Stock Market Today: the Morning's Rally Reversed in Two Minutes — Futures Tumble on the Hot CPI
At 5:01 a.m. Dow futures were up 205 points on cheap oil. At 8:32 a.m., two minutes after the inflation print, the S&P was sliding and the Nasdaq was down nearly a full percent in futures. The 8:30 number did that.
The reversal took about two minutes. Tuesday's pre-open tape had leaned on falling oil — Dow futures up 205 points at 5:01 a.m. Eastern, Brent crude under $90 a barrel — and then the Bureau of Labor Statistics published an October inflation report hotter than the forecast, and the morning changed direction. Reuters put it plainly in its market-reaction file: U.S. stocks tumbled, with futures tracking the Nasdaq falling 1.4% and those tracking the S&P 500 down 0.8%. The first timed snapshot after the print, at 08:32 a.m. ET, showed Dow E-minis clinging to a 46-point gain while S&P 500 E-minis fell 26.25 points and Nasdaq 100 E-minis dropped 256.5 points — growth stocks taking the hit, exactly as a rate story would predict.
The bond market moved faster than the stock market. Two-year Treasury yields, the ones most sensitive to the Federal Reserve's next move, soared 13 basis points to 4.68%, and the benchmark 10-year yield rose 7.6 basis points to 4.94%, per Reuters. The dollar index rose 0.3% to 102.05, and gold — the asset that is supposed to like inflation — fell 2% to $4,057 an ounce, because what the market heard in the report was not inflation alone but the hikes that answer it.
The quotes in Reuters' file split along a familiar line. A New York voice, Spartan Capital Securities' chief market economist Peter Cardillo, called the data a bit hotter than expected and said a December hike is on its way — the open question being 25 or 50 basis points. Others warned that sticky core inflation keeps borrowing costs high and eventually pressures the earnings of companies that live on credit. All of that is argument, not outcome: the cash market in New York has a full session to reprice, a 1 p.m. 10-year note auction to absorb, and CoreWeave's earnings after the bell. What the futures settled in two minutes is narrower — the December debate is no longer whether the Fed hikes, but by how much.
