Back to top

Image: Bigstock

Pre-Markets Drifting Ahead of CPI, UAW News

Read MoreHide Full Article

Pre-market futures this morning are unmistakenly taking a breather from the past three sessions closing higher on the Dow and two of three up for the Nasdaq and S&P 500. We’re once again light on data ahead of today’s opening bell, so market participants are being left to their own devices — and they appear to be adrift at present. The Dow is -18 points, -0.05%, the S&P -0.38%, the Nasdaq -0.47% and the small-cap Russell 2000 is already off -1.35% currently.

Most likely, we’ll attribute this to two pending reports which have the potential to influence market sentiment: tomorrow morning’s Consumer Price Index (CPI) and next week’s Federal Open Market Committee (FOMC) meeting, which starts a week from today and concludes a week from tomorrow. Core CPI inflation — stripping out volatile food and energy costs — is expected to take another leg down, from +4.7% last month to around +4.3% upon the Wednesday morning release. For the FOMC, the Fed is likely to stand pat at a Fed funds rate range of 5.25-5.50%, which is already the highest we’ve seen in more than 22 years.

However, a potential fly in the ointment this week is the continued impasse between what was formerly known as the “Big 3” U.S. automakers (now the “Detroit 3”) — Ford (F - Free Report) , General Motors (GM - Free Report) and Stellantis (STLA - Free Report) , which currently owns Chrysler — and the United Autoworkers Union (UAW). Staring down a deadline of a minute before midnight Thursday, the specter of seeing 100K fewer autos produced per week would no doubt have negative affects for lots of things, including inflation: no new cars for an extended period would even bring the price of used cars up again, which had recently stabilized.

Earlier this month, a 10% rate hike proposed was called “insulting” by the UAW, though yesterday “some headway” between the two sides was being reported. Should a full union strike commence, it will mean 146K autoworkers will no longer be producing new automobiles. Stellantis spokespersons expressed optimism, and said another proposal was imminent. Should a strike be averted, this might act as a tailwind to the automaking space, at least in the near term.

This afternoon, we’ll see August numbers for the U.S. Federal Budget. These are expected to tick down to -$245 billion from -$220 billion reported last month. For 2022, we see a big improvement from the previous two (Covid) years: -5.8% last year versus -12.4% in 2021 and a record-low -15% in 2020. Today’s print will likely be low-impact, relatively, but something worth keeping an eye on, especially in the bigger picture.

Questions or comments about this article and/or author? Click here>>


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


Ford Motor Company (F) - free report >>

General Motors Company (GM) - free report >>

Stellantis N.V. (STLA) - free report >>

Published in