There is a good bit of headline material this morning, yet none of it has stirred up the stock market like Hurricane Michael is stirring up the waters of the Gulf of Mexico on its way to projected landfall later today in the Florida panhandle.
That hurricane is the lead news story and for good reason. It has been upgraded to a Category 4 storm.
Michael's path through the Gulf of Mexico has taken roughly 40% of Gulf oil production offline, yet oil prices have been pretty tame this week all things considered as festering global growth concerns have mitigated worries about the temporary supply disruption created by Michael.
The growth concerns have picked up with tariff actions, rising interest rates, the IMF's reduction to its global growth forecast for this year and next, and a smattering of companies starting to call attention to the adverse impact of cost increases, currency pressures, and slowing demand.
Yesterday, PPG Industries (PPG) checked off a lot of earnings-warning boxes. Today, it is small-cap company Trinseo (TSE) that has done the same.
Trinseo isn't going to move the market per se, yet weaker-than-expected third quarter guidance that was attributed to higher raw material costs, an auto industry slowdown, and reduced customer demand is the type of earnings narrative this market is worried it will hear more of in the third quarter reporting period.
It is also worried that it will hear more about rising inflation. The Producer Price Index for September added to its worries to a certain degree, too.
The Producer Price Index for final demand increased 0.2%, as did the final demand index less food and energy (core PPI). The 0.2% month-over-month increases were in-line with the Briefing.com consensus estimates.
On a year-over-year basis, the index for final demand was up 2.6%, versus 2.8% in August, while the index for final demand less food and energy was up 2.5%, versus 2.3% in August.
The key takeaway from the report is that producer prices climbed in September without a contribution from prices for final demand energy, which fell 0.8%. Furthermore, there is nothing in the report to suggest the Fed is likely to deviate from another rate hike at its December FOMC meeting.
That might not sit well with President Trump who reiterated last night that he'd prefer the Fed not raise interest rates at this point. On a related note, New York Fed President Williams (an FOMC voter) said last night, according to reports, that he thinks the Fed will get to a neural rate in the next year or so, implying that there is still more scope for rate hikes.
The Treasury market, which was slightly weaker ahead of the PPI report, has maintained that weak disposition. The inflation-sensitive 10-yr note yield is up three basis points to 3.24% while the 2-yr note yield is up two basis points to 2.90%.
That bump in rates has been a restraining influence in the early going for buyers, who are cognizant that the stock market has not acted well of late in the face of rising interest rates. The move in rates and the continued skittishness in the U.S. stock market has overshadowed reports that indicate a Brexit deal could be close between the UK and the EU.
Currently, the S&P futures are down ten points and are trading 0.2% below fair value, which will put the S&P 500 on course to open below its 50-day moving average. The Nasdaq 100 futures are down 46 points and the Dow Jones Industrial Average futures are down 83 points.