(Bloomberg) — Stocks fell after some of Wall Street’s biggest banks gave cautious outlooks, and Brent crude fell below $70 a barrel on concerns about oversupply.
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After a rally to start the week, the S&P 500 struggled to make much headway. JPMorgan Chase & Co. fell 6.5% after its chief executive, Daniel Pinto, said analysts were too optimistic about next year’s expenses and net interest income. His comments follow guidance from Goldman Sachs Group Inc. chief David Solomon on Monday that his company’s third-quarter trading revenue could fall 10%. Tesla Inc. shares rose on an upbeat analyst call. Oracle Corp. hit an all-time high on strong earnings.
US Treasury bond prices rose after the sale of $58 billion in three-year notes.
Traders also closely watched news that regulators will make changes to their proposals for bank capital rules, halving the expected impact on big banks and exempting smaller lenders from large parts of the measure. Ahead of key inflation data, investors are also bracing for the first debate between former President Donald Trump and Vice President Kamala Harris.
The S&P 500 was little changed. The Nasdaq 100 rose 0.4%. The Dow Jones Industrial Average fell 0.4%. The Bloomberg index of seven major companies rose 1%. The Russell 2000 index of small companies fell 0.8%. The KBW Bank Index fell 2.9%.
The yield on the 10-year US Treasury note fell four basis points to 3.66%, and the dollar was volatile.
U.S. stocks are unlikely to fall 20% or more because the risk of recession remains low compared to the expected interest rate cut by the Federal Reserve, according to strategists at Goldman Sachs Group Inc.
While stocks could fall by the end of the year – hurt by high valuations, mixed growth outlooks and political uncertainty – the chances of an outright bear market are slim as the economy is also partly supported by a “healthy private sector,” the team led by Christian Mueller-Glissmann said.
In the run-up to the CPI release, a 22V Research poll showed that 56% of respondents believed core CPI was on a favorable downward path for the Fed. However, the share of investors expecting a recession remained high.
In addition, 48% of investors expect the market reaction to the CPI to be “mixed/not significant,” 32% said “risk-on” and only 20% said “risk-off.”
The company’s most prominent achievements:
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Apple has lost its legal battle over a €13 billion ($14.4 billion) Irish tax bill and Google has lost its challenge to a €2.4 billion fine for abusing its market power, in a double blow to the European Union’s crackdown on Big Tech.
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Oracle shares rose after the software giant reported earnings and bookings that beat estimates, suggesting demand for artificial intelligence continues to boost its cloud computing business.
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Teva Pharmaceuticals Ltd. is set to face an antitrust fine from the European Union over allegations it tried to co-opt rival manufacturers of its multiple sclerosis drug.
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Southwest Airlines Chairman Gary Kelly has announced his resignation along with six other directors, a dramatic move after the company faced calls for a strategic overhaul from activist investor Elliott Investment Management.
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German carmakers are sinking deeper into a crisis that is undermining the future of the country’s most important industry, with BMW AG warning that profits will be hit by a costly brake problem and Volkswagen AG scrapping job protections that workers have enjoyed for three decades.
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Volkswagen AG is ending job protections for German auto workers as part of its cost-cutting drive, setting up a showdown with unions as the country’s most important industry fights for its future.
Main events this week:
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US CPI, Wednesday
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Japan Producer Price Index, Thursday
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ECB interest rate decision, Thursday
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US Initial Jobless Claims, Producer Price Index, Thursday
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Eurozone Industrial Production, Friday
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Japan Industrial Production, Friday
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University of Michigan Consumer Confidence Index, Friday
Some key movements in the markets:
Stocks
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The S&P 500 was little changed as of 1:24 p.m. ET in New York.
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The Nasdaq 100 rose 0.4%.
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The Dow Jones Industrial Average fell 0.4%.
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The MSCI World Index fell 0.1%.
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The KBW Bank Index fell 2.9%.
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The Bloomberg Magnificent 7 Total Return Index rose 1%.
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The Russell 2000 Index fell 0.8%.
Currencies
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The Bloomberg Dollar Index was little changed.
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The euro fell 0.1% to $1.1023.
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The pound was little changed at $1.3071.
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The Japanese yen rose 0.5% to 142.46 yen per dollar.
Cryptocurrencies
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Bitcoin rose 0.4% to $57,225.57
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Ether rose 0.6% to $2,356.87
Bonds
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The yield on the 10-year US Treasury note fell four basis points to 3.66%.
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The yield on the 10-year German bond fell by four basis points to 2.13%.
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The yield on the 10-year British bond fell four basis points to 3.82%.
Goods
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West Texas Intermediate crude fell 4.2% to $65.85 a barrel.
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Spot gold rose 0.4 percent to $2,515.43 an ounce.
This story was produced with the help of Bloomberg Automation.
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