Dow Jones Today, Stocks Mostly Higher As Inflation Outpaces Expectations; AMD, ASML Lead Chips; JPMorgan, Delta Air, Infosys Earnings

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Investor's Business Daily 13 October, 2021 - 09:02am 5 views

US stocks change course, move higher hours before Wednesday's opening bell

Fox Business 13 October, 2021 - 12:02pm

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Investors also will be closely watching updates on inflation from the U.S. Labor Department, which will release its Consumer Price Index for September on Wednesday.

It is a gauge of how inflation is pressuring costs for consumers. Additional information on inflation pressures for businesses is due Thursday when the Labor Department releases its Producer Price Index.

Prices for oil and other energy have surged along with costs of other commodities. Shortages of semiconductors have meanwhile slowed output of many high-value industrial goods such as cars and consumer electronics.

On Tuesday, major indexes wavered between small gains and losses for much of the day on Wall Street, before selling gained momentum in the final minutes of trading. The S&P 500 slipped 0.2% to 4,350.65. The Dow dropped 0.3% to 34,378.34. The Nasdaq slipped 0.1% to 14,465.92.

Small company stocks, a gauge of confidence in economic growth, fared better than the broader market, driving the Russell 2000 index 0.6% higher to 2,234.27.

The pullback in the S&P 500 marked the index's third straight decline. After two days, the index's losses have offset its 0.8% gain last week.

The coming round of earnings reports will give Wall Street a clearer picture of how companies fared in the most recent quarter amid a surge in COVID-19 cases. It will also shed some light on how they expect to perform through the rest of the year.

S&P 500 companies are expected to post 27.6% annual earnings growth for the July-September quarter, according to FactSet. That's down from 28.1% growth estimated by analysts in July.

JPMorgan Chase will kick off earnings for banks on Wednesday. Bank of America, Wells Fargo and Citigroup will follow with their latest quarterly results on Thursday.

Many industries are feeling the pinch from rising inflation with higher costs for shipping and raw materials. Companies are warning that their financial results could suffer because of the supply chain problems.

The supply chain crunch has also raised prices on many goods for consumers, which could hurt consumer spending and further stunt the economic recovery. Investors will get an update on consumer spending when the Commerce Department releases its retail sales report for September on Friday.

Meanwhile, shares were mixed in Asia on Wednesday after an up-and-down day on Wall Street ended with most benchmarks lower as traders waited for updates on inflation and corporate earnings.

Tokyo's Nikkei 225 index fell 0.3% to 28,158.28 and the S&P/ASX 200 edged 0.1% lower to 7,276.80. The Shanghai Composite index declined 0.4% to 3,534.43. Seoul's Kospi gained 0.2% to 2,945.54.

Hong Kong was closed for a holiday.

Markets have been choppy for weeks as investors try to figure out how the economy will continue its recovery with COVID-19 remaining a threat and rising inflation potentially crimping consumer spending and corporate finances.

China’s producer price index is due out on Thursday. Economists have forecast a surge of over 10% year-on-year, up from 9.5% in August.

The yield on the 10-year Treasury fell to 1.58% from 1.60% late Friday. The bond market was closed on Monday for Columbus Day.

In other trading, U.S. benchmark crude oil lost 16 cents to $80.48 per barrel in electronic trading on the New York Mercantile Exchange. It gained 12 cents to $80.64 per barrel on Tuesday.

Brent crude, the international standard, declined 16 cents to $83.26 per barrel.

The U.S. dollar slipped to 113.46 Japanese yen from 113.59 yen late Tuesday. The euro rose to $1.1553 from $1.1530.

AP Business Writers Damian J. Troise and Alex Veiga contributed.

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Stock market news live updates: Stocks mixed as investors eye bank earnings, inflation data

Yahoo Finance 13 October, 2021 - 10:18am

Third-quarter earnings season also picked up, with notable companies including JPMorgan Chase (JPM) and BlackRock (BLK) posting results before market open. JPMorgan Chase, the largest U.S. bank by assets, posted results that topped estimates on both the top and bottom lines, boosted by a larger-than-expected release of credit reserves and strong sales in the firm's investment banking and equities trading divisions.

Investors have been trimming their outlooks for overall S&P 500 earnings growth for the third quarter, given that rising input prices, higher labor costs and other supply-side headwinds likely weighed on margins and chipped away at profitability. 

Recent developments for a plethora of companies across industries have already reflected the impacts of supply chain shortages and shipping challenges. The Wall Street Journal reported that firms from Costco (COST) to Walmart (WMT) have resorted to chartering their own ships to import goods ahead of the holiday season. And Bloomberg reported Tuesday that Apple (AAPL) was set to cut its iPhone production targets for this year by as many as 10 million units due to ongoing chip shortages. 

The latest batch of economic data due Wednesday confirmed that these supply and demand mismatches translated to ongoing inflationary pressures at the start of the fall. 

In the Labor Department's Consumer Price Index, core prices, excluding food and energy, rose by 4.0% in September over last year, coming down only slightly from June's 30-year high of 4.5%. And a broader measure of consumer prices including all categories rose 5.4% in September compared to last year, coming in at the fastest pace since 2008.

Wall Street analysts are looking for third-quarter earnings growth of about 27% on a year-over-year basis, according to FactSet data. Though this would still be the third-fastest earnings growth rate since 2010, it would be a marked slowdown from the second quarter's nearly 90% pace. 

Savita Subramanian, Bank of America's head of U.S. equity and quantitative strategy, wrote in a note this week that this "will be a make-or-break quarter with all eyes on margins and supply chains. 

"We think investors should fasten their seatbelts because this is going to be one rocky earnings season,” Wall Street Alliance Group’s Aadil Zaman told Yahoo Finance Live on Tuesday. “Supply chain issues are going to be dominating the earnings, and some companies, we are going to see, are going to give us an early Halloween shock.”

However, given that issues around materials shortages, port congestion and labor scarcities have already been well-known among investors, traders should focus more closely on company commentary and outlooks as a signal of future resilience, some pundits noted.  

“The message that I’m giving to our investors is focus not necessarily on what the third-quarter print is, but more importantly focus on what companies are saying about visibility going forward,” John Lynch, chief investment officer for Comerica Wealth Management, told Yahoo Finance Live. “And we think that we’re going to see good visibility from some of the value and cyclical players going forward.”

The Bureau of Labor Statistics' latest Consumer Price Index reflected a faster-than-expected rise in prices across a range of consumer goods. And the details of the report showed some of the categories that saw gains were outside the scope of those associated with the reopening, suggesting these inflationary pressures may last longer than many policymakers have so far acknowledged, according to at least one economist. 

"The top takeaway is, inflation is still running hot. It's well above the Fed's target," Matthew Luzzetti, Deutsche Bank chief U.S. economist, told Yahoo Finance Live Wednesday morning. "I think within the details, the most important point was, rental inflation was the highest we've seen since 2001." 

"It's been a difficult tug of war here between nominal wages going higher ... but inflation for the most part eating away at that and stripping away a lot of those nominal wage gains that we've seen," Luzzetti said. "If you focus on wage gains minus inflation, they've been negative for a period of time here, given that we've seen inflation picking up, particularly on a headline basis, and energy prices driving a lot of that." 

"I think from the Fed's perspective, that is one reason why they've said that they don't think this is going to be as persistent, because they would want to see wages running above productivity growth and real wages running above productivity growth, and we haven't seen that as of yet," he added. "But I think today's data at least on the rental front does tell you that the rise in inflation is probably going to be a bit more persistent than what the Fed had anticipated previously." 

Here's where markets were trading just after the opening bell Wednesday morning:

S&P 500 (^GSPC): +12.53 points (+0.29%) to 4,363.18

Dow (^DJI): +28.5 points (+0.08%) to 34,406.84

Nasdaq (^IXIC): +84.58 points (+0.58%) to 14,545.13

Crude (CL=F): -$0.66 (-0.82%) to $79.98 a barrel

Gold (GC=F): +$7.40 (+0.42%) to $1,766.70 per ounce

10-year Treasury (^TNX): -2.9 bps to yield 1.551%

Consumer prices posted a faster-than-expected rise in September compared to August and the same month last year, with a broad jump in food, housing and energy prices contributing to the gain.

The Bureau of Labor Statistics' Consumer Price Index (CPI) increased at a 0.4% monthly rate in September, accelerating from August's 0.3% pace. On a year-over-year basis, the CPI jumped 5.4%, also speeding compared to the prior month's 5.3% increase and coming in at the fastest pace since 2008. Consensus economists were looking for the CPI to increase by 0.3% and 5.3% on a month-over-month and annual basis, respectively.

Price increases across food and shelter contributed to more than half of the monthly increase in CPI, the BLS said in its report. Grocery store food prices increased for an array of products including meats, nonalcoholic beverages, fruits, vegetables and bakery goods. The energy index also increased 1.3% in a fourth straight monthly gain, led in turn by a 3.9% monthly surge in fuel oil prices.

Excluding the more volatile food and energy categories, the CPI still rose 0.2% on a month-over-month basis, coming in a tick faster than August's 0.1% increase. Over last year, the CPI excluding food and energy prices increased by 4.0%, matching August's rate. Though this metric has slowed from June's 30-year high of 4.5%, it remains elevated on a historical basis. 

Here's where markets were trading Wednesday morning: 

S&P 500 futures (ES=F): +7 points (+0.16%), to 4,347.75

Dow futures (YM=F): +42 points (+0.12%), to 34,302.00

Nasdaq futures (NQ=F): +52.75 points (+0.36%) to 14,706.66

Crude (CL=F): -$0.36 (-0.45%) to $80.28 a barrel

Gold (GC=F): +$12.90 (+0.73%) to $1,772.20 per ounce

10-year Treasury (^TNX): -1 bp to yield 1.57%

JPMorgan Chase handily exceeded Wall Street's expectations for third-quarter earnings and revenues, with the results boosted a leap in investment banking activity. 

Investment banking revenue surged 45% over last year to $3 billion, with both advisory and equity underwriting fees increasing. Elsewhere in the firm, equity sales and trading revenue grew 30% to reach a better-than-expected $2.60 billion. This growth helped offset a 20% drop in fixed-income sales and trading revenue, though this still came about in-line with estimates at $3.7 billion.

JPMorgan's quarterly earnings also received a positive impact from the release of $2.1 billion in net credit reserves, which had been set aside earlier on during the pandemic to protect against potential loan defaults and nonpayments. 

In a statement, JPMorgan Chase CEO Jamie Dimon said the reserve release came "as the economic outlook continues to improve and our scenarios have improved accordingly. As we have said before, however, we do not consider these scenario-driven releases core or recurring profits." 

Here's where markets were trading Tuesday evening:

S&P 500 futures (ES=F): -11 points (-0.25%), to 4,329.75

Dow futures (YM=F): -51 points (-0.15%), to 34,209.00

Nasdaq futures (NQ=F): -54.5 points (-0.37%) to 14,595.75

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

A shipping expert believes that the supply chain crisis may last well into 2023, given how global trade has been reshuffled to meet surging American demand.

Starting in November, all international travelers must be fully vaccinated and provide a negative Covid-19 test three days before boarding a U.S.-bound airplane.

After hitting a low of around $31,000 in mid-July, bitcoin has healthily recovered, currently trading at around $55,000. Amid talks of regulation over cryptocurrency markets, however, OANDA Market Analyst Craig Erlam believes that bitcoin’s momentum will continue.

At the beginning of July, the major crypto lender, Blockfi, officially launched its credit card that lets customers earn Bitcoin rewards based on spending. Since then its number of cardholders grew to 50,000 customers who've earned more than they anticipated thanks to Bitcoin's relatively improving price. Cardholders are on pace to spend far more than the average U.S. credit card holder.

The nation’s largest bank said Wednesday that it’s starting to get worried about inflation, warning that the hot pace of price increases could last through 2022.

JPMorgan Chase reported better-than-expected third-quarter earnings early Wednesday, kicking off a huge week for bank financials. JPM stock fell below a recent buy point. JPMorgan stock has gained more than 10% in the last few weeks, thanks to a rising 10-year Treasury yield.

Top news and what to watch in the markets on Wednesday, October 13, 2021.

The Dow Jones Industrial Average dropped 150 points Wednesday, as a key inflation gauge topped estimates. Apple sold off on iPhone news.

Time to buy Nike's stock after a recent pullback?

Since 2014, Harvard-educated David Yermack, a professor of finance at New York University, has taught courses on cryptocurrency. “Crypto investors should be aware of the high volatility of these assets, the unregulated nature of the trading platforms and the numerous frictions and delays involved in executing trades,” says Yermack.

Ten- and 30-year U.S. yields were lower on Wednesday morning, with the spread between short- and longer term rates narrowing as investors digest the September consumer-price index reading.

Bitcoin has been charging ahead again recently, and as is customary, positive BTC price action tends to resonate well with companies dependent on its success. This is especially true for bitcoin miners, who obviously stand to gain from the leading cryptocurrency’s elevated price. To wit, shares of Marathon Digital (MARA) have been putting in a strong performance as of late, and are up by 32% over the past month. Those are some nice returns, but B. Riley analyst Lucas Pipes thinks shares still ha

Futures rose ahead of inflation data and JPMorgan earnings after a weak close for the market rally. Apple iPhone woes are in focus.

AT&T Inc (NYSE: T) is trading lower Monday after Barclays analyst Kannan Venkateshwar maintained the stock with an Equal-Weight rating and lowered the price target from $34 to $30. The Barclays analyst cited challenging technicals as a result of the equity performance at Discovery Inc (NASDAQ: DISCA), which AT&T will be merging its media business with. AT&T was among the top three trending stocks on Stocktwits at publication time. AT&T is set to announce its third-quarter financial results befor

China's coal imports surged 76% in September as power plants scrambled for fuel to ease a power crunch that is pushing domestic coal prices to record highs and disrupting business activity in the world's second-largest economy. China, the world's largest coal consumer, has been grappling with a growing energy crisis brought on by shortages and record high prices for the fuel. On Tuesday, the government took its boldest step in a decades-long power sector reform by allowing coal-fired power plants to pass on the high costs of generation to some end-users via market-driven electricity prices, adding to worries about building global inflationary pressures.

Investors can earn significant returns by purchasing shares of high-quality companies and holding on for the long haul.

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