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Stocks Fall as Crypto Continues its Rise Amid Fears of Inflation

Friday, November 12, 2021 04:41 PM | Neal Farmer
Stocks Fall as Crypto Continues its Rise Amid Fears of Inflation

Stocks dipped slightly this week with the S&P 500 falling 0.31% and the tech-heavy NASDAQ dropping 0.69%. Meanwhile, cryptocurrencies enjoyed a strong surge early in the week with Bitcoin approaching $70k and Ethereum nearly hitting $5k before cooling off. Economic data was relatively light this week outside of new inflation data from the Producer and Consumer Price Index. Lastly, earnings season rolled on with a large batch of firms reporting results from the most-recent quarter.

Inflation Surprise

Traders received an unfortunate surprise Wednesday morning when the Consumer Price Index (CPI) showed a 0.9% rise in prices for October. Economists were expecting a jump of 0.6% in October following September’s relatively modest 0.4% increase.

The biggest drivers of the 0.9% increase came from the gasoline and energy indices rising 6.1% and 4.8% respectively. Additionally, used cars rose 2.5% while new vehicles jumped 1.4% in October. Food and energy prices rising more than others resulted in the core CPI index increasing “only” 0.6% compared to estimates for a 0.4% rise. Core CPI had risen just 0.2% in September.

The 50% larger than expected rise in CPI and core CPI was unexpected following the Producer Price Index (PPI) coming in on par with estimates. PPI and core PPI increased 0.6% and 0.4%, respectively in October, the same as was expected for consumer prices.

Investors will eagerly await the next comments from the Federal Reserve as the central bank announced that it will start tapering its asset purchases.

Earnings Disappoint

A plethora of firms reported quarterly earnings this week with some of the biggest names and moves being AstraZeneca (AZN), DoorDash (DASH), PayPal (PYPL), Disney (DIS).

AZN plunged more than  6% after a miss on earnings estimates and the announcement that it will move away from its non-profit model in regards to its coronavirus vaccine. Meanwhile, DASH shares rose after the firm missed badly on earnings estimates as a result of it announcing it will acquire Wolf Enterprises. Shares of PayPal fell roughly 10% after mixed quarterly results in addition to lowering its revenue forecast far below the consensus. Finally, Disney stock suffered as well with the giant missing on both earnings and revenue projections as it showed slowing streaming growth.

All in all, the S&P 500 lost 0.31%, the Dow Jones Industrial Average fell 0.63%, and the NASDAQ dropped 0.69%.

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