Stocks Mixed Ahead of Key U.S. Inflation Reports Later This Week

U.S. equities are mixed as investors await this week’s highly anticipated September inflation data. The markets seem to be on edge at the prospect of further monetary policy tightening, which could be enhanced by the inflation reports. In economic news, small business optimism unexpectedly increased but remained below the 48-year average for a ninth-consecutive month. Equity news is light as Q3 earnings season kicks off this week, while Leggett & Platt lowered its full-year guidance, and KLA Corporation ceased some of its business with China-based customers following export restrictrions. Treasury yields are mixed after a return to action following yesterday’s holiday. The U.S. dollar is mostly unchanged, crude oil prices are declining, and gold is ticking higher. Asian stocks were mostly lower following new export rules on semiconductor chips from the U.S. European stocks are lower as the Bank of England announced further intervention to try to ensure financial stability. The global markets continue to grapple with the possibility of future global rate hikes as inflationary concerns remain.

At 10:52 a.m. ET, the Dow Jones Industrial Average is up 0.2%, the S&P 500 Index is declining 0.6%, and the Nasdaq Composite is decreasing 1.0%. WTI crude oil is down $1.56 to $89.57 per barrel, and Brent crude oil is losing $1.55 at $94.64 per barrel. The gold spot price is ticking $1.00 higher to $1,676.20 per ounce, and the Dollar Index is advancing is mostly unchanged at 113.12.

Leggett & Platt Incorporated (LEG $32) lowered its full-year guidance and also announced several recent acquisitions. President and CEO of the diversified furniture and engineered components company, Mitch Dolloff, stated, “The increasingly challenged global economic environment and consumer backdrop is expected to result in lower than previously anticipated sales and earnings.” He mentions how industry headwinds such as inflationary and monetary policy have impacted consumer spending and sentiment, as well as inventory levels. Additionally, LEG reported that it acquired a leading global manufacturer of hydraulic cylinders for heavy construction machinery that has manufacturing facilities in several places around the world. LEG is trading noticeably lower.

Semiconductor manufacturing company KLA Corporation (KLAC $288) reported that it would cease some of its business with China-based customers. This follows President Biden’s announcement last Friday that the U.S. would impose exportation restrictions on certain types of semiconductor chips to China. Shares are lower.

Despite the rocky finish, the S&P 500 Index ended higher last week after rallying on Monday and Tuesday, bouncing back from a string of weekly declines that took the index to levels not seen since 2020. Inflation pressures have persisted, as noted by the jobs report released last Friday, forcing the Fed to aggressively tighten monetary policy and boosted concerns about the economy as discussed in the article, Stock Market Volatility: Jobs Report Kills Rally. Meanwhile, as the markets gear up for the start of Q3 earnings season next week, Schwab's Chief Investment Strategist Liz Ann Sonders discusses in her article, Earnings: Trampled Under Foot? how the bear market has been driven by multiple compression, making valuations look relatively compelling, but expected weakness in earnings may limit the upside potential for stocks.