Dow Jones futures rose early Thursday, along with S&P 500 futures and Nasdaq futures. All eyes are on the September CPI inflation report this morning.
The stock market was relatively quiet on Wednesday ahead of Thursday’s CPI, and the Producer Price Index and Fed minutes had little impact. Major indicators, slightly lower on Wednesday, are close to bear market lows. But at least they avoided repeating their mistake of rushing to important economic data from the Federal Reserve.
Investors should be on the sidelines. Even the best stocks struggle to stomp on water, and can go down quickly.
Vertex Pharmaceuticals (VRTX), among the strongest stocks, falling back to the 50-day line. The VRTX stock chart is good, but the biotech isn’t making progress.
Meanwhile, two more EV-related plays broke out hard on Wednesday. Albemarle (ALB) suddenly with other lithium plays. ALB stock held well, on the edge of early buy signals. Aehr . Test Systems (AEHR) fell, with EV chip equipment exposed nearly all of Friday’s big earnings gap.
for this part, Tesla (TSLA) gained 0.3%, cutting a five-day losing streak. But Tesla stock is near 52-week lows.
Dow jones futures contracts today
Dow futures are up 0.5% against fair value. S&P 500 futures rose 0.5% and Nasdaq 100 futures rose 0.3%.
The 10-year Treasury yield rose one basis point to 3.91%.
The CPI inflation report is sure to tip the Dow Jones futures contract and Treasury yields.
TSM stock is up 3% early Thursday. Shares rose 1% on Wednesday, but have remained down 8% this week, at their lowest level in two years. The weakness of personal computers and other consumer electronics, along with increased US controls on chip exports to China, has weakened semiconductors.
DAL stock is up 1.3% on Wednesday, but it’s not far from two-year lows.
CMC stock fell 1.3% on Wednesday, returning below the 50-day moving average after testing the trend line on Tuesday. If it wasn’t for the bear market and earnings – which are massive – CMC stock would be flirting with an early buy signal. steel dynamics (STLD), which will be announced next week, has the same action on the chart.
CPI Inflation Report
The Labor Department will release its Consumer Price Index for September at 8:30 AM ET. Economists expect the general consumer price index to rise 0.2% compared to August. Core CPI, which excludes food and energy, is expected to rise 0.4% after a warm August reading of 0.6%.
On an annualized basis, CPI inflation should ease slightly to 8.1% from 8.3% in August, with 9.1% in June hitting a 40-year high. But core inflation should accelerate to 6.5% from 6.3% in August, with rents being a major driver. That would match the 39-year peak in March.
On Wednesday, the producer price index for September rose 0.4% versus August, double expectations. Wholesale inflation came in at 8.5%, down slightly from August’s 8.7% but slightly above expectations of 8.4%. Core PPI rose 0.3%, in line with the consensus. Core PPI inflation eased to 7.2% from 8.1% in August.
Fed meeting minutes
On Wednesday, the central bank released minutes from the Federal Reserve’s September 20-21 meeting. Many officials. According to the Fed’s meeting minutes, he said that “the cost of taking too little action to bring down inflation is likely to outweigh the cost of taking too much.” Many participants wanted to “calibrate” the future tightening to economic conditions.
However, the Fed is looking for clear and convincing evidence that inflation is easing significantly before slowing the pace of rate hikes. So far it has not.
Fed rate hike expectations
Fed rate hike expectations jumped after CPI higher than expected in August September 13th report. The main indicators, which rose in the CPI data, fell on the actual results. Treasury yields continued to rise.
There is an 81% chance that the Federal Reserve will raise interest rates by 75 basis points for the fourth consecutive meeting in November. This is according to CME FedWatch Tool. Markets overwhelmingly anticipate at least 50 basis points in December, bringing the year-end fed funds range to 4%-4.25%. That includes a one-third chance that December will be another 75bp move.
stock market Wednesday
The stock market was quiet on Wednesday, moving between meager gains and losses as investors await the CPI report on Thursday.
The Dow Jones Industrial Average fell 0.1% on Wednesday stock market trading. The S&P 500 fell 0.3%. The Nasdaq Composite Index fell 0.1%. Small cap Russell 2000 decreased 0.3%.
Who were the big gainers: Cruise line stocks that were beaten. Norwegian Cruise Line (NCLH), Royal Caribbean (RCL) And the Carnival Corp. (CCLThe S&P 500 was the best performer on Wednesday, up 10% or more.
US crude oil prices fell 2.3% to $87.27 a barrel, continuing to correct many of the huge gains made last week as a result of OPEC+ production cuts.
The 10-year Treasury yield fell 4 basis points to 3.9%. The 10-year yield is still close to 12-year highs near 4%.
SPDR S&P Metals & Mining ETFs (XME) was flat. US Global Gates Foundation (ETF)Planes) rose 1.2%, with Delta Air being a key component. SPDR Specific Energy Fund (SPDR ETF)XLE0.8% advance and the Financial Select SPDR ETF)XLF) decreased by 0.2%. SPDR Healthcare Sector Selection Fund (XLV) decreased 0.5%.
EV playing crash
Lithium plays were among the biggest losers on Wednesday. Morgan Stanley sees lithium prices, which have soared to record highs, dropping at some point. ALB stock, which looked strong, fell 7.9%, easily the worst performer of the S&P 500. Stocks fell from the 50-day moving average to a two-month low. Square meters (Square meters), Levent (LTHM) and other lithium stocks that were also sold.
AEHR stock fell 6.35%, after crossing the 50-day line. Shares of the vehicle-exposed chip maker are down 14% for the week. On Friday, Aehr Test Systems Up 24% blast resultsBut anyone who bought that hole is now underwater.
ALB shares and Aehr Test Systems are following big sell-offs in other electric vehicle-related plays, including on semiconductors (on me).
Tesla stock, which a few weeks ago flirted with strong entries, is now trying to hold above its May lows.
Sometimes there’s a particular trigger, like disappointing Tesla deliveries. But in the end, the bear market comes to everyone.
stock market analysis
Major indicators were changed slightly on Wednesday, with investors unwilling to make big bets ahead of the CPI inflation report.
More-than-expected inflation data is likely to revive the Fed’s “pivotal” talk, especially with global markets nervous about aggressive Fed policy. Policymakers may be looking for an excuse to ditch the hefty rate hikes, but so far their rhetoric has remained decidedly hawkish.
All major indicators are below their 21 day moving averages. The last time they closed above that short-term level? September 12, the day before the August CPI. The Dow, S&P 500 and Nasdaq were also above the 50-day lines that day, but are now well below that now declining average.
Regardless of Wednesday’s tepid advance, investors are not collecting critical inflation data for the Fed, unlike Fed Chairman Jerome Powell’s Jackson Hole speech, August CPI and September jobs report last Friday. That could at least mitigate the potential downside of a hot CPI inflation reading.
What are you doing now
The S&P 500 is at the bottom of a bear market. The number of shares created continues to dwindle, even with recent counterfeit stocks like VRTX stocks not making progress.
The risks are high while the rewards are low.
Thursday’s inflation report could be a catalyst for big gains or losses. Even if stocks rebound strongly, investors shouldn’t get too excited during a good day, especially with indices that are below several key levels.
With that said, stay engaged and be prepared to act when the market decisively turns higher. This means reworking watch lists. Focus on stocks with strong relative strength, even if the charts show a lot of damage.
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