The world awaits the winner of USA vs. Germany, but it’s obvious the early victors on Wall Street this morning are the bears. Stocks are retreating as traders worry about signs the Federal Reserve could raise interest rates before long.
Here’s the story today:
1. The numbers: The Dow Jones Industrial Average, S&P 500 and the Nasdaq all kicked off the trading session solidly lower. The Dow is down around 100 points (0.6%) with the other two indexes down around the same percent.
Trading volumes could take a hit during the middle of the day as investors turn their attention to the the soccer game, but it’s not off to a good start for investors.
2. Fed fears: Stocks are slumping on fears that the Fed will soon remove the easy-money punch bowl that’s been juicing stock prices, according to key market players.
James Bullard, the president of the St. Louis Federal Reserve, warned that financial markets may not appreciate how close the central bank is to achieving its goals. Bullard told FOX Business on Thursday that a rate hike could come during the first quarter of 2015.
While the comments about a rate hike match Bullard’s previous forecast, they appeared to take the market off guard because the Fed official is normally very dovish.
Block said traders may also just be repositioning their portfolios ahead of the end of the quarter on Monday.
While stocks are solidly lower, the S&P 500 is still on track for its 49th consecutive day without a close of 1% higher or lower. That’s the longest such streak since 1995.
3. Barclays under fire: Shares of Barclays crumbled almost 8% after the New York Attorney General unleashed a lawsuit late Wednesday against the British bank alleging a lack of transparency in some of its alternative trading platforms.
The attorney general claims the bank misled investors — even going as far as lying in marketing materials — about how much high-frequency trading firms were operating in Barclays “dark pool” trading platform.
4. GoPro goes public: Camera maker GoPro has already shown it can withstand drops from space and close encounters with sharks. Now we’ll see how the gadget company grapples with life on Wall Street.
Investors can start trading GoPro shares Thursday after the company completed its initial public offering. The consumer electronics company is set to debut on the Nasdaq under the ticker symbol “GPRO” later in the morning.
On Wednesday evening, GoPro priced shares at $24 apiece, the high end of the expected range of $21 to $24. This raised roughly $425 million.
5. Movers & shakers – Alcoa, Bed Bath & Beyond, Philip Morris: It’s shaping up to be an ugly day for Bed Bath & Beyond. The home goods retailer tumbled 9% on after earnings came in lower than expected, and the retailer doesn’t forecast it will get much better the rest of the year.
Philip Morris International was also stuck in reverse, losing almost 3%, after the cigarette maker dimmed its forecast for the year due to currency troubles and economic challenges in Europe.
On the other hand, Alcoa bounced 3% after unveiling a $2.85 billion cash-and-stock deal to acquire Firth Rixson, which makes jet-engine parts. The move should help Alcoa diversify amid anemic aluminum prices.
Nabors Industries soared 7% after inking a $2.86 billion deal to combine one of its units with C&J Energy Services. Both companies are key players in getting oil and natural gas wells ready to go.
Nike is scheduled to hit the earnings stage after the closing bell.
6. Economic data: Investors will keep an eye on consumer discretionary stocks after the government said consumer spending inched up just 0.2% in May, trailing forecasts for a 0.4% rise. Spending for April was upgraded from a contraction to a 0.1% increase. Personal income rose 0.4%, as expected.
Also, new data showed unemployment claims dipped to 312,000 last week from an upwardly revised 314,000 the week before.
7. International markets looking chipper: European markets were mostly flat, while Asian markets largely ended with gains. The Hang Seng in Hong Kong was a standout performer — rising by 1.4% during the day.
Gold prices were also declining by roughly 0.5%. Prices for the shiny metal tend to rise when investors are feeling nervous, and tend to fall when investors are feeling confident. Oil prices also dipped slightly.
