5 things to know before the stock market opens Tuesday, June 14

Here are the most important news, trends and analysis that investors need to start their trading day:

1. Wall Street set to rise after S&P 500 officially closed in bear market

Traders on the floor of the NYSE, June 13, 2022.

Source: NYSE

US stock futures bounced after Tuesday’s cooler inflation report and what could be an even more aggressive Federal Reserve interest rate hike Wednesday. The S&P 500 on Monday officially closed in bear market territory, defined as a decline of 20% or more from its prior high, which was in January. The broad market index also hit a new low for the year.

  • Monday’s steep sell-off saw the S&P 500 lose 3.9% and the Nasdaq — already in a bear market since March — drop 4.7%. The Dow sank 876 points or 2.8%. The 30-stock average fell further into a correction, down 17% since its January record high. A correction is defined as a decline of 10% or more from a prior high. All three stock benchmarks have dropped for four sessions in a row.

2. 10-year Treasury yield backs off 2011 highs after cooler inflation data

The 10-year Treasury yield on Tuesday backed off 2011 highs, trading around 3.3%, after the government’s May producer price index rose 10.8% year over year, a slightly smaller rise than expected. The PPI is the other side of the inflation coin at the wholesale level, after last week’s hotter-than-expected consumer price index. The PPI remained near its historic year-over-year high of up 11.5% in March.

3. Fed to begin two-day meeting and markets now expect a 0.75% rate hike

US Federal Reserve Chair Jerome Powell discusses interest rate hikes at press conference in Washington, DC, on May 4, 2022.

Xinhua News Agency / Getty

The markets expect the Fed to hike rates by 0.75% at the end of its two-day June policy meeting Wednesday. Only the magnitude of the rate increase is in question, as Fed Chairman Jerome Powell has repeatedly said that 0.5% rises in June and July looked appropriate.

  • After the Fed’s May meeting, which saw rates go up 0.5%, Powell took a 0.75% hike off the table.
  • But a lot has changed since then with the stock market sell-off and the surge in bond yields, and another recession-signaling 2-year yield and 10-year yield inversion.
  • The markets are concerned the Fed is going to have to clamp down much harder on the economy to fight inflation and that it might lead to a recession.

4. Coinbase to lay off 18% of full-time jobs; bitcoin plunges again

Coinbase reported a 27% decline in revenues in the first quarter as usage of the platform dipped.

Chesnot | Getty Images

Crypto exchange Coinbase will cut 18% of full-time jobs, according to an email sent to employees Tuesday. CEO Brian Armstrong pointed to a possible recession, a need to manage costs, and growing “too quickly” during a bull market. Shares of Coinbase fell 7% in the premarket after closing down 11.4% on Monday. Before Tuesday’s premarket drop, the stock dropped 79% year to date as bitcoin and the entire crypto market has sold off in 2022.

  • Bitcoin dropped below $21,000 overnight in Asia before bouncing back slightly. Crypto assets were hammered Monday as concerns mount over lending platform Celsius and crypto exchange Binance briefly pausing withdrawals. Bitcoin, trading around $22.000 early Tuesday, has fallen roughly 68% from its all-time in November.

5. Oracle surges as database software giant beats on earnings, revenue

A sign is posted in front of Oracle headquarters on June 13, 2022 in Redwood Shores, California.

Justin Sullivan | Getty Images

Oracle shares surged 11% on Tuesday’s premarket, the morning after the database company issued fiscal fourth-quarter earnings and revenue that exceeded estimates. Revenue increased 5% to $11.84 billion from a year earlier, driven by growth in the company’s cloud infrastructure business, which competes with Amazon Web Services and Microsoft Azure.

  • Oracle CEO Safra Catz said in a statement, “We believe that this revenue growth spike indicates that our infrastructure business has now entered a hyper-growth phase.” Oracle’s earnings beat is particularly important as investors turn their focus to companies that can generate profitability and cash during a downturn. Before the after-hours jump, Oracle shares were down 27% for the year.

— CNBC’s Sarah Min, Samantha Subin, Fred Ibert, Jeff Cox, Abigail Ng, Kate Rooney and Ari Levy contributed to this report.

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