US Open: Soft start for stocks, Empire State pricing pressures, Mega Media Deal, China cools

US stocks are edging lower following mixed Chinese economic data, concerns that Taiwan and Singapore success in fighting COVID is in jeopardy, and after the Empire State manufacturing survey solidified the inflationary theme that is running wild on Wall Street. Earlier, a key truce was reached between the US and EU on steel and aluminum tariffs.

Even after a trading week which saw some of the high-flying commodities (copper and corn) take a break, Wall Street still remains focused on inflation.


Business activity in Empire State was strong once again with a 24.3 print, better-than-expected, but down from the prior 26.3 reading. The survey noted further price increases and strong employment growth are expected. Prices paid rose to a record high, while the forward-looking indicator came down modestly from 71.2 to 67.1. The trend from all these Fed regional surveys continue to be strong improvements with rapidly growing pricing pressures.

Mega Media Deal

A mega-media deal may have created a giant that could go toe-to-toe with Disney+ and Netflix. AT&T will spin off its media business and merge with Discovery. Shares of both AT&T and Discovery were higher on the $43 billion deal. The new combined media giant will have $20 billion in free cash flow to spend on content, which is $3 billion more than what Netflix committed to spend this year.

Now we have three titans of media, which should mean spending wars for content will likely crush the smaller streaming services. Costs will eventually go up and the consumer might actually miss the days of cable TV and adding a couple premium channels.

China’s economic outlook remains very strong, but financial markets will probably have to trim some of their end of year forecasts given the sustained price increases across commodities and some of the weakness that is already emerging in the data. Economic activity in China is cooling as factory costs surge.

Industrial production peaked in the first quarter as the April readings showed industrial output rose 9.8% from a year earlier, down from the 14.1% prior reading and 10.0% consensus estimate.

Retail sales rose 17.7% in April from a year ago, a big miss from the 25% forecast. Consumer spending is not as robust as analysts expected and that should prevent investors from becoming too aggressive with their yuan bets.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Ed Moya

Ed Moya

Senior Market Analyst, The Americas at OANDA
With more than 20 years’ trading experience, Ed Moya is a senior market analyst with OANDA, producing up-to-the-minute intermarket analysis, coverage of geopolitical events, central bank policies and market reaction to corporate news. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies. Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Most recently he worked with, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business and Sky TV. His views are trusted by the world’s most renowned global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Breitbart, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.
Ed Moya