Here are the most important news, trends and analysis that investors need to start their trading day:
- Nasdaq, S&P 500 both set to drop for 5 straight sessions
- Goldman Sachs ups Fed rate hike forecast to four times this year
- Week ahead: Powell's confirmation hearing, inflation and earnings
- Take-Two to buy mobile gamer Zynga who stocks soared on the deal
- Lululemon says fourth-quarter earnings, sales hurt due to omicron
1. Nasdaq, S&P 500 both set to drop for 5 straight sessions
U.S. stock futures dropped Monday after a rough first trading week of the new year as tech stocks were battered by rising bond yields. The Nasdaq logged a four-session losing streak Friday, with the most of the damage coming last Wednesday. For the week, the tech-heavy index sank 4.5% in its worst weekly performance since February 2021. The S&P 500 on Monday was also tracking for a five-session losing streak. The index fell 1.9% for last week. The Dow Jones Industrial Average, which has dropped three sessions in a row, fell 0.3% last week. The Dow and S&P 500 both hit record closing highs early last week.
2. Goldman Sachs ups Fed rate hike forecast to four times this year
Bond yields ticked higher Monday, with the benchmark 10-year yield trading at 1.77% after hitting a high back to January 2020 above 1.8% on Friday. Goldman Sachs expects the Federal Reserve to hike interest rates from near-zero levels four times this year as inflation rises and unemployment drops. In minutes from its December meeting, the Fed revealed talk about a balance sheet reduction in addition to signaling rate increases and an accelerating tapering. Fed Chairman Jerome Powell is set to testify Tuesday at his nomination hearing before a Senate panel.
3. Week ahead: Powell's hearing, inflation and earnings
In the week ahead, consumer and wholesale inflation reports are out Wednesday and Thursday. Economists expect another hot month for both readings, though some economists believe inflation is close to its peak. November's headline CPI of 6.8% was the highest since 1982. Retail sales are out Friday. Earnings season also begins, with Delta Air Lines' quarterly results Thursday and JPMorgan Chase, Citigroup and Wells Fargo on Friday.
4. Take-Two to buy mobile gamer Zynga who stocks soared on the deal
Take-Two Interactive said Monday it will buy mobile game maker Zynga, in a cash-and-stock deal at an enterprise value of nearly $12.7 billion. Take-Two said it would acquire all the outstanding shares of Zynga at $9.86 per share, a 64% premium to Friday's close which is largely reflected in Monday's premarket trading. Take-Two shares fell roughly 10% in the premarket. The deal is expected to close by the end of June.
5. Lululemon says fourth-quarter earnings, sales hurt due to omicron
Lululemon shares came under pressure after the retailer and apparel maker said Monday morning that earnings and revenue for its fiscal fourth quarter will likely come in at the low end of estimates. The company blames staffing shortages and shortened store hours as Covid cases surged in the U.S. due to the omicron variant. The stock lost more than 7% in premarket trading.