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Stock Futures Waver as Inflation Remains in Focus

Stock prices fluctuated as investors awaited data on October U.S. retail sales. This data is important because it will give clues about inflation pressures. Some economists believe that inflation pressures are easing, which could be good news for the stock market.

November 16, 2022
6 minutes
minute read

Stock prices fluctuated as investors awaited data on October U.S. retail sales. This data is important because it will give clues about inflation pressures. Some economists believe that inflation pressures are easing, which could be good news for the stock market.

Futures tied to the S&P 500 and Dow Jones Industrial Average were flat. Contracts tied to the tech-focused Nasdaq-100 slipped less than 0.1%.

Stocks have rallied in recent days as data indicated that pricing pressures have moderated for both consumers and suppliers. Investors are betting that a slowdown in inflation will allow the Federal Reserve to ease up on interest-rate increases. This, in turn, could provide a boost to the stock market.

"There are clearly hopes that inflation will peak and central banks will become more hawkish," said Thomas McGarrity, head of equities at RBC Wealth Management.

However, he cautioned that stocks are likely to remain volatile as investors face the rising risks of a global recession in 2023.

"We're not out of the woods yet," he said.

Investors are closely watching corporate earnings for clues on how consumers are faring with inflation and high borrowing costs. So far, quarterly updates from U.S. retailers have offered a mixed picture.

Target reported Wednesday that its shoppers pulled back in the latest quarter amid a worsening economic outlook. That contrasted with more upbeat results from retailers including Lowe’s and Walmart, which reported stronger-than-expected sales for the fall quarter.

The results of the study showed that the US consumer is more resilient than many people think. Louise Dudley, an equities portfolio manager at Federated Hermes, said that this is good news for the holiday season. Many people will be watching to see if consumers actually go out and spend money during this time.

Retail sales in the United States are expected to rise by 1.2% in October from the previous month. The data will be released at 8:30 a.m. ET.

The yield on the 10-year U.S. Treasury note fell to 3.766% on Wednesday, from 3.798% the day before. The yield on the two-year note, which is more sensitive to near-term interest rate expectations, also fell, to 4.349% from 4.359%. Yields and prices have an inverse relationship, so when prices rise, yields fall.

The U.S. dollar came under pressure on Wednesday after a strong rally this year. The WSJ Dollar Index fell 0.3% but remains up more than 10% for the year.

Cryptocurrency prices were slightly lower today as the fallout from the implosion of crypto exchange FTX continues. Bitcoin slipped 1.7% from its 5 p.m. ET price to $16,584.92. Ether, the second largest cryptocurrency by market capitalization, fell 2%.

In commodity markets, prices for Brent crude, the global benchmark, rose 0.4% to $94.25. This increase was driven by strong demand from China and other emerging markets.

European stocks were lower on Tuesday, with the Stoxx Europe 600 falling 0.7% and the U.K.'s FTSE 100 slipping 0.1%. The domestic-focused FTSE 250 index fell 1.8% after data showed U.K. inflation rose to a fresh 41-year high in October on surging energy prices.

Asian stocks were mixed on Wednesday, with Japan's Nikkei 225 gaining 0.1% and Hong Kong's Hang Seng losing 0.5%. China's benchmark Shanghai Composite lost 0.4%.Asian stocks have rallied in recent days as Beijing relaxed its strict Covid-19 measures and unveiled plans to help support its property market.

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Eric Ng
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Eric Ng
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