Nasdaq, S&P 500, Dow Jones slide as consumer inflation expectations climb

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The stock market is selling off Friday after some early choppy trading following a surprise rise in inflation expectations in the latest sentiment survey.

The Nasdaq Composite (COMP.IND) is -1.5%, the S&P 500 (SP500) is -1.1% and the Dow (DJI) -0.5%. The Dow is getting some help from a big post-earnings price jump in UnitedHealth.

The major averages had been higher after Russia President Vladimir Putin said he did not see the need for further mass mobilization.

All 11 S&P sectors are lower, with Energy the weakest. Healthcare is holding up the best.

The University of Michigan preliminary October consumer sentiment index topped forecasts, coming in at 59.8. But one-year inflation expectations jumped to 5.1% vs. 4.7% before and a forecast of 4.6%. That was the first rise in the inflation component since March.

“The uptick in inflation expectations probably is a response to the increase in gas prices in recent weeks, in which case it won’t continue,” Pantheon Macro’s Ian Shepherdson said. “Moreover, this is a preliminary reading and could be revised by as much as +/-0.2pp, if recent experience is any guide.”

“Still, on the heels of the September inflation data this rebound – reversing the drop last month – does not look good, given how closely policymakers appear to track the measure.”

Rates turned around. The 10-year Treasury yield (US10Y) is up 2 basis points to 3.98% and the 2-year yield (US2Y) is up 2 basis points to 4.47%. Moreover, the Yield curve inversion continues to widen further, as earlier it hit another two-decade record.

“Eventually a break above 4% for the 10Y now looks inevitable as the Fed is unlikely to signal any inclination to slow its pace near term,” ING said.

The U.K. is having an outsize impact again. Gilt yields reversed after Prime Minister Liz Truss named her new Chancellor.

In bank earning, J.P Morgan is higher after beating on the top and bottom lines. But Morgan Stanley is down on a revenue miss with investment banking struggling.

September retail sales came in flat, shy of expectations for a 0.2% gain. Core sales ex-autos rose 0.3% vs. a 0.4% forecast.

Import prices fell more than expected, down 1.2%.

See the stocks making the biggest moves this morning. Does the market’s mysterious, epic reversal have legs?

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