Stock futures drift higher, with inflation concerns lingering

Stock futures edged higher Tuesday morning to steady after the previous day’s drop, with investors eyeing elevated commodity prices and other signs of inflation heading into corporate earnings season.

Contracts on the S&P 500 ticked up, while energy prices extended a march higher. U.S. West Texas intermediate crude oil futures rose to hover near a seven-year high, with supply constraints and elevated fuel demand pushing prices higher. Outside of oil, aluminum prices moderated after reaching their highest level since 2008 a day earlier, and copper prices also drifted slightly lower after a near 2% jump. 

For investors, the broad rise in commodity prices has threatened to exert further pressure on corporate margins. Companies have already been grappling with a host of supply-side challenges, including port congestion and labor scarcities, that are expected to drag on profit growth heading into third-quarter earnings season later this week and over the next month. The Labor Department’s August Job Openings and Labor Turnover survey — due for release Tuesday morning — is expected to reflect yet another record number of workplace vacancies.

And rising interest rates have also raised the specter of higher borrowing costs for companies, with the 10-year yield holding above 1.61% on Monday for its highest level since June. 

“We’re definitely freaked out about crude oil prices … [and] about slightly higher interest rates,” David Bailin, Citi Private Bank chief investment officer, told Yahoo Finance. “But we have to put all of this in context. First of all, interest rates have been abnormally low. Energy prices are high due to excessive demand right now and delivery shortages across Europe and now in China … These things will abate. We think it’ll take somewhere between three and nine months for energy supplies and for the shipping issues to abate.”

Other strategists also suggested that investors look through the near-term supply-related challenges facing the markets.

“We’re going to have supply issues for a little bit longer here, but I think that’ll just work its way through,” Jeremy Bryan, portfolio manager for Gradient Investments, told Yahoo Finance Live on Monday. “The nice part about the U.S. economy and markets in general is they usually follow what the U.S. consumer does, and the U.S. consumer wants to spend. And that’s why we’re still positive on the markets.” 

7:32 a.m. ET: Stock futures point to a slightly higher open 

Here’s where markets were trading Tuesday morning: 

  • S&P 500 futures (ES=F): +4.5 points (+0.1%), to 4,355.5

  • Dow futures (YM=F): +13 points (+0.04%), to 34,389.00

  • Nasdaq futures (NQ=F): +43 points (+0.29%) to 14,743.50

  • Crude (CL=F): +$0.45 (+0.52%) to $80.94 a barrel

  • Gold (GC=F): +$7.70 (+0.44%) to $1,763.40 per ounce

  • 10-year Treasury (^TNX): +0.9 bps to yield 1.6%

7:30 a.m. ET Tuesday: A record share of small business owners reported job vacancies in September: NFIB 

Small business optimism fell more than expected in September compared to August, with supply chain disruptions and shortages weighing on owners’ outlooks. 

The National Federation of Independent Business’s Small Business Optimism Index edged down to 99.1 for September from 100.1 during the prior month. Consensus economists were looking for the index to come in at 99.5, according to Bloomberg data. 

A record share of 51% of small business owners said they had job openings that could not be filled, according to the survey. This marked a third straight month with a fresh record high of this metric. Meanwhile, 42% of owners said they raised compensation during the month, which was also a record high.

“Small business owners are doing their best to meet the needs of customers, but are unable to hire workers or receive the needed supplies and inventories,” NFIB Chief Economist Bill Dunkelberg said in a press statement. “The outlook for economic policy is not encouraging to owners, as lawmakers shift to talks about tax increases and additional regulations.”

In terms of inventories, more than 35% of small business owners said supply chain disruptions were having a “significant impact” on their firms, while 32% reported a “moderate impact” and 21% said they experienced a “mild impact.” 

6:10 p.m. ET Monday: Stock futures edge lower 

Here’s where markets were trading Monday evening:

  • S&P 500 futures (ES=F): -2.25 points (-0.05%), to 4,348.75

  • Dow futures (YM=F): -12 points (-0.03%), to 34,364.00

  • Nasdaq futures (NQ=F): -6.5 points (-0.04%) to 14,694.00

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., September 29, 2021. REUTERS/Brendan McDermid

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., September 29, 2021. REUTERS/Brendan McDermid

Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter

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