The market the day before
The session on May 9, the main American stock exchanges ended in the red zone. The S&P 500 fell 3.2% to close below 4,000 points. The Nasdaq Composite and Russell 2000 indexes declined by 4.3% and 4.2%, respectively, while the Dow Jones adjusted by 2.0%. 10 of the 11 S&P 500 sectors closed in negative territory, while the propensity to sell increased in the last 45 minutes of stock trading. Energy companies (-8.3%), the IT sector (-3.9%) and representatives of the consumer services industry (-4.3%) looked worse than others.
Company news
- Uber shares (UBER: -11.6%) are falling after CNBC reported that the company plans to cut costs, which exacerbates investors' concerns about the direction of movement of quotations of the broad market.
- Rivian (RIVN: -20.9%) did not meet analysts' profit expectations and predicts only moderate growth in car production in 2022. In addition, Ford Motor announced the sale of its stake in the issuer's capital.
- Tesla Inc. (TSLA: -9.06%) again suspended production at the Shanghai plant, this time due to supply problems.
We expect
Commodity markets are facing unprecedented pressure: quotes of some assets are updating historical highs. This is especially true for raw materials, the key exporters of which are Russia or Ukraine, including energy carriers and some cereals. Prices for most categories of raw materials are expected to rise significantly in 2022, remaining elevated in the medium term. At the same time, the rise in the price of some raw materials leads to an increase in the production costs of others. For example, rising energy prices increase the cost of resources for agricultural production (such as fuel and fertilizers), as well as the extraction and processing of metal ores, especially aluminum and iron. In turn, higher metal prices increase the cost of renewable energy technologies.
The yields of two- and 10-year treasuries increased by 3 bps and 2 bps, to 2.64% and 3.01%, respectively. The indicator for 30-year securities decreased by one point, to 2.90%.
- Trading on May 9 on the sites of Southeast Asia ended in the red zone. China's CSI 300 fell by 0.15%, Hong Kong's Hang Seng adjusted by 1.89%, Japan's Nikkei 225 lost 0.58%. EuroStoxx 50 has been growing by 1.30% since the opening of the session.
- Brent crude futures are quoted at $103.9 per barrel. Gold is trading at $1,861 per troy ounce.
In our opinion, the S&P 500 will hold the upcoming session in the range of 3950-4100 points.
Macrostatistics
The wholesale inventory data released on May 9 for March showed an increase of 2.3% mom, coinciding with the consensus, after a revised increase of 2.8% (from 2.5%) in February.
Important macro statistics are not expected to be published today.
Sentiment Index
The sentiment index dropped to 35.
Technical picture
The S&P 500 has been falling for the third day in a row, correcting below the psychologically significant 4,000 point mark. The last time the index was at such levels was in April last year. Given the downward dynamics of the last few weeks, the market will need strong support to win back the current low levels, or at least injections of funds into big tech companies, which have lost more than $1 trillion in capitalization over the past three days. RSI and MACD also do not indicate a trend reversal.
Quarterly reports
On May 10, after the close of trading, the report for the first quarter will be published by the operator of the largest crypto exchange Coinbase Global (COIN). The consensus forecast assumes a decrease in revenue by 16% YoY, to $1.48 billion, due to weak growth in trading volume and a decrease from the maximum values of the fourth quarter of 2021, as well as due to a correction in the value of cryptocurrencies. EPS is expected to show a multiple drop to $0.17 (against $3.05 a year earlier) due to the company's plans to expand the staff and increase investments in business development. The introduction of more crypto assets and increased market volatility, combined with increased interest in digital currencies, is predicted to support the activity of users (especially institutional investors) on the platform. The main long-term drivers of the exchange's business development include the launch of the NFT marketplace and the development of the decentralized finance platform DeFi.