The S&P 500 Index ($SPX) (SPY) is down by -0.58% today, the Dow Jones Industrial Average ($DOWI) (DIA) is down by -0.95%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down by -0.69%. E-mini S&P futures (ESU26) are down -0.56%, and September E-mini Nasdaq futures (NQU26) are down -0.67%.
Stock indexes are falling today, with the S&P 500 and the Dow Jones Industrials posting 6-week lows. Stocks are under pressure as elevated crude oil prices raise inflation expectations and push bond yields higher worldwide. The 10-year T-note yield rose to a 19-year high of 5.04% today. The 10-year German Bund yield rose to a 17-year high of 3.57%, and the 10-year Japan JGB bond yield rose to a 30-year high of 3.04%. Also, enthusiasm for the AI trade, the major driver of stock gains this year, remains tempered as debate continues over whether the technology may inflict catastrophic harm and whether political pressure for new regulations may slow development.
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Stock losses are limited as chipmakers and AI-infrastructure stocks recover some of Monday's sell-off and move higher. Energy producers are also climbing today, with crude oil prices up more than +2%.
As a bearish factor, the US Sep Empire manufacturing survey of general business conditions fell -13.0 points to 7.6, weaker than expectations of 15.0.
Weaker-than-expected economic news from China is negative for economic growth prospects and bearish for stocks. China Aug retail sales rose +0.4% y/y, weaker than expectations of +0.8% y/y. Also, the China Aug surveyed jobless rate unexpectedly rose +0.1 to 5.3%, showing a weaker labor market than expectations of no change at 5.2%. In addition, China Aug new home prices fell -0.17% m/m, the thirty-ninth consecutive month home prices have declined. On the positive side, China Aug industrial production rose +5.2% y/y, stronger than expectations of +4.8% y/y.
Oct WTI crude oil prices (CLV26) are up more than +2% today but are below Monday's 3.75-month high. Crude prices are climbing as disruptions to Middle East supplies persist, further tightening global oil supplies. Last Friday, Saudi Arabia closed a major pipeline following attacks, disrupting a key route that bypasses the Strait of Hormuz. The East-West pipeline, which carries 7 million bpd of crude, was closed after threats from Houthi rebels, and officials gave no indication of when it will reopen. The pipeline moves oil away from the Persian Gulf toward the Red Sea, where it can be loaded on tankers. Saudi Arabia told OPEC last Thursday that its crude production in August fell to 6.238 million bpd, the lowest since 1990.
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