The S&P 500 rose on Friday, surpassing the 5,800 point mark for the first time and the three benchmark indices achieved the best winning streak, for the Dow in eight months and for the Nasdaq since May.
In this context, the Dow Jones Industrial Average rose 0.97% to 42,863.86 points; The S&P500 gained 0.61% to 5,815.03 points and the Nasdaq Composite appreciated 0.33% to 18,342.94 points.
Banks: the most anticipated results
On Friday, the main focus was on the third quarter earnings seasonwith major financial companies getting the season underway. These results offer important insight into the economy, including the strength of loan demand.
The actions of JPMorgan Chase rose 4% after the largest U.S. lender by assets beat quarterly earnings and revenue estimates thanks to higher-than-expected net interest income.
The actions of Wells Fargo They also rose 6% after the bank reported third-quarter earnings that beat expectations, driven by lower expenses and credit costs.
Goldman Sachs, Bank of America and Citigroup will announce their earnings next week.
What happened to the shares?
Tesla shares fell 9% after the group presented its long-awaited “Cybercab” robotaxi and analysts noted that the CEO Elon Musk provided few answers to crucial questions around the technology.
Uber shares rose 11% after Tesla’s highly anticipated Robotaxi event failed to impress investors. Jefferies Investment Bank said the “Tesla’s toothless taxi is the best possible outcome for Uber”.
Stellantis NV fell almost 2.5% after announcing that Chief Financial Officer Natalie Knight is set to resign and will be replaced by Doug Ostermann. The company confirmed that it has begun the search for a candidate to replace CEO Carlos Tavares, who will retire in early 2026.
PPI data supports smaller rate cut
He producer price index for september was unchanged last month compared to August, declining from a previous reading of 0.2% and below expectations for a 0.1% rebound.
On a year-on-year basis, the index rose 1.8%, slower than the upwardly revised mark of 1.9% in August, which could indicate that cooling inflation is reducing the impact of consumer inflation data. , released earlier in the week, which were stronger than expected.
Traders are now pricing in a strong possibility of a 25 basis point cut in November, rather than the 50 basis point cut the Fed introduced in September.
Comments from Fed officials added to this notion, with Atlanta Fed President Raphael Bostic stating that holding the rate in November could also be considered.
A slower pace of interest rate cuts potentially puts pressure on Wall Street as U.S. stock valuations hit record highs on expectations of a sharp rate cut.
Inflation and rates: the analysis of experts
Last month’s US inflation report sparked mixed reactions on Wall Street, leaving analysts to assess the implications for the Federal Reserve’s next move.
Evercore ISI International Strategy & Investment said in a note that September’s CPI was “slightly firmer than expected,” 2.4%, but “compositionally mixed.” They emphasized that the report showed a continued acceleration in basic services, excluding housing, but also a cooling in inflation of housing services, particularly rents.
Furthermore, Evercore ISI highlighted that while inflation has not been fully controlled, the data may not jeopardize the rate cuts planned in November and December.
“The Fed is now past the phase where inflation readings determined the path of rates,” the analysts said, indicating a baseline expectation of a 25 basis point cut per meeting through the first quarter of 2025.
Morgan Stanley echoed the sentiment of stability, calling the CPI report a “mild acceleration” but noting that housing costs, particularly owners’ equivalent rent (OER), fell significantly. Despite a slight rebound in commodity prices, analysts maintained their forecast for a 25 basis point cut in November. “Nothing in the report changes our prediction,” they said.
William Blair’s investment banking groupadopted a more cautious tone, acknowledging that September showed “slightly less progress in inflation than expected.” The firm noted that while the inflation trend continues to slow, external factors such as rising oil prices and seasonal adjustments could introduce volatility in the coming months.
UBS Investment Bank warned of possible “volatility” ahead, as core CPI inflation is expected to rebound to between 3.3% and 3.4% in the coming months. Analysts forecast a moderate strengthening of the CPI in October, but believe that inflation will be contained after December.
Bank of America described the report as showing “some stickiness in inflation” but remained complacent about a possible 25 basis point cut in November, citing slowing rental costs. “We are not yet concerned about reacceleration risks,” the bank said.
Source: Ambito
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