Thursday May 26, 2022

Futures climb, Twitter slumps as Musk puts deal on hold By Reuters


© Reuters. FILE PHOTO: A Wall Street sign is pictured outside the New York Stock Exchange in New York, October 28, 2013. REUTERS/Carlo Allegri

By Devik Jain

(Reuters) – US stock index futures rebounded on Friday at the end of a bumpy week marked by rising concerns over tighter monetary policy and slowing economic growth, while Twitter sank after Elon Musk put his deal for the social media company on hold.

Twitter Inc (NYSE:) slumped 13.8% in premarket trading after the Tesla (NASDAQ:) Inc chief executive said the $44-billion deal was “temporarily on hold” while he awaits data on the proportion of the company’s fake accounts. Musk says he is still committed to the acquisition.

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Tesla shares jumped 7.1%, having lost more than a quarter of their market value since the Twitter deal was announced last month amid a broader market rout.

“The timing of it is interesting. We’ve just had a couple of rough weeks in the markets,” said Fiona Cincotta, analyst at City Index in London.

“It isn’t necessarily the end of the road for the deal, but I do think Musk will be looking to reprice in light of what we’ve seen in the stock market recently.”

Other growth stocks Meta Platforms, Google-owner Alphabet (NASDAQ:) Inc, Microsoft Corp (NASDAQ:), Apple Inc (NASDAQ:), Amazon.com (NASDAQ:) and Nvidia (NASDAQ:) Corp rose between 1.6% and 3.5% after falling for the most part of the week.

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Wall Street has gyrated wildly this week on concerns that the Russia-Ukraine crisis coupled with surging inflation, COVID-19 lockdowns in China and hawkish Federal Reserve policy moves could spark a global economic slowdown.

Fed Chair Jerome Powell repeated on Thursday his expectation that the central bank will raise interest rates by half a percentage point at each of its next two policy meetings while pledging “we’re prepared to do more” if data turns the wrong way.

Money markets are pricing a 73% chance of a 75 basis point hike by the Fed in June. [IRPR]

On Thursday, the came within striking distance of confirming a bear market after swooning from its all-time high reached on Jan. 3. The tech-heavy Nasdaq is already in a bear market, down 29.1% from its record close in November last year.

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The benchmark index was on course for its sixth straight weekly loss, while the blue-chip Dow and Nasdaq were looking at their seventh weekly weekly fall.

“This market has been under severe pressure. There are valid concerns but this market has discounted inflation and a mild recession earnings and disappointments in the second quarter,” said Peter Cardillo, chief market economist at Spartan Capital Securities.

“From a technical perspective, I think we’ve made a near-term bottom.”

At 07:46 am ET, were up 255 points, or 0.81%, were up 47.5 points, or 1.21%, and were up 221 points, or 1.85%.

Tech stocks have experienced their largest outflows so far this year in the week to Wednesday, with $1.1 billion dollars pulled out of equity funds, BofA analysts wrote in a note, citing EPFR data.

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