US stocks fell on Wednesday as the S&P 500 and Dow sought to recoup gains after rising for consecutive sessions.
The S&P 500 fell about 1% on Wednesday afternoon in New York. The Dow Jones Industrial Average fell more than 250 points, or 0.9%, while the Nasdaq Composite fell 0.6%. All three major averages began this week with gains rising on both Monday and Tuesday.
Intermediate crude oil prices in West Texas (CL = F) rose above $ 121 a barrel to reach their highest level since February, and the benchmark 10-year yield on US bonds resumed its rise above 3%. Shares of Scott’s Miracle-Gro Company (SMG) sank after the company became one of the newest retailers to cut guidelines after building more inventory than end users demanded.
Despite progress earlier in the week, major US stock indexes remained broadly volatile as investors weighed warnings from individual companies about inflation and the macroeconomic background against politicians’ efforts to bring down higher prices. The Federal Reserve remains calm ahead of its upcoming policy meeting next week, which is expected to lay the groundwork for the central bank to introduce a second 50-point rate hike.
Other politicians have also reaffirmed that cooling inflationary pressures remains a key priority. US Treasury Secretary Janet Yellen told senators on Tuesday that she expects inflation to remain high and confirmed that she believes the rise in prices is due to the Russian war in Ukraine, the transition from the pandemic era to commodity purchases and ongoing problems with supply chain.
“Market surveillance … as it swings between moving forward and retreating, suggests that as long as there is no clearer account of the inflation front, combined with the Fed’s thinking of further interest rate hikes in September, we can expect a leap forward and back, “Quincy Crosby, chief strategist at LPL Financial, said in an email.
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“Given the uncertainty that the market has to give up, and last but not least how corporate profits will be presented as the economy slows down, a market that fluctuates a bit before making a decision is perhaps the healthiest course “At least for now,” Crosby added.
The Bureau of Labor Statistics is ready to release its latest consumer price index on Friday, which is expected to show that inflation fell only slightly in May from 8.3% in April. Consensus economists expect core inflation to rise by 8.2% year on year and 5.9% excluding food and energy prices.
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11:46 ET: Roku shares rise due to reports that Netflix is in talks to acquire the company
Shares of Roku (ROKU) jumped more than 12% on Wednesday day amid speculation that the company is in talks to acquire Netflix (NFLX). Netflix shares also rose during the day.
Insider first announced on Wednesday that internal discussions were underway on the deal. Roku and Netflix spokesmen told Yahoo Finance they would not comment on rumors or speculation.
However, some large Wall Street companies have already questioned such a commitment. In a note Wednesday morning, Corey Carpenter and Doug Anmouth of JPMorgan called the acquisition “very unlikely” as it would lead to a massive change to ad-supported video content on Netflix.
“NFLX’s advertising efforts are still at a very early stage,” analysts wrote. “We will be surprised if NFLX makes an acquisition of this magnitude, essentially shifting the platform from a lack of ads to AVOD’s ‘all in’ for a few months. We do not think this will be well received by NFLX shareholders. “
“We believe that NFLX is more likely to build its advertising offer on its own or through smaller mergers and acquisitions – similar to its gaming efforts,” they added.
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10:04 ET: Scotts Miracle-Gro is the latest company to reduce its prospects
Lawn giant Scotts Miracle-Gro (SMG) cut its guidelines on Wednesday.
In a statement before the market opened, Scotts reduced its sales and profit prospects for 2022, citing, among other factors, “a liquid and fast-growing market.”
Shares of Scotts fell as much as 8% at the beginning of trading.
The company now expects adjusted earnings to be between $ 4.50- $ 5.00 per share.
In a report released on May 3, the company said its previous year-round EPS forecast of $ 8.00 per share was “probably unattainable.” With this latest update, Scotts forecasts adjusted year-over-year earnings of approximately half of the previous target.
Last month, Scotts said “bad” weather in most markets was having a negative impact on sales, although the company said Wednesday that some of that softness has recovered.
“While there is enough time left during the year to see continuous improvement in our control and gardening categories, this is unlikely to be the case with most of the products in our lawn care portfolio,” Scotts said on Wednesday.
In addition, Scotts also said that her retail partners – I think national outlets like Home Depot (HD) or Tractor Supply (TSCO), as well as your local gardening store – have not filled orders in the last few weeks with the speed the company may have hoped for.
“In fact, retailers’ orders were more than $ 300 million below our plans for the month in the U.S. consumer segment alone,” the company said. “This surprising trend has put significantly more pressure on our fixed cost structure, which, combined with the increase in commodity prices we have experienced since the start of the war in Ukraine, will keep us from meeting the revised financial targets we set in March. “
“The changes we saw after our last public comment in early May are clearly not what we would expect,” said Scotts CEO Jim Hagedorn. “The revised guidelines we provide are our best assessment of where things currently stand in a fluid and fast-growing market. As we strive to achieve the best result for fiscal 2022, our focus is shifting to the future. We are committed to taking decisive steps to improve our margins and cash flow in fiscal 2023 and return the business to the level of performance that our shareholders rightly expect. “
With this release, Scotts is just the latest big company to reconsider its prospects and say it’s not quite sure where things are going. And there is more than a month until the profit season for the second quarter.
“Miles Woodland, senior editor of markets.”
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9:32 a.m. ET: Shares open lower, holding losses overnight
Here are the main market movements at 9:32 AM ET:
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S&P 500 (^ GSPC): -27.54 (-0.66%) to 4,133.14
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Dow (^ DJI): -225.92 (-0.68%) to 32,954.22
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Nasdaq (^ IXIC): -65.15 (-0.54%) to 12,110.08
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Crude oil (CL = F): +0.90 $ (+ 0.75%) to $ 120.31 per barrel
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Gold (GC = F): + $ 4.50 (+ 0.24%) to $ 1,856.60 per ounce
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10-year treasury (^ TNX): +5 bps for yield 3.0220%
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7:07 a.m. ET: Declining stock futures
Here is where the markets traded before the opening bell on Wednesday morning:
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S&P 500 futures (ES = F): -12.5 points (-0.3%) to 4146.25
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Dow futures (YM = F): -123 points (-0.37%) to 32,042.00
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Nasdaq futures (NQ = F): -17.5 points (-0.14%) to 12,694.00
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Crude (CL = F): $ +1.27 (+ 1.06%) to $ 120.68
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Gold (GC = F): – $ 2.60 (-0.14%) to $ 1849.50 per ounce
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10-year treasury (^ TNX): +3.9 bps to 3.009% yield
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7:00 AM ET: Index of mortgage applications falls for fourth consecutive week, reaching its lowest level in more than two decades
US mortgage applications fell further last week as rising house prices and rising interest rates brought buying and refinancing activity to a two-decade low.
The weekly composite index of the Association of Mortgage Bankers to track the volume of mortgage applications sank by 6.5% during the period ending June 3. This is the fourth consecutive weekly decline and extended the decline by 2.3% compared to the previous week. Refinancing applications decreased by 6% per week and by 75% compared to the same period last year. Meanwhile, purchases fell 7% from the previous week and were 21% lower on a seasonally unadjusted basis than last year.
“Weakness in purchasing and refinancing applications led to its lowest level in 22 years on the market. The 30-year fixed interest rate rose to 5.4% after three consecutive declines. Although interest rates were still lower than four weeks ago, they remained high enough to stifle refinancing, “said Joel Kahn, associate vice president of economic and industrial forecasting at the MBA, in a press release.
“The buying market has been suffering from persistently low housing stocks and rising mortgage rates over the past two months,” Cannes added. “These deteriorating affordability challenges are particularly severe for prospective buyers for the first time.”
NEW YORK, NEW YORK – JUNE 03: Traders work on the floor of the New York Stock Exchange (NYSE) at the beginning of the trading day on June 3, 2022 in New York. A new job report released by the Ministry of Labor this morning shows that employers added 390,000 jobs in May. Shares fell before the start of the start on Friday, returning the indices back to red for the week. (Photo by Spencer Platt / Getty Images)
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Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter.
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