Stocks Stabilize After Tech Rout: Big Banks Lead Earnings Season Kickoff
Stocks appear to be stabilizing after a recent tech rout, with traders closely monitoring a mixed reading on inflation as major banks kick off the earnings season. Despite US producer prices climbing slightly more than expected, traders are looking past this data as they analyze categories used to calculate the Federal Reserve’s preferred inflation measure.
According to Paul Ashworth at Capital Economics, the Producer Price Index (PPI) may actually be better than it appears, as the components feeding into the Personal Consumption Expenditures (PCE) price index were benign. With this analysis in mind, Ashworth notes a potential rate cut in September.
In the midst of these market movements, Wells Fargo & Co. faced a 5% decline after cautioning about slower cost reductions than previously anticipated. Meanwhile, JPMorgan Chase & Co. reported record profits but missed some key metrics, like net interest income. On the other hand, Citigroup Inc. saw a 2.5% increase as equity trading exceeded estimates, although the company expects costs for the year to be at the top end of the provided range.
Investors are eagerly awaiting insights from major banks on the state of the US economy and their expectations for the rest of the year, particularly considering the potential impact of the upcoming presidential election.
In the Treasury market, 10-year yields edged down slightly to 4.20%. Bloomberg analysis suggests Japan may have intervened in currency markets to support the yen following the release of US inflation figures.
Corporate Highlights:
– AT&T Inc. experienced a significant hack compromising customer data, separate from a previous breach, involving records of calls and texts for a six-month period.
– Boeing Co. secured an order for 35 of its 737 Max aircraft, including the Max 10 variant, from the US aircraft leasing unit of Tokyo Century Corp.
– Deutsche Lufthansa AG lowered its profit outlook for the year, anticipating challenges with breaking even at its German unit due to rising costs and falling ticket prices.
– Rio Tinto Group is exploring potential bids for companies like Teck Resources Ltd., according to Sky News.
– Novo Nordisk A/S’s Ozempic showed promise in reducing rates of dementia and other mental issues in a University of Oxford study, hinting at additional benefits of the diabetes drug.
– Samsung Electronics Co.’s largest union called for a walk-off at one of the company’s advanced AI memory chip plants, changing tactics in pursuit of higher pay.
As markets continue to fluctuate, here are some key moves:
Stocks
– S&P 500 futures remain stable
– Nasdaq 100 futures show minimal change
– Dow Jones Industrial Average futures increase slightly
– Stoxx Europe 600 rises
– MSCI World Index remains unchanged
Currencies
– The Bloomberg Dollar Spot Index falls
– The euro and British pound rise against the dollar
– The Japanese yen strengthens
Cryptocurrencies
– Bitcoin and Ether experience slight declines
Bonds
– 10-year Treasury yields decrease
– Germany’s and Britain’s 10-year yields advance
Commodities
– West Texas Intermediate crude oil rises
– Spot gold falls
As market dynamics shift, it’s essential for investors to stay informed and prepared for potential volatility. Stay tuned for more updates and insights from Extreme Investor Network.