US stock index futures stabilized after US inflation exceeded economists' forecasts, but producer prices declined slightly. During this morning's trading, major stock indexes are trading in a slight minus, and investor sentiment continues to fluctuate between hopes that inflation has peaked and fears that a significant increase in interest rates by the Federal Reserve will hinder economic growth. Treasury bond yields have risen. Futures contracts for the S&P 500 and Nasdaq 100 declined by 0.1%, while the industrial Dow Jones continued to trade near the day's opening level. European stock indices did not change, while the MSCI Asia Pacific index reversed the previously achieved growth and began to decline.
Today, the market will be fueled by economic data from the United States. Yesterday's decline in producer prices was relieved after a surge in consumer inflation on Tuesday led to a sharp increase in expectations of an interest rate hike. Data on employment, manufacturing, and retail trade are expected today. Even if sales increase in August, this will not help the stock market much, as it will increase concerns about further inflationary growth in the United States. Markets are torn between bearish sentiment, which is only fueled by threats of higher borrowing costs, and those who continue to bet that the inflationary maximum has already been overcome. It's time to think about saving the economy from recession and a softer landing.
Traders estimate an increase of 75 basis points as already accomplished. Next week, the Fed will meet for a committee meeting, and there are those who, at the same time, are betting on a rate increase by one point at once. Against this background, Treasury bonds have exacerbated the inversion of the yield curve — a harbinger of an impending recession.
Oil continues to fluctuate in the channel as traders struggle with concerns about rising global demand. Natural gas has grown as traders are skeptical about the steps taken by the eurozone governments to contain the energy crisis.
As for the technical picture of the S&P500, after the collapse, the bulls are already trying to find something around $ 3,940, but there is not enough positive in the market. It is necessary to overcome the level of $3,968 to build an upward correction, which will open the way to $4,003. Only the breakdown of this range will support a new upward momentum, already aimed at the resistance of $4,038 and $4,062. The furthest target will be the area of $4,091. In case of further downward movement, the breakdown of $3,942 will lead to $3,905, pushing the trading instrument back to a minimum of $3,872, from a direct road to the area of $3,835, where the pressure on the index may weaken slightly.