Bank of England announces largest interest rate hike in 27 years
The Bank of England on Thursday hiked interest rates by half of a percentage point, the sixth consecutive increase and first bump of this size since 1997, in an effort to cool off inflation.
Inflation in the UK is also at a 40-year high, and is poised to continue to move higher. The bank now expects that headline inflation will peak around 13% in October, meaning its rate hikes will likely continue.
Another leg down in stocks is coming, Bernstein says
Bernstein strategists led by Sarah McCarthy said they expect the market to take another leg down in the short term.
“While longer term sentiment indicators are bearish enough to take a positive view on equities with a horizon of 12 months, in the short term we think the market is likely to have another leg down as we are just at the start of the earnings downgrade cycle , and we have not yet seen meaningful outflows from equity funds,” they said in a note to clients Thursday.
Those comments come as the market enjoys a sharp rebound from the mid-June lows. Since then, the S&P 500 is up 14.25%.
Stock futures are little changed after Wednesday’s monster rally
US stock futures pointed to a muted open Thursday, as the market took a breather following a rally in the previous session. Futures tied to the Dow Jones Industrial Average rose less than 0.1%, along with S&P 500 and Nasdaq 100 futures.
European markets mutated; big Bank of England hike expected
European stocks were muted on Thursday as uncertainty returned following gains in the previous session.
The pan-European Stoxx 600 was up 0.2% by mid-morning. Retail stocks were the standout performers, gaining 2.2%, while telecoms fell 0.5%.
The UK’s FTSE pulled back ahead of the Bank of England’s monetary policy decision later on Thursday. The central bank is broadly expected to hike interest rates by 50 basis points, its largest single increase since 1995.
Alibaba’s Hong Kong shares gain 4% ahead of earnings
Alibaba is set to report tax first-quarter earnings before the market open and analysts expect the Chinese e-commerce giant to post its first revenue decline on record.
Alibaba is projected to post revenue of 203.19 billion yuan ($30 billion) for the June quarter, down 1.2% from a year ago, according to consensus forecasts from Refinitiv.
Alibaba has faced a number of headwinds, from a stricter regulatory environment in China to a resurgence of Covid in the world’s second-largest economy which led to lockdowns of major cities. Those factors have hit the Chinese economy, dampening ad budgets and consumer spending, which will likely to weigh on Alibaba’s June quarter results.
Still, analysts expect the company to return to growth in the coming quarters. Alibaba’s Hong Kong-listed shares were more than 4% higher ahead of earnings.
Jim Cramer says charts point to a rally in gold
CNBC’s Jim Cramer said now is a good time to buy gold as signs are pointing to a rally, according to analysis by commodity trader Larry Williams.
The “Mad Money” host explained Williams’ analysis by looking at the weekly action of gold from 2014 and data on small speculators’ positioning on gold from the Commodity Futures Trading Commission’s Commitments of Traders report.
Gold prices usually peak soon after small speculators get too bullish on the precious metal, and bottom out when small speculators are too bearish, according to Williams.
“The charts, as interpreted by the legendary Larry Williams, suggest that the general public’s giving up on gold en masse and he thinks that that makes it the perfect entry time to do some buying,” Cramer said.
—Abigail Ng, Krystal Hur
Here’s how to invest for yields to beat a bad year for stocks and bonds — according to the pros
Stocks are volatile, and bonds haven’t been doing better for much of this year, with US investment grade bonds plummeting in 2022.
But analysts have recently been bullish on income investing as yields start to creep up again.
Here are some ways that the pros suggest investors can position their portfolios for diversification and protection against market volatility as well as seek higher yields as inflation continues to rise. Pro subscribers can read the story here.
Fortinet shares fall
Fortinet shares slid more than 9% in extended trading after the cybersecurity firm reported its quarterly results, which included free cash flow of $283.5 million, compared to FactSet estimates of $337.2 million. Services revenue also missed estimates.
Other cybersecurity stocks moved lower too after hours. CrowdStrike edged lower by 1% and Palo Alto Networks lost more than 1%.
Walmart beings layoffs, about a week after its profit warning
Walmart has started laying off corporate employees about a week after the retail giant slashed its profit outlook and warned about a pullback in consumer discretionary spending due to inflation. The company described the layoffs as a way to “better position the company for a strong future” in a statement to CNBC. Shares inch lower by less than 1% after hours.
Lucid shares tumble nearly 12%
Shares of the electric luxury vehicle maker Lucid Group tumbled 11.7% in extended trading after the company cut its full-year production targets for a second time to 6,000. The original forecast was 20,000. The company also reported a quarterly loss of 33 cents per share.