Here are the most important news, trends and analysis that investors need to start their trading day:
1. S&P 500 set to open higher after narrowly avoiding a bear market close
Traders on the NYSE, May 20, 2022.
- The S&P 500 on Friday dipped into bear market territory. But thanks to an incredible late-session rally from steep losses, the broad market index actually finished higher, avoiding a close of 20% or more below its prior high.
- The Nasdaq fell slightly Friday, inching closed to a 30% decline from its prior high.
- The Dow edged higher Friday, but still off 15% from its prior high.
- The Dow and the S&P 500 last reached all-time highs in January. The Nasdaq’s most recent all-time high was in November.
2. Bond yields move higher as traders wait for this week’s Fed minutes
Bond prices went lower and yields moved higher Monday as stocks made gains in the premarket. The 10-year Treasury yield was trading around 2.8%, under the key psychological level of 3%, which was breached for the first time since late 2018 earlier this month. It’s been back and forth above and below that mark for weeks on concern the Federal Reserve’s gradual approach to slow down the economy with interest rate hikes and balance sheet run-offs won’t be enough to get inflation under control.
- The Fed is set to release on Wednesday the minutes from its latest policy meeting earlier this month, which resulted in a 50 basis point rise in rates, double the increase seen in March. The market expects rate hikes at all of the remaining Fed meetings this year.
3. Biden says he would defend Taiwan militarily if China were to attack
Biden says the idea that Taiwan can be taken by force is “not appropriate.”
Pool | Getty Images News | Getty Images
President Joe Biden on Monday said he’d be willing to use military force to defend Taiwan, prompting gratitude from the democratic, self-ruled island but sharp criticism from China. In Japan, the second stop in his first trip to Asia since taking office, Biden said he doesn’t expect China to attack Taiwan despite stepping up military provocations in recent years. The U.S. has traditionally avoided making such explicit security guarantees to Taiwan — and a White House official later walked back Biden’s comments, saying they did not reflect a policy shift.
- Biden also said he’s considering easing tariffs on Chinese imports, measures put in place by his predecessor Donald Trump. Biden’s comments on tariffs came after Treasury Secretary Janet Yellen suggested such a move might help ease rampant inflation gripping the U.S. economy.
4. Ukraine’s president calls for ‘maximum’ sanctions against Russia for war
President of Ukraine Volodymyr Zelenskyy addresses the World Economic Forum (WEF) via video conference in Davos, Switzerland on May 23, 2022.
Anadolu Agency | Anadolu Agency | Getty Images
The international community should have supported Ukraine more back in 2014 when Russia first illegally annexed Crimea, Ukrainian President Volodymyr Zelenskyy said Monday, in a video address to the World Economic Forum in Davos, Switzerland. Zelenskyy called for the “maximum” level of sanctions to be imposed on Russia for its current, unprovoked war in Ukraine.
- Zelenskyy said that increasing punitive economic measures against Moscow would let other potential aggressors “clearly know the immediate consequences for their actions.” He also told Davos participants that the world is at a “turning point” and most resist Russia’s “brute force.”
5. Pfizer says three Covid shots for kids under 5 are 80% effective against omicron
Empty vials of Pfizer-BioNTech coronavirus disease (COVID-19) children’s vaccines are pictured at Skippack Pharmacy in Schwenksville, Pennsylvania, U.S., May 19, 2022.
Hannah Beier | Reuters
Pfizer and BioNTech’s three-dose Covid vaccine for children 6 months to 5 years old was 80% effective at preventing illness during the omicron wave, according to clinical trial results released Monday. A third dose of the vaccine elicited a strong immune response, and it was well tolerated by the kids in the trial. The companies said the majority of side effects were mild to moderate.
- Pfizer and the Food and Drug Administration had originally sought to fast-track authorization of the first two doses in February. Pfizer delayed its application to wait on data from the third dose after the first two shots were only 30% to 40% effective.
— CNBC’s Sam Meredith, Holly Ellyatt and Spencer Kimball as well as The Associated Press contributed to this report.
— Sign up now for the CNBC Investing Club to follow Jim Cramer’s every stock move. Follow the broader market action like a pro on CNBC Pro.