Last Updated 4:04PM EST
Stock indices finished today’s trading session in the red. The Dow Jones Industrial Average, the S&P 500, and the Nasdaq 100 fell 0.11%, 0.82%, and 1.45%, respectively.
The energy sector was the session’s laggard, as it fell 2.04%. Conversely, the utilities sector was the session’s leader, with a gain of 0.9%. In addition, WTI crude oil remained below $90 per barrel as it hovers around the low-$85 range.
Furthermore, the U.S. 10-Year Treasury yield decreased to 3.69%, a decrease of more than eight basis points. Similarly, the Three-Month Treasury yield also decreased, as it hovers around 4.23%.
The Atlanta Federal Reserve updated its latest GDPNow reading, which allows it to estimate GDP growth in real time. The “nowcast” becomes more accurate as more economic data is released throughout the quarter. Currently, it estimates that the economy will expand by about 4.4% in the fourth quarter.
This is higher than its previous estimate of 4%, which can be attributed to today’s retail sales report from the U.S. Census Bureau (see 10 a.m. update below).
Nevertheless, inflation continues to be a problem around the world. Therefore, it’ll be interesting to see what the actual GDP growth will be and how it’ll change going forward as higher rates start to impact the economy.
Stock Indices are Mixed; Global Inflation Accelerates
Last Updated 3:00PM EST
Stock indices remain mixed heading into the final hour of today’s trading session. As of 3:00 p.m. EST, the S&P 500 and the Nasdaq 100 are down 0.6% and 1.2%, respectively. Meanwhile, the Dow Jones Industrial Average is up 0.1%.
Canada released its CPI report for October, which came in at 6.9% on a year-over-year basis. This was in line with expectations and flat when compared to last month’s report.
On a month-over-month basis, CPI also came in line with expectations at 0.7%. However, this was higher than last month’s reading of 0.1%.
In addition, when looking at core CPI, which strips out the volatile energy and food prices, inflation rose by 5.8% year-over-year. This was lower than August’s reading of 6%. In addition, month-over-month core CPI was 0.4%, which was once again flat when compared to a month ago.
Despite the higher interest rates from the Bank of Canada, it appears that regular inflation has re-accelerated in September on a month-over-month basis while core inflation has not slowed down. This suggests that the Bank of Canada still has a lot of work to do going forward.
Taking a look across the Atlantic, inflation in Europe is even worse. CPI in the UK accelerated to 11.1% on a year-over-year basis and 2% on a month-over-month basis.
As a result, investors shouldn’t get too excited about the recent softer-than-expected CPI report in the U.S. because it could easily reaccelerate in the coming months.
Stock Indices are Mixed; Mortgage Rates Decrease
Last Updated 12:00PM EST
Stock indices remain mixed halfway into today’s trading session. As of 12:00 p.m. EST, the S&P 500 and the Nasdaq 100 are down 0.5% and 1.2%, respectively. Meanwhile, the Dow Jones Industrial Average is up 0.1%.
On Wednesday, the Mortgage Bankers Association released its weekly report for the U.S. 30-Year mortgage rate. The mortgage rate increased to 6.9% compared to last week’s reading of 7.14%.
Due to the higher rates, the number of mortgage applications increased week-over-week by 2.7%, following last week’s decrease of -0.1%. It appears that some home buyers wanted to lock in the lower rates before they potentially increase again.
In addition, mortgage application volume is down substantially on a year-over-year basis, with the Mortgage Market Index at 205.2 compared to 639.9 on November 17, 2021.
Stock Indices are Mixed; Retail Sales Beat Expectations
Last Updated 10:00AM EST
Equity markets are mixed to start today’s trading session. As of 10:00 a.m. EST, the S&P 500 and the Nasdaq 100 are down 0.4% and 1%, respectively. Meanwhile, the Dow Jones Industrial Average is up 0.1%.
On Wednesday, the Census Bureau released its month-over-month U.S. Retail Sales report, which measures the change in the total value of retail sales. In October, retail sales increased by 1.3%, above the expected increase of 1%.
This was primarily because consumers were spending more on gasoline, groceries, furniture, and automobiles.
Interestingly, Core Retail Sales, which excludes automobiles, also increased 1.3% month-over-month, which is above the 0.4% that was forecast. In addition, when also excluding gasoline, core retail spending grew by 0.9% in October versus the 0.2% expected.
This highlights how consumers are still willing to spend. However, it’s important for investors to remember that although strong core retail sales are a sign of strength, it can also be a double-edged sword if inflation remains high, going forward. A strong consumer, coupled with high inflation, will only give the Federal Reserve more reasons to continue increasing interest rates.
Futures Up as PPI Reveals Wholesale Price Decline
First Published 6:37AM EST
Stock futures moved up early on Wednesday as investors celebrated a lower-than-expected Producer Price Index (PPI) reading for October.
Futures on the Dow Jones Industrial Average (DJIA) gained 0.11%, while those on the S&P 500 (SPX) jumped 0.09%, as of 6.26 a.m. EST, Wednesday. Meanwhile, the Nasdaq 100 (NDX) futures climbed 0.01%.
October’s PPI report which was reported on Tuesday came in below expectations. October’s wholesale prices were 0.2% up from September’s reading. On a year-over-year basis, inflation in wholesale prices was up 8%, down from 8.4% in September.
The core PPI, which excludes the cost of food and energy, also declined in October, indicating improved supply chains as well as demand slowdown as a result of higher borrowing rates. This data might be the start of a goods price deflation.
The reading led the major averages to end the regular trading hours of Tuesday in the green. The S&P 500, the Dow, and the Nasdaq 100 gained 0.87%, 0.17%, and 1.45%, respectively.
Importantly, U.S. President Joe Biden met Chinese President Xi Jinping earlier this week for a dialogue, discussing delicate issues like their dispute over Taiwan and semiconductors. The meeting was instrumental in setting a foundation for better Sino-U.S. relations.
Chinese technology stocks gained significantly on Tuesday. Moreover, nine out of 11 S&P 500 sectors were in the green.
Nonetheless, despite the positive updates, the macroeconomic backdrop is still expected to take a long time to improve.
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