Coffee With Greta: Stubbornly High Inflation Causing Market Turmoil

DJIA Futures: -522 (-1.8%)

SPX Futures: -80 (-2.2%)

NASDAQ Futures: -329 (-3.0%)

Good morning friends! 

Futures are plunging, reversing earlier gains as a hotter-than-expected CPI shows inflation pressures remaining stubbornly high. 

Let’s get right to it!

Stocks Plunge As Inflation Runs Hot

Consumer inflation is still running red hot and that’s bad news for the stock market. 

The Bureau of Labor Statistics’ consumer price index rose 0.4% monthly in September and 8.2% year over year. 

Both readings were higher than economists’ expectations even as the Fed hikes rates in an attempt to slow inflation. 

The higher prices were boosted by rising rent as gas prices fell.

Gasoline prices were down 4.7% on a monthly basis but still up 19.7% year over year. 

Shelter prices rose 0.7% monthly and 6.6% annually. 

Food prices also continued to gain with groceries up 0.7% monthly and 13% annually. 

The core CPI – which excludes food and energy prices – rose 0.6% monthly and 6.6% year over year. 

Both of those were also hotter than expected. 

Weekly Jobless Claims Hit 7-Week High

Weekly jobless claims jumped to a 7-week high in a sign that layoffs may be rising amid the Fed’s inflation fight. 

The Labor Department reported 228,000 Americans filed initial unemployment claims last week. 

That was up by 9,000 from the previous week and higher than expectations for 225,000. 

Claims have risen in three of the last four week and this is the highest level since late August. 

Continuing claims rose by 3,000 to 1.368 million in the week ending October 1. 

British Pound Jumps

The British pound rallied against the dollar today following reports the British government is in talks to ditch parts of its recent tax cuts package. 

The pound hit an all-time low against the dollar after those unfunded tax cuts were announced on September 23. 

But Sterling traded 1.5% higher in London afternoon trading, hitting $1.1269. 

The government is reportedly considering reversing course on the changes to corporate taxes and dividend taxes.

Walgreens Tops Fiscal Q Expectations

Walgreens (WBA) shares are up 1% ahead of the open after beating fiscal Q4 expectations on the top and bottom line. 

Here’s how the healthcare company’s results compared to analysts’ expectations:

• Adjusted EPS: $0.80 vs $0.77 expected
• Revenue $32.5 billion vs 32.09 billion expected

Pharmacy and retail sales declined 7.2% year over year while comparable sales rose 1.6%.

Covid vaccines fell off sharply during the quarter with just 2.9 million administered vs 4.7 million in fiscal Q3 and 15.6 million in fiscal Q1. 

Delta Returns to Profitability, Revenue Hits Record

Delta Airlines (DAL) shares are up 1.2% in premarket trade after reporting record-high revenue in Q3.

Here’s how the airline’s results compared with analysts’ estimates:

• Adjusted EPS: $1.51 vs $1.53 expected
• Adjusted revenue: $12.84 billion vs $12.87 billion expected

That revenue was 3% higher than 2019 levels thanks to higher prices as the airline flew a smaller schedule compared to Q3 2019.

CEO Ed Bastian said, “The travel recovery continues as consumer spend shifts to experiences and demand improves in corporate and international.”

But Delta’s costs continued to surge in the quarter. 

Fuel costs came in at $3.32 billion, up nearly 48% compared to 2019.

Excluding fuel, costs per available seat mile were up nearly 23% compared to three years ago. 

Oil Prices Drop on Hot Inflation Data

Oil prices have turned lower following the release of hot inflation data this morning.

West Texas Intermediate crude futures are down 1.8% to under $86 bbl while Brent crude futures are falling 1.4% to $91 bbl. 

Prices were pushing higher earlier this morning amid fresh supply concerns after the International Energy Agency warned about the impact of OPEC+’s supply cuts.

The agency said, “The OPEC+ … plan … has derailed the growth trajectory of oil supply through the remainder of this year and next, with the resulting higher price levels exacerbating market volatility and heightening energy security concerns.”

The group downgraded its oil demand growth estimates to 1.9 million bpd and 1.7 million bpd in 2023.

In Case You Missed It

• The minutes of the Fed’s September meeting show officials are not worried about going too far in their fight against inflation. The report said, “Many participants emphasized that the cost of taking too little action to bring down inflation likely outweighed the cost of taking too much action.” Officials said inflation is “showing little signs so far of abating” and they plan to continue rate hikes until they say evidence of a change.