Stocks Futures Tumble, Inflation, RH, Xerox and Bitcoin In Focus - Five Points To Know

Busi Knews:- Stock futures decline as the 'pain' of a rate hike calms bulls; PCE inflation softening could cost something; RH shares decline following a lowered revenue outlook for 2022; Grayscale sues SEC after bitcoin ETF rejection, and Xerox CEO John Visentin passes away aged 59.

1. -- Stock Futures Slump As Rate Hike 'Pain' Tames Bulls

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U.S. equity futures fell on Thursday as the world's stock markets appeared poised to end their worst first half ever due to worries that rate hikes by central banks intended to combat inflation will instead send many developed nations into recession.

Jerome Powell, the chairman of the Federal Reserve, stated at a conference of central bankers in Portugal that failure to restore price stability would be a greater risk to the global economy than a recession brought on by rate hikes, which broadly supported this point of view.

Powell said at the annual policy forum of the European Central Bank in Sintra, "The process is quite likely to involve some pain, but the most suffering would be from failing to address this high inflation and allowing it to become chronic."

The prospect of slower growth, which is now evident in data from a variety of economic sectors, as well as the steadily pessimistic outlook from corporate America, have sent U.S. stocks into free fall: the S&P 500 is on pace for its worst start to any year since 1970 and is currently trading in bear market territory, while interest-rate-sensitive tech stocks are down more than 30% from their late November peak.

And still, the rate increases continue. The ECB is expected to raise interest rates by a similar amount next month, according to growing bets after Sweden's Riksbank increased its key lending rate by 50 basis points this morning, bringing it to 0.75 percent.

Loretta Mester, president of the Cleveland Federal Reserve Bank, said on CNBC on Wednesday that if the economy stays the same, she would support a 75 basis point rate increase the following month. The likelihood of a move that magnitude is estimated to be 82 percent by the CME Group's FedWatch.

With the Stoxx 600 down 1.53 percent in early Frankfurt trading, European equities are down the most in more than two weeks heading into the first half's last trading session.

Overnight in Asia, the MSCI ex-Japan index plummeted 1.07 percent, while the Nikkei 225 in Japan fell 1.54 percent. These declines by the region's two major indexes pushed global stocks into a bear market and gave them their worst first-half starts ever.

Standard 10-year note yields in the US decreased to 3.057 percent in overnight trading, while 2-year notes remained at over 3%.

Futures on Wall Street are pricing in a 50 point opening bell decline for the S&P 500, which is down 19.88% for the year, and a 315 point decline for the Dow Jones Industrial Average. The Nasdaq, which focuses on technology, is forecasting a decline of 190 points.

2. -- PCE Inflation Easing May Come With A Price

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According to Federal Reserve Chairman Jerome Powell, statistics from his chosen inflation index will probably support his claim that containing inflation will hurt the U.S. economy.

As rate hikes pinch corporate profit margins and pass-through costs drop, the core PCE Price index, a measure of consumer price pressures issued by the Bureau of Economic Analysis, is projected to indicate a minor slowing in May.

However, the report's estimate of consumer spending is also anticipated to confirm statistics from the Commerce Department on retail sales and show a decline in discretionary spending, a crucial driver of expansion in the services-based U.S. economy.

According to Ian Shepherdson of Pantheon Macroeconomics, "if a minor increase in the core PCE deflator is the good news in the report today, the bad news will be the weakening of actual consumption spending." "

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Analysts anticipate a 0.4 percent increase in the PCE deflator for the month, with 0.4 percent growth in personal spending and a 0.5 percent increase in personal income.

3. -- RH Shares Tumble After Cutting 2022 Sales Forecast

RH (RH) - Obtain The high-end furniture chain cut its full-year sales outlook amid what it called a "deteriorating macro-economic environment," and RH Report shares fell in pre-market trading.

RH, formerly known as Restoration Hardware, predicted an increase of up to 2% but now expects full-year sales to decline by between 2% and 5% from 2021 levels. According to the group, profit margins will probably decrease as well as a result of rising labour and input expenses.

CEO Gary Friedman stated, "Our expectation is that demand will continue to slow throughout the year. Mortgage rates are double last year's levels, luxury home sales were down 18% in the first quarter, and the Federal Reserve forecasts another 175 basis point increase to the Fed Funds Rate by year end.

To reflect an opening bell price of $225.80 per share, RH shares were marked 4.85% lower in pre-market trading, bringing the stock's year-to-date drop to almost 57.8%.

4. -- Xerox CEO John Visentin Dies At 59

John Visentin, the CEO of Xerox Holding, died this week as a result of complications from an undiagnosed illness, the company announced late on Wednesday.

After being nominated by activist investor Carl Icahn in 2018, Visentin, 59, assumed the role of group CEO. Two years later, he oversaw the firm's botched takeover bid of HP Inc. He will be temporarily succeeded by COO Steve Bandrowczak.

According to Xerox chairman James Nelson, "Since joining the firm in May 2018, John moved Xerox ahead." As a champion of innovation, he upheld and strengthened Xerox's history as a provider of print and services and set out on a transformational journey that expanded the company's knowledge and offerings to include financial services, disruptive technologies, and digital and IT services.

Nelson continued, "John's passion, energy, and commitment to the company and its clients, partners, and employees will be sorely missed.

In pre-market trading, Xerox shares were marked up 0.2 percent, indicating an opening bell price of $15.10 per share.

5. -- Grayscale Sues SEC After Bitcoin ETF Rejection

The largest digital asset management in the nation may file a lawsuit after the U.S. Securities and Platform Commission denied Grayscale's application to list a spot bitcoin ETF on the NYSE Arca exchange.

The SEC ruled that Grayscale's proposal to convert its well-liked Grayscale Bitcoin Trust (GBTC) - Get Grayscale Bitcoin Trust Report into an exchange-traded fund (ETF) failed to meet the regulator's requirements for being "designed to prevent fraudulent and manipulative acts and practises" and "to protect investors and the public interest."

By claiming that the SEC's approval of ETFs that hold bitcoin futures should "logically (make it) comfortable with ETFs that hold the same asset," Grayscale announced that it would sue the SEC over its ruling.

At the end of the session, bitcoin prices were last seen 4.75 percent lower on the session at $19,177 per. If this trend continues, it will represent the worst month ever for the largest digital currency in the world and a 72 percent decline from its all-time highs in late November.

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