After posting four consecutive weeks of gains, stocks took a hit on Monday. With no specific catalyst to point to, it appears that investor confidence is being weighed down by a combination of concerns. These include escalating conflict in the Middle East, increases in oil prices, rising bond yields, and Friday’s stronger-than-expected jobs report, which quashed hopes of another 50-point cut from the Federal Reserve. The fed funds futures are indicating a greater-than-80% chance that the central bank will lower its overnight target rate by a quarter percentage point.
Looking at the economic calendar for this week, the Fed will be releasing the minutes from its last meeting on Wednesday. Traders will be poring over it in hopes of getting some additional insight to the Federal Open Market Committee’s thinking on monetary policy moves.
On Thursday, we get the latest reading on the September Consumer Price Index (CPI) from the Bureau of Labor Statistics. Wall Street is looking for a slight downtick in the year-over-year figure, to 2.3% (versus 2.5% through the month before). Meanwhile, the month-to-month rate is expected to come in at 0.1%, down from 0.2% in August.
On Friday, we’ll receive wholesale price increases for last month with the Producer Price Index (PPI). Analyst forecasts are also calling for a dip here, with the 12-month figure declining to 0.1% (from 0.2% in August), while the month-to-month figure comes in at 0.2% (versus 0.3%). That same day, the Department of Labor will release its report on initial jobless claims. The street is anticipating an increase of 4,000 compared to the week before, to 229,000.
As we neared the start of today’s session, stock futures were indicating a positive start to the day. In overnight trading, stocks in Asia were mostly down, led by Hong Kong’s Hang Seng Index, which plunged more than 9%. Meanwhile, the European markets are showing modest losses. Elsewhere, oil prices are lower, with West Texas Intermediate crude down nearly 2%, to around $75.65 per barrel.
Summing up Monday’s moves, the Dow Jones Industrials lost 398 points, or 1.0%, the S&P was down 55 points (1.0%), and the NASDAQ composite dropped 213 points (1.2%). – Mario Ferro
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
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