Stock Market Dow S&P Futures Slide as Oil Fuels Inflation Fears
U.S. stock futures fell as rising oil prices and accelerating producer inflation revived concerns about price pressures. Dow futures dropped 0.9%, while…
U.S. stock futures tied to the Dow and S&P 500 fell Thursday as rising oil prices and accelerating producer inflation revived worries about price pressures. The pullback leaves investors weighing earnings optimism against tighter financial conditions and the prospect that inflation could complicate interest-rate decisions.
The Dow Jones Industrial Average futures dropped 0.9%, while S&P 500 futures lost 0.5% and Nasdaq-100 contracts retreated 0.7%, according to Yahoo Finance. The moves followed a slide from record highs on Wednesday.
Oil added pressure. U.S. crude futures climbed nearly 5% after rising more than 3% in the previous session, moving above $100 a barrel. Brent crude also crossed that level on Wednesday for the first time since July, according to the Yahoo Finance report carried by its UK edition.
The concern is direct: pricier energy can raise costs for businesses and households, while persistent inflation may keep borrowing costs elevated. That combination can weigh on companies’ margins and investors’ expectations for interest rates.
A short-term retreat.
Oil and inflation weigh on stock market Dow S&P
The market’s inflation concerns deepened after the Labor Department’s producer price index for final demand rose 0.4% month on month in August, following a revised 0.1% increase in July. The August result matched economists’ expectations, but annual producer price inflation accelerated to 5.4% from 4.8%, exceeding the 5.3% forecast.
Yahoo Finance also reported that Treasury yields remained near multidecade highs, with the 10-year yield at 5.28% and the 30-year yield at 5.66%. Elevated yields can tighten financial conditions as investors reassess the cost of borrowing and the value of future corporate earnings.
Oil’s rise followed further exchanges between U.S. and Iranian forces. President Donald Trump indicated that the conflict could continue beyond November’s midterm elections. The Wall Street Journal, citing U.S. officials, reported that White House advisers had discussed with Trump the possibility that it could continue through the remainder of his presidential term.
Investors are also looking ahead to the Federal Reserve’s monetary policy meeting next week, while monitoring how higher energy prices and inflation data may affect interest rates. Yahoo Finance reported that Federal Reserve Governor Chris Waller is speaking in Turkey on Thursday.
Earnings season offers a counterweight
Corporate results have provided some support for investors. PepsiCo reported third-quarter revenue of $25.27 billion, up 5.6% year over year and slightly above expectations of roughly $25 billion. Adjusted earnings per share came in at $2.34, compared with the $2.29 expected, according to the Yahoo Finance report.
PepsiCo lowered its forecast for core earnings per share growth to 2.5%-3%, down from the low end of its previous 5%-7% range. The company said it was working to stabilize its North America business. Chief Executive Ramon Laguarta said: “We continue to operate with a high sense of urgency to sustainably improve the company's financial and marketplace performance (most notably in North America).”
FactSet estimates that S&P 500 earnings grew 29.5% in the third quarter. If that estimate holds, Yahoo Finance reported, it would mark the third consecutive quarter of earnings growth above 25%.
Investors were also due to receive initial jobless claims figures from the Department of Labor at 8:30 a.m. ET. Those figures, alongside company updates and oil prices, will shape what traders watch next as markets balance earnings against inflation and the path of interest rates.
Source: finance.yahoo.com
