Tuesday October 11th

U.S. stock markets index futures were flat Tuesday after the Nasdaq Composite closed at its lowest in two years during the regular session. Dow Jones Industrial Average futures fell 17 points, or 0.06%, rebounding from a slump that took the index down about 200 points in premarket trading. S&P 500 futures declined 0.17% while Nasdaq 100 futures slipped 0.20%. Stocks closed lower Monday, with the Nasdaq Composite falling 1% following a drop in semiconductor stocks. The Dow Jones Industrial Average shed nearly 94 points, or 0.3%, while the S&P 500 declined about 0.8%. Bond prices also fell. The yield on the U.S. 10-year Treasury rose about five basis points to 3.937% after nearing the key 4% level overnight. Bond yields are inverse to prices, and a basis point is one hundredth of one percent. The moves came as investors weighed comments from JPMorgan CEO Jamie Dimon, who warned that the U.S. would likely fall into a recession over the next “six to nine months,” and said the S&P 500 could fall another 20% depending on whether the Federal Reserve engineers a soft or a hard landing for the economy. Those remarks came at the start of a big week for third quarter bank earnings, and ahead of Wednesday’s producer price report, Thursday’s consumer price index report for September and Friday’s retail sales numbers, also for last month. Investor reaction is focused solely on how the Federal Reserve will react to the economy as it works to dampen inflation. “There’s always this idea of a Fed pivot coming right around the corner, and they’re just going to tighten their belts to bring inflation down without affecting the economy more broadly,” Dan Greenhaus, chief strategist and economist at Solus Alternative Asset Management, said Monday on CNBC’s “Closing Bell: Overtime.” “All of that was always hopes and dreams. And the most likely outcome was ... what history shows always happens, which is the Fed tightens, they tighten too much, they cause an economic dislocation, the market goes down. Full stop,” he added. Shares in the Asia-Pacific were mixed on Tuesday, while Taiwan’s benchmark index fell 4.35% to 13,106.03 on its return to trade after a holiday, as investors weighed the impact of new U.S. rules on chipmaker TSMC. Japan and South Korea’s markets also resumed trading after a holiday on Monday. The Nikkei 225 fell 2.64% to 26,401.25 and the Topix lost 1.86% to 1,871.24. In South Korea, the Kospi fell 1.83% 2,192.07 and the Kosdaq shed 4.15% to 669.50. Hong Kong’s Hang Seng index fell 2% in the final hour of trade and the Hang Seng Tech index dropped 3.16%. In Australia, the S&P/ASX 200 gave up earlier gains to closed 0.34% lower at 6,645. Mainland China markets bucked the trend regionally, with the Shanghai Composite gaining 0.19% and the Shenzhen Component rising 0.529%. Oil slid on Tuesday, extending losses of nearly 2% in the previous session, as recession fears and a flare-up in Covid-19 cases in China raised concern over global demand. World Bank President David Malpass and International Monetary Fund Managing Director Kristalina Georgieva warned on Monday of a growing risk of global recession and said that inflation remains a continuing problem. Brent crude fell $2.11, or 2.2%, to $94.04 a barrel. U.S. West Texas Intermediate crude dropped $2.27, or 2.5%, to $88.86. “There is growing pessimism in the markets now,” said Craig Erlam of brokerage OANDA. Gold prices were subdued on Tuesday by a stronger dollar and elevated bond yields as investors remained on the sidelines ahead of U.S. inflation data later this week that could offer more clarity on the U.S. rate hike path. Spot gold eased 0.2% to $1,664.13 per ounce after earlier touching its lowest since Oct. 3. U.S. gold futures slipped 0.2% to $1,672.50.