Stock futures traded modestly higher Wednesday after another hot inflation reading sent the major averages tumbling to their worst day since June 2020 and dampened investors’ expectations of a less hawkish Federal Reserve.
Futures tied to the Dow Industrial Average were last up 46 points, or about 0.1%, while S&P 500 futures ticked 0.2% higher, and Nasdaq 100 futures gained 0.2%.
The Dow sank more than 1,200 points Tuesday, or nearly 4%, while the S&P 500 lost 4.3%. The Nasdaq Composite dropped 5.2%.
The market moves came after August’s consumer price index report showed headline inflation rose 0.1% on a monthly basis despite a drop in gas prices.
The hot inflation report left questions over whether stocks could go back to their June lows or fall even further. It also spurred some fears that the Federal Reserve could potentially hike even higher than the 75 basis points markets are pricing in.
“It caught the market off guard,” said LPL Financial’s Quincy Krosby. “The market had been expecting at least that we had leveled off — perhaps not moving downward but certainly not climbing higher. It was the wrong direction and the concern, of course, is always translated into what does this mean for the Fed.”
All 30 Dow stocks and S&P 500 sectors finished the session lower, led to the downside by communications services. The sector fell 5.6% and finished its worst day since February, dragged down by shares of big technology names like Netflix and Meta Platforms, which tumbled about 7.8% and 9.4%, respectively.
A reading of the producer price index is due out Wednesday morning and could offer further clues into the state of inflation before the Fed’s rate-hike meeting next week.
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THIS MORNING’S STOCK NEWS MOVERS:
Starbucks – Shares of Starbucks gained nearly 1% after the company boosted its long-term forecast and said it expects double-digit growth for revenue and earnings per share over the next three years.
STOCK SYMBOL: SBUX
Palo Alto Networks – Cybersecurity company Palo Alto Networks rose slightly following a three-for-one stock split, which took place on Tuesday. In addition, CEO Nikesh Arora told CNBC that the company is not seeing the same macro impact slowdown on cybersecurity that other sectors are experiencing.
STOCK SYMBOL: PANW
Nucor —Nucor fell 5% after the steel producer issued disappointing third-quarter earnings guidance. The company expects earnings per share to range between $6.30 and $6.40, well below a StreetAccount forecast of $7.56. “We expect the steel mills segment earnings to be considerably lower in the third quarter of 2022 as compared to the second quarter of 2022, due to metal margin contraction and reduced shipping volumes,” Nucor said.
STOCK SYMBOL: NUE
Nikola — Nikola shares rose slightly after BTIG upgraded the EV maker to buy from neutral. BTIG noted that it sees “the potential for increasing demand for green hydrogen driven by increasing wind and solar power generation.”
STOCK SYMBOL: NKLA
SoFi Technologies — SoFi rose more than 2% after Bank of America upgraded the fintech stock to buy from neutral. “We see potential for a meaningful catalyst path over the next few quarters as SoFi benefits from the student loan payment moratorium ending and its high-profile NFL-aligned marketing investments drive user growth and engagement,” BofA said.
STOCK SYMBOL: SOFI
Moderna – Shares of Moderna rose 0.6% after the company’s CEO said it would be open to supplying covid vaccines to China.
STOCK SYMBOL: MRNA
Bristol-Myers Squibb – Shares of Bristol-Myers Squibb slipped 0.7% after Berenberg downgraded the company to hold from buy. The firm said the stock is running out of room to gain.
STOCK SYMBOL: BMY
Merck & Co – Shares of Merck rose 0.7% after Berenberg upgraded it to buy from hold and boosted its price target, signaling it could climb another 17%.
STOCK SYMBOL: MRK
Railroad stocks – Shares of railroad company stocks slumped Wednesday as the sector contends with a potential strike that could limit service. Union Pacific fell 1.9% while CSX, Northern Southern Corp. also slipped ahead of market open.
STOCK SYMBOL: UNP
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DISCUSS!
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I hope you all have an excellent trading day ahead today on this Wednesday, September 14th, 2022! 🙂
