Here are the key events that will take place on Tuesday which could impact trading.
INFLATION INDICATOR: A key indicator of wholesale inflation is coming in on Tuesday morning.
At 8:30 am ET, the Bureau of Labor Statistics is expected to say that the PPI was up 0.4% on a monthly basis according to Refinitiv’s forecast, unchanged from a warmer-than-expected print of 0.4% in September.
Year-over-year, prices paid by wholesalers are expected to rise 8.3%, less than 8.5% in September and the fourth consecutive month of slowing growth.
It would also be the lowest reading since July 2021 and, coupled with last week’s cooler-than-expected October CPI report, could bolster hopes for smaller Fed rate hikes.
IN OCTOBER INFLATION KEEPS ON THE US ECONOMY, AS PRICES REMAIN OBSTLY HIGH
Excluding food and energy costs, core producer prices are expected to rise 0.3% monthly in October, matching the 0.3% increase in September.
Core PPI year-over-year growth is expected to remain stable at 7.2% in October, the seventh consecutive month from flat to slowing growth after a record 9.7% increase in March (data from April 2011).
At the same time, the New York Federal Reserve will release its carefully monitored regional manufacturing activity indicator.
The Empire State Manufacturing Survey is expected to rise to -5.0 in November, remaining in contraction territory for a fourth month after unexpectedly plunging to -31.3 in August (a number below zero means that more producers in the region New York states that trading conditions are getting worse than improving).
LOWER STOCKS: US equities closed lower on Monday after last week’s big rally as investors digested new comments from Federal Reserve officials on prospects for further interest rate hikes.
The S&P 500 was down 35.68 points, or 0.9%, to 3957.25, and the NASDAQ Composite was down 127.11 points, or 1.1%, to 11196.22. The Dow Jones Industrial Average lost 211.16 points, or 0.6%, to 33 536.70.
Stocks have risen in recent days in hopes that the Fed will not further tighten financial conditions after US inflation in October fell below economists’ estimates. The Fed’s quest to tame inflation has dragged equities, bonds and commodities lower this year.
MORTGAGE RATES ARE REDUCED BY MORE THAN 7%
Part of the excitement of the past week has cooled to start the week. Of the 11 sectors within the S&P 500, only healthcare stocks gained. Real estate, consumer discretionary and utilities groups recorded the largest declines.
“Just because there may be a spike in inflation, just because the Fed slows, it doesn’t actually mean a new bull market is starting because the risk of recession is still relatively high for next year,” said Keith Lerner, co-chief. investment officer at Truist Advisory Services Inc.
Lerner noted that stocks don’t always rise when the Fed is cutting rates, indicating the performance of the S&P 500 in 2000.
Fed Vice President Lael Brainard said on Monday that recent inflation data has offered some reassurance that price pressures are no longer widening and that the central bank may soon slow the pace of interest rate hikes. .
But Fed Governor Christopher Waller said over the weekend that policymakers still have “a way to go” and would like to see more similar data before easing a foot off the brake.
Traders and investors have argued that one data point is not enough for the Fed to change its aggressive bullish stance. Many are already looking at the economy to see how it has handled previous rate hikes.
“We’ve seen inflation decline, but I wouldn’t call it a trend,” said Jason Ray, founder and investment director of Zenith Wealth Partners. “We are still thinking the Fed will be aggressive and take steps to slow the economy.”
3Q GAIN: The retail giants and members of Dow Walmart and Home Depot are out with quarterly results Tuesday morning, kicking off a busy week for retail earnings.
Pay attention to the numbers of the Advance Auto Parts auto parts dealer after the closing bell.
|HD||THE DEPOT INC. HOUSE||306.92||-8.02||-2.55%|
|ENR||ENERGIZER HOLDINGS INC.||29.60||+0.17||+ 0.58%|
|TME||TENCENT MUSICAL ENTERTAINMENT GROUP||4.45||+0.04||+ 0.91%|
|AAP||ADVANCED AUTO PARTS INC.||183.78||-2.61||-1.40%|
Over 90% of the S&P 500 (465 companies) reported Q3 numbers and, so far, the results are above expectations.
RAILWAY STRIKE ON THE HORIZON ?: The International Brotherhood of Boilermakers (IBB) announced on Monday that its members voted against ratifying an interim agreement with major freight railways, making IBB the third trade union group to reject the Biden administration-brokered deal and increasing possibility of a nationwide strike.
The IBB said in a statement that it has now entered a period of “cooling off” and plans to continue to negotiate further with the National Carriers’ Conference Committee (NCCC), which represents the nation’s largest railways, including BNSF, CSX, Norfolk Southern and Pacific Union.
IBB joins the Brotherhood of Railroad Signalmen (BRS) and the Brotherhood of Maintenance of Way Employees Division of the International Brotherhood of Teamsters (BMWED) in rejecting proposed contracts that provide for a 24% wage increase to rail workers over the five-year period from 2020 to 2024.
‘DISAPPOINTED’ RAILWAY COMPANIES SOME TRADE UNIONS WASTE INITIAL AGREEMENT: IAN JEFFRIES
Union railroad workers opposed to the interim agreement negotiated by President Biden’s Presidential Emergency Board (PEB) are unhappy that the agreement has not done more to address quality-of-life issues, particularly lack of time to sickness and work on reduced crews.
|UNP||UNION PACIFIC CORP.||216.95||-0.55||-0.25%|
|NSC||NORFOLK SOUTHERN CORP.||251.68||+0.77||+ 0.31%|
Several union members told FOX Business they were frustrated that their union representatives signed the PEB recommendations in September, arguing that the deal did not do enough to improve working conditions.
All 12 unions involved in the negotiations must agree to ratify their new contracts, otherwise a strike could take place, devastating supply chains and the economy in general, at an estimated cost of $ 2 billion a day. Congress is expected to be involved in the event of a work stoppage, but several unions have agreed to continue negotiations in early December.
PENDING STUDENT LOAN PROVISION: A federal appeals court on Monday passed a preliminary injunction to stop President Biden’s plan to forgive student debt for millions of borrowers.
The ruling of a jury of three judges from the 8th US Circuit Court of Appeals in St. Louis came just days after a Texas federal judge blocked the program.
“The injunction will remain in effect until new orders from this court or the US Supreme Court,” read Monday’s ruling.
STUDENT LOAN REFINANCE INTEREST RATES ON BALANCE FOR 5 AND 10 YEAR LOANS
The judge in the Texas case said the plan usurped the power of Congress to pass laws. The Texas case has been appealed and the administration is likely to appeal the 8th Circuit ruling as well.
In that ruling, U.S. District Judge Mark Pittman – a Trump appointee based in Fort Worth – criticized the way the program went ahead without congressional approval.
“In this country, we are not governed by an omnipotent executive with a pen and a telephone. Instead, we are governed by a constitution that provides for three distinct and independent branches of government,” he wrote.
CLICK HERE TO READ MORE ABOUT FOX BUSINESS
The Biden administration has stopped accepting applications for the expected relief. The plan would cancel $ 10,000 in student loan debt for those earning less than $ 125,000 or families with less than $ 250,000 in income. Pell Grant beneficiaries, who typically demonstrate greater financial need, would receive an additional $ 10,000 in debt relief.