The S&P 500 Index ($SPX) (SPY) is down by -0.11% today, the Dow Jones Industrial Average ($DOWI) (DIA) is down by -0.39%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.09%. December E-mini S&P futures (ESZ26) are down -0.15%, and December E-mini Nasdaq futures (NQZ26) are up +0.04%.
Stock indexes are mixed today, with the broader market under pressure as stronger crude oil prices fuel inflation concerns and boost bond yields. WTI crude oil is up nearly +1% today, boosting inflation expectations and weighing on market sentiment. The 10-year T-note yield is up +6 bp to 5.00%. However, strength in chipmakers and AI-infrastructure stocks is limiting losses in the broader market, along with a rally in cryptocurrency-exposed stocks.
Join 200K+ Subscribers: Find out why the midday Barchart Brief newsletter is a must-read for thousands daily.Today’s weaker-than-expected US economic news is also weighing on stocks. Aug manufacturing production unexpectedly fell -0.3% m/m, weaker than expectations of +0.3% m/m and the largest decline in 10 months. Also, US Aug leading indicators unexpectedly fell -0,1%, weaker than expectations of a +0.1% increase and the first decline in 5 months.
Bitcoin (^BTCUSD) is up more than +5% today at a 2-week high after the SEC moved forward with a plan to allow digital versions of securities to start trading in the US.
Stock volatility today may be higher than usual due to the quarterly event known as triple witching, when equity options, futures, and derivatives expire. According to Citadel Securities, about $7 trillion of options are set to expire today, one of the largest ever. Index rebalancing may also lead to market turbulence, with Bloom Energy, Illumina, and Everpure added to the S&P 500 after the close, while SpaceX will get a weighting boost from a Nasdaq 100 rebalance.
Oct WTI crude oil prices (CLV26) are up nearly +1% today as Middle East tensions continue to disrupt crude supplies. Crude gains are limited on hopes that diplomacy can end hostilities in the Middle East and resume crude flows from the region. Reuters reported that China privately asked Iran to help rein in Houthi militants in Yemen. The militants have attacked energy facilities in Saudi Arabia and advanced toward the Bab-el-Mandeb strait, the chokepoint at the southern end of the Red Sea.
Some crude supplies from the Middle East are getting through, easing supply concerns. On Wednesday, US Energy Secretary Wright said 18 million bbl of crude oil and refined products went through the Strait of Hormuz on Tuesday, easing global supply concerns.
Also, Saudi Arabia said it seeks to return about half the capacity of the East-West pipeline within days following a shutdown last week because of drone strikes. The East-West pipeline, which carries 7 million bpd of crude, was closed late last week after threats from Houthi rebels. The pipeline moves oil away from the Persian Gulf toward the Red Sea, where it can be loaded on tankers. Saudi Arabia told OPEC last Thursday that its crude production in August fell to 6.238 million bpd, the lowest since 1990.
Markets are discounting a 58% chance of a +25 bp Fed rate hike at the next FOMC meeting on October 27-28.
Overseas stock markets are mixed today. The Euro Stoxx 50 is down -1.30%. China's Shanghai Composite rose to a 1-week high and closed up +0.94%. Japan's Nikkei-225 Stock Average climbed t a 1-week high and closed up +1.38%.
December 10-year T-notes (ZNZ6) are down by -12 ticks today. The 10-year T-note yield is up +6.6 bp to 4.996%. T-notes are under pressure today from today’s rally in WTI crude oil prices, which is boosting inflation expectations. T-notes are also under pressure on negative carryover from Wednesday when the Fed raised interest rates by 25 bp and signaled another rate hike later this year.
European government bond yields are moving higher today. The 10-year German bund yield is up +4.6 bp to 3.523%. The 10-year UK gilt is up +8.2 bp to 5.304%.
The ECB Aug 1-year CPI expectations rose to +3.0% from +2.9% in July, weaker than expectations of +3.1%. The Aug 3-year CPI expectations rose to +2.9% from +2.7% in July, stronger than expectations of +2.8%.
German Aug PPI rose +1.1% m/m and +4.6% y/y, stronger than expectations of +0.6% m/m and +3.9% y/y, with the +4.6% y/y increase the largest in 3.25 years.
ECB President Christine Lagarde said economic growth in the Eurozone is a bit more promising than we thought, and we're not seeing second-round effects on inflation yet.
UK Aug retail sales ex-auto fuel unexpectedly rose +0.6% m/m, stronger than expectations of a -0.2% m/m decline.
Markets are discounting a 62% chance of a +25 bp ECB rate hike at the ECB’s next meeting on October 29.
Software stocks are under pressure today, a negative factor for the broader market. Thomson Reuters (TRI) and Oracle (ORCL) are down more than -3%, and IBM (IBM) is down more than -3% to lead losers in the Dow Jones Industrials. Also, Datadog (DDOG) and Workday (WDAY) are down more than -2%, and Intuit (INTU), Adobe Systems (ADBE), Salesforce (CRM), and ServiceNow (NOW) are down more than -1%.
Cybersecurity stocks are weaker today, pressuring the overall market. Cloudflare (NET) is down more than -5%, and Palo Alto Networks (PANW) and SentinelOne (S) are down more than -4%. Also, CrowdStrike Holdings (CRWD), Fortinet (FTNT), and Okta (OKTA) are down more than -3%, and Zscaler (ZS) is down more than -1%.
Chipmakers and AI stocks are climbing today, supporting gains in the broader market. The iShares Semiconductor ETF (SOXX) is up more than +1%. SanDisk (SNDK) is up more than +6%, and Lam Research (LRCX) and Applied Materials (AMAT) are up more than +4%. Also, Seagate Technology Holdings Plc (STX) and Broadcom (AVGO) are up more than +3%, and Western Digital (WDC), KLA Corp (KLAC), and Texas Instruments (TXN) are up more than +2%. In addition, ARM Holding Plc (ARM), ASML Holding NV (ASML), Micron Technology (MU), and Analog Devices(ADI) are up more than +1%.
Cryptocurrency-exposed stocks are moving higher today, with Bitcoin (^BTCUSD) up more than +5% at a 2-week high after the SEC moved forward with a plan to allow digital versions of securities to start trading in the US. Strategy (MSTR) is up more than +11% to lead gainers in the Nasdaq 100, and Coinbase Global (COIN) is up more than +10% to lead gainers in the S&P 500. Also, MARA Holdings (MARA), Circle Internet Group (CRCL), Bullish (BLSH), and Robinhood Markets (HOOD) are up more than +7%. In addition, Galaxy Digital Holdings (GLXY) is up more than +6%, Riot Platforms (RIOT) is up more than +3%, and Iren Ltd (IREN) is up more than +1%.
Xenon Pharmaceuticals (XENE) is down more than -29% after it paused enrollment in clinical studies of major depressive disorder and bipolar depression.
Nucor (NUE) is down more than -5% to lead losers in the S&P 500 after forecasting Q3 EPS of $5.55 to $5.65, weaker than the consensus of $5.99.
Netflix (NFLX) is down more than -4% after Wells Fargo Securities downgraded the stock to underweight from equal weight with a price target of $57.
Macom Technology Solutions Holdings (MTSI) is up more than +4% after BMO Capital Markets upgraded the stock to outperform from market perform with a price target of $335.
Yeti Holdings (YETI) is up more than +3% after Stifel upgraded the stock to buy from hold with a price target of $50.
AnaptysBio Inc (ANAB) and Rezolute Inc (RZLT).
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.- A Crisis Is Looming Large as Nearly 50% of Americans Are Entering Retirement With Nothing Saved
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