Here are the most important news, trends and analysis that investors need to start their trading day:
- Nasdaq set to drop as short and long bond yield rise
- Activision soars on Microsoft deal to buy the video game giant
- Goldman Sachs misses on quarterly earnings; shares sink
- Oil prices hit more than seven-year highs after attack on UAE
- BlackRock's Fink defends annual letter, delivers stock market call
1.Nasdaq set to drop as short and long bond yields rise
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U.S. stock futures fell Tuesday. The Dow Jones Industrial Average was set to open nearly 1% lower, hit by Goldman Sachs' drop on disappointing earnings. The Nasdaq was tracking for a 1.5% drop at the open as bond yields at the short end and the long end of the curve move higher. The 2-year Treasury yield broke above 1% for the first time since February 2020, a month before the Covid pandemic declaration, which sent the U.S. economy into a recession. The 10-year yield topped 1.83%, its highest since January 2020. The stock market was closed Monday for Martin Luther King Jr. Day. After a mixed session Friday, the Dow, the S&P 500 and the Nasdaq were all lower for last week.
2. Activision soars on Microsoft deal to buy the video game giant
Microsoft will buy video game giant Activision Blizzard in a $68.7 billion all-cash deal. Activision makes popular game franchises such as "Call of Duty." Activision has been mired in controversy in recent months due to allegations of sexual harassment and misconduct among company executives. Shares of Activision soared about 37% in premarket trading, before being halted after the Wall Street Journal first reported the deal. Microsoft shares fell more than 2% following the announcement.
3. Goldman Sachs misses on quarterly earnings; shares sink
Bank earnings continued Tuesday morning with Dow stock Goldman Sachs reporting a fourth-quarter earnings miss as operating expenses surged 23% from a year earlier. The company's shares in the premarket dropped 2.8%. Revenue of $12.64 billion topped estimates. On Friday, JPMorgan Chase, also a Dow component, kicked off the quarterly reporting season. Its shares dipped in the premarket after closing down 6% despite better-than-expected quarterly earnings and revenue. JPMorgan's CFO said the company would likely miss a key profit target in the next two years.
4. Oil prices hit more than seven-year highs after attack on UAE
U.S. and international oil prices hit more than seven-year highs Tuesday after the United Arab Emirates vowed to retaliate against Yemen's Iran-aligned Houthi group for Monday's deadly attack on its capital Abu Dhabi. The UAE is the third-largest oil-producing member of OPEC and world's seventh-biggest oil producer, pumping just more than 4 million barrels per day. Overnight, West Texas Intermediate crude jumped more than 2% to hit $85.56 per barrel, before trimming those gains.
5. BlackRock's Fink defends annual letter, delivers stock market call
BlackRock CEO Larry Fink pushed back against accusations that the asset manager was using its heft and influence to support a politically correct agenda. "Stakeholder capitalism is not about politics. It is not a social or ideological agenda. It is not 'woke,'" Fink said in his annual letter to corporate leaders, released Monday. Fink reiterated those sentiments in a CNBC interview that ran on Tuesday. He said he's looking at the "the shape of the yield curve" in the bond market as a signal to where stocks go from here with an "aggressive Federal Reserve over the course of the next two years."