Hottest PPI Since 2022 Meets a Chip Rout, and SPX Opens on Wednesday's Low

Producer prices rose 1.3% in September, more than double the forecast. That takes PPI to 6.3% on the year, the most since December 2022, with energy doing over 80% of it. Retail sales beat too, 0.8% against 0.3%, but gas stations alone rose 6.4% on price. SPX closed Wednesday at 7,718.94, down 1.1%, the Nasdaq off 1.9%. Premarket 7,696, and the print barely moved it.

The bond market isn't treating this as an inflation scare. Core CPI ran hot Wednesday and CME's October hike odds roughly doubled from about one in five, yet the 10-year closed lower at 5.19% and is near 5.09% this morning, money rotating out of tech and into Treasuries. Asia made it worse overnight. The Kospi fell 7.6% with trading halted and SK Hynix down 11%, and TSMC's record quarter, $46.7 billion against its own $44.6-45.8 billion guide, hasn't stopped the ADR sliding about 3%. The chips have sold on debt, then OpenAI's revenue, then Chinese memory, and a beat from the foundry behind Nvidia and AMD was the cleanest chance to end it. Hammack, one of July's hike dissenters, speaks at 4:30.

Premarket sits on Wednesday's low of 7,693, with prior demand at 7,698 and a lone positive strike at 7,695, the only one between the flip and 7,550. One small node won't hold a real test. The profile turned over overnight to about six to one negative. The flip is 7,745 with prior demand at 7,746 on it, and the 7,770 call wall above is a sixth the size of the put wall. Between here and the flip it's small negatives through the 50-day at 7,707 and Wednesday's close at 7,719, so a bounce can travel. Underneath is the problem. The put wall at 7,670 is the day's largest node with prior demand on it, and 7,650 to 7,690 alone carries more than twice the profile's entire positive gamma.

The lean is short under the flip, sold on a bounce into the 7,712-7,719 gap fill for 7,698 and then 7,681. Selling the open on Wednesday's low is the poor entry, since the one positive strike under the flip sits right there. A break of 7,692 runs to the 7,670 put wall, and through it the 7,650 node comes quickly. A hold back over 7,735 ends it.