5 things to know before the stock market opens on Thursday, May 5
Here are the most important news, trends and analysis that investors need to start their trading day:
1. Wall Street may fall after a strong Fed rally.
A Fed rate announcement is displayed on a screen as a trader works at a post on the floor of the New York Stock Exchange (NYSE) in New York, USA, May 4, 2022. REUTERS/Brendan McDermid
Brendan McDermid | Reuters
- The 10-year Treasury yield edged up on Thursday, trading around 2.95%. The benchmark yield topped 3% on Monday, the highest level since the end of 2018. It also traded above that level again on Wednesday morning ahead of the end of the two-day May Fed meeting.
- OPEC+ on Thursday announced another modest increase in output in June after the EU laid out a proposal to ban oil production in Russia. However, oil prices still rose more than 1% after the announcement.
2. The Fed raises rates by 50 basis points, but refuses to further increase
Federal Reserve Chairman Jerome Powell speaks at a news conference following a meeting of the Federal Open Market Committee on May 4, 2022 in Washington, DC.
Vin McNamee | Getty Images
After raising the rate by 25 basis points in March, the first increase in more than three years, the Fed doubled that Wednesday afternoon to fight what Powell later called in his post-meeting press conference. “too high” inflation. The 50 basis point rate hike was the biggest Fed rate hike since 2000.
- Barring a larger 75 basis point rate hike going forward, Powell said a 50 basis point rate hike is being considered at the next two meetings in June and July. Campaigns are also observed in September, November and December.
- Along with the rate hikes, central banks on Wednesday said they would start cutting $9 trillion in assets on the Fed’s balance sheet.
3. Key data on the labor market will be released in the next two days
Pedestrians walk past a “Now Hiring” sign in Arlington, Virginia on March 16, 2022.
Stephanie Reynolds | AFP | Getty Images
Wednesday’s sharp rise in the market suggests that investors, at least for now, are more convinced that the Fed can curb inflation without triggering an economic recession. The next two days will bring key data on another pillar of the Fed’s dual mandate to promote price stability and maximum employment.
- The government announced this on Thursday Initial jobless claims rose more than expected to 200,000. The government’s April employment report will be released on Friday, and traders will see if Powell’s assertion that “the labor market continues to strengthen and is extremely tight” is confirmed.
- Labor productivity fell by 7.5% in the first quarter more than expected, the biggest decline since 1947, according to the latest government figures. Unit labor costs in non-farm enterprises rose more than expected by 11.6% in the first quarter.
4. Musk receives funding from investors, including Larry Ellison, at the request of Twitter.
Elon Musk during an event at the SpaceX headquarters in Hawthorne, California, USA on Thursday, October 10, 2019.
Bloomberg / Getty
5. EBay and Etsy fell on a weak outlook, caught in an e-commerce reset.
A sign at eBay’s headquarters in San Jose, California, USA on Monday, August 9, 2021
David Paul Morris | Bloomberg | Getty Images
- After two years of overgrowth in e-commerce companies, investors are bracing for a slowdown, especially as the economy continues to reopen and consumers return to stores. Even Amazon, which has been expanding rapidly during Covid, is not immune to an e-commerce reboot.
— CNBC Tanaya Machil, Jessie Pound, Samantha Subin, Vicki McKeever, Sam Meredith, Jeff Cox and Annie Palmer and Reuters contributed to this report.
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