Stock market bracing for red start amid inflation fears and surging oil prices

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Stock market bracing for red start amid inflation fears and surging oil prices
Credit: © Reuters.

The stock market is anticipated to open in the red on Friday, October 13, 2023, due to reignited inflation fears, rising oil prices, and the onset of third-quarter earnings announcements. This comes as global stock indexes, including Hong Kong's Hang Seng and the Shanghai Composite , experienced losses due to declining Chinese exports.

Key indicators point to a volatile day in the markets. The dollar weakened following uninspiring inflation data while bond-market volatility is expected in the coming weeks as investors interpret economic data and monetary policy direction. Oil futures have risen close to 2% amid concerns that the Israel-Gaza conflict could disrupt up to 20 million barrels of oil per day if Iran becomes involved.

Major corporations are set to reveal their financial performance for Q3. UnitedHealth (NYSE: UNH ), a Dow constituent, beat Q3 earnings expectations and raised the lower end of its annual profit guidance. Wells Fargo (NYSE: WFC )'s earnings are expected to be impacted by costs associated with replenishing the FDIC's insurance fund and exposure to commercial real estate uncertainties and consumer lending.

In contrast, LendingClub (NYSE: LC ) announced a 14% workforce reduction due to macroeconomic pressures and higher interest rates. Cassava Sciences (NASDAQ: SAVA )' shares plummeted 24% following a scientific misconduct investigation involving a collaborator. Dollar General (NYSE: DG )'s shares rose by 7.8% after former CEO Todd Vasos was reappointed, while Outset Medical's shares fell by 34% after it reported lower-than-expected preliminary third-quarter revenue and reduced its full-year sales guidance.

In other corporate news, Microsoft (NASDAQ: MSFT )'s $75 billion acquisition of Activision Blizzard (NASDAQ: ATVI ) was approved by U.K. competition authorities after Microsoft offered to restructure the deal by relinquishing cloud-streaming rights for certain popular Activision franchises. Ligado Networks has filed a $39 billion lawsuit against the U.S. over spectrum rights it alleges were wrongly denied.

In the energy sector, Exxon Mobil (NYSE: XOM ) and Chevron (NYSE: CVX ) saw premarket gains in line with rising crude prices. This comes as global oil prices are climbing due to anticipated geopolitical unrest in the Middle East, with Israel preparing for a Gaza ground offensive and Iran pledging support for its Palestinian allies.

The University of Michigan Preliminary Consumer Survey for October is expected to shed light on consumer sentiment. Meanwhile, the federal government has initiated a Hydrogen Subsidy spree with $7 billion in grants. On the political front, Steve Scalise withdrew from the House Speaker race. The Israel-Gaza conflict could have devastating humanitarian consequences if civilians are forced to evacuate northern Gaza.

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