Stocks started the week mixed, but the futures are suggesting a sharply higher move at today’s open. In overnight trading, markets in Asia ended mixed but mostly up, and the major European exchanges are all showing solid gains. Meanwhile, oil prices have moved higher, with West Texas Intermediate up about 0.3%, to around $78.50 a barrel.
Investors didn’t appear to be too fazed after Moody’s recently cut its outlook for the U.S. credit rating from “stable” to “negative” due to sizable fiscal deficits and a growing debt burden. The ratings agency also noted the “continued political polarization” in Congress as an ongoing risk. This is currently being demonstrated by the brinkmanship threatening a partial government shutdown this weekend.
In the meantime, this morning we got the latest read on inflation with the release of the Bureau of Labor Statistics’ Consumer Price Index (CPI) for October. The report showed that prices were up 3.2% year over year, versus a 3.7% advance registered for the 12 months through September and the consensus call for of a 3.3% increase. On a month-to-month basis, the index was unchanged, compared to a 0.4% advance the month before and expectations of a 0.1% move.
Tomorrow we’ll get the Producer Price Index (PPI), which measures the change in the price of goods sold by manufacturers. Wall Street is looking for some easing on that front as well, with expectations that the PPI was up about 0.1% last month, versus the 0.5% increase in September. Wednesday also brings us U.S. retail sales figures for October, which are expected to show a month-to-month decline of about 0.2%, versus a 0.6% increase recorded for September. If these reports are in line with estimates, it will further support expectations that the Federal Reserve will keep rates steady at its next meeting in mid-December.
Lastly, figures for the number of building permits issued by the government in October are scheduled to be released Friday morning, with expectations calling for a small dip to 1.450 million, versus 1.471 million the month before.
Summing up Monday’s market moves, the Dow Jones Industrials gained 54 points, or 0.2%, the S&P 500 slipped three points (0.1%), and the tech-focused NASDAQ lost 30 points (0.2%). - 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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