Dow Set to Rise as Inflation Concerns Hold, Oil Majors Surge—and What Else Is Happening in the Stock Market Today

This post was originally published on this site

A wave of U.S. bank earnings hits Thursday.

Spencer Platt/Getty Images

The stock market was rising Thursday as the debate over the impact of higher inflation remained front and center, while investors continued to look ahead to the coming wave of corporate earnings reports.

Futures for the Dow Jones Industrial Average indicated an open 190 points higher, after the index closed flat Wednesday at 34,377. Futures for the S&P 500 and Nasdaq signaled a similar start.

Overseas, Hong Kong’s Hang Seng Index fell 1.4% amid a blowout reading of Chinese producer price inflation, while in Europe the regional Stoxx 600 was 0.9% higher.

Set against the future of central bank stimulus, investors continue to fret over whether recent spikes in inflation are transitory or more long-lasting—and what it means for monetary policy. The Federal Reserve is expected to announce that it will begin slowing, or tapering, its program of monthly asset purchases, which add liquidity to markets, in November.

The U.S. consumer-price index for September, reported Wednesday, came in slightly ahead of analyst expectations, rising 0.4% on a monthly basis. If inflation continues to push higher, it raises the prospect of rate hikes from central banks sooner than expected. In China, data showed Thursday that producer price inflation rose 10.7% year-over-year to the highest level in nearly 26 years.

“Recent inflation dynamics and issues on the supply-side are something that politicians have become increasingly attuned to, and President Biden gave remarks last night where he outlined efforts to address the supply-chain bottlenecks,” noted Jim Reid, a strategist at Deutsche Bank. “That comes [amid reports] that the White House has been speaking with U.S. oil and gas producers to see how prices can be brought lower.”

With corporate earnings season in full swing, investors will be particularly attuned to how supply-chain pressures are weighing on company profits. But some analysts remain bullish on earnings.

“Earnings growth and the ‘beat’ rate will likely drop significantly compared with the second quarter’s 88% year-over-year growth and 17% beat rate for the S&P 500,” said Mark Haefele, the chief investment officer at UBS Global Wealth Management. “But we still expect roughly 30% earnings growth in the third quarter, representing a 5% beat.”

“Pent-up demand should drive revenue growth, while pricing power and operating leverage should help offset inflationary pressures,” Haefele added.

In the day ahead, investors will look to U.S. economic data in the form of initial jobless claims for last week, continuing jobless claims for the week of Oct. 2, and the producer-price index for September.

Companies reporting financial results Thursday include Bank of America (ticker: BAC), Citigroup (C), Wells Fargo (WFC), Morgan Stanley (MS), and Taiwan Semiconductor Manufacturing Company (TSM).

Here are five stocks on the move Thursday

Oil prices ticking up Thursday has boosted major oil companies, with BP ( BP ) rising 1% and Royal Dutch Shell (RDS.A) moving up 1.2% in London, as TotalEnergies (TTE) lifted 0.8% in Paris and Eni (E) climbed 1.5% in Milan.

Advertising and public relations giant Publicis (PUBGY) rose 3.6% in Paris, after reporting net revenue in the third quarter ahead of expectations.

Write to editors@barrons.com