wednesday market open the market received another big “riskoff” catalyst this morning from higherthanexpected producer price index ppi data for september stock index futures which had climbed ahead of the report gave back most of their gains but stayed slightly in the green despite a disappointing 04 jump in headline ppi analysts had expected a 02 monthly climb inflation gains were pretty evident throughout the report nothing here looks like it would give the fed any indication that its tightening is significantly slowing price growth the cme fedwatch tool now indicates a roughly 84 chance of a 75basispoint hike at the fed’s nov 12 meeting the 10year treasury yield tnx climbed to 396 this morning futures trading went on a rollercoaster ride overnight but benchmark sp 500® spx futures remained above 3600 this morning that could be a key support area after a late selloff yesterday took us to a close below 3600 the resistance level to watch appears to be 3640 the cboe volatility index® vix has been climbing this week and remained above 33 in the early going wednesday this level is well above normal and indicates expectations for choppiness ahead so anyone trading should use caution with ppi data now in the rearview mirror tomorrow’s september consumer price index cpi will be the next big number on the schedule we’ve seen the producer side of the house and now it’s on to the consumer side analyst consensus from briefingcom suggests we’ll see a 02 rise in headline cpi with core cpi up 04 from a month earlier if cpi rises less than expected tomorrow it might be seen as bearish it could be a negative sign for profits if producer prices are rising and companies can’t pass those prices on to consumers it could represent a possible hit on margins it’s often helpful to dive deeper into these reports beyond the headline figures to see where inflation is coming from where it’s rising and where it’s falling food shelter automobile and energy costs have driven a lot of the consumer inflation so far this year but lately there’ve been signs of retailers running into inventory buildups and even discounting prices we’ll see if tomorrow’s report shows signs of any pullback in prices elsewhere the market right now is trying to digest all the data coming in and then put it alongside some sort of federal reserve ratehike path it seems every time we’ve recently received a data point that doesn’t fit the perceived rosy outcome the market gets some pretty big jitters with the opening salvo for the q3 earnings season fired from the biggest banks on friday be prepared for volatility it’s a drill that’s been going on for months without an armistice but it’s somewhat constructive to see that the financial industry regulatory authority finra says investors are using less leverage that could limit the volatility a bit if we see selling accelerate not having as much leverage could be a calming factor we got some important and slightly positive inflation data yesterday when the federal reserve bank of new york released consumer inflation expectations for september expectations for inflation growth over the next year fell to 54 the lowest number in a year and a decline from 575 in august and a peak of 68 in june the fed has said it’s very focused on consumer inflation expectations due to worries they could become entrenched so this report is a bigticket item that central bankers are likely watching any drop however small is potentially helpful because it could be evidence that households are starting to see the impact of higher borrowing costs in other fedrelated news investors will be on their toes this afternoon for the latest batch of minutes from september’s federal open market committee fomc meeting the fed’s language has been uniformly hawkish in speeches since then but the minutes often delve deeper into fed officials’ thinking some people will likely try to read between the lines for possible signs of anything that could make the fed pause its pace of one large rate hike after another they’ll also be looking for language indicating whether any fed officials are concerned about tightening too much the earnings season gathers steam today and tomorrow ahead of big bank earnings on friday pepsico pep kicked things off this morning the food and beverage giant beat wall street’s earnings and revenue expectations and raised its guidance a key positive element shares rose 3 in the hours before the opening bell several food and beverage companies have now reported over the past two weeks and their results have been generally good thursday marks the first megaearnings day featuring walgreens boots alliance wba taiwan semiconductor tsm domino’s pizza dpz blackrock blk and delta dal the dal and tsm reports in particular could be worth watching the chip sector has been under intense pressure amid signs of declining demand while at the same time recent consumer surveys show consumers spending more heavily on travel then many of the big banks step up to the plate friday morning companies expected to report that day include jp morgan chase jpm morgan stanley ms wells fargo wfc and citigroup c their narrative is likely to set the tone for the rest of the q3 earnings season no rally seems safe yesterday proved that again after being up more than 300 points at times during the session the dow jones industrial average® dji finished the day up only 3631 points or 012 at 2923919 strength in two dji components—amgen amgn and walgreens boots alliance wba helped keep that index barely afloat but it was a sharp drop from midday highs amgn benefitted from an analyst upgrade and wba made gains ahead of its scheduled report of fiscal q4 earnings tomorrow the spx posted new twoyear lows intraday tuesday before closing down 065 at 358884 while the nasdaq100® ndx fell 124 to 1079135 the russell 2000® rut rose just a smidgen worries about financial stability in the uk appeared to dash the rally late in the day so did more hawkish fed talk this time from cleveland fed president loretta mester comments by bank of england governor andrew bailey about “three days left” before the boe halts its market support likely delivered most of the dagger wti crude cl prices sank for the secondstraight day apparently taking their lower cue from rising measures against covid19 in china the energy sector lost ground again while socalled “defensive” regions of the market like consumer staples and health care were among the market leaders tuesday real estate also made healthy gains tuesday but its yeartodate performance remains far worse than that of the spx amid rising mortgage rates and recession fears it’s the worstperforming sector of the year except for communication services the us dollar index dxy closed above 113 after falling below 111 last week the dollar might have benefited from global financial worries following the bank of england’s boe extension of bond buying announced early tuesday increased tension in ukraine and covid19 issues in china may also be supporting the greenback tech strikes out through the end of last week the sp 500 technology select sector ixt was down 20 from its recent august peak versus just 15 for the spx other sectors are also weak since then but why is tech getting hit harder it’s easy to say it’s thanks to bad news like softness in the semiconductor sector growing covid19 cases in china and overall economic pain and that’s true enough but there’s also a more structural aspect when the fed had its benchmark borrowing rate fixed near zero between march 2020 and march 2022 investors couldn’t make any money in fixed income but a theoretical tech company with no profits essentially had a free ride the company could borrow money at very low interest wasn’t expected to show profits and could find easy access to capital that kind of runway attracted investors and the ixt rose more than 150 from its march 2020 low to its alltime high late last december since then the ixt is down onethird and that’s partly a function of the fed’s 300 basispoint rate increase starting in march suddenly that unprofitable tech company and many others had to pay “real” money to borrow and with interest rates rising investors found they had more attractive things to do with their money like parking it in a government bond paying 4 with the cost of borrowing and servicing debt now so much higher there could be some debtrelated pain developing in tech and other sectors where many companies have borrowed heavily the big banks might be able to shed more light on loan quality when they report earnings later this week new year’s party cancellation we’re entering q3 earnings season with many analysts and companies fiercely slicing projections for company profits unfortunately the same thing might happen soon to wall street’s 2023 sp 500 earnings outlook even though it’s six months until the first of those hit our screens the current outlook is for 79 yearoveryear earnings per share growth for sp 500 companies next year according to factset but research firm briefingcom contends that’s too high persistently elevated inflation rising interest rates the strong us dollar higher energy prices china’s continuing “zerocovid” policy and a reduced “wealth effect” globally due to falling stock prices all could cause that nearly 8 projection to decline said briefingcom also if the fed succeeds in its goal of softening the labor market that means higher unemployment leading to potentially lower consumer spending all in all not a rosy forecast what’s in store the holiday shopping season looks increasingly likely to be weaker than normal at least judging by retail sector layoffs peloton interactive pton last week became the most recent consumer products company to announce job cuts retailers have cut 11 of their workers so far this year through september barron’s reported but many firms are still working out their holiday hiring plans usually retail layoffs pick up in the new year after the holidays last week’s labor department payrolls report showed a very small drop in the number of people employed in the retail services sector during september for anyone trying to get a sense of holiday shopping trends that could be an interesting sector category to search when the october jobs report arrives to see if it turns around oct 13 september consumer price index cpi and earnings from delta dal domino’s dpz progressive pgr and walgreen’s boots alliance wba oct 14 september retail sales october michigan consumer sentiment early august business inventories and earnings from citigroup c jpmorgan chase jpm wells fargo co wfc morgan stanley ms pnc financial pnc us bancorp usb and unitedhealth unh oct 17 october empire state manufacturing and earnings from bank of america bac oct 18 september industrial production september capacity utilization and earnings from goldman sachs gs johnson  johnson jnj lockheed martin lmt united airlines ual and netflix nflx oct 19 september housing starts and building permits and earnings from abbott labs abt procter  gamble pg biogen biib travelers trv tesla tsla and las vegas sands lvs oct 20 september existing home sales philadelphia fed index and earnings from alaska air alk american airlines aal att t dow dow whirlpool whr and csx csx this post contains sponsored advertising content this content is for informational purposes only and not intended to be investing advice