Here are five things you must know for Thursday, June 17:
1. -- Stock Futures Drop as Fed Sees Rate Hikes Earlier Than Expected
Stock futures declined Thursday after the Federal Reserve indicated it would tighten monetary policy earlier than previously expected.
Contracts linked to the Dow Jones Industrial Average fell 89 points, S&P 500 futures declined 12 points and Nasdaq futures dropped 65 points.
The yield on the benchmark 10-year Treasury note fell early Thursday to 1.562%.
The Federal Reserve left interest rates unchanged on Wednesday but signaled it expected to boost interest rates two times by the end of 2023, earlier than Wall Street had anticipated. Stocks finished lower Wednesday.
Investors were caught off guard by Fed Chairman Jerome Powell's confirmation that the central bank has begun discussing trimming bond purchases. And while the Fed maintained its stance that inflation spikes would be "transitory," it did upwardly revise its outlook for inflation.
"Clearly expectations for the Fed to flinch were grossly overblown - a unanimous vote clearly shows they’re all on the same page with the current state of the economy, and importantly they’ve essentially doubled down on their view that inflation is transitory, albeit at a higher rate than last time they met," said Mike Loewengart, managing director of investment strategy at E*Trade.
"But what happens next year becomes more of a question mark, and the market may be reacting to the change in the dot plot that now shows more officials indicating a rate hike is coming in 2022," he added.
The number of Fed governors who expect rate hikes as early as 2022 - known as the dot plot - went to seven from four, essentially translating into two rate hikes in 2023 based on growth and inflation projections from the 18 members of the Federal Open Markets Committee.
2. -- Thursday's Calendar: Jobless Claims, Adobe Earnings
The economic calendar in the U.S. Thursday includes weekly Jobless Claims at 8:30 a.m. ET and the Philadelphia Fed Manufacturing Index for June at 8:30 a.m.
Earnings reports are expected Thursday from Adobe (ADBE) - Get Adobe Inc. Report, Kroger (KR) - Get Kroger Co. (KR) Report, Jabil (JBL) - Get Jabil Inc. Report and Smith & Wesson Brands (SWBI) - Get Smith & Wesson Brands Inc Report.
3. -- Microsoft Names CEO Nadella as Chairman
Nadella, 53 years old, succeeds John Thompson, who will return to the role of lead independent director, a title he held from 2012 to 2014.
Microsoft's market value stands at about $1.95 trillion after the stock closed modestly lower on Wednesday. Shares were down 0.54% in premarket trading Thursday to $256.
Nadella, the company’s third CEO, also will be the third
chairman in Microsoft’s history, following Bill Gates and Thompson, Bloomberg noted.
When Nadella took the CEO job, Bill Gates stepped down as chairman of the company he co-founded. Gates last year announced he was stepping down from the board.
4. -- CureVac Sinks After COVID Vaccine Disappoints
CureVac (CVAC) - Get CureVac Report shares tumbled more than 45% in premarket trading Thursday after the company said a late-stage study of its COVID-19 vaccine candidate “did not meet prespecified statistical success criteria."
The stock sank 45.27% to $51.88 in premarket trading Thursday.
The company said that the second interim analysis of its Phase 2b/3 study in 40,000 subjects demonstrated interim vaccine efficacy of 47% against COVID-19 of any severity. It noted that at least 13 variations of the disease were circulating within the study population.
"While we were hoping for a stronger interim outcome, we recognize that demonstrating high efficacy in this unprecedented broad diversity of variants is challenging,” said Dr. Franz-Werner Haas, CureVac CEO, in a statement.
Hass told The New York Times that the company still plans to seek approval for the vaccine from the European Medicines Agency. The EU agreed to buy more than 400 million doses of the vaccine if the agency authorizes it.
“There is a huge need for vaccine, and I think we can
still make a contribution,” Haas said.
"Notwithstanding the diverse COVID-19 variants in the study, 47% vaccine efficacy fails to meet statistical success criteria," said analysts at Jefferies. Earlier this week, (NVAX) - Get Novavax, Inc. Report (NVAX) - Get Novavax, Inc. Report said its experimental coronavirus vaccine had a 90.4% efficacy rate in late-stage trials.
5. -- Honest Co. Beats Estimates
The company, founded by actress Jessica Alba, posted fiscal first-quarter revenue of $81 million, higher than analysts' estimates of $79 million. Honest Co.'s first-quarter loss was 5 cents a share, narrower than forecasts that called for a loss of 6 cents.
The stock, which was priced at $16 in May, fell 2.78% early Thursday to $17.16.