Stocks Retreat On Inflation Worries

Inflation Is Back Into Spotlight

S&P 500 futures are down by about 1% in premarket trading amid renewed fears about inflation.

The market remains nervous about the potential reduction of Fed’s asset purchase program which may be announced in early November. In addition, the recent surge in oil, gas and coal prices may lead to higher inflation in the upcoming months.

While traders have “bought the dip” during yesteday’s trading session, the market lacks sufficient catalysts to get back to the upside mode, and trading may remain choppy until Friday, when the U.S. will release the latest Non Farm Payrolls report.

ADP Employment Change Report Exceeds Expectations

While traders wait for the release of the important Non Farm Payrolls report, they have a chance to take a look at ADP Employment Change data. The report indicated that private businesses hired 568,000 workers in September compared to analyst consensus of 428,000.

At this point, positive job market data may serve as an additional bearish catalyst for stocks. When employment is recovering, the Fed can begin tapering soon.

At the same time, it should be noted that ADP Employment Change report and Non Farm Payrolls report often paint different pictures, so a good Non Farm Payrolls report is not guaranteed. Currently, analysts expect that this report will show that the economy added 473,000 jobs in September.

WTI Oil Faced Resistance Near $80 And Pulled Back

WTI oil has recently made an attempt to get to the test of the psychologically important $80 level but failed to develop sufficient upside momentum and pulled back towards the $78 level.

Yesterday, API Crude Oil Stock Change report indicated that crude inventories increased by 0.95 million barrels compared to analyst consensus which called for a decline of 0.3 million barrels.

The report may have served as a bearish catalyst for the oil market, but it looks that the main reason for today’s downside move is profit-taking after the recent rally.

For a look at all of today’s economic events, check out our economic calendar.