Rising Gas Prices, Inflation Pressure Stock Futures

Several big retail names, including Target, have stepped into the earnings confessional

Digital Content Manager
May 18, 2022 at 9:05 AM
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Stock futures are cooling after several days of relief from the heavy selling Wall Street's seen this month. Futures on the Dow Jones Industrial Average (DJIA) were last seen 163 points lower, while futures on the S&P 500 Index (SPX) and Nasdaq-100 Index (NDX) are sitting firmly below their respective fair values as well.

A dismal earnings report from retail giant Target (TGT) is likely spooking traders this morning, after the company's first-quarter profits came in much lower than expected, lending more credence to the toll inflationary pressures are putting on major companies. Rising gas prices are adding to this anxiety, with all states in the U.S. now averaging over $4.00 per gallon, while the national average hit a record $4.567 earlier today, up 48 cents from one month ago. 

Continue reading for more on today's market, including:

  • After 6-straight weeks of selling, Schaeffer's Senior Quantitative Analyst Rocky White breaks down what might be next for the S&P 500. 
  • The surge in options trading that surrounded Target stock before earnings. 
  • Plus, Lowe's stock sinks after earnings; Jefferies sees more upside for PENN; and WRBY gets a downgrade.   

futures may 18

5 Things You Need to Know Today

  1. The Cboe Options Exchange (CBOE) saw more than 1.19 million call contracts traded on Tuesday, and 825,840 put contracts. The single-session equity put/call ratio rose to 0.69, and the 21-day moving average stayed at 0.60.
  2. Home Depot (HD) competitor Lowe's Companies Inc (NYSE:LOW) is down 3.2% ahead of the bell, after the company reported a wider-than-expected drop in same-store sales, as well as a revenue miss for its first quarter. It also reported profits of $3.51 per share, which did beat estimates by a notable margin. Heading into today, the security was clinging to a slight year-over-year lead, though it's lost roughly 25% in 2022. 
  3. Jefferies this morning upgraded Penn National Gaming, Inc (NASDAQ:PENN) to "buy" from "hold." The analyst said PENN has the potential for decently sized returns in the long run, as its current valuation only represents a fraction of its digital business. PENN is up 2.8% ahead of the open, though its only a few sessions removed from its May 12, roughly two-year low of $28.29. 
  4. On the other side of the aisle, Warby Parker Inc (NYSE:WRBY) received a downgrade from Goldman Sachs to "neutral" from "buy," just a few days after the eyeglasses brand reported a profit miss for its most recent quarter. WRBY is down 3% ahead of the bell, and suffers a steep 62.5% year-to-date deficit as pressure emerges at the 10-day moving average. 
  5. Building permits and housing starts are slated for release today.

OV Buzz Chart May 18

U.S. Fed Comments Weigh on European Markets

Asian markets were mostly higher on Wednesday, despite U.S. Federal Reserve Chairman Jerome Powell’s commitment to hiking interest rates until high inflation cools off. Investors also sifted through data out of Japan, which saw its economy shrink a smaller-than-expected 1% from January to March, as opposed to the quarter before. As a result, Japan’s Nikkei was the top gainer with a 0.9% pop. Elsewhere, South Korea’s Kospi and Hong Kong’s Hang Seng each added 0.2%, while China’s Shanghai Composite shed 0.3%.

Powell’s comments are weighing on European markets, though. Also contributing to the negative sentiment is news that inflation in the U.K. rose to 9%, marking a 40-year high due to surging food and energy prices. Corporate earnings reports from Burberry and Premier Foods are capturing investors’ attention as well. At last check, the German DAX and France’s CAC 40 are both down 0.3%, and London’s FTSE 100 is 0.2% lower.

 

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