Stocks Nudge Higher, Powell In Focus, Deere Earnings, Microsoft-Twitter Spat, Regional Banks Rally – 5 Things To Know

Five things you need to know before the market opens on Friday, May 19:

1. – The S&P 500 index continues to rise as global equities catch up with the US tailwind

US stock futures extended gains on Friday, following the highest close of the year for the S&P 500 index, as investors continued to bet that debt ceiling talks would conclude with a deal over the coming days.

Comments from the White House indicated “steady progress” during staff-level talks as President Joe Biden continues his trip to Asia this week, with House Speaker Kevin McCarthy and Senate Majority Leader Chuck Schumer preparing to bring votes to their houses as soon as possible. next week.

The potential breakout comes amid a string of positive data from the broader economy, too, with retail sales, housing starts, and yesterday’s weekly jobless claims data — which fell by 22,000 over the period when monthly non-farm payroll surveys are typically completed — all pointing to the domestic economy. If it performs much better than expected before the summer months.

That view has put upward pressure on US Treasury yields, however, and has raised bets that the Fed may not be done with its rate hike cycle just yet.

The benchmark 2-year bond yield rose 2 basis points in overnight trading at 4.223% in overnight trades, with the 10-year note trading at 3.634%. The US dollar index, which tracks the greenback against a basket of six global currencies, fell 0.22% from a two-month high to trade at 103.356.

Meanwhile, FedWatch of CME Group is pricing in a 36.7% chance of a 25 basis point increase in the federal funds rate next month in Washington, up from just 10.7% last week.

Still, the strength of the broader economy, as well as a stable — but by no means spectacular — first-quarter earnings season have given stocks a solid footing this spring, as the S&P 500 closed at 4,198.05 points overnight, its highest since August. 25 in a move that extends its annual gains to about 9.34%.

Overseas stocks caught a tailwind to the US as well, with Japan’s Nikkei 225 closing 0.77% higher in Tokyo overnight at 30,808.35 points, the highest level since August of 1990. In Germany, the benchmark DAX is set within about 20 points of All — the time peak you set earlier this year.

Meanwhile, the MSCI World Index rose 0.23% at 2,846.66 points, the highest level since early February.

On Wall Street, futures contracts linked to the S&P 500 had an opening bell profit of 8 points while those linked to the Dow Jones Industrial Average were priced 47 points higher. The technology-focused Nasdaq was looking to gain 30 points.

2. – Fed Chair Powell speaking in Washington as bets rise for a rate hike

Federal Reserve Chairman Jerome Powell will sit down with his predecessor, Ben Bernanke, for a question-and-answer session at the Thomas Lubach Research Conference in Washington later this morning.

The event will mark Powell’s first public appearance since the Fed’s last policy meeting on May 3, when the central bank raised its benchmark federal funds rate for the 10th consecutive time, reaching a 2007 high of between 5% and 5.25%.

Powell hinted at the time that the Fed would remain ‘data-driven’, at least in part, when assessing its next move in June, but warned that inflation was still far from the Fed’s 2% target to ensure easing prices or conditions. Finance. .

Since then, inflation data has continued to slow, dropping below the 5% mark for the first time in two years, but housing and retail sales figures suggest consumption remains strong heading into the summer months, while the GDP forecast tool now follows The Atlanta Fed clip to the economy growing an impressive 2.9%.

Powell will hold his conversation with Bernanke at 11:00 AM ET.

3. – Dire earnings on deck with a focus on industrial demand forecasts

Deere & Co. (to) – Get a free reportShares rose in pre-market trading ahead of the industrial equipment manufacturer’s second-quarter earnings before the opening bell.

Analysts expect Deere to report net profit at $8.59 per share, up 26% from last year’s tally, with revenue up 23.3% to $14.83 billion. The group expects net income of between $8.75 billion and $9.25 billion for the current fiscal year, which ends in October, thanks to stronger pricing power for its agricultural equipment and improving global demand.

However, last month, Deere’s biggest rival Caterpillar Corp. indicated that its equipment order backlog was largely flat compared to a year ago, suggesting demand may be nearing a peak amid broader concerns about the global economy.

Shares of Deere & Co were up 0.94% in premarket trading, indicating an opening bell price of $374.00 per share.

4. – Twitter says Microsoft misuses data as AI race heats up

Microsoft (MSFT) – Get a free reportShares rose in pre-market trading after the tech giant received a note from Twitter claiming it had misused some social media group data.

In a message to Microsoft posted late Thursday, Twitter said Microsoft broke an agreement by using more data than allowed, and sharing some of that data with government officials. Microsoft said, in a response reported by Reuters, that it will review the letter and looks forward to continuing our long-term partnership with the company.

Twitter owner Elon Musk, who bought the company late last year for $44 billion, was reportedly planning to use Twitter data to train a large language model used by AI startup X.AI, which could provide a near-term challenge to Microsoft’s ChatGPT. .

Last month, Musk cut off OpenAI’s access to Twitter data, according to a New York Times report that indicated he was unhappy with the $2 million annual licensing agreement. OpenAI, along with Microsoft, are the developers of ChatGPT.

Shares of Microsoft are up 0.14% in premarket trading to indicate an opening bell price of $318.95 per share.

5. – US Banks Cut Fed Borrowing As Regionals Expansion Rise

US banks cut their total borrowing from the Federal Reserve this week, but added a modest amount to the liquidity taken from the central bank’s new emergency lending programme.

Banks borrowed $9 billion from the Fed’s main discount window over the seven-day period ended May 10, according to Fed data, down from $9.3 billion delivered during the previous period.

The Fed’s “Other Credit” balance, which was used to account for money borrowed in the liquidation of failed banks such as SVB Financial and Signature Bank and the sale of First Republic to JPMorgan (JPM) – Get a free reportby $4 billion to $208.5 billion.

Borrowing from the Federal Reserve’s new Bank Term Banking financing program, which allows banks to exchange high-quality assets for one-year loans, rose by $3.9 billion to $87 billion. Meanwhile, the Fed’s overall balance sheet has shrunk by about $59 billion, to $8.5 trillion.

Regional banking stocks performed well this week, with the KBW Regional Banking Index up 8.5% from last Friday’s close, amid filings showing (WALPL) The deposit base jumped $2 billion during the six weeks ended May 12, and billionaire investor Warren Buffett built a $9.92 million stake in Capital One Financial. (COF) – Get a free reportAs of the end of March.