Thursday October 11th

11-10-2018

S&P 500 futures go positive as rates dive on weak inflation data

U.S. stock-index futures recovered most of their losses on Thursday after the release of weaker-than-expected inflation data. Around 8:30 a.m. ET, S&P 500 and Nasdaq 100 futures turned positive, erasing sharp losses from earlier in the day. Both futures still pointed to losses for the indexes at the open, however. Dow Jones Industrial Average futures were down just 31 points after the data were released, but pointed to a decline of more than 100 points. The consumer price index rose 0.1 percent in September, well below the expected gain of 0.2 percent. Tech shares recovered most of their losses in the premarket following the release. Facebook and Apple were both down about half a percent. Earlier in the day, they were down more than 1 percent. Treasury yields fell from multiyear highs after the release of the data. The 10-year Treasury note yield traded at 3.167 percent while the two-year yield slipped to 2.848 percent. Rising U.S. Treasury yields had been keeping investors on their toesin previous sessions. The benchmark 10-year note yield recently hit its highest level in seven years while the two-year yield reached its highest mark since 2008 on Wednesday. The rise in yields has stoked fears that rising borrowing costs could slow down the economy. It also adds concerns over what the future of U.S. monetary policy. The Federal Reserve has hiked rates three times this year and is largely expected to raise rates once more before year-end. President Donald Trump criticized the Fed's strategy on more than one occasion on Wednesday, saying that the central bank was "making a mistake" by raising rates. In a telephone interview with Fox News later that day, he said he wasn't happy with the Fed, and that it was "going loco" and there was no reason for them to continue to raise rates at the pace they were doing. International Monetary Fund managing director Christine Lagarde refuted Trump's claims, saying that she "would not associate" Fed Chair Jerome Powell "with craziness." Thursday's moves come a day after the Dow sank more than 800 points and the S&P 500 dropped more than 3 percent. It was also the 28th time since 2011 the S&P 500 posted a more than 2 percent decline, according to data from Birinyi Associates. The data also shows the broad index has traded higher 59 percent of the time in the following day, averaging a gain of 1 percent. The index also falls 41 percent of the time after such a drop, and averages a decline of nearly 2 percent in those days. Worries over fast-rising interest rates and a steep tech rout sent U.S. equities tumbling on Wednesday. International markets also fell on Thursday. Asia-Pacific stocks saw sharp declines by the region's market close, while European shares tumbled. In the Greater China region, the Hang Seng index was down by 3.88 percent in afternoon trade. Over on the mainland, the Shanghai composite fell 5.22 percent to close at 2,583.46 and the Shenzhen composite plunged 6.445 percent to end at 1,293.90. The fall in the Shanghai index was its worst day since February 2016, according to Chinese financial services firm Wind Information. In Taiwan, the tech-heavy Taiex dropped by 6.31 percent to close at 9,806.11, with shares of lens  maker and Apple supplier Largan Precision plunging 9.89 percent. Japan's markets also faltered. The Nikkei 225 dropped by 3.89 percent to close at 22,590.86 while the Topix index declined by 3.52 percent to end the trading day at 1,701.86, with major sectors down. Over in South Korea, the Kospi continued the general trend for the day by tumbling 4.14 percent to close at 2,136.31. Oil prices slumped on Thursday as global stock markets fell, with investor sentiment made more bearish by an industry report showing U.S. crude inventories rising more than expected. Brent crude fell $1.63, or 2 percent, to $81.46 by 7:40 a.m. ET (1140 GMT). Brent lost 2.2 percent on Wednesday. On Oct. 3, it hit a four-year high of $86.74. U.S. light crude dropped $1.31, or 1.8 percent, to $71.86. The contract lost 2.4 percent in the previous session. Gold prices rose on Thursday as a sell-off in global stock markets prompted investors to seek safety in the metal, with a softer dollar further supporting bullion. Spot gold gained 0.8 percent to $1,203.30 an ounce by 0947 GMT. U.S. gold futures added 1.1 percent at $1,206.20 an ounce.