5 issues to know earlier than the inventory market opens Monday, July 19
Here are the most important news, trends and analysis that investors need to start their trading day:
1. Stock futures lower as investors eye rise in Covid cases
The New York Stock Exchange (NYSE) stands in the Financial District in Manhattan on January 28, 2021 in New York City.
Spencer Platt | Getty Images
U.S. stock futures were lower Monday morning, with Dow futures implying an opening decline of more than 400 points. Futures for the S&P 500 and Nasdaq also were firmly in the red, as investor concerns intensified about the economic implications of a resurgence of Covid cases. Stocks that benefit from a Covid recovery such as cruise companies led the premarket losses.
The move in futures follows negative weeks for all three major U.S. stock indexes, breaking three-week win streaks for each. The tech-heavy Nasdaq was the underperformer, declining 1.87% last week. The 30-stock Dow fell 0.52%, while the broad S&P 500 lost 0.97%. The 10-year Treasury yield, which moves inversely to prices, also was lower Monday, falling below 1.25% at one point. The yield on the benchmark note has declined in recent months, after touching 1.7% in mid-May.
Wall Street will get further insight into the U.S. economic recovery this week thanks to another batch of corporate earnings reports, including Netflix, United Airlines and Chipotle after the bell Tuesday, as well as Coca-Cola and Johnson & Johnson ahead of Wednesday’s open.
2. OPEC and allies agree to end oil production cuts by September 2022
An OPEC sign hangs outside the OPEC Secretariat in Vienna, Austria, on Nov. 29, 2017.
Akos Stiller | Bloomberg | Getty Images
OPEC and its allies have settled on a new supply deal, agreeing Sunday to steadily end 5.8 million barrels per day of oil production cuts by September 2022. The supply increases are set to begin in August, according to a statement from OPEC. The deal comes as oil prices have risen considerably this year, following a rebound in demand from the coronavirus pandemic-driven economic slump. The agreement also comes after OPEC and non-OPEC partners abruptly ended a series of meetings in gridlock earlier this month amid disagreement between Saudi Arabia and the United Arab Emirates.
Brent crude was down around 2.6% Monday morning, to $71.67 per barrel, while U.S. benchmark West Texas Intermediate crude futures were down more than 2.7% to below $70 per barrel.
3. Zoom to buy Five9 in all-stock deal
Zoom founder Eric Yuan speaks before the Nasdaq opening bell ceremony on April 18, 2019 in New York City.
Kena Betancur | Getty Images
Zoom Video Communications plans to buy software firm Five9 in an all-stock deal valued at $14.7 billion, the company’s first billion-dollar acquisition. The transaction, announced Sunday, comes as more companies shift away from fully remote work during the Covid-era and bring employees back to the office. Zoom was one of the biggest stay-at-home winners on Wall Street, with its usage, revenue and stock price soaring last year. However, the company’s stock has struggled since October, when it hit an all-time high of $588.84. Shares were lower by about 2% in premarket trading at around $355 apiece.
California-based Five9, which ended Friday with a market cap of nearly $12 billion, is a provider of cloud contact center software. In a release, Zoom CEO Eric Yuan said Five9 is “a natural fit that will deliver even more happiness and value to our customers.”
4. Bill Ackman’s SPAC scraps deal to buy 10% of Universal Music
Bill Ackman, founder and CEO of Pershing Square Capital Management.
Adam Jeffery | CNBC
Pershing Square Tontine Holdings, a special purpose acquisition company backed by Bill Ackerman, announced Monday it no longer plans to buy 10% of Vivendi’s Universal Music Group. The SPAC’s board unanimously decided against the roughly $4 billion deal, according to a shareholder letter, after discussions with the Securities and Exchange Commission. When it was announced early last month, the proposed SPAC transaction was noteworthy not only for its size, but for its multipart structure. In the letter, Ackman noted that Pershing Square Tontine Holdings’ stock was down about 18% since the deal was publicized. “We underestimated the reaction that some of our shareholders would have to the transaction’s complexity and structure,” the billionaire investor said. Ackman’s hedge fund now plans to take a stake in Universal Music Group. “Our counterparty was not left at the altar,” he said in the letter.
Programming note: Bill Ackman will appear on CNBC’s “Squawk Box” around 8 a.m. ET.
5. England lifts most Covid restrictions; Toyota pulls Olympic-related TV ads
Prime Minister Boris Johnson gives an update on the coronavirus Covid-19 pandemic during a virtual press conference inside 10 Downing Street on March 18, 2021 in London, England.
Tolga Akmen – WPA Pool | Getty Images
Nearly all of the remaining Covid restrictions in England were lifted Monday, even as coronavirus cases across the U.K. are rising. “Please, please, please be cautious,” Prime Minister Boris Johnson said in a statement. Johnson had already delayed England’s lifting of most Covid restrictions once due to the highly transmissible delta variant, which public-health experts across the globe have warned could derail progress in combating the pandemic.
The upcoming Olympics in Tokyo also continue to be impacted by Covid, with American tennis star Coco Gauff withdrawing from the Summer Games due to a positive coronavirus test. The Olympics, which were delayed a year due to Covid, are highly controversial in Japan. In a reflection of public opinion, Japanese automaker Toyota will not air any Olympic-related advertising on the country’s television during the Games. Toyota’s CEO, Akio Toyoda, and other company executives also will not attend the opening ceremony, which is set for Friday.
In the U.S., the seven-day average of new daily coronavirus cases is nearly 32,300, up 66% compared with one week ago, according to a CNBC analysis of Johns Hopkins University data. “The only pandemic we have is among the unvaccinated,” President Joe Biden said recently.
Disclosure: CNBC parent NBCUniversal owns NBC Sports and NBC Olympics. NBC Olympics is the U.S. broadcast rights holder to all Summer and Winter Games through 2032.
— The Associated Press contributed to this report. Follow all the market action like a pro on CNBC Pro. Get the latest on the pandemic with CNBC’s coronavirus coverage.