JP Morgan And Wells Fargo Kick Off Earnings Season

Key Takeaways

• Mixed Inflation Data and Rate Cut Outlook
• Earnings Season Begins with Strong Bank Reports
• Tesla’s Cybercab Unveiling and Nvidia’s Positive Outlook

Stocks closed Thursday with small losses. The S&P 500 fell 0.2% and the Nasdaq Composite was relatively unchanged. The Russell 2000 fell 0.45% while the Dow Jones Industrial Average fell 0.15%.

The latest Consumer Price Index (CPI) had mixed results, likely explaining yesterday’s lack of movement in markets. The core measurement, which strips out volatile categories such as food and fuel, was flat from month-to-month, but up slightly year-over-year. However, when you put those more volatile products back in the mix, CPI was flat month-over-month and actually down slightly year-over-year. The drop in year-over-year prices is likely a result of the drop in oil prices we’ve seen.

This morning’s Producer Price Index (PPI) was a mixed bag as well. Core
Core
PPI was down slightly on a month-over-month basis, but higher year-over-year. The full PPI that doesn’t strip anything out was down on both a month-over-month and year-over-year basis. Following the PPI, chances of a rate cut at the next Fed meeting, scheduled for November, we’re mostly unchanged with an 88% probability of a quarter-point cut. There is a 12% chance of no cut in November as well.

Today marks what many consider to be the first day of earnings season with some of the banks reporting before the open. Wells Fargo and JP Morgan both reported already this morning. Wells Fargo posted a beat on non-interest income. The better than forecast number suggests the company is taking market share. In premarket trading, the stock is up over 3%. JP Morgan reported better than expected profits and revenues and also said trading income increased. That stock is higher by nearly 2% in premarket.

Yesterday, Tesla finally unveiled its new cybercab. The car, which has no steering wheel or pedals, is expected to cost around $30 thousand. In addition, a surprise cargo van was also revealed that has the ability to transport people or products. Elon Musk, in making his presentation, suggested Tesla automated cars, Artificial Intelligence (AI) and robots could raise Tesla’s market value by as much as $30 trillion. Plans are for the cybercab to be produced before 2027. Interestingly enough, there was no mention of Tesla’s new low-priced car that many expected and in premarket, shares of Tesla are lower by 6%.

Another stock making news today is Nvidia. Goldman Sachs upgraded its price target for the company to $150 saying demand for the company’s chips continues to be strong. Also, Chinese stocks could get a boost as the country is expected to announce additional stimulus measures over the weekend that could total as much as $283 billion, according to Bloomberg.

Looking ahead to next week, it will be a heavy week of earnings for financials, but we’ll also hear from Netflix as well. Speaking of which, tastylive will be hosting a month-long series on trading earnings starting Monday at 9am CT. Also, Monday is a holiday and while the stock market will be open, the bond market will not be. That can create a bit of a rudderless day with thin trading. When that happens, you can sometimes get whipsaw movements.

For today, let’s see what the market thinks about the PPI number and if any positioning ahead of earnings takes place. I’m also watching insurance stocks which bounced some on Thursday. Despite the devastation of Hurrican Milton, the damage was less than feared in many areas. As always, I would stick with your investing plans and long-term objectives.

tastytrade, Inc. commentary for educational purposes only. This content is not, nor is intended to be, trading or investment advice or a recommendation that any investment product or strategy is suitable for any person.