U.S. stock market futures paused their recent rally, giving back some gains, as investors shift their focus to the Federal Reserve’s two-day policy meeting, plus stocks to watch today in the Money & Markets Opening Bell.
The Top Story
While no major policy announcements are expected when the Federal Reserve wraps up its meeting on Wednesday, policymakers will issue projections for the economy for the first time since December, before a decade-long economic expansion was brought to a grinding halt due to coronavirus-induced lockdowns.
Last week’s strikingly strong employment data for May strengthened views that the worst of the economic fallout from the pandemic was over, and will likely be discussed at the meeting.
The Nasdaq’s record-high closing Monday confirmed a bull market began when markets hit a low on March 23, according to a widely used definition. The S&P 500, which is about 5% below its own all-time high, also erased its year-to-date losses.
Stocks in the travel industry including American Airlines Group Inc. (Nasdaq: AAL), United Airlines Holdings Inc. (Nasdaq: UAL), Alaska Air Group Inc. (NYSE: ALK) and Marriott International Inc. (Nasdaq: MAR) shed between 2.8% and 7% in premarket trading after surging on Monday.
As of 9:20 a.m. EDT, Dow Jones futures were down 1.1%. S&P 500 futures dropped 0.9% and Nasdaq futures were off by 0.2%.
Stocks to Watch Today
Stitch Fix Inc. (Nasdaq: SFIX) — The online personal styling company reported a $0.33-per-share loss in earnings, missing analysts’ expectations. It also missed projections on revenue but suggested positive growth in the current quarter. Shares of Stitch Fix were down 7%.
Chesapeake Energy Corp. (NYSE: CHK) — Shares of the Oklahoma-based energy company plummeted more than 54% in premarket trading after news surfaced that the company is preparing to file for bankruptcy protection.
Macy’s Inc. (NYSE: M) — the American department store chain said customers are coming back to reopened stores faster than projected. The company’s preliminary earnings report said it is projecting a net loss of $652 million for the last quarter. Shares of Macy’s were up 10%.
Coronavirus Pandemic Pushes Frackers to Richest Oil Fields
While American shale producers start to recover from the recent oil price crash, there are other places the industry is zeroing in on for growth.
Now, producers are eyeing the Permian Basin — located in Texas and New Mexico — to find the richest targets for shale, according to The Wall Street Journal.
Estimates show that the Permian Basin is set to start growing next year through 2030. Other regions — like the Eagle Ford region of South Texas and the Bakken in North Dakota — will also grow, but taper off much faster.
Speculative Fervor in US Stocks Jumps
Speculative bets on rising stock prices jumped to their highest level in 20 years among options traders, according to Bloomberg.
Last week, traders bought 35.6 million new call options on equities — up from a peak of 28.7 million in February.
Research found that more than 50% of the call option volume was created by smaller investors. The last time bullish small trader positions made up 45% or more of volume, stocks fell about 3% in two months and 15% in a year.
Cathay Pacific to Get $5 Billion Bailout from Hong Kong
The government of Hong Kong is providing the bulk of a $5 billion bailout for its flagship airline, Cathay Pacific Airway (Over-the-Counter: CPCAY).
According to The Wall Street Journal, the carrier is receiving $2.5 billion from a government-owned entity called Aviation 2020 Ltd., which will buy preference shares in the company.
Cathay will separately raise $1.5 billion by selling new shares, with its biggest shareholders already committing to subscribe to the rights of those shares.
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Earnings Report
Here are the companies releasing earnings reports today:
AMC Entertainment Holdings Inc. (NYSE: AMC)
Five Below Inc. (Nasdaq: FIVE)
GameStop Corp. (NYSE: GME)
Lovesac Co. (Nasdaq: LOVE)
Verint Systems Inc. (Nasdaq: VRNT)
Check back each morning before the opening bell for stocks to watch today with Opening Bell, here on Money & Markets.