Futures contracts fall after consumer prices remain at their highest level in four decades

IN NUMBERS

U.S. stock futures fell on Wednesday after the first of two key April inflation reports this week showed consumer prices were still at 40-year highs. The data further raise concerns that inflation will remain elevated as the economy slows. April’s producer price index is released on Thursday. (CNBC)

Wall Street had a volatile session on Tuesday, with the Dow Jones Industrial Average wiping out a 500-point gain, hitting a low of around 350 points before closing 84 points lower, a fourth straight day. The S&P 500 and Nasdaq were able to close higher, snapping three-game losing streaks. Dow stock Disney (DIS) is expected to report earnings after Wednesday’s closing bell. (CNBC)

IN THE NEWS TODAY

The 10-year Treasury yield rose back above 3% on Wednesday after the government’s consumer price index in April rose 8.3% stronger than expected year-on-year. Stripping out volatile food and energy prices, the so-called core CPI still rose 6.2%, which was more than expected. (CNBC)

Inflation has been the biggest threat to a recovery that began at the start of the pandemic and saw the economy in 2021 reach its highest level of single-year growth since 1984. Sharp swings in financial markets recently reflect growing concerns that the Federal Reserve continues to move too slowly to stop soaring inflation. (CNBC)

A source of inflation in the economy has been oil prices and, in turn, record gasoline prices. West Texas Intermediate crude, the U.S. benchmark, rose about 3.5% to $103 a barrel on Wednesday after sharp declines in a row. The drop in the previous two sessions was driven by supply issues as the European Union scrambles to gain support for a Russian oil embargo. (Reuters)

Shares of Coinbase (COIN) fell 20% in Wednesday’s premarket, the morning after the crypto exchange reported quarterly revenue fell 27% to $1.17 billion, below estimates. It also announced a quarterly loss of $1.98 per share. Coinbase noted a drop in user numbers as the digital currency market recently experienced a major downturn. (CNBC)

A core token of the embattled Terra crypto project is now in free fall. UST, a so-called stablecoin intended to maintain a 1-to-1 parity with the US dollar plunged to 31 cents on Wednesday. Meanwhile, Bitcoin has lost more than 50% since its all-time high in November. It was even lower on Wednesday, below $30,000. (CNBC)

STOCKS TO MONITOR

Wendy’s (WEN) reported adjusted earnings of 17 cents per share, 1 cent below estimates, with revenue and same-store sales also missing analysts’ forecasts. The restaurant chain is being negatively impacted by rising costs for supplies and labor, and its shares fell 3.4% in premarket trading.

Krispy Kreme (DNUT) gained 1.6% pre-market after beating revenue and earnings estimates for its latest quarter. The donut chain’s “hub sales” metric jumped 49.2% for international markets and 19.4% for the United States and Canada.

Perrigo (PRGO) fell 4.1% in premarket trading after reporting a mixed quarter, with adjusted earnings 33 cents per share below the consensus estimate of 42 cents. However, the over-the-counter drugmaker reported better-than-expected revenue and raised its full-year outlook after completing the acquisition of consumer healthcare company HRA Pharma earlier this month.

Roblox (RBLX) posted a bigger-than-expected loss for its latest quarter as well as sales that fell short of Street’s forecast. The gaming platform company also said it expects losses to continue for the foreseeable future as spending increases and pandemic-induced demand fades. Roblox fell 1.1% in premarket action, paring an earlier loss of 10% in off-hours.

Unity Software (U) plunged 23% in the pre-market, after the video game software developer released weaker-than-expected revenue guidance. Its latest quarterly loss was in line with estimates, but its sales were below consensus.

Occidental Petroleum (OXY) added 1.3% in premarket shares after falling profits for its latest quarter, helped by soaring oil prices. Occidental is the top gainer among S&P 500 stocks, having more than doubled this year.

Toyota (TM) said its profit for the current fiscal year could be hit by 20% due to an increase in raw material costs. The automaker said it will work with suppliers to find alternative materials and other ways to cut expenses. The shares fell 2.2% in premarket trading.

RealReal (REAL) rebounded 9.3% pre-market after the seller of second-hand luxury goods reported better-than-expected quarterly sales. It reported a bigger-than-expected loss, but said it was poised to benefit from an inflationary trend in prices for new luxury goods.

H&R Block (HRB) reported better-than-expected quarterly sales and earnings, with the tax preparation firm also raising its outlook for upbeat tax season results. Shares of H&R Block jumped 3.3% in premarket trading.

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