Sun, September 25, 2022

Futures drop as oil rally fuels inflation concerns

Inflation

U.S. stock index futures slid on Monday as rising commodity prices added to inflation concerns, which could cloud the earnings season begun to start with Wall Street banks later this week.

Increasing raw material prices, labor deficiencies, and other supply chain bottlenecks have raised worries of elevated prices sinking corporate profit.

U.S. oil increased almost 3% and reached a seven-year high as an energy crisis seizing the major economies conferred no sign of easing.

But it raised shares of Chevron Corp (NYSE: CVX), Exxon Mobil Corp (NYSE: XOM), and APA Corp within 1.2% and 3% in premarket trading.

Mega-caps Apple Inc (NASDAQ:AAPL), Microsoft Corp (NASDAQ:MSFT) and Amazon.com Inc (NASDAQ:AMZN) sank within 0.6% and 0.8%.

Joshua Mahony, the senior market analyst at I.G., wrote in a client note that there are unquestionably significant risks to increase borne out of the recent growth in prices, with rising natural gas prices bringing the potential for sharp increases to both energy and food prices.

 

Inflation seems like it will be here for some time

 

At 7:01 a.m. ET, Dow e-minis were under 117 points, or 0.34%, S&P 500 e-minis were falling 21.5 points, or 0.49%, and Nasdaq 100 e-minis were declining 107.25 points, or 0.72%.

Earnings season will hit off this week, with JPMorgan Chase & Co (NYSE: JPM) recording on Wednesday, accompanied by Bank of America Corp (NYSE: BAC), Morgan Stanley (NYSE: M.S.), and Citigroup Inc (NYSE: C) on Thursday and Goldman Sachs Group Inc (NYSE: G.S.) on Friday.

Analysts view a 29.6% year-over-year rise in profit for S&P 500 companies in the third quarter, as stated by IBES data from Refinitiv as of Friday, down from a 96.3% increase in the second quarter.

All of Wall Street’s main indexes had finished the last week with gains, but investors still anticipate the Federal Reserve to begin tapering asset purchases later this year.

Following data last week revealed more limited jobs increase than expected in September, investors are now seeing toward inflation and retail sales numbers this week, as well as minutes of the Fed’s last meeting that could prove that a November tapering was considered.

Southwest Airlines (NYSE: LUV) Co slid 1.9% on the report that it cut at least 30% of its scheduled flights on Sunday.

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