Nasdaq Index, Dow Jones, S&P 500 News: US Stocks Wobble as Inflation Data Stuns Markets

Highlights

• Consumer prices jumped 0.4% in September, surpassing a 0.3% consensus, raising worries about Fed policy.
• Annual headline CPI grew by 3.7%, above the expected 3.6%, adding to concerns of prolonged Fed restraint.
• Weekly jobless claims slightly dipped to 209,000, just below the estimated 210,000, amid higher producer prices.

Market Reaction and Treasury Yields

As a response to the inflation data, U.S. stock index futures initially retreated but later rebounded. At 13:13 GMT, Dow e-minis were up 49 points, S&P 500 e-minis gained 4.00 points, and Nasdaq 100 e-minis rose 6.75 points.

In the bond market, the 10-year U.S. Treasury yield was flat, showing little reaction to the inflation report. The yield was slightly higher at 4.618%, while the 2-year Treasury yield rose by 6 basis points, reaching 5.069%.

Consumer Inflation Surprises to the Upside

Consumer prices rose 0.4% in September, exceeding the 0.3% consensus, fueling concerns about prolonged Fed policy tightening.

Consumer inflation in the U.S. outpaced expectations in September, with prices surging by 0.4% against a consensus estimate of 0.3%. Core CPI, which excludes volatile food and energy prices, also grew by 0.3%, aligning with expectations.

On an annual basis, the headline CPI figure increased by 3.7%, surpassing expectations of 3.6% growth. The core figure rose 4.1%, in line with estimates. These inflationary pressures have intensified worries about the Federal Reserve maintaining restrictive monetary policies for an extended period.

Despite these concerns, weekly jobless claims showed a slight decline, rising to 209,000 for the week ended Oct. 7, just below the estimated 210,000. This data follows a stronger-than-expected producer price index for September.

The ongoing Israel-Hamas conflict has also raised concerns about a potential oil supply shortage and consequent fuel price spikes if geopolitical instability spreads to neighboring oil-producing nations. Brent crude oil futures edged up 1.6% to over $87 a barrel.

Stocks in Focus

Several stocks made headlines premarket as earning season kicksoff.

Ford: Shares dipped 2.3% after the United Auto Workers union expanded its strike to target Ford’s Kentucky facility, the company’s largest.

Target: The retailer rose 2.8% after Bank of America upgraded it to “buy,” citing attractive stock prices and potential margin improvements.

Walgreens Boots Alliance: Shares fell nearly 3% after the company missed earnings estimates for the fiscal fourth quarter.

Delta Air Lines: The airline traded over 2% higher in the premarket following better-than-expected third-quarter earnings, driven by strong travel demand.

Domino’s Pizza: Shares dropped over 2% after the pizza delivery chain released third-quarter results, revealing a 0.6% decline in U.S. comparable sales.

Investors will also closely watch remarks from Atlanta Fed President Raphael Bostic and Boston Fed President Susan Collins for further insights into the central bank’s stance.

Short-Term Forecast

Given the unexpected acceleration in consumer inflation and the potential impact on monetary policy, the short-term outlook for U.S. stocks remains cautious. Investors will closely monitor how the Federal Reserve responds to these inflationary pressures and whether it considers adjusting its policy stance.

The market may experience increased volatility as it digests these developments, and short-term sentiment could be influenced by further economic data releases and central bank communications. Traders should remain vigilant and prepared for potential market fluctuations in the coming days.

Technical Analysis

The S&P 500’s current daily price of 4377.85 is above its 200-day moving average of 4218.71, signaling a bullish longer-term trend. However, it is below its 50-day moving average of 4408.16, indicating potential short-term weakness.

Given these mixed signals, caution is warranted. The index also hovers above its trend line support of 4321.38 and main and minor support levels, providing some downside cushion.

Overall, the market sentiment appears cautiously bullish, but short-term pullbacks should not be ruled out.