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U.S. stock futures were mixed on Tuesday evening as investors looked to build on a solid rally.
Futures for the Dow Jones Industrial Average added just 9 points. S&P 500 futures sat below the flatline and Nasdaq 100 futures ticked about 0.1% lower.

The move in futures came as the stock market’s recent sell-off appeared to have paused. On Tuesday, the Dow rose 431 points, or 1.3%, while the S&P 500 gained 2% and the Nasdaq Composite climbed nearly 2.8%.
The Dow has declined for seven straight weeks, but stocks have stabilized over the last three trading sessions.
Last week, the S&P 500 fell to the brink of a bear market — or 20% below its record high — but the index has now gained 4% since Thursday’s close.
Stocks and other risk assets have been pressured by inflation and the Federal Reserve’s attempt to tamp down price increases through rate hikes, which has led to concerns about a potential recession. Fed Chair Jerome Powell said at a Wall Street Journal conference on Tuesday that “there won’t be any hesitation” about raising rates until inflation is under control.
However, some recent economic data, including the jobs report and retail sales data from April, still show the U.S. economy growing.

“There’s a big difference between corrections in the equity markets and outright bear markets,” said Matt Stucky, a senior portfolio manager at Northwestern Mutual Wealth Management. “The difference being bear markets are almost always sort of associated with some kind of recessionary macroeconomic environment, or at least an inevitable one in the forecast horizon over the next six-to-12 months. For us, as we sit here today, we just don’t see that.”
A busy week of retail earnings continues on Wednesday, with Target and Lowe’s reporting results before the opening bell.
Investors will also get an updated look at the housing market, with data for housing starts and building permits for April due out Friday morning.

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House Democrats have introduced legislation to beef up Food and Drug Administration baby formula inspections in response to the plant closure that triggered a supply shortage.
The House will hold hearings on the infant formula shortage with FDA Commissioner Robert Califf.

House Democrats will hold hearings on the baby formula shortage in the U.S., and move to pass legislation to increase Food and Drug Administration inspection staff to ensure that imported products are safe for infants to consume.
Rep. Rosa DeLauro, chair of the House Appropriations Committee, introduced legislation on Tuesday that would provide the FDA with $28 million in emergency funding to ramp up inspections at baby formula plants around the world.

The FDA is increasing baby formula imports from other countries to help ease the shortage. It stems in part from the closure of Abbott Nutrition’s plant in Sturgis, Michigan, due to bacterial contamination at the facility. The U.S. normally produces 98% of the infant formula that Americans buy, and four manufacturers — Abbott, Mead Johnson Nutrition, Nestle USA and Perrigo — control 90% of the domestic market.

Rep. Rosa DeLauro, D-Conn., left, the House Appropriations Committee chair, and Speaker of the House Nancy Pelosi, D-Calif., confer during a news conference on the House Democrats $28 million emergency spending bill to address the shortage of infant formula in the United States, at the Capitol in Washington, Tuesday, May 17, 2022.
J. Scott Applewhite | AP

To sell formula in the U.S., foreign companies are required to submit applications to the FDA, which would then review whether their products are safe and nutritious for infants.
However, DeLauro said the FDA told her that it only has nine people to inspect domestic formula plants, along with seven facilities in Europe and two in Mexico. The FDA could eventually have to inspect more plants if it approves additional submissions to sell formula.
“Those facilities have to be inspected. FDA does not have the adequate inspection force to be able to do that and to do it in a timely way,” DeLauro, D-Conn., told reporters during a news conference Tuesday. The legislation also includes funding for supply chain monitoring and money to root out fraud, she said.
DeLauro said House Democrats are also considering legislation that would strengthen the FDA’s authority to hold companies accountable. The drug regulator does not have the power to order manufacturers to recall unsafe products. It can only recommend a recall when it finds safety issues.

“The FDA has no power to recall. We say recall, but it really is a moral suasion issue,” House Speaker Nancy Pelosi, D-Calif., said at the news conference.

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A House Appropriations Subcommittee on Agriculture will hold a hearing on Thursday with FDA Commissioner Robert Califf on the infant formula shortage, DeLauro said. The House Energy and Commerce Committee has set another hearing on May 25 with Califf and the FDA’s food policy chief, Frank Yiannas, according to Rep. Frank Pallone, the committee chairperson.
Representatives from infant formula manufacturers Abbott, Gerber and Reckitt will also attend next week’s hearings, Pallone said.
The Justice Department, in a complaint filed in federal court Monday, alleged that Abbott introduced adulterated infant formula into the consumer market. Four infants who consumed formula made at the Sturgis plant were hospitalized with bacterial infections, two of whom died.
Abbott in a statement Monday maintained there’s “no conclusive evidence” to tie the infant illnesses to the company’s products.
As Democrats ramp up their efforts to address the crisis, they have also increased their calls for accountability.
“I think there might be a need for an indictment,” Pelosi said, without specifying who should face indictment. The speaker’s office did not response to requests for clarification.
Abbott and the FDA reached an agreement, subject to federal court enforcement, to reopen the plant after the company brings in outside experts to fix unsanitary conditions at the plant. However, Abbott has said it will take about two weeks to reopen, subject to FDA approval. It could take up to eight weeks for product to arrive in stores.
Abbott is subject to the agreement, called a consent decree, for at least five years. If it does not comply with the decree, the company is subject to $30,000 in damages for every day it’s in violation.
Abbott is required to shut down the Sturgis plant again if any product tests positive for Cronobacter sakazakii or Salmonella. It must then dispose of the product, find the contamination source and correct the problem.
Abbott would only be able to restart the plant when it receives clearance from the FDA.

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CNBC’s Jim Cramer said Tuesday that while the price of crude oil might see some gains, it’ll be limited in duration and scale, according to analysis from DeCarley Trading market strategist Carley Garner.
“Just keep in mind that while oil rallies, they tend to happen in the blink of an eye, oil sell-offs are just as quick,” the “Mad Money” host said.

CNBC’s Jim Cramer said Tuesday that while the price of crude oil might see some gains, it’ll be limited in duration and scale, leaning on analysis from DeCarley Trading commodity strategist Carley Garner.
“The charts, as interpreted by Carley Garner, suggest that the good news for oil might be mostly baked in, meaning the upside is limited. … Just keep in mind that while oil rallies, they tend to happen in the blink of an eye, oil sell-offs are just as quick,” the “Mad Money” host said.

Before getting into Garner’s interpretation, Cramer laid out two fundamental facts investors should be aware of to understand the analysis.

The U.S. West Texas Intermediate crude oil futures contract is a major benchmark for the overall price of oil. It’s also “among the healthiest, least volatile energy futures in the world,” Cramer said. 
It’s difficult to predict oil prices in a wartime situation. “We’ve got lots of political and economic turmoil, with the end result being tremendous volatility in the energy markets, coupled with shocking moments of illiquidity … as traders react to tight oil and gas supplies while they attempt to hedge against inflation,” he said.

Cramer started his explanation of Garner’s analysis by examining the weekly chart of the West Texas Intermediate crude. 
WTI crude settled $1.80, or 1.58%, lower at $112.40 per barrel on Tuesday.

Arrows pointing outwards

Garner says that measuring bull and bear markets by 20% swings shows the chart’s already had a year’s worth of price movements, according to Cramer. “In early March, we were seeing 20% swings practically every day. Since then, the volatility’s gotten less” intense but is still wild compared to history, Cramer said.
He also said that the price of WTI crude broke through its trendline ceiling of resistance when Russia invaded Ukraine, while before it had an “expanding wedge pattern,” according to Garner.

“If West Texas crude breaks down below $102, down about $10 from where it’s currently trading, then we can potentially go back to the wedge. If that happens, Garner thinks it could potentially lead to mass liquidation that takes oil back to the $70s,” he said, adding that high prices and global efforts to tamp down inflation will eventually slow demand.
Cramer also examined the Relative Strength Index, a momentum indicator, at the bottom of the chart. “While it’s currently pointing higher, it’s also nearing overbought levels. In the short-term, Garner thinks crude could have more upside, but eventually, she sees prices coming back down to the levels we would’ve seen before Russia invaded Ukraine. We just don’t know how long it will take,” he said.
Next, the monthly chart of WTI crude shows that since the widespread adoption of fracking, oil has had a ceiling at $120 a barrel – with prices briefly going higher when Russia invaded Ukraine – but failed to close above that level on a monthly basis. Garner doesn’t believe oil will be able to breach the $120 ceiling on its second attempt, Cramer said.

Arrows pointing outwards

The monthly Relative Strength Index is already overbought, he added. “That tells Garner oil prices are already extended and vulnerable to a swift decline if traders are ever given a reason to change course.”
Next, Cramer looked at the daily WTI chart, which he said shows that oil prices have shed a triangle pattern.

Arrows pointing outwards

“That’s catapulted crude higher, and while Garner could see a bit more upside in the near future, there’s also two ceilings of resistance, one at $115 and one at $120. Plus, as time goes on, she expects Wall Street’s focus to shift from supply constraints to the demand side of the equation,” he said, adding that he disagrees with her assessment.
“At the moment, I think oil still looks good. … As long as Russia’s a pariah state, oil’s got a strong floor underneath it,” he said.
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It’s that time again! “Mad Money” host Jim Cramer rings the lightning round bell, which means he’s giving his answers to callers’ stock questions at rapid speed.

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Fisker Inc: “I will not recommend this stock. It is going to lose money hand over fist.”

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CNBC’s Jim Cramer on Tuesday said that investors should keep an eye on retailer earnings and Covid news from China as indicators for how Wednesday’s trading session will go.
If we get more good news from China tonight “along with fine quarters from Target and Lowe’s …  we’re going to have another one of these great days tomorrow,” the “Mad Money” host said.

CNBC’s Jim Cramer on Tuesday said that investors should keep an eye on retailer earnings and Covid news from China as indicators for how Wednesday’s trading session will go.
If we get more good news from China tonight “along with fine quarters from Target and Lowe’s …  we’re going to have another one of these great days tomorrow. But if we don’t get that good news, we’re going to end up with a miserable, horrible, Walmart-style view of the world,” the “Mad Money” host said, referring to the retail behemoth’s quarterly earnings miss.

Cramer’s comments come after Shanghai reached “zero Covid status” on Tuesday, which means it saw three consecutive days of no new cases outside of quarantine zones.
“When you get a positive out of China … you get a run in many stocks that we’ve had way, way too much fear for: Tesla, Nike and Apple,” he said.
Cramer also pointed to other retailers and companies in the travel industry that reported upbeat quarters, suggesting healthy consumer spending and boosting related stocks.
Home Depot saw better-than-expected profit and revenue in the first quarter while United Airlines raised its current-quarter revenue forecast. Both companies’ stocks closed up on Tuesday. Shares of Delta and American Airlines saw gains piggybacking off of United’s rosy revenue guidance.
More broadly, the Dow Jones Industrial Average rose 1.34% while the S&P 500 increased 2.02%. The tech-heavy Nasdaq Composite gained 2.76%.

“There were a lot of just run-of-the-mill winners, too, like the Nasdaq names that were under so much pressure yesterday. I felt that on Friday and yesterday. … The close was simply horrible yesterday. I couldn’t believe the amount of” damage done to new companies, Cramer said.
“Now they’re bouncing. What’s happening here? I think there is a bifurcation — a subtle one — that’s happening right now. The haves, and the haves are Airbnb, DoorDash and Block, formerly Square, and then there’s everything else,” he added.
Disclosure: Cramer’s Charitable Trust owns shares of Walmart.

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A quarter of Britons have resorted to skipping meals amid worsening inflationary pressures and food scarcity concerns, according to one survey.
More than four in five people in the U.K. are worried about rising living costs and their ability to afford basics necessities over the next six months.
The findings come after Bank of England governor Andrew Bailey pointed to a forthcoming “apocalyptic” food crisis.

More than four in five people in the U.K. are worried about rising living costs and their ability to afford basics necessities like food and energy over the coming months, according to a new survey.
Tolga Akmen | Afp | Getty Images

LONDON — A quarter of Britons have resorted to skipping meals as inflationary pressures and a worsening food crisis conflate in what the Bank of England recently dubbed an “apocalyptic” outlook for consumers.
More than four in five people in the U.K. are worried about rising living costs and their ability to afford basics necessities like food and energy over the coming months, according to a new survey released Tuesday.

In a survey of 2,000 Britons conducted by Ipsos and Sky News, 89% said they were concerned about how the cost-of-living crisis would affect the country as a whole over the next six months, while 83% were concerned about their personal circumstances.
While the picture was broadly similar nationwide, those on lower wages were more acutely worried, with more than half of those earning under £20,000 ($25,000) describing themselves as “very concerned” about how they would make ends meet this year. That compares to two in five of those earning £55,000 or more.
A major British caterer said separately Tuesday that schools were now facing “difficult decisions” as to whether to reduce meal sizes or use lower quality ingredients amid surging prices.

‘Apocalyptic’ price hikes

The findings come after Bank of England Governor Andrew Bailey said Monday that rising prices and food scarcity issues from the war in Ukraine were a real worry for Britain and many other parts of the world.
“There’s a lot of uncertainty around this situation,” Bailey told the Treasury Committee at the House of Commons.

“Sorry for being apocalyptic for a moment, but that is a major concern,” he said.
Bailey added that such external factors would have a greater impact on price increases than any recent or forthcoming interest rate hikes. The central bank chief, who has spearheaded four consecutive interest rate hikes since December, dismissed suggestions that policymakers should have acted sooner to quell inflation.

It wouldn’t be surprising to see food price inflation over the course of the year running towards 8-10%.

Archie Norman
chairman, Marks & Spencer

British grocery inflation hit 5.9% in April, its highest level since December 2011, according to market researcher Kantar. That as wider U.K. inflation hit a 30-year-high of 7% last month amid rising energy costs.
British retailer Marks & Spencer warned on Tuesday that food price inflation could soar further to 10% by the end of this year.
“It wouldn’t be surprising to see food price inflation over the course of the year running towards 8-10%,” Archie Norman, chairman of the high-end food brand, told BBC radio Tuesday. “Some has gone through now but still quite a lot’s to come.”
Norman added, however, that Bailey’s use of the word “apocalyptic” was heavy-handed given wider economic factors, like wage increases. “I wouldn’t use the word apocalyptic, certainly not for our customers,” he said.

Food scarcity fears mount

Food scarcity concerns have been mounting over recent months as the war in Ukraine has exacerbated existing food supply chain issues.
Ukraine, seen as a “breadbasket of Europe,” has been unable to export grains, fertilizers and vegetable oil amid the conflict, while ongoing fighting has destroyed crop fields and disrupted regular harvests.
MHP, the largest producer and exporter of chicken in Ukraine and a major supplier of grain and sunflower oil, said Tuesday that the current situation amounted to an agricultural crisis.
“I’ve never seen anything like this,” John Rich, MHP executive chairman and an industry veteran, told CNBC.

“We have Covid, we’ve got a war, we’ve got the China Covid-zero policy — which has made freight just about impossible — and we’ve got climate change. All of this has compounded, frankly, into a non-functional global supply chain system,” he said.
The United States and the European Union said over the weekend that they are looking at how to improve food supply chains and navigate export restrictions.
It comes after India on Saturday announced a ban on wheat exports to “manage the overall food security of the country.” Indonesia, meanwhile, earlier implemented restrictions on exports of palm oil — a key component in many food products — in a bid to curb food shortages at home.

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Netflix is laying off around 150 employees across the company.
The eliminated positions represent less than 2% of the streamer’s 11,000 staffers, with most of the cuts happening in the U.S.
The staff reductions come less than a month after Netflix reported its first subscriber loss in a decade and forecast future losses in the next quarter.

Netflix is laying off around 150 employees across the company, CNBC confirmed Tuesday.
The eliminated positions represent less than 2% of the streamer’s 11,000 staffers, with most of the cuts happening in the U.S.

“As we explained on earnings, our slowing revenue growth means we are also having to slow our cost growth as a company,” a representative from the company told CNBC. “So sadly, we are letting around 150 employees go today, mostly US-based. These changes are primarily driven by business needs rather than individual performance, which makes them especially tough as none of us want to say goodbye to such great colleagues. We’re working hard to support them through this very difficult transition”.

Netflix’s revelation that it lost 200,000 subscribers in the first quarter put further pressure on an already beleaguered tech sector, but top tech analyst Mark Mahaney believes the current weakness in the sector presents several opportunities for investors.
Aaronp/bauer-griffin | Gc Images | Getty Images

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The audit rate for Americans earning more than $5 million a year plunged from to just over 2% in 2019 from over 16% in 2010, according to a report from the Government Accountability Office.
The main reason for the decline, according to the report, is a lack of IRS funding.
The IRS also has seen its staffing levels fall to the same levels as 1973, despite having millions more returns to process and additional mandates to perform.

The Internal Revenue Service headquarters in Washington, D.C.
Andrew Harrer | Bloomberg | Getty Images

The wealthiest Americans are getting their taxes audited at a far lower rate than they were over a decade ago, due in large part to staff and funding shortages at the Internal Revenue Service, according to a new report.
The audit rate for Americans earning more than $5 million a year plunged to just over 2% in 2019 from over 16% in 2010, according to a report from the Government Accountability Office, a federal watchdog. That means only about 1 in 50 high earners were audited in 2019, compared with about 1 in 6 in 2010.

The decline in audits, especially among the wealthy, has become a heated political issue in Washington. The report estimated that taxpayers underreported their income tax by a combined $245 billion a year between 2011 and 2013, and said that “taxpayers are more likely to voluntarily comply with the tax laws if they believe their return may be audited.”
The main reason for the decline, according to the report, is a lack of IRS funding. In fiscal year 2021, the agency’s budget was $11.9 billion — $200 million less than its 2010 budget.
The IRS also has seen its staffing levels fall to the same levels as 1973, despite having millions more returns to process and additional mandates to perform. In March, the IRS said it planned to hire 10,000 workers to tackle a backlog of 20 million unprocessed tax returns.
President Joe Biden and Democrats in Congress have proposed investing $80 billion in new technology and more auditors at the IRS to increase tax collections by $700 billion over 10 years. Republicans say the agency hasn’t provided adequate proof of the size of the “tax gap” — or amount of uncollected taxes — and has been prone to data leaks and inefficiency.
The decline in funding and auditors means that taxpayers, and especially the top earners, are far less likely to get caught underpaying their taxes than a decade ago. Overall audit rates for American taxpayers fell to 0.2% in 2019 from 0.9% in 2010.

The wealthy are still audited at a higher rate than the general taxpayer population. Yet their audit rates have declined at a much higher rate. The audit rate for taxpayers earning between $5 million and $10 million fell to 1.4% from 13.5%.
Those earning more than $10 million saw their audit rate fall to 3.9% in 2019 from 21.2% in 2010, while audit rates for $10 million-plus earners ticked up slightly for the 2017 and 2018 tax years due to a Treasury Department mandate to impose audit rates of at least 8% on those making $10 million or more.
“This is yet more evidence of the consequences of two decades of IRS budget cuts,” said Howard Gleckman, senior fellow in the Urban-Brookings Tax Policy Center at the Urban Institute. He added that given the staffing shortages and IRS backlogs during the pandemic, “I suspect 2020 was far worse.”

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