Oct 13, 2022
VOT Research Desk
Market Insights and Analysis
As Wall Street tried to shake off inflation data that showed consumer prices climbed more than expected, U.S. stocks recovered from large early-session drops.
In noon trading, the Dow Jones Industrial Average (DJI) pushed up by more than 600 points, or 2.17 percent, while the S&P 500 (GSPC) gained approximately 1.7%. The technology-heavy Nasdaq100 Composite (IXIC) increased by 1.2 percent. The 10-year Treasury rate edged nearer to 4%.
Brent crude, the international standard for oil prices, increased 1.97 percent to $94.31 per barrel in energy markets.
The Consumer Price Index (CPI) for September was released early on Thursday by the Bureau of Labor Statistics. It showed that prices increased by 8.2% over the previous year and by 0.4% over the previous month. The core consumer price index, which does not include energy or food, increased by 6.6% from a year earlier, reaching a level not seen since 1982.Monthly, the core CPI increased by 0.6 percent.
Bloomberg polled a group of economists and found that they expected the core reading to rise to 6.5% from the previous year and a slight slowdown to 8.1% annually.
Full-screen This reading indicates yet another CPI print that exceeded expectations. According to the report, the most important “many contributors” were the indexes for medical care, food, and shelter. As gasoline prices have decreased, overall inflation has decreased from 8.3% year-over-year in August.
According to analysts, the report effectively ensured that the Federal Reserve would raise interest rates by at least another 75 basis points when it meets in November.
The stronger than expected 0.4% rise in consumer prices in September, driven once again by a stronger increase in core prices, nails on a 75bp rate hike at the November meeting and suggests that the Fed may need to continue raising rates at that pace in December and possibly beyond.” This is in contrast to the Fed minutes that were released yesterday.
In any case, corporate earnings and inflation data continue to make for a murky week for investors.As inflation continued, the Producer Price Index (PPI), which measures prices at the wholesale level, increased by 0.4 percent in September after decreasing by 0.2 percent in August.
Investors also considered the minutes of the most recent monetary-policy meeting of the Federal Reserve, in which a number of Fed officials suggested that the risk of doing too little to control price increases outweighed the risk of doing too much.
Wall Street was keeping an eye out for any indication of when and how much the central bankers would slow down their rate hikes. However, restrictive monetary policy was predicted by officials in September to continue until inflation significantly decreased.
Therefore, analysts at Bespoke Investments wrote in a note to clients that, despite the fact that the FOMC may have a dovish faction for the time being, they are still far from the majority and are still only tentatively making a case to slow the pace of hikes.
Before the market opened, Delta Air Lines (DAL) announced its first earnings report. On Thursday, Delta reported a quarterly profit that fell short of Wall Street estimates, despite the carrier’s forecast that travel demand will remain robust despite the increasing likelihood of an economic recession.
Following the announcement that Netflix would begin offering a streaming plan with advertising for approximately $7 per month beginning on November 3 in the United States as a means of increasing the number of subscribers, Netflix’s stock rose nearly 3%.
