Dow Jones futures rose slightly on Thursday morning, along with S&P 500 futures and Nasdaq futures, as the market rally awaited the release of the CPI inflation report. The stock market rally gave up morning highs on Wednesday, turning negative before bouncing back late. The Nasdaq, Dow Jones and Russell 2000 all closed at key levels.

Treasury Yields Slide Ahead of CPI Report

Treasury yields continued to slide on Wednesday, as investors anticipated the consumer price index data for September, which will be released at 8:30 a.m. ET on Thursday. Economists expect the CPI to rise 0.3% month-over-month, after jumping 0.6% in August on soaring gasoline prices. Year-over-year, the CPI inflation rate is expected to slow to 3.6% from 3.7%.

Dow Jones Futures Rise as Market Rally Awaits Inflation Data; Novo Nordisk Stock Soars
Dow Jones Futures Rise as Market Rally Awaits Inflation Data; Novo Nordisk Stock Soars

The CPI report will be closely watched by the Federal Reserve, which has signaled that it plans to start tapering its bond-buying program soon, but has also maintained that inflation is transitory and will ease as supply chain disruptions and labor shortages ease. The Fed minutes released on Wednesday from the September meeting showed that most policymakers agreed that it would be appropriate to start reducing the pace of asset purchases this year, but some wanted to wait for more evidence of a sustained economic recovery.

The Fed’s preferred inflation gauge, the core PCE index, which excludes food and energy prices, rose 3.6% year-over-year in August, well above the Fed’s 2% target. However, the September producer price index, which was released on Wednesday, came in a little hot at 0.5% month-over-month and 8.6% year-over-year, but there were details that bode well for the core PCE index later this month. The core PPI, which excludes food, energy and trade services, rose only 0.2% month-over-month and 6.8% year-over-year, suggesting that some of the inflationary pressures are easing.

Novo Nordisk Stock Soars on Weight-Loss Drug News

Novo Nordisk stock soared 15% on Wednesday, hitting a new all-time high, after the Danish drugmaker announced positive results from a late-stage trial of its experimental weight-loss drug semaglutide. The drug, which is already approved for treating diabetes and obesity under the brand name Ozempic and Wegovy, showed that it could help people with obesity lose an average of 17.4% of their body weight over 68 weeks, compared to 2.4% for those who received a placebo.

The trial also showed that semaglutide could reduce the risk of cardiovascular events such as heart attack and stroke by 21%, compared to placebo. Novo Nordisk said it plans to submit the drug for approval as a treatment for reducing cardiovascular risk in people with obesity in the first half of 2022.

The news boosted Novo Nordisk’s rival Eli Lilly stock, which rose 3.6% on Wednesday. Eli Lilly is developing its own weight-loss drug tirzepatide, which is also in late-stage trials and has shown promising results so far.

However, the news also crushed medical device stocks that make products for treating obesity, such as gastric bands and balloons. ReShape Lifesciences stock plunged 32%, Apollo Endosurgery stock tumbled 25%, Obalon Therapeutics stock sank 18%, and Aspire Bariatrics stock dropped 14%.

Delta Air Lines Earnings Due Amid Rising Fuel Costs

Delta Air Lines will report its third-quarter earnings before the market opens on Thursday. Analysts expect the airline to report a loss of $1.07 per share on revenue of $9.15 billion, according to Zacks Investment Research. That would mark a significant improvement from a year ago, when Delta posted a loss of $3.30 per share on revenue of $3.06 billion amid the pandemic-induced travel slump.

However, Delta and other airlines have been facing headwinds from rising fuel costs and concerns about waning travel demand amid the spread of the delta variant of Covid-19. Delta said last month that it expects its fuel costs to average $2.37 per gallon in the third quarter, up from $1.87 per gallon in the second quarter and $1.25 per gallon a year ago.

Delta also said that it expects its revenue recovery to be delayed by one to two months due to the delta variant impact, and that it expects its adjusted operating margin to be between -3% and -5% in the third quarter.

Delta stock fell 1.4% on Wednesday, closing below its 50-day and 200-day moving averages. Other airline stocks also sold off hard on Wednesday, with American Airlines stock dropping 4%, United Airlines stock sliding 3%, Southwest Airlines stock declining 2.6%, and JetBlue Airways stock losing 2.4%.

The Israel-Hamas fighting also added to the woes of the airline industry, as Delta and other major airlines suspended flights to Tel Aviv on Wednesday, citing security concerns. The move came after a rocket fired by Hamas militants hit a building near Tel Aviv’s Ben Gurion airport, injuring five people.


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