After a 17% decrease as a result of a $1.5 billion convertible bond issuance, NIO stock, which is currently trading at $9, seems to be trapped around the 21-day simple moving average. The US CPI report for September showed a small rise in headline inflation. NIO shares struggled to break above the $9 barrier as the day began with a 2.5% decline, closely matching the 21-day Simple Moving Average.
Equity futures, including the NASDAQ 100, initially increased by 0.4% prior to the CPI release, but half of those gains were lost as inflation came in higher than anticipated. US Treasury yields increased as a result of higher headline inflation, with the 2-year yield rising by more than 1%.
The NASDAQ 100, S&P 500, and Dow Jones futures all indicated during premarket trading that they would continue to rise, but after the publication of the US CPI data, they slowed down. For instance, the gain for NASDAQ 100 futures fell from 0.4% to 0.2%. The performance of the indices in the regular market was uneven, with the NASDAQ Composite rising by 0.4% in the first half-hour while the Dow Jones fell by 0.2%.
Nio stock update: Stocks could face problems due to increased headline inflation
Core inflation, which eliminates more erratic prices for food and energy, met forecasts. The core CPI for September climbed by 4.1% yearly and 0.3% monthly, as forecast by economists.
The headline inflation rate did, however, slightly exceed expectations. The monthly headline CPI was 0.4%, above the expected 0.3%. Similarly, the annualised headline CPI came in at 3.7% as opposed to the predicted 3.6%. The increase in oil prices throughout August and September is to blame for this.
Since a rise in inflation could lead the Federal Reserve (Fed) to raise interest rates, this is typically viewed as a bad sign for the stock market. This prospect has, however, lost some of its likelihood during the past week as some Fed officials have suggested that holding rates in the present range of 5.25% to 5.5%, which has been in place since July, may be more necessary than raising them in order to battle inflation.
The president of the San Francisco Fed Bank, Mary Daly, stated on Tuesday that the recent increase in Treasury yields would be a better option than hiking interest rates because it is anticipated to reduce spending and investment. Other Fed officials, including Fed Vice Chair Philip Jefferson, Fed Chair Raphael Bostic, and President of the Atlanta Federal Reserve Bank Lorie Logan, all of whom expressed similar views in their own speeches, have backed this point of view.
The possibility of a rate hike at the November meeting has recently decreased, according to data from the CME Group’s FedWatch Tool. In particular, the tool showed a 91% chance of rates being the same on Thursday, up from just 80% the week prior.
In a related situation, this week has been difficult for Nio’s stock price to rise. This happened in response to the Aito firm, which is sponsored by Huawei, announcing that it had received 50,000 orders for its M7 electric SUV. The shares of Li Auto (LI) and XPeng (XPEV) have decreased as a result of Aito’s entry into the cutthroat Chinese EV industry.
Stock Analysis for NIO
NIO’s 21-day Simple Moving Average (SMA) is currently at $8.97, which is exactly where the stock price of NIO closed on Wednesday. NIO has run into resistance near the $9 level after the business successfully raised $1.5 billion through convertible notes on September 18.
In the past, a more significant resistance level for NIO’s shares has been at $9.50. This barrier, however, seems to have been slightly lessened by the projected dilution brought on by the convertible bond transactions.
It will probably take a trigger for NIO’s stock to return to the high-volume zone in the $10.15 to $11.30 region. There is support at about $8 right now.