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Top 5 Things to Know in the Market on Tuesday, June 9th

Published 06/09/2020, 06:18 AM
Updated 06/09/2020, 06:20 AM
© Reuters.

© Reuters.

By Peter Nurse 

Investing.com -- The U.S. is in recession, the World Bank predicts a hefty 5.2% hit to global output in 2020 and yet the Nasdaq is at an all-time high. Crude oil is expected to give back some of its recent gains, while the IPO market is set to welcome Vroom in a busy week. Here’s what you need to know in financial markets on Tuesday, June 9th.

1. U.S. is in recession - official

The economic downturn in the U.S. triggered by the social distancing measures adopted to combat the Covid-19 virus has been officially declared a recession, which started in February - bringing to an end the longest period of economic expansion in U.S. history.

The National Bureau of Economic Research, the body which acts as the arbiter for determining U.S. business cycles, said late Monday "the unprecedented magnitude of the decline in employment and production, and its broad reach across the entire economy, warrants the designation of this episode as a recession, even if it turns out to be briefer than earlier contractions." 

The designation has not come as a surprise, after all U.S. gross domestic product fell 4.8% annualized in the first three months of the year and the next quarter is expected to be much worse. At the same time, the unemployment rate rose from a record low of 3.5% in February, hitting 14.7% in April and 13.3% last month.

This puts the spotlight on the two-day meeting of the Federal Reserve, concluding Wednesday, for signs of more stimulus ahead.

2. Global output faces 5.2% coronavirus hit in 2020

The Covid-19 outbreak may be past its peak. New York City, regarded as the epicenter of the outbreak in the U.S., started the slow process of reopening for business on Monday. 

But it’s important not to forget the damage caused, with over seven million having been infected and more than 400,000 dead to date.

And there’s also the economic impact.

Global economic output is set to contract by 5.2% in 2020 due to the coronavirus, the World Bank said on Monday, in its latest Global Economic Prospects report.

Advanced economies are expected to shrink 7.0% in 2020, the report said, while emerging market economies will contract 2.5%, their first since aggregate data became available in 1960.

These forecasts predict a deeper slowdown than the estimates released in April by the International Monetary Fund, which predicted a 3.0% global contraction in 2020.

3. Stocks set to open lower, after bull market confirmation

U.S. stock markets are set to open lower, with investors set to take profits after Monday’s gains confirmed a bull market in the tech-driven Nasdaq Composite index.

By 6:30 AM (1030 GMT), theDow Jones 30 futures contract was down 316 points or 1.2%, while the S&P 500 futures contract was down 1% and the Nasdaq 100 futures contract was 0.6% lower.

The Nasdaq has climbed over 40% from its March 23 bottom, making a new high and confirming a bull market, which is considered to have begun at the index's low, just 16 weeks after the coronavirus outbreak pushed the U.S. economy into recession.

The S&P 500 also ended in positive territory for the year, but remains about 4.5% below its record high close, while the Dow is about 6.7% below.

Stocks in focus Tuesday include spirits maker Brown Forman (NYSE:BFb), which is expected to report fiscal fourth-quarter earnings of 28 cents a share on revenue $695 million. The company makes liquor brands including Jack Daniel's and Finlandia. And online pet food and grooming product supplier Chewy (NYSE:CHWY) is scheduled to report profit of 18 cents a share on revenue of $1.5 billion.

4. Oil prices retreat; More losses ahead?

Crude oil prices have sold off Tuesday, retreating from the three-month highs achieved after a group of major producers agreed to extend a deal on record output cuts to the end of July.

And more losses look likely going forward, according to Goldman Sachs.

"This rebound has been fueled by a macro risk-on backdrop and a policy induced Chinese crude import binge, yet fundamentals are turning bearish," Goldman said.

With demand expectations running ahead of a more gradual and still uncertain rebound, the oil market faces a big challenge of normalising a billion barrels of excess inventories, analysts at the bank wrote.

The investment bank expects Brent prices to reach $35 per barrel in the short term.

By 6:30 AM ET, U.S. crude futures were down 2.3% at $37.30 a barrel, while the global benchmark Brent was down 1.8% at $40.06 a barrel.

5. Vroom to start trading after IPO

Online used-car seller Vroom (NASDAQ:VRM) is set to start trading Tuesday after pricing its initial public offering at $22 a share late Monday, above its previous range of $18-$20. 

The company is offering about 12.25 million shares, for a market capitalization of around $2.48 billion.

Vroom has not been profitable since its start in 2012, but is looking to benefit from the shift to online shopping accelerated by the pandemic. That said, the car industry, as a whole, has been suffering and Vroom has already had to cut prices and its profit margins have shrunk.

Investors will be watching this deal carefully, given the week is expected to see eight IPOs launched, raising about $2 billion,

 

Latest comments

trends to make money in intra day trading
What kind of investors are those who take out one-day profit? Call them day traders, speculators, whatever you like, but these market participants are not investors.
why do you say that
Because. These are called gamblers. Just sit on the sidelines and watch as the market washes them away 😊
The workd has suffered its time for speedy recovery. Bull 🐮market all the way, watch out bears.
World*
Institutions will sell junks first those they have pumped so much like airlines and travel and people will buy them right away. they know which companies has less juice to survive in long term. There is selling is coming but not like big drop. Once Bull market ends.. slow bleeding Bear markets last for year or more. Where we will see up and down easily but in long run.. normal investors will be trapped on higher prices. It will be slow phasic selling not panic. Do not tempt to jump with some discount prices.. think long term and take informed decision.
The newsmakers and "experts" are just sharing opinions, Market results don't lie.
"But it’s important not to forget the damage caused, with over seven million having been infected and more than 400,000 dead to date." Where did you get the "seven million" figure? Seems wrong to me.
Those are the world wide infections and deaths.
i like david costa
Wow I thought we needed 2 contracting quarters in a row to be considered a recession. We just change the rules to harm Trump?
 How do you know it will be the shortest?  It has only just begun.
No matter when it seems to become a political talking point especially in an election year. The NBER people decide. You can check out the board of directors and their appointment info here: >>>>>https://www.nber.org/board.html<<<<<>>>https://www.learningmarkets.com/who-decides-when-we-are-in-a-recession/<<<<
Their University appointment information looks to me as extremely  "BLUE".
Does number 1 and Number 3 make you scratch your head?
regarding Vroom...if a company has not been profitable since inception....it has no "profit margin" to shrink.
mashaa
We're in recession but it's a bull market. Who cares 🤷‍♂️
Who cares! At this point its not even a need to pull out just to get cents when you are going to buy higher than your lows.
Finally, looks like we will have a great day to invest is some stocks that have been real movers. I don't look at down days as anything except a buying opportunity! Always have plenty of liquidity for days like this or you will miss out.
if you have plenty of liquidity, that means you missed out last week.
 unless all the profits were cashed in last evening.. I have heavily invested over last 2 weeks to take advantage of the rally and currently in solid profits but let's see how many of them hold today as pre-market is looking very stressed out.
Wall Street doesn't have a heart, Wallstreet doesn't have any feelings? Wallstreet is a money making machine. Wallstreet goes up on good financial news, goes down a bad financial news!!!! Wallstreet is forward looking and doesn't care about the past!!!! It cares about the future!!!! If you really want to make money. Don't worry about it !!!!! If you don't ??? Go cry in a corner, because Wallstreet doesn"t care about you, it cares about the money it can make!!!!!
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