Stock futures are declining this morning following yesterday’s significant rally, as investors process an inflation report that strengthens expectations for an imminent interest rate hike by the Federal Reserve. The benchmark S&P 500 and the tech-heavy Nasdaq recently experienced declines of 0.5% and 0.6%, respectively, while the Dow Jones Industrial Average recorded a decrease of 0.2%. Each of the indexes concluded the trading session on Monday with an increase exceeding 2%, primarily driven by substantial advancements in the semiconductor sector. Those gains eliminated a significant portion of the losses incurred last week, when technology equities experienced a decline due to apprehensions that Democratic dominance in Congress and various crucial state governments might threaten the advancement of artificial intelligence, which has been a driving force in the market’s growth in recent years.
The October consumer price index report from the Bureau of Labour Statistics is influencing market sentiment this morning. Consumer prices increased by 0.4% last month, a decrease from the previous month yet marginally above economists’ expectations. The unexpectedly high inflation reading reinforces the perspective that the Federal Reserve, which increased its key interest rate in September for the first time in three years, is likely to take similar action at its upcoming policy meeting in early December. The yield on the 10-year Treasury, which affects interest rates on all sorts of loans, surged to 4.98% following the data release, up from 4.90% at yesterday’s close, as investors considered the prospect of more hikes by the Fed.
Chip stocks are experiencing downward pressure today, retracing a fraction of the substantial gains observed on Monday. After rising more than 7% yesterday, the iShares Semiconductor ETF was down 1% recently, as Marvell Technology and Micron dropped 3%, and Intel fell 1%. Advanced Micro Devices and Broadcom ticked higher after starting the session in the red. Shares of Nvidia, the chip company at the center of the AI boom, were down nearly 4%, after tumbling more than 4% on Monday. The stock has been rocked this week by news that the company’s CEO, Jensen Huang, is being investigated by the company’s board for his relationship with a woman alleged to be a spy for China.
Other Magnificent 7 stocks are predominantly lower this morning, with Microsoft and Tesla experiencing declines of 1%. Shares of Alphabet, Apple and Meta Platforms ticked lower, while Amazon added 1%. In other markets, WTI oil futures experienced a decline of 2.8%, settling at $84.45 per barrel. This follows a significant drop from the previous day, marking the lowest trading level since late August, as investors remain attentive to new developments in the Iran conflict. Gold futures declined by 1.3% to $4,060 per ounce, whereas bitcoin was priced at $73,600, a decrease from yesterday’s peak of approximately $76,000, marking its lowest point in nearly three months.
