Stocks Mostly Higher on Strong Q3 Bank Earnings Results

The S&P 500 Index ($SPX) (SPY) today is up by +0.15%, the Dow Jones Industrials Index ($DOWI) (DIA) is up by +0.46%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down by -0.36%.

Stocks today are mixed, with the Dow Jones Industrials posting a new all-time high.  Strength in bank stocks today supports the overall market after JPMorgan Chase and Wells Fargo reported better-than-expected Q3 earnings results.

Today’s stronger-than-expected US Sep producer price report pushed T-note yields higher and is bearish for stocks.  Also, a -7% fall in Tesla weighs on the Nasdaq 100 Stock Index after Elon Musk unveiled prototypes of the company’s robotaxi Cybercab that analysts said was “light on details.” 

US Sep PPI final demand eased to +1.8% y/y from +1.9% y/y in Aug, stronger than expectations of +1.6% y/y.  Also, Sep PPI ex-food and energy rose +2.8% y/y, stronger than expectations of +2.6% y/y.

Middle East tensions continue to be a negative factor for stocks.  In addition to Gaza, Israel is waging a ground and air offensive in Lebanon to combat Hezbollah.  The Israel Defense Force (IDF) said Tuesday that it deployed a fourth division of troops in southern Lebanon while maintaining airstrikes in Beirut’s southern suburbs.  The markets are also awaiting Israel’s response to last Tuesday’s missile barrage from Iran.

The results of corporate Q3 earnings may determine the near-term direction of stocks.  According to Bloomberg Intelligence, companies in the S&P 500 are expected to report an average +4.7% increase in quarterly earnings in Q3 from a year ago, down from +7.9% growth projected in July.

The markets are discounting the chances at 85% for a -25 bp rate cut at the November 6-7 FOMC meeting and at 0% for a -50 bp rate cut at that meeting.

Overseas stock markets today are mixed.  The Euro Stoxx 50 is up by +0.11%.  China's Shanghai Composite fell to a 1-week low and closed down by -2.55%.   Japan's Nikkei Stock 225 climbed to a 2-week high and closed up by +0.57%.

Interest Rates

December 10-year T-notes (ZNZ24) today are down -3 ticks.  The 10-year T-note yield is up +1.2 bp to 4.104%.  Dec T-notes today are under pressure on negative carryover from weakness in European government bonds.  Also, today’s stronger-than-expected US Sep PPI report weighs on T-note prices.  In addition, rising inflation expectations are bearish for T-notes after the 10-year break-even inflation rate rose to a 4-1/4 month high today at 2.340%. 

European government bond yields today are higher.  The 10-year German bund yield climbed to a 5-week high of 2.299% and is up by +3.9 bp to 2.295%.  The 10-year UK gilt rose to a 3-1/4 month high of 4.248% and is up by +3.3 bp to 4.244%.

Swaps are discounting the chances of a -25 bp rate cut by the ECB at 96% for the Oct 17 meeting.

US Stock Movers

Uber Technologies (UBER) is up more than +6% to lead gainers in the S&P 500 after Elon Musk offered few details on plans for a self-driving vehicle service that could compete with Uber.

Wells Fargo & Co (WFC) is up more than +4% after reporting Q3 EPS of $1.42, stronger than the consensus of $1.28. 

JPMorgan Chase (JPM) is up more than +3% to lead gainers in the Dow Jones Industrials after reporting Q3 investment banking revenue of $2.35 billion, better than the consensus of $2.13 billion, and raising its full-year net interest income forecast to $92.5 billion from a prior estimate of $91 billion.

Atlassian (TEAM) is up more than +3% after Morgan Stanley named the stock a top pick of software stocks with a price target of $224.

Blackrock (BLK) is up more than +2% after reporting $160 billion of net inflows in Q3, well above the consensus of $100 billion. 

Fastenal (FAST) is up more than +4% to lead gainers in the Nasdaq 100 after reporting Q3 net sales of $1.91 billion, better than the consensus of $1.90 billion.   

Affirm Holdings (AFRM) is up more than +4% after Wells Fargo Securities upgraded the stock to overweight from equal weight with a price target of $52. 

United Natural Foods (UNFI) is up more than +3% after Northcoast Research upgraded the stock to buy from neutral.

  Tesla (TSLA) is down more than -7% to lead losers in the S&P 500 and Nasdaq 100 after Elon Musk unveiled prototypes of the company’s robotaxi Cybercab that analysts said was “light on details.” 

A.O. Smith (AOS) is down more than -7% after cutting its full-year net sales forecast to $3.80 billion-$3.90 billion from a previous forecast of $3.97 billion-$4.05 billion, weaker than the consensus of $3.99 billion. 

Walgreens Boots Alliance (WBA) is down more than -1% after Morgan Stanley cut its price target on the stock to $7 from $9.

Stellantis NV (STLA) is down more than -4% after RBC Capital Markets said it isn’t entirely clear how the management changes can help to reverse trends for the company after it announced several changes on Thursday. 

Toast Inc (TOST) is down more than -1% on signs of insider selling after an SEC filing showed President Fredette sold $1.34 million shares on Tuesday. 

Earnings Reports (10/11/2024)

Bank of New York Mellon Corp/The (BK), Blackrock Inc (BLK), Fastenal Co (FAST), JPMorgan Chase & Co (JPM), Wells Fargo & Co (WFC).

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On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.