Bitcoin, Federal Reserve, Target and Take-Two - 5 Things You Must Know

Stock futures fall as optimism about the U.S. recovery turns to worries about higher inflation; Target and Lowe's report earnings; Bitcoin tumbles after warning from China.
Author:
Updated:
Original:

Here are five things you must know for Wednesday, May 19:

1. -- Stock Futures Sink on Inflation Worries

Stock futures declined Wednesday as optimism about the U.S. recovery has turned to worries about higher inflation.

Contracts linked to the Dow Jones Industrial Average fell 296 points, S&P 500 futures were down 42 points and Nasdaq futures dropped 202 points.

The yield on the 10-year Treasury bond rose to 1.659% early Wednesday.

The anxiety over rising price pressures either will be eased or heightened by the release Wednesday of the minutes from the latest Federal Reserve meeting.

The Fed has maintained the stance that a jump in inflation only will be temporary as the U.S. economy reopens. Investors will be monitoring the minutes to determine the central bank's thoughts on price pressures and hints on when it might begin pulling back support.

Technology shares have been leading the Wall Street declines since the pricey growth stocks suffer the most from higher interest rates.

Stocks finished lower Tuesday as tech stocks were sold off during the late afternoon. The three benchmark stock indexes fell for a second straight day.

Bitcoin tumbled to below $40,000 after the People's Bank of China published a warning over the use of virtual currencies in the world's second-largest economy.

2. -- Wednesday's Calendar: FOMC Minutes, Target and Lowe's Earnings

The U.S. economic calendar Wednesday includes minutes from the April 27-28 meeting of the Federal Open Market Committee, the Federal Reserve's monetary policymaking body, at 2 p.m. ET.

The calendar also includes Oil Inventories for the week ended May 14 at 10:30 a.m.

Lowe's  (LOW) - Get Report reported first-quarter adjusted earnings of $3.21 a share, beating estimates of $2.61. A same-stores sales jump of 24.4% also topped Wall Street forecasts.

Target  (TGT) - Get Report posted much stronger-than-expected first-quarter earnings and said profit margins likely will improve over the rest of the year as the country exits the coronavirus pandemic and shoppers are powered by trillions in government stimulus.

Earnings reports are also expected Wednesday from Cisco Systems  (CSCO) - Get Report, TJX Cos.  (TJX) - Get Report, JD.com  (JD) - Get Report, L Brands  (LB) - Get Report and Analog Devices ADI.

Target Earnings Preview: The Must-Know Chart Levels

3. -- Bitcoin Tumbles on China Crackdown

Bitcoin was tumbling almost 11% to $40,364 and other cryptocurrencies slid after the People’s Bank of China said the digital coins couldn't be used a form of payment because they're not real currencies.

Bitcoin has fallen to as low $38,585 over the past 24 hours, according to CoinDesk. In April, it traded at an all-time high of near $65,000.

Bitcoin has given up all the gains it made following Tesla's  (TSLA) - Get Report
announcement on Feb. 8 that it had purchased $1.5 billion of the digital asset, Bloomberg reported. The electric vehicle maker soon after said it would accept Bitcoin as as a form of payment for its cars, further boosting Bitcoin prices. 

But then Tesla CEO Elon Musk surprised the market when he said his company would no longer accept payments in Bitcoin. Musk cited the environmental impact of bitcoin mining for the decision.

Henrik Fisker, CEO and founder of electric vehicle start-up Fisker  (FSR) - Get Report, also said his company doesn't plan to invest in Bitcoin or accept the cryptocurrency as payment.

4. -- Jim Cramer: The Baton Has Been Passed to Travel and Leisure Names

Jim Cramer, the founder of TheStreet, told "Mad Money" viewers on Tuesday that the baton has been passed to travel and leisure names from stay-at-home stocks as the economy reopens.

But it's still not too late to cash in on the transition, Cramer said.

He said it's time to buy Norwegian Cruise Line Holdings  (NCLH) - Get Report, which finally has received approval to sail again. He also recommended Wynn Resorts  (WYNN) - Get Report as a play on Las Vegas and Walt Disney  (DIS) - Get Report, which will profit from the reopening of movie theaters, theme parks and cruises.

Search Jim Cramer's "Mad Money" trading recommendations using our exclusive "Mad Money" Stock Screener.

Wynn and Disney are holdings in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells the stocks? Learn more now.

5. -- Take-Two Rises on Plans for Video Game Releases

Take-Two Interactive  (TTWO) - Get Report rose nearly 2% in premarket trading after the maker of video games topped earnings and sales estimates in its fiscal fourth quarter and announced plans for a number of new releases in the second half of the year.

Take-Two, the maker of "Grand Theft Auto," struck an optimistic tone despite a current fiscal-year forecast for earnings and revenue that was below analysts' estimates.

The company said it expects to release 21 video games during fiscal 2022, followed by 40 titles in fiscal 2023 and 2024.

"Overall, this was a very solid quarter for the company," said Jim Cramer and the Action Alerts PLUS team, which holds Take-Two in its portfolio.

"Guidance wasn't as strong as expected, but we reiterate that this a team known to be conservative and coming out of the pandemic it makes more sense than ever to under-promise given the uncertainty relating to engagement and therefore in-game purchase activity as the world reopens," the AAP team added.