Thursday August 12th

12-08-2021

U.S. stock futures are flat with the Dow hovering at a record

U.S. stock index futures were mostly flat Thursday after the market shrugged off a jump in consumer prices and new jobless claims data with the Dow Jones Industrial Average and S&P 500 at record levels. Dow futures rose 20 points, less than 0.1%. S&P 500 futures held steady, and Nasdaq 100 futures traded just under the flatline. The Labor Department reported Thursday morning that initial jobless claims declined slightly last week as the U.S. labor market continues its recovery from last year’s recession. There were 375,000 claims last week, matching estimates. The prior reading came in at 385,000 claims. The prices U.S. manufacturers and other businesses pay for labor, raw materials and other goods rose again in July. The government said its producer price index, excluding volatile food and energy components, rose 0.9% last month versus a forecast for a 0.5% gain. The 10-year Treasury yield rose to 1.37% following the economic data. The update to producer price inflation came a day after the Labor Department said consumer prices surged 5.4% from a year earlier, for the month of July, and 0.5% from the previous month. Core inflation, however, rose by just 0.3% in July, below the 0.4% increase forecast. Core inflation excludes energy and food prices and is considered a more reliable measure by economists since energy and food prices can be so volatile. “Inflation has, at a minimum, paused,” said Brad McMillan, chief investment officer at Commonwealth Financial Network. “For both the headline and core figures, the monthly and annual numbers were stable or down from last month. Based on that data, inflation is certainly not on an unstoppable increase.” Treasury yields dipped after the inflation report and as a 10-year note auction showed strong demand. Dallas Fed President Robert Kaplan told CNBC the Fed should start removing stimulus in October, adding to the decline in yields. “The inflation story is more about isolated components, rather than general increases in prices, and even those components are showing signs of peaking,” McMillan said. “As we dig into the numbers, inflation is above where it has been but is showing signs of rolling over and returning to more comfortable levels.” Dow member Disney will report earnings after the closing bell. The shares, down slightly in 2021, were flat in the premarket. Micron shares fell 2% in extended trading after Morgan Stanley predicted a slowdown in the memory chip market and downgraded the stock. On Wednesday, the Dow gained 0.6% to reach 35,484.97 and close at a new record. The S&P 500 rose 0.2% to an all-time high of 4,447.70. The Nasdaq Composite traded about 0.1% lower to 14,765.13. Asia-Pacific stocks were mostly lower by the close on Thursday, as U.S. markets again notched highs after data showed inflation was not as bad as feared. The dollar weakened while Asian currencies rose. Chinese stocks closed in negative territory. The Shanghai composite was down 0.22% to close at 3,524.74, while the Shenzhen component declined 0.79% to 14,901.97. Hong Kong’s Hang Seng index lost nearly 1%. The Nikkei 225 in Japan was down 0.2% to close at 28,015.02, while the Topix closed nearly flat to 1,953.55. In South Korea, the Kospi fell 0.38% to 3,208.38. Oil prices were steady on Thursday following two days of gains after a call from the United States, the world’s top oil consumer, for major producers to boost output reinforced supply concerns as economies ease their coronavirus restrictions. Brent crude futures slid 10 cents to $71.34 per barrel while U.S. West Texas Intermediate (WTI) crude futures declined 17 cents to $69.08 per barrel. Gold edged up on Thursday as fears of early tapering by the Federal Reserve eased after data indicated a slight moderation in U.S. consumer price increases, with a resultant dip in the dollar and bond yields lending further support to bullion. Spot gold was little changed at $1,751.27 per ounce by 6:26 a.m. ET, having recorded it biggest one-day percentage gain since May 6 on Wednesday. U.S. gold futures were up 0.1% to $1,754.00.