Wednesday November 10th

10-11-2021

Stock futures slide on inflation fears after hotter-than-expected CPI, Dow futures fall nearly 100 points

U.S. stock index futures fell on renewed inflation fears after October’s consumer price reading jumped at the hottest annual pace in more than three decades. Dow Jones Industrial Average futures shed about 90 points, or 0.3%. S&P 500 futures dipped 0.4% and Nasdaq 100 futures fell 0.8%. The consumer price index jumped 6.2% from a year ago, well above the 5.9% estimate from economists polled by Dow Jones and the largest annual increase since 1990. On a monthly basis, the CPI increased 0.9% against the 0.6% estimate. The 10-year Treasury yield jumped after the report. In regular trading Tuesday, the Dow lost about 0.3% to close at 36,319.98. The S&P 500 fell 0.4%, snapping an eight-day win streak, and the Nasdaq Composite fell 0.6%. The sell-off in Tesla continued as the electric vehicle stock fell more than 1% in premarket trading Wednesday, a day after ending nearly 12% lower and more than 16% down on the week. “The weakness in Tesla (which is largely technical, not fundamental) is also weighing on the consumer discretionary sector within the S&P 500 today, and the October PPI may also be doing so as business input prices continue to rise,” Goldman Sachs’ Jeff Currie said in a note Tuesday. “The prospect of Covid transforming from pandemic to endemic, and the potential for supply chain congestion to moderate are all likely to continue to drive growth, albeit more slowly,” Currie added. On Tuesday morning, the Labor Department reported a 0.6% increase in the October producer price index, which was in line with the Dow Jones consensus estimate. Wholesale prices jumped 8.6% in October from a year ago, however, the hottest annual pace on record in almost 11 years. “Investor worries came to the fore again today,” Brent Schutte, chief investment strategist at Northwestern Mutual Wealth Management Company, told CNBC. “The inflation narrative is still out there and needs to be resolved. We think investors will see inflation abate in the coming months as the Fed remains accommodative, people come back into the workforce and consumers shift from buying goods to services… and we expect that will pull the market higher as we move toward the end of the year.” Earnings season continues to be strong, with most of the S&P 500 companies who have already reported earnings beating estimates, according to FactSet. Disney, Affirm, Bumble and The Honest Company are all scheduled to report Wednesday after the bell. Shares in Asia-Pacific were mixed on Wednesday as investors reacted to the release of Chinese inflation data for October. Hong Kong’s Hang Seng index gained 0.74% to close at 24,996.14. Mainland Chinese stocks finished the trading day lower as the Shanghai composite fell 0.41% to 3,492.46 while the Shenzhen component slipped 0.385% to 14,515.88. The Nikkei 225 in Japan closed 0.61% lower at 29,106.78 while the Topix index fell 0.54% to 2,007.96. Shares of Japanese automaker Nissan Motor surged 7.51% after the firm on Tuesday upgraded its profit outlook. South Korea’s Kospi slipped 1.09%, closing at 2,930.17. Oil prices slipped after early gains on Wednesday, though a potential drop in U.S. crude stocks and tighter supplies capped losses. Brent crude futures were at $84.61 a barrel, down 17 cents, or 0.2%, after touching a session high of $85.50. U.S. West Texas Intermediate (WTI) crude futures fell by 48 cents, or 0.6%, to $83.67 after rising close to $85. Gold prices eased on Wednesday as the dollar firmed, with investors looking forward to key U.S. inflation data that could have a bearing on the Federal Reserve’s next policy move. Spot gold fell 0.4% to $1,824.90 per ounce by 0535 GMT, after recording its highest since Sept. 3 in the previous session. U.S. gold futures eased 0.1% to $1,828.40.