On concerns about a slowdown, S&P500 Futures are still falling as rates hit a new many-month bottom.

Market Analytics and Considerations

Key Notes

• Since lower US PPI has increased the perceived cost of the S&P500, investor confidence has remained negative.
• In order to cope with weaker demand, businesses have already been obliged to reduce the price of their goods.
• US Treasury yields have reached a multi-month trough as nothing more than a result of the downbeat assessment in inflation predictions triggered by lower US PPI.

A sharp sell-off by market players in US stocks on Thursday morning accompanies Wednesday’s disappointing US Producer Price Index (PPI) Dec release and monthly Retail Sales numbers. In order to preserve harmony with declining retail consumption, businesses have indeed been obliged to reduce the pricing of products and services at their entrance points, putting pressure on S&P500 futures.

There at time of publication, S&P500 futures showed only minor losses before falling deeper to around 3,925, showing a sharp decline in speculators’ willingness to take risks.

On an annualized basis, the main US PPI decreased to 6.2percentage points from the expected 6.8%. Additionally, the underlying PPI, which does not include the price of food and oil, was revised downward from 5.9% to 5.5%. In addition, monthly retail sales reduced significantly by 1.1percentage points compared to predictions of -0.8 percent The appraisals of different companies have escalated to the expensive side during the earnings season, which pushed speculators to abandon American equities. This is due to manufacturers have now been compelled to reduce provided rates in order to maintain sales volume. Due to a reduction in production operations, this may also require producers to shrink the size of their products in advance.

The US PPI report came in less than expected, which encourages yet another reduction in inflation expectations. This has strengthened the argument for a slowdown in the Federal Reserve’s (Fed) rate increases in upcoming monetary and fiscal policy deliberations.

According to Reuters, Patrick Harker, the president of the Philadelphia Federal Reserve, reaffirmed on Wednesday that he is prepared for the US central bank to commence increasing interest rates by 25 basis points because there are some indications that perhaps the inflationary heat is abating.

Technical Overview