Stocks Steady as Traders Await US Earnings Season: Markets Wrap

By Investor Empires On Oct 11, 2024

(Bloomberg) — European stocks and U.S. futures were little changed, as traders digested hotter-than-expected U.S. inflation and braced for the start of earnings season.

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The Stoxx 600 and S&P 500 futures traded flat at the open, capping a week in which US stocks hit another record high. The European Stoxx 600 index fell. The French 10-year bond yield fell after the government announced a budget that focused heavily on spending and tax cuts to address the public debt pile.

September’s higher-than-expected inflation reading and rising unemployment benefits highlighted the challenge facing the Federal Reserve, suggesting progress has stalled in the battle to get prices to the target. Investors will now watch US September producer price numbers on Friday for further indications of the Fed’s easing path.

“The Fed has said the last mile to get to the inflation target is going to be difficult, and that’s what we’re seeing,” said David Donabedian of CIBC Private Wealth in the US. “But we still expect the Fed to cut interest rates by a quarter of a percentage point in November, and will likely make a similar cut at its December meeting.”

Swaps market prices pointing to a possible Fed rate cut next month were little changed, with traders pricing in a roughly 80% probability that the Fed will cut by 25 basis points in November. This compares to a fully calculated move ahead of strong US jobs data last week.

Fed policymakers John Williams, Austin Goolsbee and Thomas Barkin were unfazed by the higher-than-expected CPI, suggesting officials can continue to cut interest rates.

Investors are also bracing for third-quarter earnings announcements later Friday from JPMorgan Chase & Co., Wells Fargo & Co. and Bank of New York Mellon Corp.

JPMorgan’s forecast for net interest income will be a key focus, after company executives tried to temper expectations for the main revenue source. As for Wells Fargo, investors may be looking for updates on its asset cap.

In China, the CSI 300 fell 2.4% in afternoon trading as caution increased ahead of a key news conference at the end of the week that could shed more light on Beijing’s fiscal stimulus. Investors and analysts expect Beijing to deploy up to 2 trillion yuan ($283 billion) in new fiscal stimulus as authorities seek to boost growth and restore confidence.

Oil fell, paring some of the gains made on Thursday when West Texas Intermediate futures rose 3.6% as traders awaited Israel’s response to the Iranian missile attack.

Main events this week:

JPMorgan and Wells Fargo kick off earnings season for Wall Street’s big banks on Friday
US Producer Price Index, University of Michigan Consumer Confidence, Friday
The Fed’s Lori Logan, Austin Goolsby and Michelle Bowman speak on Friday

Some key movements in the markets:

Stocks

The Stoxx Europe 600 Index was down 0.2% as of 8:12 a.m. London time
S&P 500 futures were little changed
Nasdaq 100 futures were little changed
Dow Jones Industrial Average futures were little changed
There was little change in the MSCI Asian stock index
MSCI Emerging Markets Index rises 0.2%

Currencies

The Bloomberg Dollar Spot Index was little changed
There was little change in the euro at $1.0937
The Japanese yen fell 0.1 percent to 148.74 yen to the dollar
There was little change in the yuan in external transactions at 7.0802 to the dollar
There was little change in the pound sterling at $1.3050

Cryptocurrencies

Bitcoin rose 1.9% to $60,847.48
Ethereum rose 2% to $2,412.98

Bonds

The yield on the 10-year Treasury note rose one basis point to 4.07%.
The yield on 10-year German bonds was little changed at 2.26%.
The yield on British 10-year bonds fell one basis point to 4.20%.

Goods

Brent crude fell 1.2 percent to $78.42 a barrel
Spot gold rose 0.4 percent to $2,640.10 per ounce

This story was produced with assistance from Bloomberg Automation.

-With assistance from Winnie Hsu, Natalia Knyazevich, and Richard Henderson.