Here are the most important news, trends and analysis that investors need to start their trading day:
Wall Street set to open lower as bond yields remain highTarget shares sink after the retailer warns about earningsKohl’s jumps after entering into sale talks with Vitamin Shoppe ownerYellen to kick off two days of Capitol Hill testimony on inflationSenators introduce a bipartisan bill to regulate crypto
1. Wall Street set to open lower as bond yields remain high
U.S. stock futures dropped Tuesday, with elevated bond yields playing spoiler again. Sentiment also took a hit on shares of Target falling more than 8% in the premarket on a profit warning.
The Dow Jones Industrial Average gave up nearly all of Monday’s more than 300-point gain by the close as the benchmark 10-year Treasury yield topped 3%, hitting its highest level in nearly a month.The S&P 500 and the Nasdaq were able to hold on to more of their Monday advances than the Dow, finishing 0.3% and 0.4% higher, respectively.Despite strong gains in the week leading up to Memorial Day, last week’s losses kept the Dow and the S&P 500 firmly in corrections and the Nasdaq in a bear market, based on declines from their prior all-time highs.
2. Target shares sink after the retailer warns about earnings
Target warned Tuesday that earnings will take a short-term hit as the retailer marks down unwanted items, cancels orders and takes aggressive steps to get rid of extra inventory. Target anticipates its operating margin rate for the fiscal second quarter will be around 2%. That’s lower than the outlook it gave less than three weeks ago when it reported a wider fiscal first-quarter earnings miss, which sent the stock down roughly 25% in its worst single-day performance on Wall Street since 1987.
3. Kohl’s jumps after entering into sale talks with Vitamin Shoppe owner
Kohl’s shares surged nearly 10% in Tuesday’s premarket, the morning after the department store chain said it entered into exclusive sale negotiations with the retail holding behind The Vitamin Shoppe and Pet Supplies Plus. Franchise Group is proposing to buy Kohl’s for $60 per share, a more than 40% premium to Monday’s close. Franchise Group is working with Oak Street Real Estate Capital to finance the deal mostly through real estate, according to a person familiar with the matter.
4. Yellen to kick off two days of Capitol Hill testimony on inflation
Ahead of Friday’s read on May consumer prices, inflation takes center stage on Capitol Hill this week as Treasury Secretary Janet Yellen testifies before a Senate panel Tuesday and a House panel Wednesday. Yellen, a former Federal Reserve chair, faces tough questions about how the Biden administration has handled the economy after she was wrong about inflation being transitory. Forty-year high inflation has pushed the national average for a gallon of gas to another record, just 8 cents shy of $5, according to AAA.
5. Senators introduce a bipartisan bill to regulate crypto
Sens. Kirsten Gillibrand, D-N.Y., and Cynthia Lummis, R-Wyo., on Tuesday unveiled a bipartisan bill to create a regulatory framework around crypto. The Lummis-Gillibrand bill, the product of months of Capitol Hill collaboration, amounts to classifying the vast majority of digital assets as commodities. The Responsible Financial Innovation Act would empower the Commodity Futures Trading Commission to regulate most existing digital assets. Both Lummis and Gillibrand want to work to develop their respective states into blockchain and crypto havens.
— CNBC’s Tanaya Macheel, Melissa Repko, Lauren Thomas and Thomas Franck as well as Reuters contributed to this report.
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