Why Is the Stock Market Down Today? Nickel Shock Adds to Inflation Fears
U.S. equity futures fell 0.6% pre-market as the nickel price spike reignited inflation concerns, pushing 10-year Treasury yields up 8 basis points to 4.72% and pressuring growth stocks. The Dow Jones Industrial Average dropped 220 points at the open, with materials and industrial sectors leading losses.
Nickel Price Surge: LME Stocks Plummet as Morowali Floods Worsen
Indonesia's Morowali industrial park, which accounts for 40% of global nickel pig iron (NPI) output, remained submerged after record rainfall, with 70 of 120 production lines halted. The LME cash-3M spread flipped to a $450 backwardation from a $120 contango a month ago, signaling acute physical tightness. LME inventories plunged 18% in two weeks to 28,500 tonnes, the lowest since 2022, while cancelled warrants surged to 45% of stocks, indicating further drawdowns ahead. The three-month nickel contract on the LME settled at $26,850/tonne, up 12% on the week, the biggest weekly gain since March 2022.
The Stock Market Today News: Nickel Rally Weighs on Industrials as Inflation Fears Mount
In today's stock market news, nickel's 12% weekly gain is adding to inflationary pressures, with the 10-year breakeven rate rising to 2.45%. The S&P 500 materials sector fell 1.2%, while stainless steel producers like Outokumpu and Acerinox dropped over 4% on margin concerns. The dollar strengthened 0.4%, further pressuring commodities. Meanwhile, gold held steady at $4,039/oz as investors sought inflation hedges.
The Stock Market Today Up or Down? Nickel Supply Shock Threatens Fed's Rate Path
With nickel now up 28% year-to-date, the risk of a broader commodity rally is complicating the Fed's disinflation narrative. Markets are pricing a 72% probability of a December rate cut, down from 92% a week ago, according to FedWatch. The VIX rose to 18.5, reflecting heightened uncertainty. If nickel prices remain elevated, the Fed may delay easing, further pressuring equities.
