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What you need to know in markets Wednesday

Selling begot selling for US crude oil.

Domestic oil prices continued their rout and fell for the 12th consecutive session Tuesday, marking the longest losing streak in history. WTI crude settled at $55.69 per barrel, down more than 27% from its early October highs, as concerns of a supply glut continue to pressure prices for the domestic benchmark.

Equities also extended a multi-session rout, with the S&P 500 closing lower Tuesday for the fourth consecutive day. The S&P 500 (^GSPC) fell 0.15%, or 4.04 points, while the Dow (^DJI) slipped 0.40%, or 100.69 points, to 25,286.49 points. The Nasdaq (^IXIC) was unchanged at the end of Tuesday’s trading session.

Economic calendar and earnings

The Labor Department will report monthly Consumer Price Index readings for October on Wednesday. Core CPI excluding volatile food and energy is expected to have grown 0.2% month-over-month in October, versus 0.1% in September. In the 12 months through October, CPI is expected to have increased 2.5%, versus 2.3% for the year through September.

“Expect a rebound in October’s core CPI, but the trends are benign,” Ian Shepherdson, chief economist at Pantheon Macroeconomics, said Tuesday. “The strong dollar is exerting downward pressure on goods prices, and the slow rate of increase of unit labor costs means that non-rent services inflation is contained too.”

The Labor Department will also release data for the pace of increase for real average hourly and weekly wages on Wednesday at 8:30 a.m.

Randal Quarles, Federal Reserve vice chairman of supervision, is slated to deliver the regulator’s semiannual report to Congress before the House Financial Services Committee at 10 a.m. ET Wednesday. Later in the day, Robert Kaplan, the president and CEO of the Dallas Fed, will speak with Federal Reserve Chairman Jerome Powell in Texas about national and global economics issues.

Meanwhile, US Trade Representative Robert Lighthizer is scheduled to meet with Cecilia Malmström, European Commissioner for Trade, in an attempt to move toward U.S.-E.U. trade talks.

The earnings calendar has begun to clear as the vast majority of S&P 500 companies have now reported quarterly results. Department store Macy’s (M) will report before market open Wednesday, while Cisco (CSCO) will deliver results after market close. Canopy Growth Corporation will be the next major pot stock to report earnings, following results from Tilray (TLRY) and Aurora Cannabis (ACB) earlier this week.

Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., November 12, 2018. REUTERS/Brendan McDermid

Now, here’s what Yahoo Finance market correspondent Myles Udland’s eye:

Almost one-third of investors think the stock market has peaked

Investors are starting to lose some of their faith in this market cycle.

For the second straight month, Bank of America Merrill Lynch’s global fund manager survey indicates that investors are as bearish as they’ve been on the global economy since 2008.

In November, 44% of fund managers said they think global economic growth will decelerate in the next 12 months; last month, 38% of fund managers thought the same. These are both the highest readings since November 2008.

But in Tuesday’s latest survey, a slight increase in the number of investors looking for a deceleration in the world economy was overshadowed by a clear step-up in bearish views on the world’s most important risk market — the S&P 500.

In November, 30% of investors said they thought that U.S. stocks have already peaked, roughly double the 16% of investors who thought stocks had peaked last month. (Emphasis ours.)

A third of investors polled by Bank of America throwing in the towel on higher stock prices this cycle doesn’t show outright capitulation, but the continued choppiness for the market after a brutal October has clearly increased concerns that the market’s best days are behind investors. And this data indicates a creeping anxiety among investors about the overall direction of the market, which for the last few years has been clearly up and to the right.

Stronger global and U.S. economic growth and stellar corporate earnings had been more than enough to keep bulls resolute about the market’s general trend over the last two years. Fears over rising interest rates, slowing global economic growth, slowing earnings growth, and rising interest rates have cast that market view into doubt over the last few months.

Overall, fund managers surveyed by BAML still see the market rising before the end of this cycle — BAML’s survey shows investors think the S&P’s eventual peak this cycle will be 3,056, a roughly 12% advance from current levels. “We remain bearish, as investor positioning does not yet signal ‘The Big Low’ in asset markets,” said Michael Hartnett, chief investment strategist at Bank of America Merrill Lynch. 

Again, a gloomier view on the global economy does not indicate an outright rolling over of investor sentiment. But continued tepid optimism for a modest rise in stock prices amid a doubling in the number of market participants that think we’re not going anywhere but down makes clear that investor confidence continues to bleed out of the market — and indicates there is still plenty of room for the situation in financial markets to get much worse.

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

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