Register to chat with like-minded investors on our interactive forums.
Choppy Trading May Persist On Wall Street Amid Slew Of Data
US Market
The major U.S. index futures are currently pointing to a roughly flat open on Wednesday, with stocks likely to extend the choppy trading seen over the two previous sessions.
Traders may be reluctant to make significant moves amid uncertainty about the near-term outlook for the markets following the wild swings seen to start the week.
The major averages ended a volatile session in negative territory on Monday before rebounding to end another choppy session higher on Tuesday.
The Dow reached a nearly three-month intraday high in early trading on Tuesday before pulling back to end the day little changed.
Uncertainty about the outlook for interest rates may also contribute to another choppy session, as traders react to mixed comments from Federal Reserve officials as well as a slew of U.S. economic data.
After showing a substantial move to the upside in early trading on Tuesday, stocks gave back ground over the course of the trading session but managed to close mostly higher.
The tech-heavy Nasdaq jumped 162.19 points or 1.5 percent to a nearly two-month closing high of 11,358.41 percent, while the S&P 500 advanced 34.48 points or 0.9 percent to 3,991.73.
Meanwhile, the narrower Dow inched up 56.22 points or 0.2 percent to 33,592.92 after surging 450 points in early trading to its best intraday level in almost three months.
The early rally on Wall Street came following the release of a Labor Department report showing producer prices in the U.S. crept up by much less than expected in the month of October.
The Labor Department said its producer price index for final demand inched up by 0.2 percent in October, matching a revised uptick in September.
Economists expected producer prices to climb by 0.5 percent compared to the 0.4 percent increase originally reported for the previous month.
The report also showed the annual rate of producer price growth slowed to 8.0 percent in October from 8.4 percent in September. The year-over-year growth was expected to edge down to 8.3 percent.
Following last week’s tamer-than-expected consumer price inflation report, the data added to optimism about the Federal Reserve slowing the pace of interest rate hikes as soon as next month.
“It’s premature to conclude a dovish Fed pivot is on the way, though Vice Chair Lael Brainard’s comments yesterday, on top of downside surprises in both October CPI and PPI reports, raise the odds,” said Will Compernolle, Senior Economist at FHN Financial.
CME Group’s FedWatch Tool is currently indicating an 80.6 percent chance the Fed will raise rates by 50 basis points next month and a 19.4 percent chance of another 75 basis point rate hike.
The strength on Wall Street also came amid a surge by shares of Walmart (WMT), with the retail giant spiking by 6.5 percent.
The jump by Walmart came after the company reported better than expected third quarter results and announced a $20 billion share buyback.
However, stocks pulled back well off their best levels of the day following reports Russian missiles crossed into Poland, killing two people.
Semiconductor stocks turned in some of the market’s best performances on the day, with the Philadelphia Semiconductor Index spiking by 3.0 percent to its best closing level in well over two months.
Taiwan Semiconductor (TSM) posted a standout gain on news Warren Buffett’s Berkshire Hathaway has bought more than $4.1 billion of the chipmaker’s stock.
Significant strength also remained visible among housing stocks, as reflected by the 2.0 percent surge by the Philadelphia Housing Sector Index.
Retail stocks also saw considerable strength following the upbeat earnings news from Walmart, driving the Dow Jones U.S. Retail Index up by 1.9 percent
Energy, airline and brokerage stocks also showed notable moves to the upside, although most sectors closed well off their best levels of the day.
U.S. Economic Reports
Retail sales in the U.S. showed a significant increase in the month of October, according to a report released by the Commerce Department on Wednesday.
The report showed retail sales surged by 1.3 percent in October after coming in unchanged in September. Economists had expected retail sales to jump by 1.0 percent.
Excluding a sharp increase in sales by motor vehicle and parts dealers, retail sales still shot up by 1.3 percent in October after inching up by 0.1 percent in September. Ex-auto sales were expected to rise by 0.4 percent.
A separate report released by the Labor Department showed a modest decrease in U.S. import prices in the month of October.
The Labor Department said import prices edged down by 0.2 percent in October after tumbling by a revised 1.1 percent in September.
Economists had expected import prices to fall by 0.4 percent compared to the 1.1 percent slump originally reported for the previous month.
Meanwhile, the report showed export prices dipped by 0.3 percent in October after plunging by a revised 1.5 percent in September.
Export prices were expected to decline by 0.4 percent compared to the 0.8 percent decrease originally reported for the previous month.
At 9:15 am ET, the Federal Reserve is scheduled to release its report on industrial production in the month of October. Industrial production is expected to inch up by 0.2 percent in October after rising by 0.4 percent in September.
New York Federal Reserve President John Williams is due to speak before a hybrid 2022 U.S. Treasury Market Conference at 9:50 am ET.
At 10 am ET, the National Association of Home Builders is scheduled to release its report on homebuilder confidence in the month of November. The housing market index is expected to dip to 36 in November from 38 in October.
The Commerce Department is also due to release its report on business inventories in the month of September at 10 am ET. Business inventories are expected to increase by 0.5 percent.
Also at 10 am ET, Federal Reserve Vice Chair for Supervision Michael Barr is scheduled to testify on Oversight of Prudential Regulators: Ensuring the Safety, Soundness, Diversity, and Accountability of Depository Institutions before the House Financial Services Committee.
The Energy Information Administration is due to release its report on oil inventories in the week ended November 11th at 10:30 am ET.
Crude oil inventories are expected to edge down by 0.4 million barrels after climbing by 3.9 million barrels in the previous week.
At 1 pm ET, the Treasury Department is scheduled to announce the results of this month’s auction of $15 billion worth of twenty-year bonds.
Federal Reserve Board Governor Christopher Waller is due to speak on the economic outlook before the 59th Annual Economic Forecast Luncheon hosted by Arizona State University at 2:35 pm ET.
Stocks in Focus
Shares of Target (TGT) are moving sharply lower in pre-market trading after the retail giant reported weaker than expected third quarter earnings and slashed its operating margin forecast for the current quarter.
Auto parts retailer Advance Auto Parts (AAP) is also likely to come under pressure after reporting third quarter earnings that missed analyst estimates and lowering its full-year guidance.
On the other hand, shares of Lowe’s (LOW) may move to the upside after the home improvement retailer reported third quarter results that exceeded expectations on both the top and bottom lines.
Europe
European stocks have moved mostly lower on Wednesday, as investors take stock of rising geopolitical risks and awaited the highly anticipated U.K. budget announcement on Thursday.
The dollar rally fizzled out after U.S. President Joe Biden said it was “unlikely” that the blast in Poland was caused by a missile fired from Russian territory.
While the German DAX Index has slumped by 0.9 percent, the French CAC 40 Index is down by 0.5 percent and the U.K.’s FTSE 100 Index is down by 0.2 percent.
Swedish pulp and paper manufacturer Billerud has moved sharply lower after Jefferies cut its rating on the stock.
Beazley ha also showed a notable move to the downside after the British insurer launched a share sale to raise around £385 million.
Carnival has also plunged after the cruise operator said it has commenced a private offering of $1 billion aggregate principal amount of convertible senior notes due 2027 to be used as part of a refinancing plan.
Electricity infrastructure firm SSE has also come under pressure despite reporting a higher half-year profit.
Mercedes Benz Group has also moved sharply lower after slashing prices on two electric car models in China.
Meanwhile, Swiss insurer Zurich Insurance has rallied after announcing more ambitious financial targets for the next three years.
Alstom has also risen. The French train maker confirmed its full-year outlook and mid-term targets after posting solid results for the first half of 2022-23.
Siemens Energy has also jumped. The German company swung to a profit in the fourth quarter of its fiscal year and said it expects net loss to reduce in fiscal 2023.
In economic news, official data showed U.K. consumer price inflation reached a 41-year high in October, driven by household energy and food prices.
U.K. consumer prices grew 11.1 percent on a yearly basis, following September’s 10.1 percent increase, data showed. The rate was the highest since October 1981 and exceeded economists’ forecast of 10.7 percent.
Another report revealed that factory gate inflation eased to 14.8 percent in October from 16.3 percent a month ago, with a monthly drop in petroleum prices providing a large downward contribution. Economists had forecast prices to climb 14.6 percent.
Asia
Asian stocks ended on a subdued note Wednesday, as investors waited for more clarity over reports Russian missiles aimed at Ukraine have hit NATO territory in Poland.
If the missiles that hit Poland were fired by Russia, it would mark the first time in the war that Russian weapons have come down on a member of the North Atlantic Treaty Organization (NATO).
Regional losses were somewhat tempered by an easing of inflation and interest rate concerns after data showed U.S. producer inflation hit a 14-month low in October.
The dollar rally fizzled out and gold steadied near a three-month high, while oil prices slipped on demand worries amid growing COVID-19 concerns in China.
China’s Shanghai Composite Index dropped 0.5 percent to 3,119.98 on growth concerns after data showed house prices in the country marked their worst fall in seven years in October.
Hong Kong’s Hang Seng Index fell 0.5 percent to 18,256.48 on profit taking after recent strong gains on optimism over the scaling back of COVID restrictions and new initiatives to support the property sector.
Japanese shares edged up slightly after U.S. President Joe Biden said it was “unlikely” that the blast in Poland may have been caused by a missile fired from Russian territory.
Separate reports suggested that Ukrainian air defense might have fired the missile that killed 2 in Poland.
The Nikkei 225 Index inched up 0.1 percent to 28,028.30, while the broader Topix finished marginally lower at 1,963.29, dragged down by insurers.
T&D Holdings slumped 4.1 percent and Dai-ichi Life Holdings tumbled 3.6 percent.
Japan’s core machinery orders, a leading indicator of capital spending, fell 4.6 percent in September from the previous month, government data showed earlier today.
Seoul stocks fell, with the Kospi ending 0.1 percent lower at 2,477.45 amid increased geopolitical tensions in Europe. Bio stocks led losses, with Samsung Biologics and Celltrion falling 2.9 percent and 4.5 percent, respectively.
Australian shares ended lower for a third straight session despite positive wage data. The benchmark S&P ASX 200 Index dipped 0.3 percent to 7,122.20, with financials and healthcare stocks leading losses. The broader All Ordinaries Index fell 0.3 percent to 7,327.40.
Commodities
Crude oil futures are sliding $0.82 to $86.10 a barrel after jumping $1.05 to $86.92 a barrel on Tuesday. Meanwhile, an ounce of gold is trading at $1,782.50, up $5.70 compared to the previous session’s close of $1,776.80. On Tuesday, gold edged down $0.10.
On the currency front, the U.S. dollar is trading at 139.72 yen compared to the 139.28 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is trading at $1.0405 compared to yesterday’s $1.0349.
