The Tuesday Market Minute
- Wall Street trades higher after data shows a modest easing of August inflation pressures ahead of next week’s Fed policy meeting.
- CPI data shows price pressures easing in August even as factory gate inflation continues to hit new records amid supply chain disruptions and input cost increases.
- China locks down the industrial city of Xiamen amid a new COVID outbreak, while Japan says more than 50% of its citizens have been fully vaccinated.
- Apple will unveil a new iPhone 13 later today following a security embarrassment traced to a cyber surveillance firm based in Israel.
- Oil hits six-weeks highs as Hurricane Nicholas pounds the Texas coast on its path towards the city of Houston.
U.S. stocks moved lower Tuesday as investors digested data showing a much-needed easing of consumer price inflation in the world’s biggest economy.
With companies from Apple (AAPL) – Get Apple Inc. (AAPL) Report to Macy’s M to 3M Co. (MMM) – Get 3M Company Report cautioning on the impact of supply chain disruptions and rising input costs, factory gate inflation is holding at the highest levels in 13 years. Consumer prices, however, are starting to moderate, with headline inflation slowing to 5.3% and core prices rising at the weakest pace since February.
The data should not only support the Federal Reserve’s narrative that inflation pressures will begin to ease over the first few months of 2022, but it may also give Chairman Jerome Powell and his colleagues another month or two of breathing room to monitor incoming data and the pace of domestic COVID infections.
That said, the world’s biggest fund managers appear less concerned about tapering, according to Bank of America’s benchmark September survey, and more focused on slowing growth, muted corporate profits and the potential for negative inflation some time next year.
The Dow Jones Industrial Average was marked 195 points lower in the opening half hour of trading while the S&P 500 slipped 12 points. The Nasdaq Composite was only down 3 points as benchmark 10-year note yields eased to 1.277% following the August CPI data.
Oil prices were also moving higher, taking Brent crude prices to a fresh six-week peak, as Hurricane Nicholas looks to add further disruption to drilling installations in the Gulf of Mexico, following damage from Hurricane Ida, as it makes landfall along the Texas coastline.
Brent contracts for November delivery, the global benchmark, were last seen 54 cents higher at $74.05 per barrel while WTI futures for October added 52 cents to $70.97 per barrel.
Staying in the sector, Chevron Corp. (CVX) – Get Chevron Corporation Report shares edged 0.5% higher Tuesday after the group said it will triple its capital investment plans over the coming years, while reaffirming its near-term cash flow forecasts, as the oil major accelerates its transition to lower carbon businesses amid reports of an activist investor challenge.
Apple shares were also active, rising 0.2% to $149.87 each after it suffered a significant iPhone security embarrassment just hours ahead of its flagship product launch event in Cupertino, California, that was traced to an Israeli cyber surveillance firm.
Oracle (ORCL) – Get Oracle Corporation Report shares moved lower, however, falling 3.7% to $85.60 each after the cloud computing and software group posted weaker-than-expected first quarter sales that offset solid profits and a firm near-term outlook.
Cloud services and license revenues, its key growth driver, rose 6% to $7.4 billion, but didn’t assuage investor concerns that cloud rivals like Microsoft and Amazon are taking some of Oracle’s hoped-for market share.
Boeing (BA) – Get Boeing Company Report shares were also active, and were last seen down 0.9% to $212.60 each, after the world’s biggest planemaker published its annual industry forecast that indicates global demand for commercial aircraft hasn’t yet returned to pre-pandemic levels.
Away from the U.S., European stocks edged lower heading into the start of trading on Wall Street, with luxury goods stocks leading declines amid concerns for China growth linked to the latest COVID outbreak in the Fujian province.
Asia stocks, in fact, slipped 0.31% lower heading into the final hours of trading, although Japan’s Nikkei 225 hit a fresh 1990 high of 30.670.10 points after the government unveiled data showing that more than half of the country’s 126 million people have been fully vaccinated.
