Friday December 10th

10-12-2021

Dow futures rise 200 points continuing this week’s rally despite inflation jump

U.S. stock index futures rose on Friday, extending Wall Street’s rally this week, despite inflation hitting a 39-year high. Futures contracts tied to the Dow Jones Industrial Average rose 210 points, or 0.5%. S&P 500 futures rose 0.65% and Nasdaq 100 futures added 0.75%. Inflation soared 6.8% year-over-year in November to fastest rate since 1982, the Labor Department said Friday. The print came in slightly higher than the 6.7% Dow Jones estimate. The consumer price index, which measures the cost of a wide-ranging basket of goods, rose 0.8% for the month. Core CPI, which excludes food and energy prices, rose 0.5% for the month and 4.9% from a year ago, in line with estimates. Some investors may have been anticipating an even hotter inflation reading than economists, leading to a relief rally following the number. DoubleLine’s Jeffrey Gundlach said in a call this week he fears inflation could soon top 7%. Investors are also wary that a high inflation reading could lead the Federal Reserve to hasten the taper of its $120-billion monthly bond-buying program. Oracle shares soared, gaining more than 11% premarket, a day after beating earnings on the top and bottom lines. Southwest Airlines dropped 2.5% in premarket trading following another downgrade on Wall Street, this time from Goldman Sachs. The industry has been deemed susceptible to inflation risk, and Alaska Air Group also was off Friday, falling 2.7%. Interactive fitness company Peloton added to its woes, dropping 2.7% premarket after tumbling 11.3% on Thursday. Credit Suisse cut its view on the company, saying a return to gyms and shifts in consumer spending will weigh on profitability. The moves came after the major averages ended the regular trading session lower, each snapping a three-day win streak. The Dow, moved less than a point lower, finishing at the flatline. The S&P 500 fell 0.7% and the tech-heavy Nasdaq Composite lost 1.7%. Nevertheless, all are on track to finish the week higher. The Dow is up 3.4% this week. The S&P 500 and Nasdaq Composite have risen about 2.8% each since Monday. Jobless claims data released on Thursday showed the labor market recovery remains strong. The Labor Department reported initial claims for unemployment insurance totaled 184,000, below the 211,000 estimated by economists surveyed by Dow Jones and the lowest reading since 1969. The University of Michigan is also set to release consumer sentiment data on Friday, which AXS Investments CEO Greg Bassuk said he’s also following closely as it appears at odds with inflation levels. “Sentiment seems to be really at lows, yet consumer shopping and retail strength seems to be quite strong, so there’s a mismatch there,” he said. “We think the proof is really at the cash register. As long as we’re seeing strong consumer shopping, employers continuing to bring people back to work, bigger picture we remain much more bullish moving toward the end of the year.” Asia-Pacific markets declined on Friday as investors assess risks associated with the new omicron Covid variant and look ahead to key inflation data in the U.S. Japan’s Nikkei 225 extended losses from the previous session and declined 1% to 28,437.77. The Topix index fell 0.77% to 1,975.48. In South Korea, the Kospi fell 0.64% to 3,010.23 while the Kosdaq was down 1.1% at 1,011.57. Shares on the Chinese mainland also traded lower, with the Shanghai composite closing down 0.18% at 3,666.35 while the Shenzhen component dipped 0.24% to 15,111.56. In Hong Kong, the Hang Seng index fell 1.07% to 23,995.72. Oil prices were on track for their biggest weekly gain since late August, with market sentiment buoyed by easing concerns over the Omicron coronavirus variant’s impact on global economic growth and fuel demand. The Brent and WTI benchmarks were both on course for gains of more than 7% this week, their first weekly gain in seven, even after a brief bout of profit-taking. Brent crude futures were up 66 cents, or 0.9%, at $75.08 a barrel after falling 1.9% on Thursday. U.S. West Texas Intermediate (WTI) crude futures rose 74 cents, or 1%, to $71.68 after sliding 2% in a volatile session the previous day. Gold prices edged higher on Friday but were headed for a fourth straight weekly fall as investors kept to the sidelines ahead of key U.S. inflation data that could influence the Federal Reserve’s next policy move. Spot gold rose 0.1% to $1,776.23 per ounce by 0057 GMT. U.S. gold futures gained 0.1% to $1,778.60.