Markets in the red as energy stocks plunge and investors mull inflation data

Yahoo Finance's Jared Blikre looks at how the stock market is faring on Thursday morning, as stocks dip in the red amid recession fears and inflation data.

Video Transcript

JULIE HYMAN: Let's get a check on markets now, oh, about seven minutes after the open of trading on this Thursday morning. Jared Blikre is on the floor of the New York Stock Exchange, looking at some of the selling action this morning, Jared.

JARED BLIKRE: Yes, the markets narrowly escaped disaster yesterday. And it looks like they're trying to price it in today with that hot PPI number. I have a number of thoughts on that. But let's get to the markets on the YFi Interactive. It's shaping up to be the worst week in about a month here. And let's check out the four-day price action. You can see the NASDAQ down nearly 5%. And we still got basically two trading days left in the week.

Now I want to check out our S&P 500 two-month chart that I've been tracking here. We have been in a big trade-- or a big trading range for about three weeks. And we are heading back down to the lower end of that. If we break through, I don't have much confidence that these lows near 3,600 are simply going to hold. And the reason I say that is because just taking a look at the MOVE Index-- now this is like the VIX of bonds-- this is extremely elevated. I'm going to put a three-year chart, so you can see the pandemic line. We have been trending higher for a long time.

And we could very well take out these highs here. It's going to be very difficult for equities to get off the ground if we're seeing this bond market volatility. And we're seeing more action in the 10-year T-note yield. Let's see if we can get that up there. We can see that's up another nine basis points today. And these sound like small numbers, 0.09%, but it's important to realize that these are tied to heavily levered trades. And they do mean a lot to the market.

Well, it looks like my YFi Interactive signal is a little bit slow here. Oh, one more chart. I think I can get you the 13-week T-bill yield. And that has been screaming higher as well. This tracks what the Fed is actually doing with the short end of the curve. So, all in all, not looking very bright on all of these time frames.

Now, let's get inside the market. You're going to see a lot of red on our heatmaps here. I wasn't able to find any sector or any style that's really in the green. You can see Costco there at the top. That's standing out. That is a consumer staple. So, I guess, nice to see that. But let's take a look at our sector action for the day. Everything in the red. You can see energy down 3 and 1/2%. Crude oil now crashing at 95. It could easily go to 85. And this kind of ties back to the PPI number that we got this morning.

Now, Brian, I know you're excited about crashing egg costs. Usually, that would filter through to the consumer in one to two quarters. However, I've been reading some analysis that say that might not happen this time because consumer-- well, I guess the companies that make these products-- and let's say, for eggs, this is going to be a baking company, Nabisco-- who knows?

They're not necessarily going to lower their prices because they have been shell-shocked by price inflation, just the same way as consumers are. So you may see margins getting better over the coming quarters because of the commodity crash. And I do expect these PPI numbers to come down. But unfortunately, it may not necessarily reach the consumer just yet.

BRIAN SOZZI: I saw what you did there. You worked in eggs and shell-shocked, shell. I like that, Jared. Real quick, before I let you go--

JARED BLIKRE: Thank you.

BRIAN SOZZI: --your early read on these bank earnings-- big misses.

JARED BLIKRE: Big misses. Not a surprise, though. We were expecting-- the bar was already low. So the fact that we're already exceeding that low., I don't think, is too much of a surprise. There was so much volatility. Nobody can track-- nobody can model a lot of these businesses because of the chaos in the market.

So I think earnings estimates are just going to crash this quarter. And we're just seeing the beginning of this. We saw this start about two weeks ago. There is a long way for this to go. So I think this is going to play out over the earnings season. Probably going to be in for some nasty surprises here, Brian.

BRIAN SOZZI: All right, Jared Blikre. Thanks so much.