Moscow, Russia, on May 9, 2022.

Maxim Chemetov | Reuters

Russian President Vladimir Putin on Monday tried to defend Moscow’s unprovoked invasion of Ukraine in a speech on “Victory Day”, an annual observance marking the Soviet Union’s victory over Nazi Germany. Putin urged his forces to succeed in Ukraine, saying it was his duty to remember those who prevailed in World War II. Putin referred to the Donbass region in eastern Ukraine several times throughout his speech, appearing to double down on Russia’s new strategy of focusing on the “liberation” of Donetsk and Luhansk.

—CNBC Samantha Subin, Jesse Book, Vicky McKeever and Holly Ellyat as well as Reuters contributed to this report.

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