A trader works on the floor of the New York Stock Exchange (NYSE) in New York City, July 13, 2022.
Brendan McDermid | Reuters
Here are the most important news items that investors need to start their trading day:
1. Another weak morning for stocks
Just days ago, investors toasted a winning week in the markets as stocks attempted to crawl out of a big hole left by the worst first half for equities in five decades. Things have fallen off this week, however, as June inflation numbers came in hotter than expected, prompting concerns on Wall Street that the Fed would raise rates in an even more aggressive way this month. Futures were down across the board before the bell Thursday morning, while markets digested the first big bank earnings reports.
2. Yellen says inflation is ‘unacceptably high’
U.S. Treasury Secretary Janet Yellen testifies before a House Ways and Means Committee hearing on President Biden’s proposed 2023 U.S. budget, on Capitol Hill in Washington, June 8, 2022.
Jonathan Ernst | Reuters
Speaking of inflation, which remains at four-decade highs, Treasury Secretary Janet Yellen couldn’t escape the topic, even on a trip to Indonesia. She said tackling rising prices is the “top priority” in Washington, and pledged to support the Fed’s efforts. The U.S. central bank is expected to boost rates by another 75 basis points this month, but some observers believe the policy makers could go even higher, to a 1%, or 100-basis-point, hike. Yellen also weighed in on the impact of a stronger dollar on other economies: “On the one hand, it can strengthen their ability to export, which is good for their growth. On the other hand, to the extent that countries have dollar-denominated debt, it can make those debt problems — which already are very severe — more difficult.”
3. JPMorgan and Morgan Stanley report earnings
A person enters the JPMorgan Chase headquarters in New York, June 30, 2022.
Andrew Kelly | Reuters
JPMorgan Chase kicked off big bank earnings by reporting a 28% decline in profit during the second quarter as the bank built up reserves to contend with bad loans. Later, Morgan Stanley reported that its revenue fell in the second quarter, which CEO James Gorman called “a more volatile market environment than we have seen for some time.” Investors are looking for how Wall Street dealt with the volatility during the most recent period, which saw strong consumer spending and job growth, even as inflation kept mounting and growing signs of an economic slowdown.
4. Netflix taps Microsoft
The Netflix logo is seen on a TV remote controller, in this illustration taken January 20, 2022.
Dado Ruvic | Reuters
Netflix is pushing forward with its plan for an ad-supported tier – and it’s doing so with a surprising partner. After talking with other prospective partners, including YouTube parent Google and NBCUniversal parent Comcast, the streaming giant decided on Microsoft. The ad-tier effort is still in the “very early days,” with “much to work through,” according to Netflix, but investors are eager for any signs that the company is working to counter a subscriber exodus. Netflix said earlier this year that it expects to lose 2 million subscribers during the second quarter. The company is slated to report quarterly results Tuesday.
5. Crypto firm files for bankruptcy
Bitcoin and other cryptocurrencies fell sharply as investors dump risk assets. A crypto lending company called Celsius is pausing withdrawals for its customers, sparking fears of contagion into the broader market.
Nurphoto | Nurphoto | Getty Images
Lender Celsius is the latest crypto firm to fall, kicking off the bankruptcy process this week. A month ago, the firm froze customer accounts over “extreme market conditions” as various cryptocurrencies, including bitcoin, were in the midst of a dramatic selloff. Celsius’ move follows Voyager’s Chapter 11 bankruptcy filing last week after its exposure to Three Arrows Capital generated big losses. Three Arrows Capital is now defunct, and a judge froze its remaining assets this week as it undergoes liquidation.
Disclosure: Comcast owns CNBC parent NBCUniversal.
– CNBC’s Carmen Reinecke, Su-Lin Tan, Hugh Son, Jessica Bursztynsky, Kate Rooney and Paige Tortorelli contributed to this report.
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