Markets Dip as Inflation Data and Earnings Season Drive Uncertainty
Markets Dip as Inflation Data and Earnings Season Drive Uncertainty
By:JJ Kinahan
Despite AI optimism, Tesla shares fall After cybercab unveiling
- Stocks slipped slightly as mixed inflation data failed to excite investors.
- Tesla unveilsed its cybercab, but shares dropped despite AI hype.
- Wells Fargo and JPMorgan shine as earnings season kicks off.
Stocks closed with modest losses yesterday as the S&P 500 dipped 0.2%, the Nasdaq Composite remained flat, the Russell 2000 fell 0.45% and the Dow Jones Industrial Average slipped 0.15%.
The latest consumer price index (CPI) report showed mixed results, explaining the market's muted response. Core CPI, which excludes volatile food and fuel, was unchanged month-over-month but remains slightly up year-over-year. Including volatile items, CPI was flat month-over-month and slightly down year-over-year, likely because of falling oil prices.
The producer price index (PPI) released this morning was also mixed. Core PPI dropped slightly month-over-month but increased year-over-year, while the full PPI—which includes all categories—fell on both measures. Following the PPI release, the probability of a quarter-point rate cut at the Federal Reserve's November meeting remains high at 88%, with a 12% chance of no change.
Earnings season begins
Today also marks the unofficial start of earnings season. Wells Fargo (WFC) beat expectations on non-interest income, suggesting it is gaining market share, and its stock is up over 3% in premarket trading. JP Morgan (JPM) exceeded profit and revenue forecasts, with trading income rising, pushing the stock up nearly 2% premarket.
In other news, Tesla (TSLA) unveiled its $30,000 cybercab, which lacks a steering wheel or pedals, alongside a surprise cargo van. Despite the introductions, Tesla shares dropped 6% in premarket trading. Nvidia (NVDA) received a price target upgrade from Goldman Sachs because of strong demand for chips.
The effects of Columbus Day
Next week will bring a wave of earnings reports, including one from Netflix (NFLX), and the market may experience volatility on Monday because the bond market will be closed for the holiday, while stocks remain open.
As always, stay focused on your long-term investing goals.
JJ Kinahan is CEO of IG North America—which includes tastylive, tastytrade and IG's FX Business. Kinahan traded for 21 years at the Chicago Board Options Exchange. He serves on the CBOE Advisory Board and the SIFMA Options Committee. @thejjkinahan
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