Finance

Stock futures fell in overnight trading on Monday as the markets struggled to sustain a comeback rally following weeks of losses.
Futures on the Dow Jones Industrial Average fell 110 points, or 0.34%. S&P 500 futures dipped 0.69% and Nasdaq 100 futures dropped 1.33%.

Zoom Video shares popped 6% in extended trading after sharing strong guidance for the second quarter while Snap shares plummeted more than 28% as the company said it’s bracing to miss earnings and revenue targets in the current quarter and warned of a hiring slowdown.
The moves came as the markets staged a rebound from last week’s steep market sell-off, which saw the Dow hit its first eight-week losing streak since 1923, and the S&P 500 briefly fall into bear market territory on an intraday basis.
Stocks rallied during Monday’s regular trading session as the Dow jumped 618 points, or nearly 2%, following a week of sharp losses. The S&P 500 rose 1.9%, and the Nasdaq Composite gained 1.6%.
The moves left investors wondering whether the bounce can hold or if it was yet another minor relief rally amid the relentless sell-off that has yet to reach a bottom.
“This kind of environment where you’ve got the whipsaw and ups and downs that are so big is a trading environment where it can feel on any given day like you were wrong yesterday and that is ripe for mistakes,” Sofi’s head of investment strategy Liz Young told CNBC’s “Closing Bell: Overtime.”

Bank stocks contributed to Monday’s gains led by JPMorgan, which jumped 6.2% after the company said it will reach key targets earlier than expected with the help of rising rates. VMware shares soared nearly 25% on news that Broadcom is reportedly in talks to acquire the clouder service provider.
Monday’s market rally was broad-based, with 11 sectors positive, led by financials. The sector added 3.23% and saw its best day since March 9.
Investors are looking ahead to new home sales and a speech from Fed Chair Jerome Powell at the National Center for American Indian Enterprise Development summit on Tuesday. Nordstrom, Best Buy, and Ralph Lauren are also slated to report earnings.

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People pass the JP Morgan Chase & Co. Corporate headquarters in the Manhattan borough of New York City.
Mike Segar | Reuters

Check out the companies making headlines in midday trading.
JPMorgan Chase – JPMorgan rose 6.2% after the bank said it expects to reach key return targets sooner than planned thanks to rising interest rates giving its lending business a boost. Other banks were also among the top gainers Monday. Citi and Bank of America got a 6% boost each, and Wells Fargo added 5%. Banks tend to benefit from rising rates, which allow for higher margins and profits.

Starbucks – Shares of the global coffee chain rose slightly after the company said it will exit the Russian market amid the country’s invasion of Ukraine, joining companies like McDonald’s, Exxon Mobil and British American Tobacco in withdrawing from the country completely. Starbucks has 130 locations in Russia, which account for less than 1% of the company’s annual revenue.
Gap — Shares fell 5.5% after Gap was downgraded by Citi along with a string of other apparel companies, such as Abercrombie and Fitch and Children’s Place, saying last week’s earnings reports should serve as a “wake-up call” for retailers. Shares of Abercrombie and Fitch fell nearly 2%, shares of Children’s Place fell 4%.
Electronic Arts — Shares of Electronic Arts added 2.3% on news that it’s seeking a sale or merger. Walt Disney, Apple and Amazon have reportedly held talks with the video game maker.
Eli Lilly — Eli Lilly’s stock added 1.25% as SVB Securities said the drugmaker’s diabetes drug is “game-changing” and could bring more gains for the stock.
VMWare – The cloud stock surged more than 24.8% after multiple reports said VMWare is in advanced talks to be acquired by chipmaker Broadcom. Broadcom shares dipped 3.1%. 

Autodesk — Autodesk shares fell 4.1% after Deutsche Bank downgraded the software company to hold from buy and cut its price target. Deutsche also said it anticipates mixed first-quarter results from Autodesk.
Emergent BioSolutions — Emergent BioSolutions jumped 3.8% as the life sciences company makes a smallpox vaccine that can be used to prevent spreading monkeypox.
Porch Group — Shares of the home services company gained 5.4% after JPMorgan initiated coverage with an overweight rating, saying that Porch Group has differentiated itself through its business-to-business strategy.
— CNBC’s Tanaya Macheel, Yun Li, Hannah Miao and Sarah Min contributed reporting

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Spiraling food and energy prices are squeezing households around the world, while central banks are tightening monetary policy to rein in inflation, exerting further pressure on indebted nations, companies and families.

CNBC’s Geoff Cutmore speaks with a panel of top global leaders — Kristalina Georgieva, managing director of the IMF, François Villeroy de Galhau, governor of the Bank of France, Jane Fraser, CEO of Citi, and David Rubenstein, co-founder and co-chairman at Carlyle — to discuss the headwinds and tailwinds facing the global economy and what mix of policies are needed in this new volatile context.
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The lender said that a 17% return on tangible common equity “remains our target and may be achieved in 2022,” according to a presentation.
That’s a switch from earlier this year, when CFO Jeremy Barnum warned that headwinds, including rising costs, would cause the bank to miss its target for the next one to two years.
JPMorgan shares rose 2.1% in premarket trading.

Jamie Dimon, CEO of JPMorgan Chase speaks to the Economic Club of New York in New York, January 16, 2019.
Carlo Allegri | Reuters

JPMorgan Chase on Monday reversed course on guidance it gave in January, saying the bank could achieve a key performance target this year after all.
The lender said that a 17% return on tangible common equity “remains our target and may be achieved in 2022,” according to a presentation. That’s a switch from earlier this year, when CFO Jeremy Barnum warned that headwinds, including rising costs, would cause the bank to miss its target for the next one to two years.

“There’s a very good chance this year” of hitting the target and exceeding it next year if there’s a “benign” credit environment, CEO Jamie Dimon told investors Monday in opening remarks for the bank’s Investor Day meeting.
JPMorgan shares rose 2.1% in premarket trading.
JPMorgan is holding its first Investor Day since 2020 in response to questions from investors and analysts about the bank’s strategy and investments. The bank’s shares began tanking in January after it revealed an unexpected jump in fourth-quarter expenses and management said that it would likely miss its 17% target for returns.
On Monday, the bank said that while guidance around 2022 expenses was unchanged at about $77 billion, rising interest rate expectations as the Federal Reserve combats inflation may be proving a boost. The bank said net interest income in 2022 could exceed $56 billion, well above the $50 billion estimate given in January.
The U.S. economy remains strong and borrowers of all kinds continued to repay their loans at a high rate, Barnum told analysts. The “unusually low” level of credit-card charge-offs will persist into next year, he said.

Before the investor meeting, analysts had wanted greater detail on the types of investments in technology, personnel and acquisitions embedded within expectations for an 8% increase in expenses this year to $77 billion.
“This issue is certain to us: front-loaded spending for less certain back-ended benefits,” veteran bank analyst Mike Mayo wrote in a January note in which he slashed his recommendation on JPMorgan shares.
Since then, JPMorgan executives realized that they erred in not giving more disclosure around their business plans, which include roughly $15 billion in investments for 2022 alone, according to a person with knowledge of the bank.
In recent years, the biggest U.S. bank by assets has aggressively invested in technology and personnel to compete with both traditional and emerging fintech players. That has helped it win market share in business lines from credit cards to deposits to Wall Street trading.
Apart from Dimon and his CFO, division heads including Daniel Pinto, Marianne Lake and Jennifer Piepszak are expected to give presentations on Monday.
JPMorgan shares have posted the worst performance among the six biggest U.S. banks, falling about 26% this year before Monday and exceeding the 19% drop of the KBW Bank Index.
This story is developing. Please check back for updates.

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Bitcoin and other cryptocurrencies are “worth nothing,” European Central Bank President Christine Lagarde said.
Lagarde said she thinks crypto should be regulated to protect inexperienced investors.
Her comments come at a time of heightened regulatory scrutiny of the crypto market.

The European Central Bank is exploring whether to issue its own digital alternative to cash.
Olivier Matthys | AFP | Getty Images

European Central Bank President Christine Lagarde thinks cryptocurrencies aren’t worth a dime.
“My very humble assessment is that it is worth nothing,” Lagarde said of crypto in an interview with Dutch talk show “College Tour” that aired Sunday.

“It is based on nothing,” she added. “There is no underlying asset to act as an anchor of safety.”
Lagarde called on global policymakers to put rules in place to protect inexperienced investors making big bets on digital assets. Cryptocurrencies have plunged across the board this year, with bitcoin — the world’s largest — erasing more than half of its value since its November all-time highs.
“I’m concerned about those people who think it’s going to be a reward, who have no understanding of the risks, who will lose it all, and who will be terribly disappointed, which is why I believe that should be regulated,” Lagarde said.
One member of the show’s audience said they lost 7,000 euros ($7,469) after buying the token cardano, to which Lagarde responded: “That hurts.”
The former International Monetary Fund chief’s skepticism of crypto isn’t new. She’s previously raised concerns about the environmental impact of digital currencies, as well as their potential use in money laundering and sanctions evasion.

Her latest comments arrive at a time of heightened scrutiny of the crypto market as regulators react to the fallout from the collapse of terraUSD, a controversial so-called stablecoin that was meant to always be worth $1.
Several central banks are working on their own virtual alternatives to cash in response to the rapid growth of digital currencies — the ECB being one of them. A digital euro would be “vastly different” from private cryptocurrencies, Lagarde said.

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Take a look at some of the biggest movers in the premarket:
Electronic Arts (EA) – The video game maker’s shares rose 2.5% in the premarket after Puck News reported that the company was actively seeking a buyer or merger partner. EA has reportedly held talks with Walt Disney (DIS), Apple (AAPL) and Amazon (AMZN), among others.

VMWare (VMW) – The cloud computing company’s stock surged 21.3% in premarket trading following multiple reports that it is in advanced talks to be bought by chipmaker Broadcom (AVGO). The two companies are said to be discussing a cash-and-stock deal which could happen soon, according to people familiar with the matter. Broadcom slid 4.3%.
GameStop (GME) – GameStop jumped 3.5% in premarket trading after the video game retailer launched a digital wallet for cryptocurrencies and NFTs.
HP Inc. (HPQ) – The computer and printer maker was downgraded to “neutral” from “buy” at Citi, based on moderating demand for PCs in the near to mid-term. HP fell 2.7% in premarket action.
Pfizer (PFE) – Pfizer and partner BioNTech (BNTX) said three doses of their Covid-19 vaccine offered strong protection for children under 5, according to preliminary data. BioNTech rose 1.8% in premarket trading, while Pfizer edged higher by 0.2%.
Motorola Solutions (MSI) – Morgan Stanley upgraded the communications equipment and software company’s stock to “overweight” from “equal-weight,” with a number of favorable trends in place including an increase in demand for video surveillance. Motorola Solutions gained 2.5% in the premarket.

Emergent BioSolutions (EBS) – The biopharma company’s stock rallied 11.1% in premarket trading, amid the increasing concerns about the spread of monkeypox. Emergent is a supplier of smallpox vaccine, which can be used as protection against monkeypox.
Autodesk (ADSK) – The design software company’s stock fell 3.9% in premarket action after RBC cut its price target on the stock to $255 per share from $295 a share. RBC said Street earnings consensus may be too high and that Autodesk needs to establish consistency in its results to increase investor confidence.
Boeing (BA) – Boeing rose 1% in premarket trading after its Starliner spacecraft successfully docked with the International Space Station over the weekend.
Corning (GLW) – The materials science company’s stock slid 2.6% in the premarket after Citi downgraded it to “neutral” from “buy,” citing lower PC and tablet demand impacting Corning’s optical components business. Citi also notes uncertainty about demand recovery for premium and large-size televisions.

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Tether has seen its circulating supply plunge from a record $84 billion on May 11 to around $73 billion as of Monday.
Regulators have raised concerns about stablecoins after the collapse of UST, which at one point was the world’s third-biggest stablecoin.
The panic over UST has drawn attention to other stablecoins — tether, in particular.

Tether claims its dollar-pegged token is “fully backed.”
Justin Tallis | Afp | Getty Images

Investors have yanked more than $10 billion out of tether in the past two weeks amid heightened regulatory scrutiny over stablecoins.
Tether, the world’s largest stablecoin, has seen its circulating supply plunge from a record $84.2 billion on May 11 to around $73.3 billion as of Monday, according to data from CoinGecko. About $1 billion was withdrawn late Friday evening.

The cryptocurrency, which is meant to be pegged to the U.S. dollar, temporarily dipped as low as 95 cents on May 12 after another type of stablecoin, terraUSD — or UST — plunged well below $1. That resulted in a sell-off in UST’s associated luna token, which in turn wiped out more than $40 billion in holders’ wealth.
The fallout from the collapse of Terra, the blockchain behind UST and luna, sent shockwaves through the crypto market, with bitcoin and other cryptocurrencies tumbling sharply. That’s causing concern for regulators.
“Whenever there’s a failure or a catastrophe in crypto, the fear is always that someone will misread the situation and overcorrect in a position that’s not helpful for the entire community writ large,” Kathleen Breitman, a co-creator of the Tezos blockchain, told CNBC.
“As much as I relish seeing things that don’t make sense fail, there’s always a tinge of like, ‘Are people going to extrapolate from this that everything that’s a stablecoin is unsound?’ That’s always the big fear.”

Arrows pointing outwards

Unlike tether, UST wasn’t backed by fiat currency held in a reserve. Instead, it relied on some complex engineering where price stability was maintained through the destruction and creation of UST and its sister token luna. Investors were lured in by the promise of 20% savings yields from Anchor, Terra’s flagship lending platform, a rate many investors said was unsustainable.

Terra creator Do Kwon had also accumulated billions of dollars’ worth of bitcoin and other tokens through his Luna Foundation Guard fund, but nearly all of the funds were depleted in a futile effort to save UST.
Nevertheless, the panic over UST has drawn attention to other stablecoins — tether, in particular.
Regulators and economists have long questioned whether Tether has enough assets in its reserves to justify its stablecoin’s purported peg to the dollar.
The company previously claimed tether was backed one-to-one by dollars in a bank account, but subsequently revealed it was using other assets including commercial paper — short-term corporate debt — and even digital tokens as collateral after a settlement with the New York attorney general.
Last week, Tether said it reduced the amount of commercial paper it owns and increased its holdings of U.S. Treasury bills. For the first time, the British Virgin Islands-based firm said it also holds some foreign government debt. Tether declined to comment further on the source of its funds, but said it is pursuing a more thorough audit of its reserves.

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Traders on the NYSE, May 20, 2022.
Source: NYSE

Stock futures rose in overnight trading Sunday after the Dow Jones Industrial Average fell for its 8th straight week amid a broader market sell-off.
Futures on the Dow industrial average gained 224 points, or 0.72%. S&P 500 futures added 0.9% and Nasdaq 100 futures rose 1.11%.

The moves came after the S&P 500 on Friday dipped into bear market territory on an intraday basis. While the benchmark was down 20% at one point, it did not close in a bear market after a late-day comeback.
In Friday’s regular trading session, the S&P 500 closed 0.01% higher at 3,901.36 after falling as much as 2.3% earlier in the session. The Dow added 8.77 points at 31,261.90 after sinking as much as 600 points and the Nasdaq inched 0.3% lower.
The S&P 500 currently sits 19% off its record high while the Dow is down 15.4%. The Nasdaq is already deep in bear market territory, down 30% from its high.
Last week marked the Dow’s first eight-week losing streak since 1923, while the S&P 500 capped a seven-week losing streak, its worst since 2001.
The Nasdaq saw its seventh negative week in a row for the first time since March 2001. The tech-heavy index also saw its lowest intraday level since November 2020 on Friday.

Eight of 11 sectors ended the week in the red, led by consumer staples, which dipped 8.63% and had its worst weekly performance since March 2020. Energy finished the week on top, rising 1.09%. Consumer discretionary and communication services also finished the week more than 32% off their 52-week highs.
“Investors are trying to come to grips with what exactly is happening and always try to guess what the outcome is,” said Susan Schmidt of Aviva Investors. “Investors hate, and the markets hate uncertainty, and this is a period where they don’t have any clear indication on what’s going to happen with this push-pull between inflation and the economy.”
Investors are looking ahead to a new batch of earnings this week, including an array of big retail names. Zoom Video is set to report results Monday followed by Costco, Nvidia, Dollar General, Nordstrom and Macy’s later in the week.

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