Here are five things you must know for Thursday, March 18:
1. — Nasdaq Futures Tumble as Treasury Yields Climb
Stock futures traded mostly lower Thursday and Nasdaq futures slumped as Treasury yields soared to their highest levels since January 2020.
Contracts linked to the Dow Jones Industrial Average rose 51 points, S&P 500 futures fell 14 points and futures on the tech-heavy Nasdaq dropped 146 points.
The Dow and S&P 500 closed at record highs Wednesday after the Federal Reserve said it expects to keep interest rates near zero through 2023 and upgraded its outlook for economic growth.
The Dow closed above 33,000 for the first time.
The central bank said it expects gross domestic product to increase 6.5% in 2021, up sharply from the projection of 4.2% it made in December. The Federal Reserve predicted that inflation, as measured by personal consumption expenditures, would rise 2.4% this year and then slow next year to 2%.
The central bank also kept interest rates unchanged at its meeting Wednesday and maintained its asset purchase program at $120 billion of bonds a month.
“As expected, there’s no surprise actions by the Fed … but what some may be surprised by is the extent of the Fed’s commitment to accommodation,” said Mike Loewengart, managing director of investment strategy at E*Trade. “The reign of easy money continues – and likely will for about two more years.
“It’s telling that they have essentially shrugged off the pickup in economic activity and corresponding bond yields, and instead chose to underline that many parts of the market are far from recovered. While the market sees the economy as a cup half full the Fed is seeing it half empty – and they will continue to use their tools to fill it back up,” Loewengart added.
Bond yields have pushed higher recently on rising inflation expectations and have sparked a rotation to value stocks from high-growth equities, particularly technology shares. The 10-year Treasury yield – the difference between its market price and the payout at maturity – rose to as high as 1.745% Thursday.
Jim Cramer: We Might Have to Tolerate Inflation for a While
2. — Thursday’s Calendar: Nike and FedEx Earnings, Jobless Claims
The U.S. economic calendar for Thursday includes weekly Jobless Claims at 8:30 a.m. ET and the Philadelphia Fed Manufacturing Index for March at 8:30 a.m.
Earnings reports are expected Thursday from Nike (NKE) – Get Report, FedEx (FDX) – Get Report, Dollar General (DG) – Get Report, Accenture (ACN) – Get Report, Utz Brands UTZ, Ollie’s Bargain Outlet (OLLI) – Get Report and Signet Jewelers (SIG) – Get Report.
3. — AMC Says Nearly All U.S. Theaters to Be Open by Friday
AMC Entertainment (AMC) – Get Report was rising 4% in premarket trading Thursday after the movie-theater chain said nearly all its U.S. theaters would be open by Friday.
The company said 98% of its theaters will be operating by Friday, and 99% by March 26. The last remaining theaters AMC has left to reopen are mostly in Southern California. The company said it was awaiting local approvals.
Entertainment venues such as AMC have been closed for more than a year because of the coronavirus pandemic. AMC was hit especially hard, with the company coming close to filing for Chapter 11 as COVID-19 pushed back release dates for major films. AMC posted a loss of $4.6 billion in 2020.
“It was exactly one year ago that we closed all AMC locations in the United States. It gives me immense joy to say that by the end of next week we expect that 99% of our U.S. locations will have reopened,” said CEO Adam Aron in a statement. “As we have done at all of locations around the country, AMC is reopening and operating with the highest devotion to the health and safety of our guests and associates.”
AMC’s plans follow an announcement from Walt Disney (DIS) – Get Report that it would be reopening Disneyland in Anaheim, Calif., on April 30 to limited capacity. The park will operate at about 15% capacity to start.
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4. — Sundial Growers Rises Despite Wider Loss
Sundial Growers (SNDL) – Get Report was rising 9% in premarket trading Thursday despite the cannabis company reporting a quarterly loss wider than analysts’ expectations.
The company’s fourth-quarter Ebitda loss was C$5.6 million, wider than forecasts that called for a loss of C$5.3 million.
Net revenue in the period was C$13.85 million.
The company said it sold 7,247 kilogram equivalents of cannabis in the fourth quarter, a 25% increase from the previous quarter.
Sundial shares have risen more than 223% so far this year as they have been caught up in the Reddit-fueled retail investor frenzy. On Monday, Sundial shares jumped after the company announced it had formed a joint investing venture with SAF Opportunities LP.
The stock gained 9.09% to $1.68 in premarket trading.
5. — Lordstown Is Focus of SEC Probe
Lordstown Motors (RIDE) – Get Report reported a wider fourth-quarter loss and the electric-truck maker disclosed the Securities and Exchange Commission was seeking information regarding a short-seller’s critical report.
In its first report as a public company, Lordstown Motors posted a net loss of $38.2 million, or 23 cents a share, compared with year-earlier loss of $7.1 million, or 10 cents a share. The company didn’t report any revenue since it has yet to make any vehicles.
The company said it was cooperating with an SEC probe following last week’s highly critical report on the company by short-seller Hindenburg Research.
Hindenburg said in a report Friday that Lordstown was “an electric-vehicle SPAC with no revenue and no sellable product, which we believe has misled investors on both its demand and production capabilities.”
Lordstown earlier this week issued a preliminary response to the report, saying it was “aware of the remarks made in the report and intends to respond as appropriate in due time.”
The stock fell 3.58% to $14.55 in premarket trading.
