Chip sector sinks further away: market waits for crucial inflation figures of 2:30 pm
The US stock market futures are turning light green today, while the chippers are sinking and the market is waiting for an important inflation rate.
Wall Street starts cautiously positive on Wednesday, but investors are mainly waiting for the US inflation rate over September. Futures on the S&P 500, Nasdaq 100 and Dow Jones are slightly higher. Still, the atmosphere remains tense.
The VanEck Semiconductor ETF fell Tuesday for the sixth trading day in a row. Investors are increasingly concerned about high valuations, huge investments in AI infrastructure and increasing competition from China.
This is special, because the underlying profit growth remains exceptionally strong. According to FactSet, profit growth of about 130 percent is expected for the semiconductor and chip machine makers this quarter.
So the question doesn't seem to be the problem. It is mainly about the question of how much future growth is already in the prices.
The most important macroeconomic test comes today with the US CPI figure. Economists expect annual inflation to rise from 3.4 to 3.6 percent. That comes at a sensitive time.
The Fed raised interest rates again in September and the market now expects a big chance of another hike before the end of the year. A higher inflation rate can push bond yields up again and put extra pressure on growth stocks, just like Bitcoin (BTC) and gold.
Important inflation figures appear at 14:30. Download the Newsbit app and receive an instant notification as soon as the figures are known.
On top of that comes the high oil price. Brent oil rose to about $106.33 per barrel on Wednesday, while WTI was trading around $94.73.
Tensions between Saudi Arabia and the Iran-backed Houthis are once again raising concerns about oil supplies.
Hedge fund manager Paul Tudor Jones even thinks that oil could rise another 20 to 25 dollars. That would again cause additional inflationary pressure.
At the same time, another load of important quarterly figures arrives today. ASML has surpassed expectations with a record quarter and later today Bank of America and Morgan Stanley are next.
Strong corporate earnings can support the stock market, but if inflation and oil prices continue to rise, pressure from the bond market is likely to remain strong.