Federal Reserve Chairman Jerome Powell during the National Association of Business Economics (NABE) annual meeting in Nashville, Tennessee, USA, Monday, September 30, 2024.
Seth Herald | Bloomberg | Getty Images
This report comes from today’s CNBC Daily Open, our international markets newsletter. CNBC Daily Open tells investors everything they need to know, no matter where they are. Do you like what you see? You can register here.
What you need to know today
Tesla’s Cybercab and Robovan
Tesla Shares fell 8.8% after the company’s “We, Robot” announcement disappointed investors. At Thursday night’s event, CEO Elon Musk unveiled the Cybercab, a two-seater without a steering wheel or pedals, and the Robovan, a high-capacity autonomous vehicle. But Musk offered few other details, prompting analysts to question the company.
More assurances from China
At a press conference on Saturday, Chinese Finance Minister Lan Fan told reporters that the scope for Beijing to increase its fiscal deficit is “rather large,” but the government is still discussing stimulus plans, according to a CNBC translation of Chinese. Lan also announced measures to support employment and the real estate industry.
Bank profits are in good shape
JPMorgan Chasethe largest U.S. bank, reported third-quarter earnings and revenue that beat estimates. Net interest income rose 3% from a year ago and helped revenue grow 6%. Wells Fargo had a decent third quarter. The bank beat earnings estimates, but unlike JPMorgan, revenue fell short of expectations and NII fell.
[PRO] Profits will show the direction of the market
After the deluge of data, such as the September jobs report and the consumer price index, earnings will set the course for markets in the near term. Big banks dominate third quarter reports this week. Of Bank of America and Goldman Sachs turn on Tuesday, while Morgan Stanley reports earnings on Wednesday.
The essence
It seems that September inflation was hotter than expected a hit indeed.
With a snap of its fingers, the producer price index calmed concerns about inflation that remains stubborn. The index, which measures wholesale prices – and thus generally predicts changes in the CPI – was unchanged in September from August, defying expectations from a Dow Jones survey of a 0.1% rise.
In fact, last week’s inflation data looked so promising that Goldman Sachs believes the Federal Reserve has come close to bringing inflation down to its 2% target without collapsing the economy, as CNBC’s Jeff Cox reports.
While consumer sentiment eased slightly in October, according to the University of Michigan Consumer Survey, “long-term business conditions rose to their highest rate in six months,” wrote Joanne Hsu, director of the survey.
JPMorgan Chase’s third-quarter earnings may be the first taste of that. America’s largest bank beat estimates for both revenue and profit. As banks generally reflect the health of the wider economy, it’s a sign that things aren’t all bad despite falling consumer confidence.
Admittedly, earnings reflect what has already happened. Investors are more interested in what is going to happen. But consumers are “good and on a strong footing,” JPMorgan CFO Jeremy Barnum told reporters.
Markets cheered the string of positive news.
On Friday, the S&P 500 added 0.61%, the Dow Jones Industrial Average increased by 0.97% and Nasdaq Composite rose 0.33%.
That capped a winning week for Wall Street – their fifth in a row. The S&P and Nasdaq rose 1.1%, while the Dow fared slightly better with a weekly gain of 1.2%.
“What we’re seeing … is a broadening of the market,” said Craig Sterling, head of U.S. equity research at Amundi US.
It’s a reminder that falling inflation is just a stopgap to investors’ real end game for a healthy stock market.
– CNBC’s Jeff Cox, Samantha Subin and Brian Evans contributed to this story.