grid capital logo
under construction — please contact +1 970 452 16 46

NIO Experiences a Decline Due to Unexpected Inflation Numbers

At the time of publication:

NIO’s stock has hit a roadblock around the $9 mark, right at the 21-day simple moving average. This slowdown comes after the release of the September US Consumer Price Index (CPI) report, which revealed a slight uptick in headline inflation.

Nio’s stock is struggling to recover from a 17% drop, a consequence of its decision to raise $1.5 billion from convertible bonds. Before the CPI data was released, equity futures, including the NASDAQ 100, saw a 0.4% rise. However, these gains were halved when the inflation figures came in higher than expected. US Treasury yields also rose following the inflation data, with the 2-year yield increasing by more than 1%.

Nio (NIO) stock started Thursday’s 12 regular session 2.5% lower. It remained stuck below the $9 price level, hovering near the 21-day Simple Moving Average (SMA). Initially, NIO shares had shown a nearly 1% increase before the market opened, but the September CPI data revealed higher inflation than anticipated.

In the premarket, NASDAQ 100, S&P 500, and Dow Jones futures had all rallied as many expected the week’s positive momentum to continue. However, these gains were cut in half after the US CPI data was released. NASDAQ 100 futures saw their gains reduced from 0.4% to 0.2%. As the regular market opened, some indices saw reductions, resulting in a mixed market. The NASDAQ Composite rose by 0.4% in the first half-hour, while the Dow Jones dipped by 0.2%.

News about Nio’s stock: Elevated Headline Inflation Spells Trouble for Equities

The core inflation, a measure that excludes volatile energy and food prices, met consensus expectations. Economists correctly predicted that the September core CPI would rise by 0.3% on a monthly basis and by 4.1% annually.

However, the headline inflation exceeded expectations slightly. The monthly headline CPI came in at 0.4%, surpassing the 0.3% forecast. Similarly, the annualized headline CPI was reported at 3.7%, instead of the expected 3.6%. This increase is likely attributed to rising oil prices during August and September.

This development is generally considered unfavorable for equities, as higher inflation readings might prompt the Federal Reserve (Fed) to consider further interest rate hikes. However, this possibility has seemed less likely in the past week, as several Fed officials have indicated that fighting inflation may not require immediate rate hikes. They have suggested that keeping rates steady at the 5.25% to 5.5% range, where they have been since July, is sufficient.

On Tuesday 10, San Francisco Fed Bank President Mary Daly stated that the recent uptick in Treasury yields could be viewed as an alternative to rate hikes, as it is expected to reduce spending and investment. Fed Vice Chair Philip Jefferson, Dallas Fed Bank President Lorie Logan, and Atlanta Federal Reserve Bank President Raphael Bostic have also expressed similar sentiments in separate statements.

In a separate development, Nio’s stock has faced challenges the week (9-15 oct) as Huawei-backed Aito announced receiving 50,000 orders for its M7 electric SUV. Aito now poses as a new competitor in the Chinese EV market, causing shares of Li Auto (LI) and XPeng (XPEV) to also retreat in response to this announcement.

Request Access

    By clicking the button you agree to the Privacy Policy
    Recent Posts